How To Negotiate Salary: 5 Secrets Backed By Research

how-to-negotiate-salary
In the history of the world, nobody has ever said, “I make too much money.” And for most of us how much we make is determined during a salary negotiation.

I wanted to get the inside dirt on how we can earn more. So I decided to call an expert…

Adam Galinsky is the chair of the Management Division at the Columbia Business School. He teaches negotiation and is author of Friend & Foe: When to Cooperate, When to Compete, and How to Succeed at Both.

Adam has 5 tips that can make all the difference next time you’re looking to increase your pay. Let’s get to it…

 

1) The 2 Most Important Things To Have In A Negotiation

Preparation is vital. The old Sun Tzu maxim is very true here: “All wars are won or lost before they are ever fought.” What you do before the negotiation is often the most important thing.

So what does good preparation mean? Adam says two things are key:

  • Getting a credible alternative. What are you going to do if they say “no”? If you have another job offer, they know you can walk away from the deal and they’re more likely to play ball.
  • Knowing the market rates for your services. If you don’t know what people similar to you are being paid, you won’t know what you can reasonably ask for, or what a good or bad offer is.

Here’s Adam:

The first thing that I always tell people is that in negotiations there are two fundamental forms of power that really matter, and they particularly matter in salary negotiation. The first thing is: do you have a good alternative so that you can credibly ask for more? The second thing is: do you have information about what’s acceptable or what’s been done in the past?

(To learn the secret to being happier and more successful, click here.)

So you’ve done your homework. You have an alternative and you know what the going rates are. But what’s the right attitude going into a salary negotiation and how can you make sure you have it?

 

2) Use A “Power Prime”

Adam’s research shows that feeling powerful helps you make smarter decisions during a negotiation. Here’s Adam:

Whenever we put an offer on the table or respond to an offer, there’s a lot of anxiety involved in that. Am I asking for too much? Am I asking for too little? Am I selling myself short? Am I going to offend the other side? One of the things that power does for you psychologically is it allows you to feel more confident in whatever number you’re putting on the table. The second thing it does is it prevents you from selling yourself short. I think oftentimes people ask for too little because of that anxiety of offending the other side. Feeling powerful is particularly helpful in salary negotiations because it allows you to ask for what you think you’re worth.

So how do you make sure you feel invincible? Adam says it’s as simple as taking a moment before the negotiation to recollect a time when you did feel powerful. He calls this a “Power Prime.” Here’s Adam:

I’ve done tons of research demonstrating that thinking about a time when you had power has a dramatic transformative effect on how you behave. It allows you to feel more confident, allows you to feel more optimistic, and those combine to allow you to be more assertive, agentic, and take more action.

(To learn how FBI hostage negotiators get the best deals, click here.)

So you’ve done your research and you used a “power prime.” But that’s all about you. How should you think about the other guy? There’s a right way and a wrong way…

 

3) Use Perspective Taking, Not Empathy

Adam says you want to understand the other side but you don’t want to feel for them.

You want to use “perspective taking.” All that means is trying to rationally see it from their side.

Does your prospective employer have a firm policy on salary but is very flexible on bonuses? Are they tight with money but happy to offer benefits and perks? Doing research and asking questions can help you learn the best areas to emphasize.

You want to find what is low value for them and high value for you. Here’s Adam:

…if I am good at taking someone else’s perspective, I can figure out what the minimum value I can offer them and still get them to accept a deal. If I really know what someone else wants, it might allow me to recognize solutions that are really low cost to me but high value to them and allow me to ask for something that’s high value for me, and thereby make both parties better off. What perspective taking allows people to do is to recognize the core underlying things that another person cares about, and, in doing so, come up with deals that leave you with a better outcome in the process.

Trying to understand their needs is a rational process. What Adam warns against is feeling the other side’s position instead of just cognitively understanding it.

Research shows that when you feel rather than think, you’re more likely to make unnecessary concessions. Here’s Adam:

There’s a difference between a cognitive appreciation of what someone else wants and a sympathetic emotional reaction to what they want. What we’ve shown in our research is that sympathy creates concessionary behavior. Sympathy leads to worse distributive outcomes because you either get exploited for your sympathy or you give things up on your own as a way to make yourself feel better. What perspective taking allows you to do is not just get blindsided by your own emotional sympathy, but to really recognize what the other person wants and to ask yourself cognitively, “How can I offer that to them in a way that doesn’t cause me a lot of pain?”

(To learn FBI Behavioral Unit techniques for getting people to like you, click here.)

Okay, so you’re taking their perspective. Who should make the first offer? When do you want to go first and when do you want to keep your mouth shut and let them present a deal?

 

4) If You Have Good Information, Always Make The First Offer

You want to know what the going salary is for someone at your level and then make the most aggressive first offer you can reasonably justify. More often than not, people who make the first offer do better. Here’s Adam:

What we found across lots of studies is that, on average, going first leads to a beneficial outcome. In a buyer/seller negotiation, that means the price is higher when a seller goes first than when the buyer goes first. It looks like it’s a pretty robust effect.

When do you not want to make the first offer? When you have no idea what the market rate is. You could accidentally ask for far too little or way too much. Here’s Adam:

It pays to not go first when you have a lack of information.

The reason making the first offer is generally a good idea is because of a psychological principle called “anchoring.” The first number that gets mentioned in a salary negotiation has an incredible amount of power.

It becomes the standard by which counteroffers are judged and most people are reluctant to stray too far from it.

You can make your anchor even more sticky by not using round numbers. When someone says “$100,000” it sounds like they didn’t put a lot of thought into it and will probably accept less.

But when someone says “$102,500” it seems like they probably have a good reason for asking for that exact amount. Here’s Adam:

We want to not give meek first offers. One of the ways that we can make our anchors more potent is by making them a little bit more aggressive. Another thing that we can do to make them heavier is making our first offers more precise.

(To learn how to use hostage negotiation principles to deal with your kids, click here.)

So if you’ve got good info, you’re making the first offer and establishing that anchor. Great. What’s the best way to present that offer so you seem flexible and they’re more likely to accept the deal?

 

5) Giving Them Options Can Help

Employers often mention salary ranges but employees rarely do. Adam says this can be a mistake.

As long as you’d be happy with the number at the bottom of a range you present, giving them a range can make you look more flexible. Here’s Adam:

When you ask people in negotiation class, “Did you make a range?,” most people say “no” because the other person has the incentive just to give you the lower end of the range. That’s true, but it’s better if the lower end of that range is really in the high end of the scale, because one of the things that you’re doing when you offer a range is you’re giving the impression of flexibility.

Another way to create more value for both sides is to do something Adam calls “multiple equivalent simultaneous offers.”

Like we discussed, an employer might be stingy with salary but flexible on bonuses. And it might be hard to get them to tell you about these preferences because they don’t want to give you more leverage.

So if you present multiple offers at the same time, all of which you’d happily accept, you create a possibility that they might be likely to accept and get around sticking points. Here’s Adam:

You could say to an employer, “Here are the four issues we’re dealing with and here are two different packages that I’d be equally happy with.” Let’s say both of them have a pretty robust salary, but you have some adjustments on how much travel you do versus the number of vacation days versus the amount of bonus that you get versus moving expenses. You say, “Which one do you prefer?” That also allows you to figure out their preferences in the process. They might care much more about travel time than moving expenses, and so I could push a little bit harder in that direction.

(To learn how to be more resilient — from a Navy SEAL platoon commander — click here.)

We’ve learned a lot from Adam. Let’s round this up and explore the best way to get started…

 

Sum Up

Here’s what Adam had to say about how to negotiate salary:

  • Have an alternative and know what your market value is: Preparation is what wins negotiations.
  • Use a “Power Prime”: Take a moment to think about a time you felt powerful and you’ll act more powerful.
  • Use perspective taking, not empathy: Understand their needs but don’t feel their needs.
  • If you have good information, always make the first offer: Get anchoring on your side. Use precise numbers.
  • Giving them options can help: Try giving a range or multiple offers you’d be happy with.

Where should you start? If you do nothing else, what’s the single most important thing to do before your salary negotiation?

Know what other people are getting in as much detail as possible. Information truly is power in this case. Here’s Adam:

Be prepared so when you go into a negotiation you know what questions they’re going to ask, you know what other people are getting paid, how fast other people get bonuses, all these other pieces of information that are essential.

Negotiating salary doesn’t have to be hard. Do your research, feel powerful, use perspective taking, offer them options and don’t forget to make the first offer so you can drop a good anchor.

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