A crash course in salary negotiation – Use psychology to get the pay you deserve

Great salary negotiation means you can earn more money doing the job you’re already doing.

Smart salary negotiation can change your life in a day, and is just one example of how you can take your career and your success into your own hands.

Salary negotiation

Rather than being unhappy with what you earn and waiting patiently for someone to offer you more money, why not simply ask for that raise and begin enjoying a better quality of life right away? Alternatively, you could find another job and ask for more money than you’re currently earning. Lifestyle design is about being proactive: knowing what you want and going about achieving it!

But to be successful, you need to understand the basics of salary negotiation. How can you encourage your employer to give you more money to continue doing what you are already doing?

In this post, you’ll learn the basics of successful salary negotiation, so that you can be better compensated for your hard work.

The basics of salary negotiation

First the basics. The key thing to understand about any negotiation is that the aim is not to “win.” Rather, the best outcome is a compromise: a situation in which both parties come away happy. If your employer feels they’ve been conned into paying you more than you’re worth, then that’s not going to make for a long and happy working relationship moving forward.

The best outcome is a compromise: a situation in which both parties come away happy.

With that in mind, you are going to be working within what is referred to as the ZOPA, or “Zone of Possible Agreement.” This is the range of acceptable outcomes; in this case the range of salary options that each party is willing to accept (the lowest you will work for, all the way up to the highest they will pay).

salary negotiation tips interview

One way to begin a salary negotiation is to determine that ZOPA. Here, you will each write down a number privately, before sharing them with each other. Either your numbers will be the same, in which case you have an accord, or you will now have a satisfying range to work within.

What this also tells you, is that you need to do some soul-searching and research prior to the salary negotiation. In other words, you need to have a good idea of what your target salary and minimum acceptable outcome are before you go in.

Pre-suasion

Another concept to familiarize yourself with is “pre-suasion.” There is only so much you can do to change someone’s mind during a 20-minute meeting: the vast majority of the decision making has therefore already been made by your employer.

So once you have determined that you would like to earn more money, the next step is to go about creating the optimal circumstances for the upcoming discussion. In other words: you need to get into their good books.

There is only so much you can do to change someone’s mind during a 20-minute meeting.

Now is the time to begin doing your best work, to demonstrate just how valuable you are to the team. Likewise, if you have just been put in charge of a big client and you know that your employer can’t afford to lose you, now would be a perfect time to start negotiating more pay.

Zone of Possible Agreement

On a more basic level, it’s a good idea to schedule your meeting for a time when you know your employer will be in a good mood. Emotion actually accounts for a huge proportion of decision making, which is something shop owners and salesmen know very well!

Setting the scene

Likewise, if you can do something for them prior to the discussion – such as making them a coffee – this can actually have a big impact on the outcome. The “norm of reciprocity” tells us that when someone does something for us, we are compelled to do something in return of greater value. According to some reports, we’ll try and repay our perceived debt plus anywhere between 10-30%.

Make them that cup of tea and they might feel compelled to give you an extra grand. At least, it can’t hurt!

How anchoring makes your outcome inevitable

Another topic that is often brought up in relation to negotiation is “anchoring.” This is a technique that attempts to “anchor” the discussion around a particular outcome, thereby making that outcome more likely.

You simply keep referring to that number.

For example, if you have a particular target salary in mind – let’s say $60K – then you simply keep referring to that number. Ask why you are worth “less than $60K.” Ask what you can do to be worth “$60k.” If you wrote this number down, keep it right in the middle of the table.

By doing this, you help to bring this number right to the forefront of everyone’s minds. It then becomes much easier to simply settle on that number. This is very much like telling someone “don’t drive into the tree.” By directing their attention, they almost always end up hitting the tree!

(Instead, you should say “don’t crash,” just FYI!)

Providing and demonstrating value

Remember, a good salary negotiation should end leaving both parties satisfied. The way you accomplish this, is by ensuring that everyone is compensated with adequate value.

You’re getting monetary value out of this arrangement, so what are you offering the employer or client in return? The answer should be high-quality work, which ultimately translates to greater income for the business. Companies need to earn more from each person than they are spending, and at this point in the discussion, it is your job to demonstrate how you have been providing more value than you’ve been receiving.

Providing value

One of the best options is to look at your job description. If you have been consistently doing more than you are required, then you can mount a case for a pay increase. Likewise, you might be able to point to a recent success you’ve enjoyed at the company, that brought in a lot of cash!

As a freelance writer, when I increase my rates I will often explain how I am also increasing the value I offer in some way. Perhaps I’m charging a bit more, but I’m doing more research now for each article.

Another tip is to research what the going rate in your industry is. What are your colleagues being paid? And what could you get at another company? Of course, if you can land a job offer somewhere else, this will serve as powerful leverage in your salary negotiatio. Even if you don’t plan on leaving, shop around!

Being incremental

Every psychology student knows about the infamous experiment referred to as the “obedience study” or “Milgram experiment” carried out by Stanley Milgram in the 1960s. This study demonstrated how a combination of authority and gradually incrementing requests could be utilized to get normal people to carry out atrocious acts. It could never be carried out today, due to ethical concerns!

In this case, Milgram encouraged participants to deliver fake lethal electric shocks to stooges (thinking the setup was real). He did this by incrementally asking the participant to increase the shock by just a few volts each time.

The logic goes: “well I already hit them with 290 volts, what difference is an extra 10 volts?”

You can use a similar effect in order to gradually chip away toward your dream salary. Simply start asking your employer for smaller raises, more often. This has worked particularly well for me as a freelance writer/programmer: I simply approach clients asking for an extra 10 cents per 100 words, which seems like nothing at the time. But it adds up, and especially if I ask for the same increase in another 6 months!

What to do if they still say no

When you begin your salary negotiation, it’s often a good idea to have a back-up outcome that you’d be happy to accept. For example, if you went in asking for $60k, you should have a lower number ready in mind as a fall back (such as $55k).

If your employer/potential employer is really not budging on the $60K, then you simply say “then how about $50K?”

The example I was given, was that of a girl scout going door-to-door to sell her cookies. She tries hard to sell you 10 boxes, and you feel bad but ultimately turn her down. Then she says “how about just one?”

$55K might be a lot of money, but when placed next to $60K, it sounds like a lot less.

Even if you wouldn’t have bought a single box initially, this now seems like a very reasonable compromise, and so you are likely to go ahead and buy. Once again, this speaks to the nature of negotiation as a compromise, but it also adheres to the “contrast effect” which is a type of cognitive bias. That is to say, that $55K might be a lot of money, but when placed next to $60K, it sounds like a lot less. By raising the bar, you may manage to sneak in a big pay rise without anyone noticing!

Turn failure into success

Another option if they still keep saying “no,” is to ask what you can do in future in order to be “worth” that salary increase.

“I understand your position, but how can I demonstrate that I am worth $60K in future?”

At this point, the employer will likely give you some criteria to meet, and now it’s your job to ensure you tick those boxes going forward. Manage this, and they’ll have no option but to acquiesce the next time you make the request!

And apart from anything else? It lets your employer know that this salary negotiation is not over: you’ll be back until you get the outcome you’re looking for!

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