How to Negotiate your Salary: The Definitive Guide

The fear and lack of information prevents most employees from negotiating salary or even submitting a counter offer.

• 53% of employees 

  Say they avoid salary negotiation because they don’t feel comfortable asking for more money.
• 48% of employees 

  Say they avoid salary negotiation because they are afraid the employer will decide to not hire them.
• 38% of employees
  ‍Say they avoid salary negotiation because they don’t want to look greedy to their new employer.

The reality of the compensation discussion is that the cards are stacked against you.

They’re stacked against you in three main ways:

Finding a job is an emotional experience. Finding a place where you feel valued, fit in with your team, and can take care of your monetary responsibilities is high stakes. It’s about where to spend your most valuable resource — your time — and making money to survive.

On the other hand, employers view their compensation strategy, your total comp, and the number of hires they need to reach their goals as the logistics of running a business. Businesses have the benefit of “groupthink” in every negotiation and every job offer. The bottom line for the employer is to make the best decision for the company (and that means getting the best hire at the best price). Decisions are typically not based on emotions; they’re simply decisions to help move the business forward.

When 45% of employees do make the decision to negotiate salary, they show up with data that simply isn’t accurate. Free online salary data websites don’t verify salary information and too many employees have reasons to inflate or under report their compensation (anonymity, pride, etc.). Data is often outdated and doesn’t offer any insight into comp philosophies, percentiles, geography, skill level, and more.

But for employers, there’s a billion dollar industry that helps companies figure out how much to pay each new hire. Why? Employees are the most expensive line item for every business and it’s critical those costs are cut in any way possible. This employer-only data shows comp bands for each role, helping the employer see how low they can go in a job offer. (Sometimes the low end of a band is $50,000 less than the high end.)

For most employees, pay negotiation only happens a few times in their career when they decide to change jobs. And that shift in employment only happens a handful of times. The average employee changes jobs 5–7 times in their career. And only 30% of employees change jobs every 12 months.

Stack that against recruiters who are interacting with dozens of candidates per month. The balance of negotiating skills, information on salary, interviewing experience, and even salary negotiation scripts is wildly tipped toward the employer.

Interested in getting access to verified salary data to help you negotiate better pay? Join the waitlist for FairComp today.

When it’s time to negotiate an offer, it’s critical that you don’t show your cards too early. There’s a good chance that the recruiter will ask for your target salary range, but it’s imperative that you do not share a number. By offering up a number, you’ll pin yourself into a range that may be significantly lower than what the employer is willing to pay for your role.

Keep your target salary range to yourself. 
While it’s illegal in most states to ask about your salary range, businesses try to skirt this issue by asking for your target range. This conversation might look something like this (and here is a salary negotiation script to avoid the question): 

Recruiter

“Before we get too deep into the process, I would love to understand what you’re looking for. Would you mind sharing a target range of what you’re looking for in your next role?”

You (option 1)

“I'm looking for something that's competitive in the market. It's hard to access comp data for this role, so I don't currently have a range in mind."

You (option 2)

“It’s a bit too early to discuss compensation. I would love to learn more about the team, the role, and ensure mutual fit before talking about comp details.”

You (option 3)

“I’m so glad you asked. I’ve been meaning to ask you about the comp structure at the company. Can you walk me through the comp philosophy and what the comp structure looks like for this role and level?”

Recruiter

“Totally understand. Just want to make sure we don’t waste each others’ time if we’re not in the same ballpark.”

You

“I’m confident we’ll make something work for both parties if there’s a mutual fit.”

Once you kick off the conversation about the offer, there are a few important questions to ask. These questions can help you be better prepared to review your offer:

• What is the salary range for this role?
  ‍In California, Colorado, and New York City, companies are required to disclose salary ranges, so you shouldn’t feel bad asking for it. Lead the conversation by asking about the company’s compensation philosophy so you can better understand how they think about total comp. A great example to think about—if the company doesn’t have an annual bonus percentage as part of their compensation expectations, you might expect a higher base salary.
• What is the level for the role?

  Get clear on the requirements and level for the role . You might get higher pay at one level, but remember that higher levels come with a bigger set of expectations. And while it may be advantageous to get to the upper part of a band in a lower level, you might be better off starting at the low end of a higher band so you don’t cap your earning early on at the company. Some companies keep a level rubric that specifically outlines the expectations of each level and the next level up. If you can get access to this information, you can position yourself for the appropriate level (according to your skills and experience).
• Are you offering RSUs (restricted stock units)?

  If your offer includes RSUs, you’re in luck. RSUs are far less complicated than ISOs. Find out how many shares you will be granted and the value of those shares. For example, if the company is offering $300,000 in RSUs and they tell you that equals 75,000 shares, the current share value is $4. This price can go up or down with fundraising or a liquidation event. Regardless, the equity offer is $300,000 today and that’s your starting point for negotiation. The way RSUs are valued varies by company. Most private companies value their RSUs on the previous fundraising round’s preferred price. Public companies typically value their RSus on the value at the time the grant was approved. Others implement a 30-day trailing average of the stock price to help prevent any insider knowledge impacting the sale of RSUs.
• Are you offering ISOs (incentive stock options)?

  If the employer is offering ISOs, things can get a bit more complicated. When you are granted ISOs, you have the option to purchase (known as exercising) ISOs at a lower price (known as the strike price or 409a value) than what investors are paying for them today. If ISOs are part of your offer, ask what the strike price is (the 409a value) and the preferred price (the value of the shares based on the most recent valuation—this is what investors paid for the company most recently). This strategy can help you value your shares. A good example to consider is a strike price of $0.50 and a preferred price of $2.00 with 100,000 shares. With these numbers, you have the option to exercise them for $50,000 and sell them for $200,000 during a liquidation event or if you have the option to sell them in a secondary market. In this example, the inherent value of your ISOs is $150,000 (you can find this number by subtracting the strike price from the preferred price).
• What was the company’s most recent valuation?
  ‍Consider asking what the company is currently valued at/about the current profit margins. Even in cases where it isn’t verifiable, it can help you make a decision about whether the company has longevity and is worth your time joining.
• What is the vesting schedule for any equity that is granted as part of my offer?
  ‍What is the post termination exercise window? When you receive equity as part of your offer, it isn’t all instantly available to you (even if it’s instantly worth something with public shares). Most companies employ a vesting schedule to incentivize longevity from each employee that receives equity. A common vesting schedule is 4 years with 25% of the equity vesting each year. If you have ISOs, you’re also going to want to know how long you have to exercise those shares. For most companies, it’s 90 days after you leave the company. Exercising ISOs can be expensive, so make sure you factor this cost in if you’re joining a pre-IPO company.
• Is there an equity refresh program?
  ‍An equity refresh program allows existing employees to receive additional equity as a reward and/or recognition of good work. With this option, you can have an opportunity to earn more equity as you prove your value.

Key Note:
We are NOT financial advisors and the information in this asset is not financial advice. Consult with your financial advisor to learn more about how to treat your equity. For more information about your stock options, feel free to visit this link.

Be prepared when you ask for a higher compensation.
As you prepare to negotiate your offer for a higher salary (or a bump in the signing bonus, PTO, equity, etc.), there are a few major things to consider.

First, what are the requirements of the role? Get specific as you prepare to show how you meet those requirements at an advanced level. If the company is looking for 3 years of experience and you have 6, you’re qualified to earn towards the top of the band. Think through all of the other possible examples you can share that show you’re operating above the “median” for the role to make your case.

Second, how much more can you ask for? There are two styles of negotiation that experienced employees use when they ask for a higher comp.

Last, consider salary negotiation scripts and salary negotiation email examples to help you prepare your talk track.

Negotiation Style 1: Anchor High
It can be smart to ask for 10 - 20% above the number you are shooting for with this new offer. The recruiter is likely to counter offer with something lower (often claiming that they have reached the “max” they can offer). But if you’ve gone 10 - 20% higher than your target number, you’re more likely to get an offer than matches your expectations, even with a counter offer. If you’re looking for $100k and you share that upfront, your offer will likely come in at $90k. Instead, start the conversation at $120k and your chances of hitting $100k increase.

Negotiation Style 2: Best and Final
With this negotiation tactic, make a clear argument for what you want and then make it clear that you’ll take nothing less (but be polite—don’t forget that an employer can rescind an offer if something feels off, even in the stage of the hiring process). Consider a statement like this: “I don’t want to go back and forth. I want to work here, but given my experience, the requirements for the role, and what other companies are talking to me about, I want $100k in base salary and I’ll sign today.”

Third, consider other creative ways to earn more. Your total compensation isn’t just about salary. Some companies are more flexible with equity, bonuses, and other areas of comp. If you’ve already asked about the salary range and the compensation philosophy prevents the recruiter from going higher on salary, ask for equity, a higher annual bonus, or a sign-on bonus.

Interested in getting access to verified salary data to help you negotiate better pay? Join the waitlist for FairComp today.

Annual performance reviews are a typical part of the employee experience. Many companies set aside specific budget to give employees a percentage increase each year. In these cases, there’s an extensive process that HR and leaders follow to determine how to allocate the budget for raises.

For most companies, following a rating strategy is effective and efficient. Every employee is assigned a rating and with that, a percentage increase.

To help leaders budget properly, a predetermined distribution of ratings is often established across each team.

• Exceed Your Goals

  This might be obvious, but it’s an important first step to getting the top stop on the team. Hit and exceed your goals! And if you don’t have specific goals, that’s a good place to start. Set goals with your manager and show your progress throughout the year. There’s simply no substitute for delivering results. (Pro tip: always connect your goals to the company’s goals. If you’re winning, the company should be winning—making it easier to show your value to the company.)
• Encourage Regular Feedback with Key People

  Implement regular feedback loops with your managers, your peers, and your org or department leader. If you’re a manager, implement the same strategy for your direct reports (feedback from your employees is just as critical). 360 evaluations are a common annual performance review process, especially in cross-functional teams. And while you might have a great operating rhythm with your manager, you don’t want a poor situation with your peers or org leader to put you at risk and impact your rating. Keep in contact with the people that will have a say in how you’re performing.
• Get Clear on Where You Stand with Your Manager (all the time)

  Don’t wait to be surprised about feedback from your manager. Adopt the mantra that you always know where you stand with your leader. Encourage and solicit feedback on a monthly cadence. Codify the feedback in writing to ensure you heard correctly and are aligned. Constructive feedback can help you understand your gaps and know which areas you need to improve.
• Create a “Highlight Reel” with Your Accomplishments

  Build a system for yourself where you collect and organize key accomplishments. This “highlight reel” is key to helping your manager (and others) remember your impact and your performance at the company. You can’t expect your manager to worry about the team of 10+ employees and recall every accomplishment or goal achieved specifically by you. Make it easy for them (and you) by recording accomplishments, collecting positive feedback, and more in your “highlight reel.” Add to your “highlight reel” every 1–2 weeks.
• Share Highlights of Your “Highlight Reel” with Your Manager Before Your Annual Review
  Once you have your “highlight reel” process in place, share the highlights with your manager before annual reviews kick off. This conversation will make it easier for your manager to assign a rating (and make a case for that rating). It should safeguard against the possibility that your manager will forget some of your accomplishments. (Pro tip: after your conversation with your manager, share the highlights in an email so it’s easy for them to pull up and reference later.)

More than 50% of employees say they don’t negotiate for a higher salary when offered a new position. We’ve covered the reasons why—fear, poor experience negotiating, concerns that the employer will rescind the offer, worries that the employer will view them as greedy, etc.

More than 50% of employees say they don’t negotiate for a higher salary when offered a new position. We’ve covered the reasons why—fear, poor experience negotiating, concerns that the employer will rescind the offer, worries that the employer will view them as greedy, etc.

Research shows that only 30% of U.S. employees tried to negotiate a higher salary in their last job offer.

It’s clear that most people simply aren't comfortable negotiating their salary. When you don’t attempt to negotiate, you leave money on the table.

But here’s the good news. Employers are willing to negotiate. In fact, 75% of employers say they are willing to negotiate salary on an initial job offer. And other data suggests that 85% of employees who ask for an increase in salary receive at least some of what they ask for.

Don’t let the perceived risks of negotiation prevent you from earning what you’re worth. The risks of not asking may be far greater.

You’re leaving money on the table.
Without any negotiation, you simply don’t know what higher salary you might be leaving on the table. Total compensation ranges can have variance in the six figures. Without verified salary data and a clear understanding of your role’s level and the comp philosophy, you could be walking away from a serious jump in salary.

You’re creating a large downstream impact.
If you don’t attempt a negotiation, you’re setting yourself up with a salary baseline that will impact your future earnings. Most businesses anchor annual raises to your starting salary. If that starting point is low, you’re compounding much less than you would if you had attempted a negotiation with your initial offer.

Negotiating a Raise at Your Current Company

The only real risks of asking for a raise at your current company are tied to your delivery (and your performance). Here are some crucial scenarios to consider before you ask:

• Review cycles just concluded
  Review cycles just concluded
If the company just finished the review cycle and you didn’t get a raise, it’s not time to ask for one—it’s time to find out why you didn’t receive one in the first place. It’s very possible that the company only provided raises to eligible employees (e.g. employees that hit their goals, were rated highly based on 360 reviews, or those that have been there for at least 12 calendar months). If you ask for a raise in this scenario, you will likely sound tone-deaf, lacking serious self awareness.
• Performance or behavior related conversations are ongoing

  If you’re in the hot seat for an issue that hasn’t passed yet, you definitely shouldn’t be asking for a raise. Review your conversations with your manager (and you should be having those regularly) and make sure you know where you stand before you go barging into a 1:1 asking for more compensation for work that doesn’t align with higher pay.
• Your promotion is brand new
  If you just got promoted (and you were also compensated for a higher title and more responsibility), you need to give it some time. If you ask for more now, you will come off as greedy (and tone-deaf again, like scenario 1).

How do you know when it’s time to move on and find something new? First, you need to get clear about what you don’t have in your current role and what you’re seeking.

Consider the following questions:

• Do you want to make more money?
• Are you learning & growing?
• Have you lost faith in your company’s mission?
• Do you want or need a bigger challenge?
• Has the culture at your current employer changed or turned toxic?

If you’re looking for something new based purely on financial reasons, there are few more questions to consider:

1. Are you capped in your current role? 

   If you haven’t had a conversation about your compensation with your manager, it’s time to schedule one. Start here before you start looking for something different. When you ask about banding for your current role and you’re prepping to ask for a raise, bring in hard facts about the value you’ve brought to the company (updated processes that have saved the team time, new customers, beating quota, etc.). Don’t ask for a raise without sharing why you deserve it (through all of the ways you’re helping the company achieve the overall mission and make more money).
2. Can you earn more in a different role at the same company? 

   If you love the company, but you are limited financially in your current role, consider talking to your manager about other options within the business. Open up the conversation with HR and look at the open roles available.
3. Is the market paying at a higher level than what your current rate is today?
   For many employees, hopping to another company for the same role is a faster way to earn a higher paycheck. Compensation philosophies vary by company (some pay at the lower percentile while others pay at the top range of the percentile). Get clear on your company’s comp philosophy and the band for your role so you have a good understanding of how far you can grow (or how little room you have to grow).