Increase Your Income (Part 2): Negotiate a Higher Salary

“Ang baba ng sweldo ko!”

Raise your hand if you’ve ever said or thought this. Perhaps this is even followed by “Lilipat na ako ng kumpanya!” or “Ang hirap ng ginagawa ko, ganito lang matatanggap ko?”

If you find yourself saying or thinking these things, perhaps it’s time to do something about it. Specifically, negotiate a higher salary. Trying to get a raise sounds like common sense but, surprisingly, we’re often hesitant to ask for more money.

Why is that? Maybe most of us think that successfully negotiating a higher salary includes some kind of fancy schmancy Jedi Mind Trick – a skill we don’t possess.

"Do or do not, there is no try." - Yoda

And you know what? You’re right. You need some special mind tricks up your sleeve. The good news is that these aren’t special powers – all it takes is preparation and practice. But first, you’d need to overcome the doubts and hesitations standing in your way.

Overcome Hesitation

The first thing you want to get out of the way before you ask for a raise is the doubt, hesitation, and fear. There’s this fabulous quote from author Mark Twain that goes:

“There are a thousand excuses for failure, but never a good reason.”

For our purposes, “failure” here is one’s failure to TRY negotiating. At all. And here are some of the common excuses we have for avoiding salary negotiation:

“I don’t know how to do it.”

Then learn. There are hundreds, if not thousands, of free, accessible resources on negotiation. Once you’ve got the basic tactics in your head, you just need a bit of practice in implementing them. Apart from this article, here are a few resources you can try:

• “Salary Tutor” by Jim Hopkinson. (You can get the audio book for free if you join Audible’s free 30-day membership – just don’t forget to discontinue the membership if you’re not interested in paying after 30 days)
• “Case Study: Negotiating a $16,000 raise  doing what others will not” by Ramit Sethi of IWillTeachYouToBeRich.com
• “Principles for Negotiating Salary and Employment Packages” from Caltech (PDF)

“I don’t think my company is the type to give a raise.”

Don’t think that the company you’re working for can afford a raise? Then ask yourself if there’s anyone working there right now, regardless of position, who earns around PHP 5,000 more than you do? How about PHP 10,000? How about twice more than your current pay? If so, then there’s probably enough for a small raise for you in your current position – if you can demonstrate the value you provide to the company.

“It’s too risky.”

What’s the worst thing that could happen if you ask your boss for a raise?

He’ll say no. Also, this experience will help you pinpoint your negotiation weaknesses so you can do better next time.

And what’s the worst thing that could happen if you negotiate a higher salary during a job interview?

They’ll say no. Also, this experience will help you pinpoint your negotiation weaknesses so you can do better next time.

What’s the best thing that could happen?

You’ll get a bit more money.

As long as you were (1) prepared and (2) did absolutely everything you could during the negotiation, then you have nothing to worry about.

The worst thing that could happen is that they’ll say no – even then, you’d still have a learning experience. You will still be alive. There are still other jobs. And even without jobs, there are still hundreds of other ways to make money.

It’s much riskier to do nothing and say, “I can’t. It’s too risky.” Eh di lalong walang mangyayari.

“I’m not sure that I’m worth a raise.”

Then get sure. If you don’t think you’re worth a raise, stop reading now. There’s probably nothing I can write that will convince you otherwise. Because when it comes to negotiation, you are the first person you must convince.

Preparation

I’m gonna be honest with you: it takes at least FIVE HOURS to prepare for a salary negotiation.

You might say, “WHAT?! I have no time/patience/energy for FIVE HOURS of this!”

If the idea of spending soooo much time on this is making you hesitate, ask yourself if you’ve spent the same amount of time researching a gadget purchase, playing a video game, or driving through traffic. Ever watched a season of Lost, Gossip Girl, or any other TV show during a weekend? That’s around FOUR TIMES LONGER than planning a negotiation.

Even if you factor in your daily salary as payment for the time you “wasted” planning for your negotiation, even a tiny salary increase of PHP 1,000 per month will be worth it.

Yes, 5 hours might seem like a long time in the short term, but think of the LONG TERM VALUE you’ll get in exchange for those hours. Consider the increase in your income for the next few years because of this.

So if you’re ready, and you want to invest the time and energy to getting this right, you may need the following:

Research (AKA Googling Stuff)

The good news is, most of the data you need is probably on the internet. Here’s some of the information you need to have:

• The salary range of someone with your skills and experience (measured by years) in your current job position (or, for applicants, the position you are applying for).
• Get specific and find the lowest salary you can find for that position, the highest salary, and the average salary.
• If you’re negotiating a raise with your current employer, list down all your successful projects, tasks, and achievements since you last got a pay raise and QUANTIFY it. Get some numbers. DON’T say “I saved the company a lot of money with my suggestion”. Get specific. Say instead “My suggestion last January saved the company 25,000 pesos per month. So as of now I’ve saved the company 175,000 and will save an additional 125,000 by the end of the year.”

Creating Your Salary Report

In the book “Salary Tutor”, author Jim Hopkinson recommends creating a report based on your research. It’s just a one-page report containing the figures you found while researching.

Don’t make it wordy – present the information using tables, charts, and other graphics. This makes the information easy to process and, at the same time, a well-designed report will be really impressive especially if you’re doing negotiations for an upcoming job rather than your current one.

“Think about this for a second: how many job candidates do you think are walking into an interview with a salary analysis document customized to the postition and industry? [...] If I were the hiring manager and someone I was interviewing came to me with a document like this and presented it at the proper time, I’d say the foresight, analysis, presentation, and preparedness alone would be enough to give them the salary bump they are asking for.”

- Jim Hopkinson, “Salary Tutor”

Not confident with your design skills? Then ask a good friend of yours, preferably a graphic designer, to help you out. Take them out to lunch in exchange. Remember, if you can’t do something yourself, it’s okay to ask for help.

Here’s an example of what your final output may look like (though this is merely for demonstration purposes, so the data is not 100% accurate):

NOTE: The data in this image may not be 100% accurate - I made it for demonstration purposes only.

Negotiation

Now comes the scary (read: exciting) part, negotiation. Here are a few pointers:

Who brings up compensation first? If you’re being interviewed for a new position, the hiring manager or HR person should bring it up, not you. The best time to discuss salary is once they’ve realized that they want you for the job. Otherwise, it’ll sound like you’re more interested in the money than doing the work.

BUT if you’re going to ask for a raise at your current job, YOU should open the negotiations.

Who sets the anchor for the bidding? You do. Most people recommend that you wait for the company to initiate bringing up the numbers, but based on this article about psychological research on salary negotiation, you should start the bidding. From the article (emphasis mine):

The first number that gets mentioned is important because it acts as an anchor against which other numbers are judged. If you allow the other side to set the anchor then they will set it low and grab control of the negotiation. Studies find that, whether consciously or otherwise, this first offer sets the tone for the whole negotiation.

Source: PsyBlog, spring.org.uk

When do you bring out the Industry Salary Report? Bring it out when it seems like they won’t budge on a low figure they’ve given you, especially if it’s lower or almost equal to the minimum amount you are willing to receive. They may cite several reasons for not being able to afford more, such as “the economy”, and this is the time you take out your research document.

In “Salary Tutor”, Hopkinson recommends the following script when presenting your report:

“I really appreciate the generous offer, and I’m really excited about the position, but I’ve done a lot of homework in preparation for this interview, and according to my analysis…” [Bring the suitable report out and discuss the data.] “Based on my experience, etc. I believe that I should be in the middle to high of that range.”

I tend to hire contractors to help me with my work, and if any of them did something like this, I would be thoroughly impressed. Even if the figure they want to negotiate is more expensive than what I could afford, I’d probably look for a way to afford it just because finding someone with this kind of initiative and foresight is extremely difficult.

How do you use all this information?

If you’ve read this far – congratulations! You must really be determined to negotiate your salary. But don’t think you deserve a medal just yet. Next weekend, there will be a new Frugal Pinoy update containing the following:

• Action steps. A checklist of things to do before your negotiation.
• Industry Salary Report Templates. So that you don’t have an excuse for NOT doing this awesome thing.
• Real-life examples and tactics. Some Frugal Pinoy readers have successfully negotiated raises. You’re gonna learn how they did it. If you want to be included in this list of examples, click here to contact me and tell me how you successfully negotiated a raise. (It’s okay to be anonymous!)

Photo by Flickr user jdhancock