Negotiating Salary at your Annual Review

As I mentioned in one of my previous posts, your annual evaluation is undoubtedly the best time to negotiate a salary increase. What is the best way to approach the subject? There is unfortunately no magic formula of assuring that your expectations will be met. Besides, everyone has their own style when it comes to negotiations and what might be a natural thing for you to say to your boss might not necessarily work for your colleague. All I can do is share what always worked for me!

1.       Make sure you deserve an increase. A salary increase is usually a reflection of strong performance. If you had a weak year with few achievements, yet numerous points for improvement, park the discussion about compensation until you get back on track and show your value to the company.

2.       Give your boss a heads up. Let your boss know a couple of days before your annual review that you would like to discuss your salary during the performance evaluation. The reason I do this is that an employer is obviously unable to give a salary increase on the spot if he or she was not even expecting to be having the discussion. By giving him (or her) heads up, you increase your chances of having a definite answer when you bring up the subject during your meeting. If you are uncomfortable with being direct, approach your boss with a question: “Would my annual review be an appropriate time to discuss my salary?”

3.       Be prepared! Do research – know what the salary bracket for someone in your position and at your level of experience should be and bring the information to the meeting. This can come from job ads targeting someone with your background, online salary estimators or articles. Do not tell your boss that your friend or colleague does the same thing as you (or is even less qualified) and makes more. Your aim is to be professional and discuss factual information of which you are certain.

4.       Anticipate an unfavourable outcome. Although you might be a shining star on your team and an undeniable workaholic, you are never guaranteed a boss that will recognize this and a company that will be interested in bumping up your pay. Don’t hide your disappointment! Be open with your employer and express (once again factually and not emotionally) that, in your understanding, stellar performance is linked to an increase in compensation. However, don’t show that you are devastated! You can always find a better position and if you do not make an impression that you are heartbroken, your employer is bound to think that you are considering other options.

5.       Think of other perks that could add value to your compensation. Consider the fact that a company might simply be unable to bump up your salary because of temporary financial constraints or perhaps the fact that you were hired at a higher starting salary than your colleagues and your employer would have a difficult time justifying your increase. If the reasons your boss gives you are fair and acceptable to you, suggest other options. Would you be motivated with an extra week of vacation? Could your boss offer you a paid parking spot? Would it possible to request that the company cover your cell phone bill? There are many options – think of the ones that work for you!

I realize that many people are uncomfortable discussing compensation and hope that their boss would simply recognize their performance and increase the pay accordingly. Since this is not the case, however, you do need to take matter into your own hands. Just remember – you are not the first person to bring up the subject to your boss and s/he will not think ill of you because of it!

Negotiating salary after receiving a job offer (attn: junior candidates!)

Junior candidates often ask me about the best time to negotiate salary. My answer is always the same – at your annual review!

When you are fresh out of school or only have a couple of years of experience, negotiating salary is tricky and may very well make a negative impression on your potential employer. Once you receive an offer of employment, the salary has already been discussed by the decision makers and consensus has been reached. Unless you have a unique background with a highly specific blend of skills and experience - indispensable to the prospective employer - more often than not the company will not be open to re-negotiating your starting package.

Often candidates are struggling to understand why the offer they receive is not at the top of the original salary range. The answer is simple – budgets are not static and can change during the interview process. Clients are sometimes unaware of the job market and salary ranges. They may overestimate their budget for a new position, only to realize that there are many excellent applicants at a much lower salary range. Receiving an offer and reminding the client insistently that the original ad stipulated a higher range than what you are being offered, will win you no points.   

Ultimately you have to ask yourself how interested you are in joining the company in question and how much you want the job. Think that it will add undeniable value to your resume? Be flexible and don’t put the offer in jeopardy by coming off as pushy and unreasonable. However, if the offer is nowhere near your cut off point in terms of salary, go ahead and mention to the hiring manager that you expected a different amount and ask if there is anything that can be done for you to reach it. Quite possibly, you will be told that the salary can be reviewed upon the end of your 3-month probation or at the end of your first year of employment. If you would rather not risk the offer, stop negotiating and revisit the situation once you prove your value to the company and your performance is reviewed.

During my career in recruitment, I have witnessed candidates lose their dream jobs trying to negotiate an extra $2,000 ($77 on a bi-weekly pay-check, minus the taxes). On the other hand, I have seen bright and eager juniors accept a lower salary to start and then receive a $10,000 – 15,000 increase within a year of employment.

Be strategic and do not miss out on an amazing opportunity just to prove a point!