You Should Always Negotiate a Raise: Here Are 10 Reasons Why
The idea of negotiation may send you into a tailspin, but recent research indicates you may want to overcome your fear. For many people, the "ask" is a high barrier, one that helps companies across the country keep salaries and, consequently, costs low. According to the experts, salary negotiations offer many benefits to an employee. Surprisingly, they aren't all about the money. (See also: How to Win Salary Negotiations)
1. For New Hires, the Money Is on the Table...
Lewis Schiff explains in his book Business Brilliant that three out of four new hires accept the first salary they're offered, without negotiation. Meanwhile, he found, nine out of ten HR managers admit being willing to offer a higher starting salary, if only the candidate asks. That means there's a huge potential payoff for just a short conversation.
2. ...And It's Worth a Million Dollars
Over a career lifetime, a 20-minute annual salary negotiation can add almost one million dollars to your bottom line. Let's take a look at fictitious friends Adam and Anna to illustrate. The friends begin their careers at the same company at age 22 with a $50,000 per year annual salary. At each annual performance review, Adam happily accepts the 2% pay increase he's offered. Anna, meanwhile, negotiates an extra 1%, getting herself a 3% annual raise per year. At the end of their careers at age 65, Anna's salary tops out at $178,226 while Adam's reaches just $117,159. Over the course of their careers, Anna earns $977,287.60 more than Adam. (See also: Ways to Boost your Take-Home Pay)
3. Negotiating Earns Respect
According to a survey on job negotiation, 84% of bosses have more respect for a candidate who negotiates than for one that does not. It doesn't always mean you'll get a salary bump in the current year, but the act of negotiation increases your odds for the future.
4. It Helps Close the Gender Gap
Men are four times as likely to negotiate salary than women, according to Linda Babcock and Sara Laschever, authors of "Women Don't Ask: The High Price of Avoiding Negotiation." Over the course of a career, lifetime earnings become increasingly disparate as men negotiate more often with each performance review, promotion, or new job. The gender gap, says Babcock in her research, can often more accurately be defined as a negotiation gap. The easiest way to decrease the gulf, for women, is to learn the art of the ask. (See also: Why Women Don't Negotiate)
5. It Allows an Early Retirement
According to David Larson, professional negotiator and owner of NegotiatingSalary.com, someone who negotiates an extra 1% increase per year can retire seven years earlier. Negotiate an extra 2% and you can retire 11 years earlier.
6. Even With a Raise, You're Cheaper Than a New Employee
Employee turnover is expensive. In a recent interview Larson said that it costs an employer approximately 150%-250% of an annual salary to hire and train a new worker. Many managers would rather avoid the time and cost of getting someone new up to speed. Your job as a negotiator is to convince your manager (and probably her manager as well) that your pay bump offers the company more benefits than would bringing in a new hire.
7. You Can Ask for Perks Instead of Dollars
Not every employer can offer more money in every situation, no matter how skilled a negotiator you are. You may, however, be able to negotiate for other flexible job perks like more vacation time, a signing bonus, or an altered work schedule.
8. The Odds Are in Your Favor
According to a recent survey, four out of five people who asked for a higher salary last year received it. An additional 8% didn't get the raise but did receive additional benefits or incentives. Those are awfully good odds.
9. Life Isn't Fair
Turns out pay raises aren't always awarded to those most deserving, industrious, or ingenious. Larson, who has negotiated more than 700 salaries, admits that pay raises "are never even. Most people get nothing. Some people get more. The ones who get more are the ones who know how to convince their bosses to give them more." (See also: Convincing Your Boss to Let You Work From Home)
10. Your Fears Are Unfounded
Most people don't negotiate salary because they're afraid a new job offer will be rescinded or they'll offend a current boss. According to the professionals, neither is likely to happen, so long as you ask well. When I asked Lori Marcus, executive recruiter and Principal at QUAD656, an employee recruitment form, if she's ever seen a hiring manager rescind a job offer, she said, "No. Not for asking for more money." However, she conceded, "It's all in the approach." In short, it's important to always be respectful and to frame the conversation in terms of how your pay bump benefits your employer.
Of course, knowing why to negotiate is only the first half of the battle. Knowing how to negotiate is equally, if not more, important.
Have you negotiated a salary increase? Did you get it? Please share your experience in comments!