Your starting salary with a new company is really important because it may affect your salary for the rest of your life.
Why is this?
In many companies, incremental annual increases are negotiated company wide, and are tightly negotiated. So in today’s market your increase may be 1% I a year. And maybe another 1% the following year.
When you are negotiating a starting salary you may be able to influence the outcome to improve by 10% and still be within the salary range for the position. It would, in simple arithmetic terms, take you 10 years to get to that level in annual increases. And don’t forget increases are compounded, and may also affect your pension ultimately. And if or when you leave the company your last salary is seen as an important factor in setting your new salary
So you need to negotiate the best deal you can at the outset. How do you do this? People are normally quite private about their salary, and don’t disclose it to others. And companies often don’t issue pay scales.
Well first of all, research. What are the salary scales offered for this and similar positions? Look at newspaper ads and websites, and job adverts. There are also salary databases and surveys available on the internet .
If you are working through a recruitment agency, they will know exactly what the parameters are. Often they are rewarded with a percentage of your first years’ salary, so it is in their best interest to guide you to the top of the scale. However sometimes they are bonused for bringing in a salary saving so tread carefully!
The scope of negotiation will depend on the type of company you are working with. If this is a large company with a formal HR department, the job will be positioned on a company wide scale and the salary will need to fit into that scale, except in exceptional circumstances. Another consideration is that your salary will normally need to be commensurate with peers, and less than your line manager. In a smaller company there may be more leeway .
In addition to salary, consider the benefits and perks offered. Sometimes, the benefit package can be as important as the amount you get in your paycheck. Find out details of health and life insurance coverage, pension contributions (yours and the company’s), holiday allowance, sick time, disability, and other benefits. Inquire about how much of the benefits costs are provided by the company, in full, and how much you are expected to contribute. If there are a variety of options available, request copies of the plan descriptions so you can compare benefit packages.
There may be much more room for manoeuvre with a smaller company, where the owner/manager has absolute authority over pay scales, and does not have to justify their decisions to anybody .Of course, there is the issue of affordability and you can price yourself out of the market if you are not careful.
Then it comes down to your negotiation skills. Always start a little high and indicate your willingness to negotiate if necessary.
Another tactic is to negotiate a package that will include other benefits-perhaps you have young children so it is important to you to be able to come in 15 minutes late having dropped the children at school. How much is that concession worth to you, what does it cost the company, particularly if you make the time up at lunchtime?
Do you need all the holidays the company offer? Maybe they offer 5 weeks and your spouse only gets 4-can you sacrifice a week’s holiday for more cash? Or vice versa-can you sacrifice salary for holiday?
Maybe you agree to accept a lower starting salary in lieu of a bonus for results you believe you can deliver in the first six months or a year. This clearly demonstrates that you have belief and are willing to take a risk on yourself.
Across several years if you get the bonus consolidated into your salary, you can build your salary nicely!