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Salary Negotiation Strategies That Can Backfire

Investopedia logoInvestopedia 08-01-2016 Terri Williams
© Provided by Investopedia

Negotiating an acceptable salary is a crucial part of accepting a new position, but if candidates botch this step, it may cost them the job. And even if the fallout isn’t quite as severe, the company may have lingering regrets that may affect the employee’s ability to succeed at work.

Many candidates are confident in their negotiating skills, but according to Dennis Theodorou, Detroit, Michigan-based vice president of JMJ Phillip Executive Search, this confidence is misplaced. Theodorou says, “People look for a job every three years on average and negotiate a salary once or twice every three years, which means they're not experts in salary negotiations.”

And this lack of knowledge can result in missteps. Below are some of the negotiation strategies that have the potential to backfire.

1. Negotiating Too Soon

The first mistake candidates make is trying to negotiate their salary before the company has even extended an offer of employment. Steven Rothberg, president and founder of College Recruiter in Minneapolis, Minnesota, tells Investpedia, “The best time to negotiate your starting salary and other components of your total compensation is after receiving but before accepting the offer of employment.” Approaching this topic too soon could be a potential job interview deal breaker.

2. Leveraging One Offer to Get a Counter Offer

You may have interviewed with more than one company. However, don’t assume that companies are willing to match another employer’s offer, and don’t make the salary the determining factor. Kristin Scarth, a career services manager at Employment BOOST in Detroit, Mich., warns Investopedia readers that trying to leverage one job offer against another offer might be a short-sighted approach. “No two jobs are apple-to-apple, and if you're trying to get one company to come up another $5,000 just because you have a better offer, it doesn't mean that they’re going to comply–and it doesn’t mean that you should choose the highest-paying job.” Scarth advises candidates to weigh the pros and cons of each company and choose the organization that offers the best overall employment situation.

3. Failing to Do Your Homework

One popular trend that may backfire is trying to negotiate without doing your homework. Theodorou says that many people request a certain amount because a salary website stated this was their worth. “This never works out. If you're making $65,000 and the new job is offering $70,000 and your rebuttal is that Google says that you should be making $82,000, this situation will likely not end well,” warns Theodorou.

It is important to conduct market research, but there are various other factors that determine salaries, such as years of experience, company size, industry, and location. According to Katie Weigel, Reno, Nevada-based division director with Robert Half Finance & Accounting, “You should know if what you are asking for is at or above competitive compensation for your location.”  And if your requirements seem unreasonable to the potential employer, Weigel says it could cost you that job, especially if the hiring manager has interviewed other candidates that also made favorable impressions.

Regarding a salary range, Theodorou warns that asking for more than a 5% to 10% raise when switching jobs usually doesn't produce the desired result. “We see roughly 3% to 5% when getting a new job that's local, and 5% to 10% when having to relocate.” However, Theodorou says there are exceptions, for example, if you currently manage three people, and the new job involves managing 50 people, there is a reasonable expectation of a higher salary.

4. Negotiating Solely for Money

If more money is out of the question, Rothberg recommends negotiating other aspects of the job that can help you achieve a healthy work-life balance. “Rather than asking for Friday afternoons off, ask if you can work an extra hour the other four days of the week so that you're still working 40 hours a week.”

5. Bait and Switch

One terrible salary strategy is to agree to a verbal offer and then request more after receiving the written offer. According to Steven Lindner, executive partner of The WorkPlace Group in New York City, “Agreeing to a lower compensation just to get a foot in the door, hoping that once they meet you and see how terrific you really are that they will pay you what you really want is a waste of everyone's time.” Lindner also says this is a surefire way to have the job offer rescinded. 

6. Missteps by Current Workers

Sometimes current employees try to renegotiate their salaries by threatening to leave if they don’t receive a raise. Lindner says this is a sure way to end up in the unemployment line. “Managers prefer to advocate for individuals who are engaged, passionate and committed to them and the business.” And if you show that money is your primary concern, he says that managers know you will leave when a better offer is presented by another company.

By failing to follow the company’s guidelines for promotions and raises, these workers may end up jeopardizing their career. Sure, you may get the raise from your current employer but according to most companies polled, they will make note of this occurrence, never forgetting it and will likely be looking to replace you.”

The Bottom Line

While salary is an important part of accepting a new job, don’t let it become an obstacle that prevents you from seeing the big picture. While it’s normal to want a job that pays well, failing to understand when, how and why to negotiate your salary may cause the company to look for other candidates.

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