This Is How 2 Top MBA Professors Recommend You Smooth Negotiations for a Better Salary
Like just about everything, you are much better off with a plan.
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I've always thought about what makes salary negotiations so stressful, partly because of my own mixed success in that exercise over the years. In most cases, I felt as though I deserved a raise when the conversation finally arrived. But when you're forced to sit across from your boss, the situation becomes challenging.
Your palms sweat, and you sometimes forget to mention the key points you prepared. Your boss, on the other hand, is cool and collected. She is motivated to bring this negotiation to a close as quickly as possible, while granting you a modest raise.
Salary negotiation doesn't need to be stressful. Employees can gain the upper hand when negotiating with employers. But like most things, negotiating well takes practice and understanding. Here are several principles developed by some of the world's top business professors who study the art and science of negotiation. Armed with the proper information, you too can learn how to discuss terms with your boss like an expert.
Related: 8 Ways to Negotiate Your Way to a Higher Salary
Survey the motivations and constraints of the organization
Deepak Malhotra is a Harvard Business School professor who specializes in negotiation and deal making. A few years ago, Malhotra recorded a lecture he hosts annually for soon to be HBS graduates. The lecture is all about how new graduates can negotiate to get the best possible offer.
Malhorta makes one point clear in his research and in this video in particular. Understanding the constraints the other party must operate within will make it easier for you to negotiate well. By understanding constraints, you'll be able to propose a counter offer that is more likely to be acceptable to the organization. It will also help you to think of a creative counter offer that might otherwise be difficult to imagine without understanding the areas where the organization can be flexible.
Understanding restraints will require research both thorough independent review and thorough interviews. Start by using Google News to look for information about new company directors, or funding.
Next, speak with members of the organization to better understand the constraints they must operate within. When I've tried to get a raise in the past, I would often talk to people I knew at the company to see what their salary negotiation experiences were like.
Finally, ask questions during the interview process to help you understand key aspects of negotiating, such as time constraints. Time can be a valuable asset when it comes to negotiating. If you have enough time, you may be able to cultivate a competing offer by interviewing at another organization. Or if time is limited, you may be able to exchange a definitive yes on your part for better compensation in order to help the organization move forward with an important company initiative.
Related: Elon Musk Reportedly Gave His Assistant a 2-Week Test When She Asked for a Big Raise -- What Happened to Her Is an Important Lesson in Salary Negotiations
Understand the full-compensation package before countering
It's easy to get caught up in the thought that compensation boils down to a salary plus a bonus. But in reality, compensation can be much more than that. Professor Deborah Kolb is a Harvard professor and negotiation expert, and is an advocate for negotiating "conditions of success" in addition to standard aspects of compensation.
Kolb argues that current compensation is important, but what's even more important are the conditions under which you will operate if you accept the job or remain at your current workplace. By using the negotiation to ensure you are well positioned to be successful, you'll put yourself in an even better position to negotiate in the future.
When evaluating an offer remember to consider the full-compensation package before making a decision to accept or counter. Furthermore, if the other party asks you to share salary expectations or your reaction to a recent offer, remember to take full compensation into account.
Related: Why Banning Salary Negotiations Won't Close the Gender Pay Gap
Extend the negotiation timeline if a deal can't get done immediately
It may be difficult to arrive at a satisfactory offer in the near term. This is particularly true for employees negotiating a raise at their current company. If this is the case, it may make sense to extend the negotiation to a later date.
For example, consider asking the person you are negotiating with if they are willing to table the discussion for a short period of time. Using the extra time you've bought yourself, try to earn an offer from another company to use as leverage, or you can improve performance to earn a better offer.
Another reason to extend the negotiation timeline is to properly evaluate an offer. Resist the temptation of accepting or declining an offer in-person. Instead, you'll want to research the full compensation. Estimate take home pay using an online tax calculator, review the employee handbook you'll be expected to sign, and look over benefits packages to see how they compare with your expectations.
Related: The 4 Tax-Exempt Benefits Your Employees Want Most
Salary negotiation doesn't need to be stressful. If you have earned the opportunity to negotiate with a hiring manager, it means you are already a desirable professional. Rather than feeling anxious, remember that you have leverage.
Channel your nervous energy into understanding the constraints of the people on the other side of the table, and evaluate the compensation package. After your research is complete, focus on making an aggressive but reasonable counter offer.