How to Negotiate Your Salary, with Ramit Sethi

So, okay, so let's say now that I have just in this scenario, you have no other competing offers, and I've just made you an offer for 50, $50,000. So, Justin, here's the offer. And our salary is $50,000.

Well, first, I just want to say I'm very excited about the role. I think first and foremost, I want to be here. This is the job that I want. Now, with that said, I think that the experience that I bring to the table, the value that I've been able to demonstrate in my prior roles, warrants a much higher salary than 50,000. In terms of my own research regarding this particular role at this company and other companies, what I've actually seen is that there's a range of more like 45,000 to 65,000. And I think that given my experience, given the success that I've been able to have in prior roles, which I believe I'm going to bring to this role as well, that I deserve to be at the higher end of that range. So my aspiration is to actually be at 65,000.

Well, I appreciate that, and as you know, we'd love to have you. Unfortunately, you know, the economy is just really tough, and, you know, there's not much I can really do about that. So, you know, that's pretty much the situation right now with this economy.

And I totally get that. I think that at the end of the day, I would look at this like an investment. Are you going to invest $50,000 with someone who's going to be able to double your money? Or if you were to pay 65,000, you're going to be working with someone who's going to be able to triple, quadruple, or many times improve that return. And the work that I've done in the past, I think it's the same thing. Oftentimes we've been told your price point is too expensive, but at the end of the day, it's the return on that price point. And I think that compared to other candidates, I'm going to be able to more than make up that $15,000 difference.

Okay. I mean, you do make a case. So I just was able to actually check with my manager, and we're able to be slightly flexible on that rate. We had quoted you 50, and I know you brought up a range, and so I'm able to offer you 57. Would that be acceptable?

You know, one other thing which we didn't talk about is some of the other modes of compensation. So, you know, stock options, bonus. Would it Be appropriate to talk about some of those because while 57 is better than the 50 that you offered, it's still, you know, it's still not, given my research, what I think that I deserve in this role. And so if there's more flexibility, understanding that, you know, you guys may be constrained from a budgetary perspective right now, if there's more flexibility around stock or options or bonus at end of the year, sure, we can talk.

Let's discuss that. So on stock options, we are flexible. We've offered you 20,000 options and we're able to actually extend that number with the understanding that you are a top candidate. So we are pleased to be able to offer you 40,000 options and that actually doubles the number originally. Now, as you know, we can't promise where the stock is going to go, but we think that that's a very compelling offer.

Sure. I think that goes a long way to closing the gap. And I really appreciate your flexibility there because I am committed to this role and I think options are a great way for you guys to demonstrate that you're committed to me and for me to demonstrate that I'm committed to you. The one other thing that I would love to talk about is what would the review cycle be for my performance in terms of evaluating my candidacy for a promotion or a raise? Because while I understand right now we're going through some tough times, what I would love to do is my understanding is it tends to be a year, but could we have an accelerated review cycle after six months to potentially re peg my salary to a level that is more commensurate with, I think the experience that I'm bringing to the table here.

We normally don't do that, but in this case you've been flexible and I think we've come to a fair agreement for both of us.

So.

So yeah, I can speak to the hiring manager and we can certainly do a six month review cycle. And with that said, that's pretty much the best I can do. Would that work for you?

Yep, I think so.

Okay, that was awesome. So let's analyze what happened first of all. So tell me what you did from your perspective and I'll tell you the notes that I took as well.

Sure. So I think one again, coming in, having research, I made up some numbers, but that's the right tactic to take. Talk to your friends, go online. There's a lot of resources online that'll tell you the ranges of salaries for particular positions. You need to know that information. Otherwise it might be that you're perfectly happy with 50. But you turn around, you start that company, and you realize everyone around you is getting paid 100 because the range is much more significant than you had initially thought. So it's knowing the range, knowing my worth. I. You should be thoughtful and introspective about where you think you stack up. There is a risk, it's probably a smaller risk, but there is a risk where you push so hard that the expectations become so high for you once you get in the company that you don't set yourself up for success. So if you're a top candidate and you know you deserve to be at the top of that range, stick to your guns. Re highlight the attributes and the experiences, your promotion progression, your current salary, whatever it might be to emphasize why you deserve to be at the top of the range. But I think it's coming in and knowing what you want. So for me, you started at 50. In my mind, I said, okay, range 45 to 65. And I felt like I should have been at the top of the range. So I felt like at that point in time, you had shown some good faith, attempt to go and try to reevaluate that, and came up with 57. Then I want to get flexible. We hadn't talked about other attributes and elements of compensation, which oftentimes can be more or as important as your base salary. And so what are the degrees of flexibility that you have there? And now let's introduce those. Now that I feel like I've maxed out what you're willing to pay on a salary basis, and then the key reason that I was hearing from you in terms of why you weren't able to reach my salary expectation was the economy. And so what are some creative ways? Feel free to get a little bit creative. What are some creative ways to ensure that you get what you deserve when things are looking better, when things do turn around, maybe six months from now, things are just as bad or worse and you're not able to get that, but set yourself up for that success possible.

The things I noticed were that, first of all, it was not adversarial. It was, let's work on this together because we both have the same goal. I noticed that your answers were longer than in the interview, and I think that's appropriate. It's a time where we're covering a little bit more depth, and that's fine. And when you spoke, I listened because I knew I really need to understand this guy. I've already judged him and he's great. I want to work with Him. Now, let me listen. You constantly reiterated that you were excited for the job. As soon as I made you the offer, you said, well, first of all, thank you. And at each step, you said, you know, that goes a long way to closing the gap. And again, I just want to tell you how excited I am to work here. It cannot be overstated how important that excitement is.

That's absolutely intentional. Because I think to your first point, what you want to avoid is an adversarial conversation or a conversation where you've built up all this goodwill over the course of the interviews. This person's excited to have you on board. Obviously, what you want to do is come in day one, and they're excited to have you. They have high hopes. They're looking for you to be successful. They wouldn't hire you if they didn't think you were going to be successful in the role. And if you take two kind of sharp. If the tactics you use in negotiation come across as being too cutthroat or too adversarial, you can damage some of that credibility. And again, big picture, what am I going for? You may want to maximize your salary, but is it worth eking out that last $1,000? Could I have pressed you and gotten 58 instead of 57? Because maybe 58 was your actual max. Maybe. But what would it have taken to get there? So you have to kind of read the hiring manager or the recruiting manager that you're talking with to figure out, okay, is this, you know, is this all they can do? Have we reached their limit? Or, you know, maybe they can do a little bit better, but it's going to do more harm than good.

Yeah. This is the art and science of negotiation. You mentioned the range, which is just the default.

What?

Everyone should come in with their range and their data. That's a given. But then you took it to another level. You said, based on my success at the last company, which I also expect to bring to this company. So now you're talking about me, because that range is nice, but I want to hear about me and what you're going to do for me. So I thought that was very clever. When I pushed back, you turned into the investment strategy, and I think we both kind of laughed about that. Like, think of it as an investment. And you gave a couple of examples. That was clever. One thing after I gave you the 57, was you then said, would it be appropriate to discuss this? So you're giving me a little bit of power because you know that you're about to Just really hit me hard with something else. Doing one ask is one thing, but you did about three asks. So you paused, you let me have control for a second. And then I said, okay, that's appropriate. You caught up on my thing that said the economy. So you said, understanding that you may be constrained for budgetary reasons, which may or may not be true, but you're giving me that power again. So I felt like, oh, he really understands me. He's a flexible guy. Once I raised your rate, you said, that goes a long way to closing the gap. So you're appreciating what I've done. I like that. And then, of course, the review cycle. So tell me what your thinking was there.

Yeah, I think if you're being forthcoming in terms of we can't pay you more because of the economic environment, it should be a very easy conversation thing for you to be able to agree to that. Let's review your salary in six months rather than a year's time. Given that we're bringing you in, it's kind of an acknowledgment. Now, if you're pulling a fast on me and you are being disingenuous in terms of your ability, it kind of puts you in a tough situation. Actually, it's a little bit of a. It's about as strong arm as I think you want to get from a candidate perspective in a negotiation because it kind of forces your hand for you to say, no, we can't do that. Now. I start to get a little suspicious, actually. It kind of reveals your true intentions.

Okay, and what do you do then?

I would probe a little more on if you say no, that wouldn't be appropriate. It's like, well, why wouldn't that be appropriate if what you're telling me right now is that this is a point in time where we're unable to do it. Wouldn't it make sense in six months time to reevaluate that?

Wouldn't it make sense? That's a very gentle way of saying, hey, what are you doing here?

Hey, dummy, I caught you calling you out. So it's trying to. It's maximizing. It's using all the tools at your disposal to try to maximize what the company's paying you. Right. It's ensuring that the company's paying you up to the value that you're going to be bringing.

A couple other questions for you. One, how would you have changed this if you had other offers? What would you say?

Yeah, you know, I think the. I would probably still. Again, I Started the conversation with a. I'm very excited about this job with another offer. I think it gets a little tricky. Like I said, number one thing hiring managers hate is to lose you to a competing firm firm. So they're probably going to get more aggressive. But what I don't, again, big picture. I don't want them to think like, actually, I really want to work over here, but if you pay me more, I'll come over here. Because all of a sudden the dynamics of that relationship, of why I'm interested, what I've been selling through interviewing process starts to be called into question. So it's recognizing the offer you have, like you should at some point in time. If you tell me 50 and the offer's for 60, I'm probably just going to tell you, look, that's significantly under my competing offer. I'll try to not tell you the exact number because what I don't want to say is, I have an offer for 60 and you tell me, perfect, we'll pay you 60 or 61. But I want to let you know, directionally, there's another offer on our table. I prefer to be here, but I want to make sure that I'm going to bring a lot of my skills. I'm going to be able to do a lot of great things at whichever company I go for. And I want to make sure that my value is fairly represented by my compensation. And I think you have to keep coming back to anchoring it on that, because if it comes across as I'm just money hungry, I'm going to try to milk every dime out of this. You're not setting the right stage for a successful career there. If you're coming in on that footing versus I want to be here, I'm going to add a tremendous amount of value and here's what I'm worth, right?

And let's just find a fair number that works for both of us.