The surplus between your salary and your expenses is the single biggest lever that you can pull to jump start your financial independence journey early in your career. Socking away that savings cash into investments begins the miracle of compound interest ASAP. Even a 1% increase in salary over a career can mean six figures of extra cash by the time you retire. A few minutes of salary negotiation can make all the difference to seed your money tree. Over the first 9 years of my working career, I tripled my compensation. That is an average of around 22% simple increase in pay every year (not compounded). Because salary is such an important early component to getting your f-you money and your eventual financial independence, I want to share some useful strategies to maximize pay that worked for me.
Expert Negotiator
When I was in my early 20’s I thought salary negotiation was a thing you do once while interviewing. I thought that if I got to the offer stage and just strung together the right phrases, I could make way more cash. I could say things like “How would you feel about X+20% on the comp. side” or “Could you do $XX?” While this is somewhat true, it is incomplete. Over time I have learned that negotiation is much more nuanced. I will come back to this in a minute. However, for those interested in the actual salary negotiation or job offer situation, here is the rough script that I have often used successfully when negotiating a salary at job offer.
How To Negotiate a Salary: Script
First things first, I have in mind a threshold that I must hit at minimum in order to accept the role. I also have another number in mind that would make me accept without further negotiation. This helps prevent from getting emotional and taking a lowball offer because of FOMO in the heat of negotiation.
Assuming the initial offer comes in below my immediate accept threshold, I launch into some version of the following:
After meeting the team and learning more about x-corp I am excited about this role. I believe that I bring A and B to the table that could really be impactful in C mission. The compensation is at the lower end of the range I was targeting based on my experience level, salary history, and D. Do you have any flexibility in compensation. Hiring manager responds something like what were you hoping for? Or something like, we feel this is a competitive package. You convincingly respond that you were targeting a range that starts slightly above their offer and ends just under the edge of incredulity. If hiring manager indicates that the range just can’t be hit, I may have interviewed at the wrong place or for the wrong role. Usually the hiring manager goes away and returns with a new offer…
Competitive Salary
If the new offer is well above my actual threshold I may take it. If it is below or I feel could be higher based on my read, I indicate that I have been actively interviewing for several organizations and have another offer to consider or one that I have been told is being prepared. In most cases for me this has been true and I have scheduled interviews to make it so. To each their own as far as honesty on this point. However, it provides leverage. It gives real reason to explain that the role with x-corp feels like the greatest fit. However, I have my family and financial situation to think about as well.
“Compensation is obviously only one factor but I want to be fair to the process. Do you have any leeway?” After all, FOMO exists for the hiring manager as well. At budget reviews they could lose the open requisition, or they could simply lose another couple weeks interviewing and end up hiring someone worse.
At this point I feel you need to be careful. Discussion should have the tone that you are leaning toward this job but passing on more cash feels just a bit weird. It should feel collaborative as to whether this is the best offer or if the hiring manager has any leeway. Once I was asked, “if I could get you $X would you be ready to join the team?” I said yes and he got it for me. Trust and collaboration out of the gate.
This rough script has worked for me. However, as a general rule of thumb scripts are only for actors. The rest of us must make it our own. Take it in and be able to talk in your own words that are genuine to who you are.
Get What You Deserve
I mentioned earlier that I have learned over time that negotiation is more nuanced than a conversation about salary. It relies on trust, delivery, and consistency over time. Salary negotiation is not just something that stops when you get hired. It is something you are doing every performance review, every annual goal setting meeting, every assignment, and every work day.
It is true that you don’t get what you deserve, you get what you negotiate. You have to ask for it. However, there is also something to be said about building trust over time and putting in great work. You don’t want to kill the cow, just milk it. You want to be seen as a go getter but not as arrogant. The old saying is that if you wish to lead you must learn to follow. In other words, you need to be coachable and then you will be shown how to coach.
If you have 2 years of experience, you are not a corporate director. Don’t ask to leap titles. However, it is fine to push for a leadership / management track and get as much experience as you can along the way. I do know someone who called himself a senior engineer less than one year out of school and flew high early in his career rapidly getting a director title. However, he fizzled out early without a foundation of learning and experience to back up his big talk. You miss out on learning and asking questions when you are supposed to be the one with the answers. In short I think it is good to reach but not lie.
“Be So Good They Can’t Ignore You”
-Steve Martin
This is Steve Martin’s advice for career success. While Steve Martin is literally a genius and starred in my favorite comedy of all time, I think I have better advice. “Don’t let them ignore you…Oh and also be really f*cking good.” Ok it is not as catchy but I’m not a genius like Steve. The point is to do awesome work but more importantly make it count. Kind of like if a tree falls in the woods but no one is around, you know who cares? Experienced sales people understand exactly what they are worth to the company. They view their compensation as a direct percentage of the value that they add through the deals that they close. If they are selling, they get credit in the form of commissions, or else they go somewhere where someone will give them that credit ($) for the value that they are creating.
Know What You are worth
Just like a good sales person, it pays to know what you are worth. This means looking at ranges for your position and the next one above. However, it also involves understanding how your company compensates its employees. How do pay scales work at your company? Is there career band tied to salary ranges? What is your band? Are there bonus pools or options pools? You need to understand the system to get the best out of it. How about performance reviews, how are they tied to salary, raises, and bonuses? You can find out an amazing amount of information by asking your manager and/or HR. Often they are glad that someone is actually interested.
Help Me Help You
It also pays to not be ignored and to get credit for your awesome work. The easiest way to do this is to get yourself into the meeting where the results of your work will be presented by putting together a slide or 2 explaining the progress and then asking to be included. It doesn’t hurt to remember that credit is never divided only multiplied. Making your boss look good makes you look good (and promotable).
I shot for 20%+ raises every year early in my career. The way I achieved it was to simply start the dialogue by asking my manager what it would specifically take for me to reach the next title. In other words, which of the competencies of that next title did I need development in and what specifically could I complete to get there. I stressed that I have always been a very goal driven person and would like to aggressively work toward that goal. After this initial discussion, I would return in the following one on one with the message that I have been thinking a lot about it and really want to strive toward getting to that next title in the coming year. I then shared some ideas how to work on the areas discussed with my manager and asked for feedback.
Bosses love employees that want to set aggressive goals. It also brings them onto your side in collaboration toward your raise in a specific timeframe. In addition, it puts some onus on them to put in for the promotion on their side even if it is a tight year for the company. After all, as a manager myself I could hardly feel like an effective one if I was not giving my reports a path to success.
As you meet with your boss over the year, you explain your progress toward the plan that was laid out. When you deliver on your end, the boss is aligned to deliver on his/her end when promotions are being considered. This is at least annually and often during or just after annual performance reviews. Knowing when in the year to target the promotion is part of those discussions with your boss during periodic one on ones.
Money In Hand
If for some reason you are not given a realistic path for aggressively developing, leave the job. Top performers do not belong in orgs that are about tenure and age. I once worked at a company where someone repeatedly did not deliver what was promised. I then discovered he had not tested his work in the most basic way to make it meaningful. When I challenged him on these points in a meeting, I was later told to drop it because he has “gray hair.” I personally value results over hair color. I did not stay in that organization very long.
Is The Best Way To Get a Raise to Quit?
Sometimes it makes sense to leave a job for reasons mentioned above. However, it can also just be a good way to get a promotion. In my experience, it is harder to get promoted inside your company than to interview for the next title externally. My reasoning for this is some version of familiarity breeding contempt. Inside your organization they may still think of you as that junior employee you were 2 years ago, even if you have turned into a total rockstar in the past 2 years. At the same time, anyone can put on a good show for a 1-3 day interview process. Hence, that external candidate looks shiny and new while you have the tarnish of reality and even past legacy that may no longer be true.
Companies also often under pay their employees over time through insufficient annual cost of living increases and reduced raises because people won’t generally leave a job over just a few thousand bucks. Don’t believe me? Well, do you know anyone who was passed over for a promotion and then offered the moon when they put in their notice? 3 times I have been offered money and titles on my way out the door. However, I had already gotten the raise, just somewhere else. On that note, it is always better to interview while you have a job rather than leave one and then search. It gives you leverage at your interview and also gives your current employer a chance to give you that jaw dropping, please stay, offer.
A $5 Million Piece of Paper
The last point I will make about raising pay is simple but powerful. Get valuable trainings, certifications, or even college degrees to raise your pay. This one is kind of obvious, however, I wrote in a previous post about how a busy parent passed on a couple of credentialing credits that would have made almost a $5,000,000 difference in his retirement savings over a career! If your company offers certifications or training programs for sought after skills, it’s almost like a raise. If the company does not raise your compensation for these skills over time, thank goodness for the free market. Look elsewhere and see the script above.
How To Ask For A Raise
A lot of advice I’ve heard about getting a raise in the past has been around being like-able, networking, having a positive outlook, and working hard. Thanks captain obvious. Sure these things don’t hurt. However, in this piece we’ve covered a lot of practical and useful tactics:
- A Script To Maximize Your Job Offer
- Salary Negotiation Is Ongoing (every review, every assignment, every day)
- It’s Good To Reach But Not Lie (motivated vs arrogant, build skills together with your rep.)
- Don’t let them ignore you…Oh and also be really f*cking good
- Know What You Are Worth
- Know How The System Works
- What do I have to do to get to that next level? (Help Your Boss Help You)
- Why Sometimes The Best Way To Get a Raise is to Leave
- A $5 Million Piece of Paper (Get those lucrative credentials)
I used these things to triple my pay in the first 9 years of my career. If you’ve been reading along on this site, you also know that maximizing salary has been one of the levers that has allowed me to make work optional before turning 40. I hope these help you as well.
If there is anything that you feel I have missed or any questions that I could answer to help you maximize your salary please make a comment below. Best of luck!
