Underpaid? Four Salary Negotiation Strategies If You Are Currently Paid Below Market

– Posted in: Negotiation
Money (bills and coins) on a table

There are many reasons you could be underpaid despite being excellent at what you do. You might have taken on additional responsibilities but without a commensurate raise. You might be a longtime employee getting small cost-of-living adjustments while new hires coming from the outside leapfrog into higher salary bands. You might be starting out in your career or ramping back up after an absence and only have lower-paying or unpaid projects in your recent history. In all of these cases, in order to get your salary back up to market value, you will need to negotiate a higher starting salary or raise than you have received before.

But this is a tricky proposition given that past salary often sets the bar that prospective employers use to set the next salary. If you were underpaid before, are you destined to remain underpaid forever? Here are four salary negotiation tips to reset that future salary bar and finally get paid your rightful market value:

Don’t lie

On many job applications, you are asked for your salary history. You might be tempted to fudge these numbers. After all, you have researched that peers with your skill level and experience command up to 20% more, so you could put a higher number for your last position, and it still won’t seem out of range. However, a question about history is a question of fact, not opinion. If you were asked for target salary or desired salary, then by all means go with the current market value (as the next two tips will encourage). But questions of fact require factual answers. Your salary negotiation starts at the interview process, not just when an offer is made. You are setting up the foundation for being the employee your prospective employer wants to hire. This starts with honesty on a job application.

For the currently employed, your salary history is known, of course. But a lie in this case might be a competing offer that doesn’t exist. Lies can easily backfire. Your current employer may actually call your bluff and encourage you to take that amazing (but non-existent!) offer.

Don’t lowball

At the same time, don’t lowball your salary unnecessarily. On a job application that asks for salary, make sure to address your total compensation, not just salary, especially if the non-salary portion is significant. In a recent position I hired for, the selected candidate got an almost 50% increase in base salary. However, in terms of total compensation, the % increase was not nearly that high – she was giving up three weeks of vacation and a significant transportation allowance. If the application asks for base salary only, write a note to indicate that additional compensation outside of salary is significant. No need to share the details then; plan to discuss this once you get further along. This way, you have answered the immediate question on the application but you also set the expectation that there is more.

For the currently employed, this means that you should be prepared to discuss all the elements of your compensation, not just base salary, when you schedule that raise meeting. Performance bonus, ownership participation, future compensation growth, title, resources, training…there are many ways that compensation can be designed to bring up your market value.

Use objective numbers

Once you are in that offer stage (or that raise meeting), individual you is negotiating with the entire company. Level that playing field by calling on outside market data to support your case. It isn’t just you that thinks you’re underpaid. Pull out objective data – the research into similar roles at similar companies in similar industries that points to a compensation higher than where you are. Remember that salary is hyperlocal – you want to compare like roles, companies and industries. Don’t expect a start-up to pay what a Fortune 500 will pay. But don’t assume a start-up can’t be competitive (remember tip 2 about unnecessary lowballing: there are several ways to increase overall compensation).

Another form of objective data is bottom line results. What is the measurable value of what you would bring if they hired you (or already bring if currently employed)? Calculate the expected profit of the product they want you to launch, or the impact of the additional funds you would raise, or the increased revenue that people you would support would bring in thanks to your increased efficiency. This isn’t just about more money for you, but about more money for everybody.

Objective data is particularly useful when you’re negotiating from a salary of zero – the full-time student entering the workforce or the on-ramper reentering after a leave. Being able to articulate and measure exactly how you will add value is a strong indicator that you understand what you need to do and will contribute from day one. Prospective employers love new hires who can produce from day one.

Use subjective emotions

Objective data is very helpful for that employer who is moved by analysis and logic. But people hire people, so the hiring process (and related decisions on compensation) is a relationship-driven process. Nurture the relationship in every negotiation. Express your gratitude for the offer (or for your years in the firm). Express your excitement at the future – employers love the reassurance that you see yourself at this company. Acknowledge whenever there is agreement: if the employer says your market data is compelling but their hands are tied, open first with, “I’m glad you find the data compelling.” You can then probe on exactly where the constraints are, but always focus on where you already agree.

If you do all of these things – answer honestly, look at total compensation, use objective numbers and subjective emotion – will you get to Yes? Not always. Recognize that a No here is a No in a very specific context – what you asked for, when you asked for it, in the way you asked for it, and to whom you asked. Change any one of these parameters, and you might get a different result. Brainstorm on alternatives, and ask for something different. Accept what you get now, but ask in another three months. Practice your negotiation skills, and ask in a different way. Or recognize that this employer isn’t the one, and continue your search elsewhere. Negotiation is a process, and you can always find a way to move forward.

This post originally appeared in my leadership column on Forbes 

You’ll find bite-sized career tips on my YouTube Channel. Check out my recent short video: How To Budget Your Time If You Want To Be In A New Job In 3 To 6 Months

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