Your complete guide to negotiating your compensationDec 01, 2022
Money doesn’t buy happiness, but it does buy freedom. Whether you love or hate your job – or you’re trying to find a new one – you need to be fairly compensated for your talents.
Your compensation can let you down for a number of reasons – inflation, a career transition, the gender wage gap, not knowing what your colleagues are being paid. When you realize you need to be getting more for your work, you must know how to have that conversation with your boss or hiring manager.
Let’s start with what you may be missing.
When the job posting doesn’t include salary
Pay transparency has been a topic of discussion on the news, LinkedIn, and various boards because more people are demanding more information. It isn’t fair to expect people to put in work to apply for a job without knowing how they will be compensated for it.
Since May, employers in New York are legally required to include salaries in job descriptions when they are hiring.
But not all provinces and states are like New York. One of the ways to figure out if you are competitive in a job market is to understand the limits on salary compensation in your company and the company next door.
Organizations establish salary bands for specific roles by basing them on market and internal value. Moving up a level will lead to a salary increase, but some bands overlap as work overlaps, and employees can get promoted without seeing that reflected in compensation.
If you understand your company’s salary bands, you can compare it to a competitor’s to see what other pay options you’re working with. One job title at your workplace could be a whole different salary range at another. This could tell you not only what you should negotiate for, but also where you should seek employment instead if the difference is drastic.
The most basic pay structure a company can use is the salary range. It provides a general range of pay for anyone working in a particular field. Employers use salary ranges to get an idea of how much they should pay employees. You can use them to learn about the most money you can make at another company.
Maybe the ceiling is more than you have ever made so you are ready to switch companies and make your way up that corporate ladder. But it is also helpful to see if you have already reached your full salary potential or will reach it very quickly, based on your skillset and your current pay.
Employers use pay grades to determine how much employees get paid based on experience and education. With pay grades, the lowest and highest level of pay is relative to your professional and academic background. Sometimes a point system is used to set a salary.
This can be great if you have multiple degrees or a solid work background to give your salary a strong foundation. At the same time, this may limit your earning potential if you do not.
Pay bands are a broader version of pay grades because they are not limited by points and they could include a few different grade ranges at each band. You may not have the same schooling as someone, but you could be one or two levels away from their salary, within the same band. There’s room for growth based on your performance, not just your past.
Now that you’re looking to the future, you have to see what other employers are paying their staff. While some companies refuse to show pay under the disguise of “competitive salaries”, others are trying to reveal as many position salaries as possible.
For example, Robert Half Talent Solutions created a Salary Guide to compare salary and benefits across the country. When you type in your position title and the city you are working in, you’ll find:
- Entry-level and beginner salaries
- Mid-level salaries
- Advanced salaries
- The national salary midpoint
- Experience needed for the position
- The demand for employees in the position
This search entry will also show related positions and their salaries in the 25th, 50th, and 75th percentile.
It will also give you insight about hiring trends in the industry your position falls into. It will help you give a sense of the market, which could be a great spark of encouragement given the recent layoffs. For example, a senior web developer’s hiring trends include:
- More business hiring contract professionals to keep their projects on track
- 54% of tech managers hiring new positions
- 2% of tech managers reducing positions
Source: Hiring Trends in Technology
If you want to look outside Canada, these insights are also available in countries around the world such as the United States, Brazil, Germany, China, Australia, and so on.
Other websites get more specific about positions and pay equity. Levels can show you salaries of positions within specific companies. If you’re seeking a well-known company, you can get find out what your future colleagues are taking home – but that’s not all.
Source: Levels Home Page
Levels reveals the base salary, average total compensation, and how much employees make in stock grants and bonuses. And then it points you toward similar companies to see if other companies are paying their employees what you believe you deserve.
Levels will show you related salary ranges according to where you live.
So if you’re looking for a job and you don’t know what they pay – or what you should ask for when you begin discussing pay, make sure you do your research first.
More than salary
There’s your salary and there’s your compensation. It’s time for you to get more than an annual base salary for your work.
Your salary is the minimum amount you will earn as an employee in exchange for the hours you work in the week. You can get paid per hour, which means heavier and lighter workloads during the week can give you a bigger or smaller paycheck at the end of the month. You can also get paid in a fixed amount. Your full-time hours can be 32 to 40 hours a week, and you’ll still get your $35,000 to $90,000 a year. The point is, you’ll pretty much be making the same amount of money as long as you clock in. But you can get more.
That’s where compensation comes in.
Compensation includes benefits and bonuses on top of your salary. This can be overtime pay, professional development budget, medical insurance, life insurance, vacation time, mental health days, equity in the company, retirement benefits, pension plans, sign-on bonuses, and more.
Sometimes people will take a lower salary to get more benefits. It can be hard to calculate the value of benefits to and compare it to what you’ll receive each pay period. Exploring what benefits suit your needs and lifestyles is a good place to start.
For example, 32% of Canadians aged 45 to 64 don’t have retirement savings. No matter how young you are, it’s important to put away money for retirement, the same way you put away money for a rainy day. So if exiting the workforce with a good lump of money is important to you so you can stop working early and enjoy your retirement, you may want to consider an RRSP investment plan with your company. The registered retirement savings plan exempts the money you contribute from your paycheck from taxes.
Maybe you are offered $30,000 more than you made at your old job but you only have one week of vacation to spend it on. Asking for more paid time off on top of your salary or negotiating a few thousand off your base salary could be worth it. Four weeks vacation and statutory holidays to enjoy without a smaller paycheck could be something that you negotiate for.
How to negotiate
As 3Skills co-founder Joshua Alawode says, “As long as you’ve done your research and you understand what the market is paying for your role, it is not unreasonable for you to ask for what’s fair.”
You don’t have to accept a low-ball offer when you’re accepting an entry level job. You don’t have to get a pay cut when you’re transitioning into a new career. As long as you meet qualifications and complete a strong interview, it should not matter that you have come from a different line of work.
You should also consider reaching out to current employees that are in and around the roles you’re seeking. Discover what people at the company are making to know what kind of compensation is available to you. Whether you get to someone on a call, through email, or on a career forum, you should invite employees to talk about their position and their compensation.
The more you know, the better equipped you are for a back-and-forth with the hiring manager.
During the interview process
At this point, you have already researched what the position pays in the industry and the company. When you get to the interview or the conversations following it, you need to highlight all your roles and responsibilities and how they advanced your previous workplaces’ goals and overall mission. Use figures and percentages to demonstrate growth, retention, and surplus. Use stories to demonstrate your ability to work as a team. Sell them on your ability to make a seamless entry to the team and company.
Then give them a range.
If you tie yourself to one number, you may undersell yourself or you may give them an excuse to not bother negotiating. One number seems immutable, but a range invites discussion. Let your lower number be the absolute lowest salary and benefits package you would consider appropriate compensation. Do not start with your absolute minimum because if they meet you at the bottom, you have no margin for freedom. On the other end of your spectrum is the number for your reasonable but lofty dreams. If you think an extra $10,000 and one week of vacation would be amazing but unlikely, offer the figure anyway and see what they say. The worst answer they could give you is no – but meeting you somewhere in the middle will be great too.
Asking for a raise
It is better to ask for a raise face-to-face. If you work remotely, a video call is the next best thing, then a phone call. Email should be your last resort.
Conversations are more personal and discussing compensation, which is related to your work and quality of life is something that needs the most space for healthy dialogue. When you can converse with your manager, they will be able to hear the sincerity and confidence in your appeal and your tone of voice. You can also read their body language and demeanour too so you know if you need to adjust your expectations, lower the range your are proposing – or maybe even increase it depending on how open they are.
When you’re asking for a raise, you should give them a simple report one everything you have completed for them and the company such as your responsibilities and your achievements. The same way you emphasized the projects you contributed to and led to get this position during your interview, you need to resell yourself to your manager. The advantage of this is that they have seen your work first hand and have a familiarity with how well you handled your projects and contributed to the company’s mission.
Next you approach with the average salary for your position, if you know you are getting paid under it. This will remind them that they should be a fair company and an equal opportunities employer. They do not want to be known for being underpaid and they do not want to send a message that your work is being devalued. Remember, it is cheaper to promote someone that to risk someone leaving and spending thousands on recruiting and training a new hire on the off chance that they will not only fill your position, but perform at the level you were performing at when you left – not to mention the weeks or months it will take someone new to get familiar with the role.
Finally, round the conversation out with how your responsibilities, achievements, and the average salaries should be adequately compensated. Name your annual base salary and the benefits you desire.
After their response, you can offer to send them an email with the same points you covered during the conversation.
Compensation can be a difficult conversation to have, but it is among the most important ones to have as you begin and navigate your career. Don’t get stuck in a place that undervalues your work. There are more than enough companies willing to pay you for your talent so you are happy to go to work and can enjoy life outside of it.