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Business Negotiation Salary Negotiating - Don't Miss the Boat
Business Negotiation Salary Negotiating - Don't Miss the Boat
| Salary Negotiating - Don't Miss the Boat |
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| Written by Trevor Davide Grant |
| Tuesday, 27 January 2009 08:32 |
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Salary negotiation early in one's career can have a huge impact on the lifestyle they have in the long run. The biggest impact is determined by the salary they negotiate before their first day of work in their job. This should be considered whether it is a first job out of school or a mid-career job change. Beyond that, there are impacts even when you are working for an employer that you are very happy with. Not engaging in salary negotiation at the right time can have real financial impact. Throughout your career, you may earn pay increases or promotions within the company that you work for, but take as an example, when the company offers scheduled raises, as most companies do, the impact of your intitial salary with that company is measurable. This not only applies to your first salary and subsequent incremental raises but also to salary market differentials when you changes roles within a company. You may move into a job requiring significantly more responsibility or effort, but the salary you had beforehand can influence the starting salary of the new job. Take for example a person starting a new job as a business analyst in a software company somewhere in the US. Say for example that person begins with a starting salary of $45,000. Most likely that person will have to put in 6 months to a full year before they are offered their first pay increase. Suppose it is a 10% pay raise which would be SIGNIFICANT in many companies. The employee would gain an additional $4500 per year because of that increase. Suppose that same person started at $55,000 or more. That same pay hike of 10% would provide the same employee $5500 additional salary per year. With the first salary band, the employee would still be under the $50,000 mark after one full year of effort and after a 10% pay increase, while in the second situation the employee would be at over $60,000 a year after a 10% pay increment. Now analyze the compound repercussion of these two starting salaries on the individuals earning potential. First let's examine a 4 year timeline, all other things being equal (that is, suggesting no pay increases and no job advances). The person earning $45K will have earned $180K in total salary in 4 years. The person earning $55K will have earned $220K in 4 years. That is a $40K difference just based on where the employee started in terms of negotiated compensation. Introduce the 10% raise after year one and consider the impact as the person continues through their career. The person with a better salary in the beginning will always be ahead of the person with the lower starting salary, ceteris parabis (i.e. same job, same performance). The person with the higher salary negotiation will be inching ahead faster than the person starting with the lower salary. This impact accelerates with each passing year assuming the same % annual pay raise for each. When requesting a pay increase, if a person earning $50,000 earns a 5% raise without negotiating anything additional, that's okay. But consider the impact if the person negotiates a 15% increase because they have really performed well in the job and they have all the supporting research and a track record to command it. That employee will have negotiated $7,500 in a raise versus just accepting $2500. Multiply that by 10 years, and there is a clear $50,000 difference in the person's salary potential. Many experts suggest that it is better to try negotiating a raise or an improvement to the compensation package than to simply receive the package that is offered. The first offer is often the lowest offer and can be improved with salary negotiation. This negotiation must be done with care and must be well based with a supporting case for the difference. It must also consider factors such as market, company guidelines, and professional performance. However when done well, it can really pay off. Remember to consider the value of all factors of compensation when asking for an increase. Some people truly value time and quality of life, while others are willing to venture out and accept stock options in lieu of extra salary. However, when it comes to salary negotiation, don't be afraid to consider asking for more salary. About the Author: Trevor Davide Grant is a project manager in the IT field and has extensive experience in salary negotiation. Trevor has worked for large telecom, electric utilities, software development consulting, and a prevalent web 2.0 site. He has learned salary negotiating in the most powerfulway. Learn great tacticson the topic of negotiating salary at www.HowToNegotiateASalary.com. Kindly provided by MoneyHunter.org You are welcome to use this article on your own website, if you include the link just before this text. |
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