6 Simple Steps to Discovering Your True Salary Potential

By Alaina Tweddale on 17 October 2014 0 comments

Salary negotiation is not always easy, especially if you don't know the value you and your position bring to your team and to your company.

So ask yourself these six questions and uncover your true market worth before you start driving a hard bargain. (See also: You Should Always Negotiate a Raise: Here are 10 Reasons Why)

1. How Valuable Are You to Your Team?

For any salary negotiation to be successful, you need to be highly regarded by your boss and colleagues. If your reputation is lacking, it's time to start enhancing skills and networking within the office. People who get ahead at work tend to follow through on their commitments, help other people reach their goals, and do more than what is merely expected. Get a firm understanding of what skills and traits are valued within your organization and do your best to personify them.

If you don't know what these are, it never hurts to ask. Set up time with your boss to ask which skills she'd like to see you develop. Talk to senior team members and find out what successes led to their promotions. Ask peers how you're perceived within the organization (or even within your team). All of this feedback can help you develop the picture of where you currently stand and what steps you can take to move up within your organization.

2. Do You Understand Your Compensation Structure?

Many positions come with multiple compensation streams including salary, commission, stock options, and retirement and health benefits. Each is (normally) offered for a different reason and so should be considered separately when negotiating for compensation.

Salary is what your employee offers in exchange for your job performance. In theory, if you do a good job, you'll get higher pay raises.

Stock options, in contrast, are generally offered to incentivize employee loyalty, which is why you'll often see this perk packaged with a vesting schedule. In other words, don't fail to negotiate for a salary bump because your employer offers a stock option. According to one career writer, the best time to ask for a raise is when you first recognize you're not being paid your fair worth. If you wait for your annual review, your team's salary increases will have already been planned out, and your boss likely won't have budget flexibility. Start lobbying six months in advance, however, and you have real potential to change the outcome of the conversation.

Attractive health and retirement benefits are designed to make a job more attractive than competing offers for new prospects.

3. How Is Your Industry Compensating Your Role?

You'll want to be aware of the salary range for your role, within your industry and geographic location. Jobs in some industries and areas of the country pay substantially higher than in others. Check out services like Salary.com or Payscale to research the range for your current field.

4. What Would It Cost to Replace You?

Before you can negotiate, it pays to know that what you're asking for is less than your replacement cost. According to one health benefits and insurance blog, it costs a business the equivalent of six to nine months of salary to recruit and train a new worker. For someone making $40,000 per year, that adds up to $20,000 to $30,000.

If you're an employee worth keeping (i.e., you're good at what you do and not at PIA to be around), then your boss would probably rather avoid the hassle and cost of finding a new recruit. The problem? Bosses aren't always proactive about making sure their employees are paid fairly. It's up to you to open a dialogue about your expectations. Ask what steps you can take to improve your job skills and reach a higher salary level. If your boss isn't willing to discuss a potential salary increase (even over the long term), it may be an indication that you're not valued in your role or that there just isn't budget for the bump. If this is the case, then consider step number 5 (or 6).

5. Is Your Current Employer Your Best Option?

If your current boss doesn't appreciate the value you bring to the role, it may be time to start looking at other options. Sometimes a non-quantifiable event like a personality conflict with a boss can get in the way of an employee's upward mobility. If you know you provide quality work but still can't seem to move beyond your current role, it may be time to explore options outside of your current employer. (See also: The 10 Things You Need to Do If You Want to Quit Your Job)

6. What's Going On Outside of Your Company?

Keeping your finger on your industry's pulse is the best way to stay aware of new job opportunities. If you're not properly valued by your current employer, you may want to find out what a competitor would pay for your skills.

Make connections through trade organizations, your local chamber of commerce, or by befriending people who perform similar functions at the competitor down the street. You never know what opportunities may arise and it can pay off to be well networked. You may even want to apply for competitor jobs. Being offered a position that pays 20% more can provide valuable leverage with your current boss. Or, you may simply decide that the new position offers better long-term opportunity than your current gig. Either way, the more you know about the current market in your industry, the better prepared you are for any opportunities that may come your way. (See also: Your 31 Hidden Networks That Can Help You Land Jobs)

Have you used your negotiating prowess to land a new and better job? What knowledge did you arm yourself with and what strategies worked best for you? We want to hear about it in the comments below.

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