During a job interview, the majority of Americans miss a crucial step: negotiating their potential future salary. More than half, 58% of men and 61% of women, say they did not ask for a higher salary when they were last hired, according to the Pew Research Center.
But that could mean leaving a lot of money on the table. “What I think people don’t understand is that the salary you earn increases over time,” says Nolan Church, a former Google recruiter and current CEO of salary data company FairComp. This means that “as they go up, they anchor themselves to that salary.” The higher you start, the more that salary will increase over time.
Here’s how Church recommends negotiating for a higher salary during an interview.
“Companies start negotiating offers from the bottom”
To get started, it’s important to understand how companies market your offering.
Many companies “typically spend tens of thousands of dollars per year on compensation data,” says the Church. They get them from data providers with up-to-date, real-time salary figures in their industry. “That’s how they will create groups,” or salary ranges for specific roles, he says.
And when it’s time to make that offer, “generally, companies start the offer negotiation at the bottom of the ladder.”
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Another guiding principle in how companies construct their offerings is the compensation philosophy, which describes their attitude toward compensation in general. This includes where they fall on the pay spectrum: do they pay more than most companies, the same or less – how much paid time off they offer, etc.
These two elements play into their calculations.
“What is your compensation philosophy? »
After the interview process, when you receive a job offer, Church recommends asking your potential employer two questions. First, “how does this level fit with your groups internally?”
When companies set their salary ranges, they often use “tiers one through ten.” he says. Levels may be reflected in titles but are not always so clear. He gives the example of the role of software engineer, which can be played by both people who have just graduated from university and those who have worked for decades.
“Determining the specific level you’re at will indicate the level of seniority the company believes you have,” he says, and therefore the type of salary it thinks you’re entitled to.
The second question he recommends asking is, “What is your compensation philosophy?” » They might say something like “we pay the 75th percentile,” meaning they pay better than 75% of companies in the industry. This will give you an idea of where they anchor their offerings in the market.
“I want to join us, if you can reach this number”
Once they’ve made you the offer and answered your questions, tell them, “I’m really excited about this offer,” Church says. “Give me a few days to process and I’ll come back with you.” So start doing some research.
Check out sites like Levels.fyi and Church’s own company, FairComp, which can offer data on salaries and levels. Also leverage conversations in your network. Especially for those around you in your industry, try saying something like, “Hey, I want to have a conversation with you about compensation,” Church says. “Would you be open to that?” Based on what you find, you can start to piece together what you should ask.
When you get back to your potential employer, say something like, “I know you said that about the compensation philosophy,” he says. “I’m really excited. I want to join, if you can reach that number…I’ll sign today.”
They might respond to you and say yes, they might respond to you and offer you a little less, and they might respond to you and say no at all.
The fact is, “if you don’t ask,” Church says, “the answer is always no.”
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