The Ultimate Guide to Negotiating a Raise.
I want to start by sharing a testimonial from my boss — Brad Tillock.
“Varun is a great negotiator and is always planning his performance reviews six months before. You may think that his negotiation skills are bad for my business, but on the contrary, he has been able to use the same skills to add our company a lot of value. Varun has deserved his high compensation improvements, and along with that he has strengthened the company’s revenue, reputation, and our relationship.”
I’m so grateful for this quote.
Over the last four years, I’ve been able to negotiate:
- On average, a 9.18% raise each year (in the US the average is 2.9%),
- Multiple days per week work from home schedule, flexible holidays (based on my faith), and a high-profit sharing agreement.
- To top it off, I’ve been successful in asking for a 4-month trial to work from India at the end of 2017.
I say that not just to brag, but because I’ve come a long way from paying extra to street vendors in Mumbai, to learning how to negotiate the right way.
Yes, I was that friend of yours who paid Rs. 1999 ($30 — a lot of money in the late 1990s) for a fake Cristiano Ronaldo’s jersey. I was terrible at negotiation. Terrible!
And it cost me over $120,000 in the long run.
Let me show you how. Let’s say you have two situations — X and Y. In both cases, you start at a yearly salary of $75,000.
When I saw that number I started thinking — New Zealand vacation + Euro tour with parents + charitable donations + rest in savings = Wowza
In situation X you get a standard 2% raise each year. While in situation Y you negotiate a 5% raise on average each year. An average of 5% is achievable because one year you might get a big raise and the next one you may get the standard 2%.
If situation Y, you end up with $122,133 more!
Your starting numbers can be different, but the math will still shock you. If you invest the difference, the potential is even higher.
Think about this.
Would you ever miss an investment opportunity that gives you a $120,000 return for $0 invested?
Would you say no to a $120,000 saving on a 10-year house purchase?
Would you say no if you win a $120,000 voucher to travel the world or buy your favorite car?
So why should you let this opportunity go?
The benefits of negotiation are not just monetary. By negotiating the right way, you get reputational and relational benefits.
Today, in this ultimate guide I want to share with you:
The V-Negotiation System (trust me I didn’t name it after me).
In this guide, we’ll cover:
- The V-Negotiation System. The exact step-by-step system I used to go from “taking what is given” to negotiating 8% and above raises each year.
- How by being a top performer you can ask for things beyond your salary, such as shorter review cycles, additional vacation days, company-sponsored training, to name a few.
- How to answer objections that are raised during the negotiation without it being an adversarial conversation.
Varun, you’re not in my situation. How can I negotiate when…
Can you use this guide if:
- You work for a large company with a fixed compensation structure or where a manager decides your performance and the HR decides your salary? YES — I’ll share case studies from my friends who work for large Fortune 500 companies and have successfully negotiated raises.
- You are an immigrant, and you feel ungrateful about asking for more money when they will be sponsoring a visa for you? YES — I am in the same boat with you, and it is possible to ask for fair compensation.
- You are not a direct hire to the company but a contractor through an agency? YES — It is slightly tricky, but it is still possible.
My goal is to write the best piece of content online on the topic of raise negotiation. So that’s why you will find a step-by-step system full of examples, scripts, case studies, and situational breakdowns.
This guide is long and detailed. So don’t try to consume it in one sitting. Follow the Negotiation System outlined in Chapter three and do a deep dive in the step most relevant to you.
Sneak Peek: Answer any objection and make your case — without being adversarial.
I’m giving you a sneak peek of the most important step of the V-Negotiation System — how to answer objections during a raise negotiation?
Before sharing with you my story and the entire negotiation system, I want to give you a taste of the kind of information you can expect in this guide.
When do we think about our salary the most?
There are common triggers when we start thinking about our salaries:
- When we hear salaries of our peers and realize that we’re not paid as much. It’s stings more when we know we are better at the job than them.
- When we work hard for the company but we feel like the company doesn’t value us when it comes to giving a raise or a promotion.
- When we see our bank balance depleting because of an emergency expense. Ah, this is the worst. I was in this situation, and it is the first time I felt stressed. Failed in engineering, who cares. Best friend said no to move on to dating (btw she said yes later), no stress. Bank balance close to zero, Holy ****.
- When we want to <insert dream here> and we don’t have the savings for it. For me, it was researching a Euro trip with my family and realizing I couldn’t afford it yet.
When we’re hit with one of the above feelings, we say, “Damn, I wish I was earning more money.”
Invariably we then start daydreaming about telling our boss, “I need a raise.”
You picture yourself as confident and all powerful.
Something doesn’t sit right when we continue to think about that moment and our confidence.
We have self-doubt:
- “What should I say to convince my boss?”
- “How should I handle the conversation without it turning into an argument?”
- “During the performance review, I get nervous. my confidence drops and I don’t say anything.”
- “Is there a trick I can use during the negotiation?”
We say these things because we’re brought up in a system where we feel that negotiation involves fooling the person on the other side of the table or getting the upper hand. Plus, we feel that a conversation around money has to adversarial.
A negotiation conversation is neither a trick, nor it needs to be a weird game of chess that makes us feel awkward.
It is a strategic conversation, which done right, can improve your relationship with your manager and get you that much-deserved raise.
And the most important strategy in your arsenal is the Triple-A technique.
Introducing the Triple-A Technique
Triple-A Technique will be the Ace up your sleeve.
The Triple-A Technique stands for Agree-Ask-Attention.
When you’re in the meeting with your manager, and he objects:
- Agree: Understand where your boss or HR rep is coming from. Empathy is key.
- Ask: State your “ask” (salary, shorter review cycle, vacation days) backed by research and performance.
- Attention: Once you state your ask, shut up and listen. Two things that are difficult to do but are most important.
The Triple-A Technique is the custom strategy that I developed for my negotiations using techniques from two people — Ramit Sethi and Chris Voss.
I owe a lot to Ramit. Many of the tactics that you will see here, I’ve learned from him.
He has a technique called the ARMS technique, for answering objections during the negotiation which I’ve built upon.
The other person I’ve learned a lot from is Chris Voss.
If there is any person who can be considered an expert negotiator, it is the FBI hostage negotiator.
Chris Voss is the co-author of “Never Split the Difference: Negotiating As If Your Life Depended On It.” He is a former FBI Lead International Kidnapping Negotiator and now the CEO and Founder of The Black Swan Group.
In the book, Chris Voss shares many field-tested tactics we can use during a negotiation in the corporate world. I’ll share those tactics in each step of the Negotiation System.
So how do you use the Triple-A technique?
Let’s take an example of the most common objection that comes up during the compensation review, “We don’t have the budget.
We’ve all given up on negotiation easily. The objection of a budget is more of a test than reality (in most cases).
Here’s a script you can use:
I understand that we have budget constraints this year. Based on my performance review, I’ve been able to perform very well on all the projects assigned to me and taken additional tasks to strengthen our team. Is there a way we can reflect that? [Attention: Shut up and listen]
If we break down the above script:
- Agree: I understand that we have budget constraints this year. You don’t just agree for the sake of it. You empathize with the situation as a team.
- Ask (performance backed): Based on my performance review, I’ve been able to perform very well on all the projects assigned to me and taken additional tasks to strengthen our team. Is there a way we can reflect that? You don’t just say, “I understand there are budget constraints but can you increase my salary?” You talk about why you deserve to be compensated and make an ask. If you can frame it as an open-ended question, even better.
- Attention: Two key aspects of giving attention is to shut up and actively listen. Wait for the person on the other side of the table to give a response, listen to what they say, and understand the real meaning behind what they’re saying. The worse thing you can do after you make an ask is to continue talking!
Now, the budget is not the only reason your company will use.
Don’t smile when you hear any of these objections in your next compensation review.
You can use the Triple-A Technique to answer any objection.
We will do a detailed breakdown of this technique in Stage III of the V-Negotiation System below.
Why just knowing the Triple-A Technique is not enough?
The reason I wanted to give you just a sneak peek, is because we all think, “If only I know how to give smart answers during the performance review, my negotiation would be successful.”
You can’t start a car in the 5th gear even if you’re Vin Diesel in Fast & Furious <add the number of the latest release>
In reality, using the Triple-A technique is like using the 5th gear in your car. It will help you reach your destination faster and more efficiently, but it cannot be used when you start driving. You have to go through the first few gears before you can switch to the 5th gear.
The Triple-A Technique will not help you make your case if you’re not one of the best performers in your group. No matter how polished your answers, your company will not be inclined to give you a high raise.
The Triple-A Technique will also be ineffective if you’ve not set the stage for the compensation discussion with your manager.
When used with the entire Negotiation System, the Triple-A technique will give you the best results possible.
Before we dive deep into the V-Negotiation System, let me share the story about why I’m sharing this system with you.
One of my fondest memories of life is hiking the Angels Landing trail in the Zion National Park.
Why is this day important for this guide? It’s because this adventure is synonymous with my negotiation journey.
View from the top. The hike is scary! You hold chains and climb in the last 0.5 miles with 1500 feet drops on each side — don’t ever watch the YouTube video if you plan to hike it.
I visited the Zion National Park along with my wife and parents in the Summer of 2016. While at the park everyone was talking about the Angels Landing Hike. All the pictures I had seen of the view from the summit were mesmerizing.
However, everyone would talk about the hike with caution as it is dangerous and scary!
There is a portion of the hike where you have to hold chains to stop yourself from falling down the 1500 ft drop on both sides. What the!
Having never hiked before in my life, I was cynical about getting on the trail. My wife wanted to, but I was just giving lame reasons like, “Oh what if we get injured and ruin our trip,” or, “I don’t think we will be able to do it (so why even try).”
It was strange because, in my mind, I couldn’t label any of my fears. I was not scared of heights (having jumped out of a plane once), and I was not afraid of getting injured (as we saw people of all ages).
I was just fearful of the unknown.
But my wife was adamant about giving it a shot, so we had to 😉
(In hindsight, thank you, love.)
We’re hiking to the top of this mountain. (At least that was my wife’s plan.)
So we started hiking.
During the hike, if we caught someone coming down we would ask them, “How is the hike?” We would get either a “We didn’t go to the top because it ‘seemed’ scary,” or, “It is beautiful, exhilarating, crazy awesome, and not as scary as it sounds.”
These statements fueled my wife’s determination and at the same time they fueled my skepticism.
Slowly, my family and I were able to complete the hard but exciting hike to the point called Scout’s Lookout. Beyond that point, it was only 0.5 miles to the summit. But this was where the real challenge began.
It is beyond this point where we would have to hike with the support of chains.
Hold on for dear life! Check out those people on the side of the mountain.
My parents stayed back while my wife wanted to continue and I planned to give her company reluctantly. In the first 50 meters, we could grasp why people feared this hike.
We had to hold the chains while resting our feet on some protruded rocks. My wife was losing grip because of not having proper shoes, and we decided to go back.
As we’re about to go back, she said, “If you want to go ahead, you should.” That statement lit something in me, and by this time her determination was rubbing off on me too. I decided to continue.
The hike was insane!
I did my best to avoid looking down as you’re walking on a 6 feet ledge, holding chains for support, with 1500 feet drop on both sides. I know I’ve said the 1500-ft-drop part before.
It was effing scary!
As I was alone, I would always follow a group of people. One, to know if there is any section that is difficult, and two, in case something happened to me, there would be people to notify the park that a “bald Indian guy” met with an accident. (The hike is safe-ish, and there have been no deaths since 2010).
Slowly, I reached the top of the hike, and it felt like the best win I had since the time I convinced my best friend to date me!
(Thereby avoiding being friend-zoned and having the luxury of your partner be your best friend.)
The hike was effing fantastic!
Angels Landing hike is an analogy for my negotiation journey.
At the start of the hike, I had limiting beliefs.
The same way, having never successfully negotiated in my life, I had limiting beliefs regarding negotiating.
“I don’t know how to negotiate. I don’t want to seem arrogant. I don’t want to sound demanding and ruin my relationship with my boss.” I said.
Even while I was reading about how to negotiate, I didn’t take action on it because it seemed scary.
So what changed?
During the hike, my wife was the trigger. She kept pushing me to face this adventure.
I was not joking, check out those chains and the drops on either side.
In my negotiation journey, the trigger was experiencing the shortage of money.
The money I was earning was extremely close to the amount I needed to sustain my family, and pay off the student loans.
Have you ever been in a pinch for money?
It’s an uncomfortable feeling that hits you right in your gut.
I knew I had to negotiate my salary to earn more as it was technically our (fellow immigrants) only way to earn more money.
I had to start hiking with the chains to reach a summit where I have enough money.
Like I followed a group during the hike, I followed expert advice for negotiating.
With a mentor like Ramit Sethi:
- I was able to push aside the feeling of giving up before trying.
- I was able to learn the right way to negotiate — which is to be a top performer and add value to the company first, before asking for value back.
- I was able to learn how to break through the barriers that come up. Like the objections, your boss or HR will raise during your compensation review.
The feeling after my first successful negotiation was the same as the feeling I got from seeing the view at the top of Angels Landing.
After applying their principles, I was able to successfully negotiate my compensation — year after year — and get me closer to building my dream life.
It is the best feeling in the world when you’re able to proactively make your life better.
I want to help you through the difficult part so that you can reach your summit too.
The V-Negotiation System
The V-Negotiation System is based on the V-Model — a strategy we use in the auto industry to develop vehicles.
The key reason why this development model is popular is that it breaks down a complex product into simple stages, where every stage on the left part of the V, coordinates with the corresponding stage on the right part of the V.
That’s the approach we can use with our negotiation as well.
The V-Negotiation System Stages and Timeline.
In V-Negotiation System you start laying the groundwork six months before your performance review.
Like my mentor, Ramit says, “When it comes to a negotiation, 80% of the work is done before you step into the room.”
So to have the highest chance of success in your negotiation, we need to do 80% of the work before we are in the room discussing our compensation.
That’s why we complete many stages before the negotiation day.
Stage I: Build Your Mindset (right now)
- Understand and overcome the barriers we use to limit ourselves from even thinking about asking for a raise.
Stage II: Kick-off Meeting (6 months before)
- Set specific and measurable goals for your performance. Make sure that the goals make them and your team look good. Everyone has a boss.
- Ask for a compensation review 6 months from the day of the meeting.
Stage III: Prepare Scripts (5 months before)
- Prepare answers to any objections that might arise during the negotiation by using the Triple-A Technique.
Stage IV: Be a Top Performer and Prepare Your Briefcase (kickoff day to negotiation day)
- Position yourself as a top performer for your team.
- Building results, reports, and prototypes, to communicate how you’ve performed on your goals.
- Research the market on salaries for your position and company type. If you’ve additional roles, research the market for salaries of those positions. Prepare your plan of asking for more than base pay — like vacation days, faster review cycles, and more.
Stage V: Practice–Practice–Practice the scripts (1 month before)
- There are three ways to practice your scripts. Talking to yourself using a mirror, recording yourself with a camera, or practicing with a buddy.
Stage VI: Negotiation Day!
- Initiate the negotiation
- Change in strategy based on the type of company — small to midsize, large traditional company, or external contract.
Stage VII: Review (after negotiation)
- Do a final review of what went right and what went wrong.
- Prepare for the next time you have to negotiate.
What if I don’t have six months?
To achieve maximum success in getting a raise, you have to start preparing for a compensation review six months in advance.
Why? To give yourself a chance to be a top performer, achieve goals that you and your boss have signed off on, and prepare your scripts for the negotiation.
But I can understand if you are googling for “negotiation tips” as your performance review is tomorrow. Or in a week’s time. I get it; I’m guilty of that too.
In India, such a moment is called a “Tube-light” because a tube-light flickers for a few seconds before starting. Just like we flicker away our time till the end moment when we realize we need to understand the game being played around us.
In this case, take a crash course by following these steps:
- Stage IV: Understand what being a top performer means and brainstorm ways with which you can communicate to your manager that you’re a top performer.
- Combine Stage III and V: Use the scripts I give in this guide, modify them for your particular situation, and adopt at least one form of practice. Among all the important steps in this crash course, this one is the most important.
Stage I: Build Your Mindset (right now)
Have you ever given an exam without preparation?
I remember giving an exam in my undergrad for a subject called “Strength of Machines” with no preparation whatsoever.
In our college, the rule was that you had to sit for 30 minutes once the exam starts compulsorily. I was so unprepared for the final freaking exams that I waited for the time to say 30 minutes, got up, and left.
What an idiot!
Obviously, I failed the subject and had to retake the exam. I knew going in that it was a lost cause! I think about that moment today (which was in 2007), and I still kick myself.
Going to a negotiation without having your mind all set for it, is like going to an exam with the intent of failing!
Barriers we use to hold us back from negotiating
Mindset Barrier 1: “I don’t want to be arrogant by asking for a bigger raise.”
There are two different aspects of this barrier.
First, “I’m so grateful for having a job, and standard raises each year. I don’t want to seem demanding if I ask for more.”
And second, “Talking about money makes me feel weird, I don’t want to have an adversarial conversation with my company.”
Let’s tackle the first one first.
If you’re an average performer with a salary close to the market average, then you’re right in not asking for more than the standard raise.
However, there are two variables in this equation — average performance and average salary.
- If you’re an above average employee in the way you perform on your projects and the responsibilities you handle, your manager will value you more.
- If you’re getting paid less than the market, then you can make a case for yourself too because your company would want to be fair.
The variable of performance trumps your market value any day.
What I mean by that is, if you’re crushing your performance goals and taking more responsibilities to help your team (and manager) look good, you will have leverage.
If you’re in a big company where the HR sets the policy, then you will give the leverage to your manager to fight for you.
Negotiation is all about leverage. Being a top performer is the best leverage you can have.
The second objection comes from the fact that we would like to avoid a difficult conversation at all costs.
We don’t want no confrontation. (Yup I know that’s not proper grammar)
That’s because we think that a salary negotiation means a shouting match where you communicate what you deserve, and your boss feels you don’t deserve anything.
Which is weird, because we don’t feel the same way when negotiating for a car or negotiating an offer for a house?
Maybe it’s because we’ve seen those negotiations in our daily lives, but salary negotiations are always behind closed doors in hushed tones.
Salary negotiations when done right, are not even close to adversarial. We just need to learn the right system for it.
The goal of this guide is to show you the system I’ve used has not only provided monetary benefit but also strengthened my relationship with my boss.
Mindset Barrier 2: I’m in a large company with strict HR policies for compensation
I work in a traditional industry (automotive), but I have never worked for a large company.
When I talk about negotiation with my friends, the first barrier I get is, “Varun; these strategies won’t work for a large company like ours.”
Let me share the experience of a friend; we will call him Adam, who is working at a Fortune 500 company. Even though he is a top performer, he couldn’t translate those achievements into a raise.
If you work in a large company, you will relate to his story.
I got my first job offer, after completing my masters, from an automaker in 2010.
The economic downturn was all too real and getting a job felt like I found gold. I was not in a position or had the guts to negotiate at that time. I knew the pay was below market rate, but I was happy to get a job that was my passion.
Within the next three years, I was one of the two people who created an automotive analysis tool that could predict the fuel economy for all future programs.
At least fifty people were using it as a mainstream simulation tool, and there are vehicles on the road that prove the value we added to the company. I am always appreciated by my manager, senior manager and the Director for my technical contribution. I have heard the “Don’t get hit by a bus” joke a million times.
At the end of the third year, I had only a 2% pay raise from where I started.
I decided to ask my manager for an incentive. I researched the salary range for my position using sites like Glassdoor. I even spoke with recruiters to find out my current market value.
I found that my pay was 8% below market rate. I documented that information and took it to my manager. My manager said he would speak to the HR and let me know. After months of constant reminders, one day, he told me that the HR refused to increase the pay because according to their analysis, I was at the market rate. And “he couldn’t do anything.”
I spoke to the HR representative who didn’t know me. Our HR department is bigger than many companies. I gave him a 10-min presentation on the contribution I made and how my pay compares to market rate.
Here’s how the conversation went:
HR: I cannot give you a raise. Our analysis says you are at market rate.
Me: I showed you the value I add to the company, and I spoke to recruiters who are ready to offer me a lot more.
HR: Everyone adds value to the company. (Smirk). Also, do you have any offer from the other company?
Me: No. I do not want to hold the company hostage. I was expecting my commitment and work was ready to be rewarded. We can talk about vacations or other incentives.
HR: Sorry! This is beyond my jurisdiction. “I cannot do anything.” Get me an offer from outside, and we can reconsider.
The same conversation happened after the fifth year. The manager did not have my paycheck under his jurisdiction. The HR barely knew me and did not know my contribution. They asked me to get an offer from outside. I decided to move inside to another group. As it was a lateral move, nothing changed for the HR. The performance of my team took a recognizable nose-dive, but no one had a problem. Especially the HR.
One slow cog in a gigantic ship does not drown it.
That’s tough. I feel for my friend.
He did multiple things right. Researching his salary, communicating his value to the company, and making moves within this organization, which are part of the V-Negotiation system.
In most big companies, if you follow what my friend did, you will get a raise.
Sometimes, you will come across a company that just doesn’t want to move on salary. In such a case you have to give the right ammunition to your manager and your HR to make a case for you.
In my friend’s case, the ammunition is a competing offer letter. A competing offer is not holding your company hostage — especially if the HR asks for it — it is a real data point for your market value.
In this guide, we will talk about how he could’ve done things differently, along with multiple case studies of successful raise negotiations at large companies.
By the way, my friend got a promotion (which came with a raise). Promotions can be side effects of negotiating the right way.
Mindset Barrier 3: Raise is not something you ask for — your manager should recognize your hard work.
My reaction when someone gives this reason.
For this reason alone, I’m going to call B.S.
You and your manager are a relationship, just like the other relationships you have in your life.
Can you expect your partner or a loved one to be committed to you without communicating how much invested you are in your relationship (and backing that with your actions)?
In the same breath, do you expect your manager to recognize your progress on the project without showing your results and telling him where you’re in your project?
Then how can you expect your boss to compensate you for your efforts without sharing your performance and asking for raise?
Mindset Barrier 4: I require sponsorship from the company as I’m an international worker.
International workers in any country have the deepest mental barriers.
While researching for this guide, a friend of mine said, “Another reason why we don’t negotiate is if the company is willing to sponsor your visa, you feel obliged not to bother your supervisor with talks about a raise. Most people wait until their visa process is done before approaching the raise issue, regardless of how well they perform for the company.”
Since I was an international student myself, I shared this concern.
The reason for our concern is deep-seated because all our hard work of leaving our home countries in search for a better life is hinged on “a job.”
Plus, in our journey. It seems like every major decision is made by a person on the other side of the table:
- We go through the grueling college application process from thousands of miles away. Then we wait to get accepted.
- We study hard and then apply for jobs in our industry. Then we wait for a company to give us a chance to interview.
- We do our best in the interview and wait for the company to decide whether they want to hire us.
- We get hired, work hard and then wait to see whether the company will sponsor our visa or not.
Damn! When you’re feeling grateful for completing the next step after having worked hard for the last, it’s easy to think of all these decisions as favors.
And once we’re in this favor mindset, we feel obliged to not ask for more.
This is where we make a critical mistake.
We’re as grateful as Tom Hanks when he was stranded at sea and rescued by a cargo ship in the movie Castaway.
We need to shift our thinking to the other side of the table — that’s what the top performers do. The best students and the high performing employees think differently. They know:
- Colleges don’t want to lose out on the best students that have applied to a competing university.
- A hiring manager doesn’t want to lose the best candidate for the job.
- Your manager doesn’t want to lose their high performing team member.
- The company doesn’t want to lose out on a good employee.
So the first thing to do is to shift our mentality from your job being a one-way street to a two-way lane. You’re equally valued by your company as much as you value your job.
The second is to understand the economics of sponsorship.
Visa sponsorship is not a new process. It is decades long. The industries that mostly hire international students — STEM, finance, to name a few — know how the visa process works.
Your company decides to give your job offer after they consider the sponsorship costs. Not before!
Plus, the chances are that as an international we were hired at a much more competitive rate (I didn’t want to say cheaper >_<) than the market.
Companies are in need of highly skilled workers because of the demand-supply relationship. So they’re as vested in your future with the company as you are.
So why do they raise that objection during the job offer and performance review?
Because it works.
We accept that objection and move on. The HR is just doing their job, and your manager will fight for you only when you help him make a case for yourself.
So how should you answer the sponsorship objection during the negotiation?
Use the Triple-A Technique.
Here’s a script you can use:
I understand that the company has to invest in my visa sponsorship process [AGREE]. [ASK] With the work I’ve done since joining the group, especially Project X and Project Y (specific results of star projects), the company has made a significant ROI on the costs involved with my visa sponsorship. How can we reflect the increased ROI and my improved performance on my projects this year, to the compensation going forward? [ATTENTION: Shut up and listen]
Mindset Barrier 5: I’m satisfied with my current salary.
When someone gives me this reason, I ask the question, “Are you being paid the market value for all the roles you play for your company?”
Then I shut up and wait for them to reply.
If they say yes, I give them a high-five and tell them that I respect their stand.
But what if they say “no” or “I’m not sure?”
I dig deeper.
“I know you own a <insert car name>, would you pay $5000 than the asking price to the dealer at the time you’re buying the car?”
Or, “Would you pay $5000 more each year for rent than the asking price from your landlord?”
We are going to negotiate a lower price for all of our essential purchases.
In fact, we pride ourselves on saving even a $1000 on a car purchase or apartment rent.
So then why are we satisfied with leaving more than $120,000 (see the top of the guide) on the negotiation table?
One, humans have a loss aversion. We prefer avoiding a loss (money going out of our pocket), but we don’t have the same tendency for a decline in gains (money coming into our pocket).
And two, we have some of the other barriers of not negotiating, and we cover them up for this reason to make ourselves feel better.
Trust me I understand. Been there, done that!
So then, why should we negotiate?
Benefit 1: It is the easiest way to earn more money doing what you already do!
Let me bring the graph up that I showed at the start of this guide.
Just by moving to a 5% raise instead of a 2% raise once, you raise your salary by thousands in the first year!
That is a huge ROI for your time.
Let’s assume you put 10 hours (2 hours for reading this long, detailed guide :D) in learning how to negotiate using the V-Negotiation system. By getting a 5% raise instead of a 2% raise, you earned $3000 more. You’re looking at a $300/hour earned.
Compare that with your hourly salary, and you will see that the return on investment is at least 10X more.
If you don’t know your hourly salary, here’s an easy way to calculate:
- Take your yearly salary (example, $70,000)
- Drop three zeros ($70,000 = $70)
- Divide this number by 2 ($70/2 = $35)
That is approximately your hourly salary.
We calculated the ROI in the first year alone. The ROI is skyrocketed if we take into account the earned income over the years, and the interest you earn if the difference is invested.
Benefit 2: Beyond economic benefit, you get Relational and Reputational benefits.
While writing this guide, I was struggling with how to articulate the other non-economic benefits of negotiating.
On the side, I was also getting feedback from my friends on an outline of this article, when my friend shared his story with me, and it fit perfectly with what I was trying to articulate.
Shashank, who is an MBA graduate from Cornell University was negotiating a job offer at a top management consulting company.
Here’s what he learned about negotiation in his master’s program:
One should always aim for three benefits at the end of a negotiation.
- Economic benefits
- Reputational benefits
- Relational benefits
So basically if at the end of the raise negotiation someone is unable to get the raise (economic benefits), that is not necessarily a failed negotiation.
I had this exact experience while accepting my offer with <management consulting company>.
If you do your conversations right, your manager or hiring manager is going to realize you know what your true worth is, you have the confidence to ask for it, and you have the skills to do so professionally. Later on in the year, when he’s looking for a person to do important work, they’ll think of you as the person with solid communication skills and confidence and people skills, etc. In this way, negotiating helps build your reputation.
And lastly, because of the negotiation meeting, you get this chance to connect with your hiring/manager and to tell them more about yourself, about why you’re worth that raise and in that back-and-forth, the manager shares their thoughts and experiences around it and at the end of the 30 minutes, you’ve built a new relational level with them as well.
This is all the theory I’d studied in class, but my experiment went quite well too.
I spoke with a partner at <management consulting company> while accepting my offer. I gave him 3 solid reasons why I am worth more. They didn’t agree for the raise, but before hanging up, he said this – ‘Shashank, I’m glad we had this conversation. 80-90% of our new hires don’t even try negotiating, and the ones that do usually don’t do it in a very professional manner. I’m gonna keep an eye out for you.’
So basically, zero economical benefit but tremendous reputational and relational benefits. I would call this negotiation a decent success.”
When you have the right kind of conversation (which we will learn in this guide), you get benefits that go beyond the economics.
I couldn’t have written it better.
Benefit 3: Negotiation is a skill that will help you in other areas of life.
Don’t tell my wife, but I use the negotiation skills I’ve learned in discussions with her as well.
And since I do it in the right way, even if I get my way or not, my reputation in her eyes and my relationship with her gets stronger.
Maybe I should share this with my wife 😀
All relationships require negotiation. Whether it is at work or home.
Jokes aside, think about the different situations in a day that you’re using your negotiation skills:
- You may need to work with your boss to make sure your tasks are aligned with the group’s goals.
- You might be working with a difficult colleague to get a process moving forward.
- Maybe you’re in the market for a new car, or a new house.
- You and your partner might be deciding on a destination for travel.
- You might have a decision to make on the new gaming system your child wants (my dad was in this spot multiple times >_<)
Each of these discussions is a critical conversation and having strong negotiation skills will help.
Benefit 4: Higher base salary can help while changing jobs.
When looking for a new job, what is the first thing that a potential employer wants to know?
Your current salary.
The best advice is to not give away your current salary. However, some companies can be pesky about not moving forward without that piece of information. If you’re interested in the job and want to see their job offer, you will give them this information.
In such a situation, having a higher base salary that you’ve negotiated over the years will help you. Typically, the offer comes at 10-15% higher than your current salary.
Stage II: Kick-off Meeting (6 months before negotiation)
Prepare your boss for a compensation review.
The worst thing you can do is to blindside your manager by calling a meeting and asking for a raise.
If you turn the tables, you will realize your boss doesn’t do the same thing too by giving you a performance review right at your desk at 1:52 PM on a random Monday (unless your boss is a lousy manager).
To increase your chances of having a successful negotiation, it is better to set the stage for a potential compensation review 6 months down the line.
With the contingency that you’re able to show results on the goals that you will set together.
Note: If you work for as a contractor in a company, then set a meeting with your manager at the contract house.
How should I set the stage?
#1 Write down specific, measurable goals that make your team look good
Let me stress on the point here.
Set goals that make your manager and your team look good.
In the corporate world, everybody has a boss. Even if you’re the CEO, you have a boss in the Board of Directors or shareholders.
The best way to convince your manager to give you a raise is to help them look good in front of their bosses.
So how do you set goals?
Great goals are specific, can be measured, and have a deadline.
- Bad goal: I will continue to work on my projects for the year.
- Great goal: I will complete Phase III of Project A by 30th March and Phase II of Project B by 25th June.
- Bad goal: Create a roadmap for potential expansion areas for our company.
- Great goal: By 15th April, I will present a roadmap of expansion areas in sub-industry X, prioritized based on revenue potential, market size, and cost.
Once you understand how to set goals the right way you need to think about the right goals. Goals that align with the responsibilities of your group and that assist your manager’s goals.
Each industry is different but to just give you a flavor, here’s a snapshot of some of my goals (from my engineer role and intrapreneur role):
- Present three ideas to improve the fuel economy of engine A by 3% using valvetrain technology. To be completed by 30th June.
- Improve the company’s yearly revenue by 16%. This involves generating 40 new leads, giving 18 new sales presentations and increasing our average order value by 13%.
If there is no ambiguity between you and your manager over what each goal means and how you’re going to track it, then you’ve set good goals.
So now the next step is to present your goals and tweak them based on your manager’s input.
#2 Ask for a meeting with your manager
Here’s a script you can use to set a meeting with your boss.
Hi <Insert boss’s name>, I wanted to thank you for your guidance in all my projects last year. The #1 thing I took away from our discussion is <Insert one thoughtful insight>. For the next 6 months, I want to focus specifically on raising my skillset and being a top performer for our group and company. To achieve that goal, setting specific targets is crucial for me and I would like your insight into this process. Can we set a 30-minute meeting on <Set date and time>? I’ve looked at your calendar, and that spot is free.The other alternatives are:
- <Alt time and date I>
- <Alt time and date II>
Will the <Set date and time> work for you?Thank you,<Insert your name>
You’re sharing how you were attentive to his feedback.By using this script, you’re signaling many traits of being a top performer.
- You’re expressing a desire to be better than average and want to make them look good.
- By asking for their insight into goal setting, you’re letting them know that you respect their inputs.
- You have worked on getting the details of the meeting date and time right by checking their calendar and also suggesting alternative dates.
It will be impossible for your boss to deny an initiative from their employee.
So now you have a meeting set, what do you say in the meeting.
#3 What to say during the meeting?
Here’s a script you can use at the start of the meeting. I use a timeline of 6 months for this example, but you can use a shorter time frame.
Thank you <insert boss’ name> for meeting me today.As I said in my note, I want to focus specifically on raising my skillset and being a top performer for our group and company.So I have prepared some specific and measurable goals for the next 6 months. It would be great to get your insights and buy-in.
Wait for your boss to respond and share your goals with them. Once you’ve decided on your goals, ask them for a compensation review at the end of the 6 months.
(Agree) Thank you for your guidance in helping me set specific goals.(Ask) If I can show exceptional performance with these goals, would you be open to a discussion around my compensation at the end of 6 months?
If they say yesIn most cases, they will say “yes,” because you’re putting the contingency of performing exceptionally well, and they are agreeing to a discussion and not promising you a raise.
You can answer this objection using the Triple-A Technique.
Great! I look forward to completing my goals and having a discussion with you.
If they say no, they will mostly say, “Since we had a conversation about your compensation recently, we won’t be able to review it in 6 months.”
(Agree) I understand that performance reviews are done yearly.(Ask) By setting these specific goals, I plan to make an above average contribution to the goals of the group and continue the momentum in the future. Based on my performance on these goals I would like to discuss ways in which the compensation can reflect the work I’ve done.(Attention: Shut up and listen)
Your manager will mostly agree to have a review at the end of 6 months.
In rare occasions, they might still say no. In that case, you can add it as a data point when you’re thinking about your future at the company.
If you’re stuck at a company sponsoring your visa, you might say, “My boss will never agree to this, and I can’t even change my job.” You can increase the timeline to a year. If you’re getting bad responses from your manager from years, you can weigh the option of moving to a different group within your company or look to change the job if your visa needs are met at the new firm.
Stage III: Prepare Scripts for Every Objection (5 months before negotiation)
What should I say when my boss says, “Not possible!”
“I can have a great performance review, but if I raise my compensation conversation and my boss says ‘No,’ I shut off and don’t know what to say next.”
Yes, I feel the same way too. What if my boss says no! What should we do!
We do what athletes do. Take my favorite sports person in individual sports, Roger Federer.
Roger played for 5 years before he won his first grand slam. He could have shut down his career anytime an opponent defeated him (ultimately saying “No.”). But he didn’t!
He continued to prepare for the next tournament, and the next one, and the ones after that.
Preparing scripts for a negotiation is making sure we have the firepower ready for the competition.
The Triple-A Technique
In a Negotiation, the Triple-A Technique is your north star. Every time you get stuck, use it to navigate the conversation forward.
To refresh, what’s The Triple-A Technique:
- Agree: Understand the position of your boss and the HR team. Empathy is key.
- Ask: State your “ask” (salary, shorter review cycle, vacation days) backed by research and performance.
- Attention: Once you state your ask, shut up and listen. Two things that are simple but not easy.
The reason you agree is to display tactical empathy. What is tactical empathy?
Why is agreeing with the person on the other side of the table important?
The reason is not to display fake admiration but to empathize with the other person.
The person on the other side of the table is a human too, and they’ve been in your position. They want the best for you. So when they share their concerns, it is important to understand them.
You can counter. It is critical to counter because that is where negotiations are won. But you counter with empathy.
It’s recognition of their perspective and articulating what you see in a strategic, even proactive manner.
So, what are the ways we can Agree with our counterpart:
- Validate their position.
- Label their emotion.
Validating their position means agreeing with their statement and going one step further by showing you understand what they say.
Let’s take a few examples:
- Boss: We don’t do compensation review before a year.
- You: I understand (agree). It is typical in our industry to have one-year review cycles for average performers (validate, while opening the door for making your case).
- Boss: We are limited by budget this year.
- You: Yes, I am aware (agree) of our budget this year, and I agree that budget constraints apply to the standard work of every team member (validate).
If you’re replying to a statement that is difficult to validate, mainly because you might not understand it, you can use labeling to understand the position more deeply.
If you are using a label, then don’t make an ask following that. Wait for your counterpart to elaborate on what you said.
- Boss: I talked to my manager, and the answer is “no.”
- You: It sounds like you’ve given this a lot of thought and were met with resistance. [Shut up and listen.]
- HR: We have an internal calculation to decide a raise in pay each year, and this is the most we will be able to give this year.
- You: It feels like there are multiple criteria involved in this calculation. [Shut up and listen.]
Wait for them to make their position clear, beyond saying, “That’s right.” Don’t say anything until they elaborate. Use the silence.
In both these cases, you’re trying to get a clearer picture of the deeper reasons behind their statement, so that you can counter with a better ask.
Once you understand your boss’s position, make the ask.
Growing up do you remember asking your parents for something and getting flatly denied?
(I hope you were not coddled as a child.)
We threw tantrums, gave ultimatums, but nothing worked.
Because there is an art to making the ask. You just can’t keep saying, “I need a raise,” over and over again and expect the outcome to be different.
Here’s how to make your case.
- Connect your counterpart’s objection with average performance and reposition yourself as a top performer. Back your statement by reiterating your performance.
- End with a calibrated question.
Focusing on your “top performer” status.
You will be doing months of work to show that you’re a top performer.
Once you validate your counterpart’s objection, connect that objection with average performance and reposition yourself as a top performer.
- Boss: We don’t do compensation review before a year.
- You: I understand. It is typical in our industry to have one-year review cycles for average performers (validate, connecting with average performance). Based on my presentation today, I’ve been able to perform at a high level (repositioning yourself as a top performer).
- Boss: You’re already earning the maximum salary for your job position.
- You: I understand that my salary is the market average for this position (connecting with market average). If you look at my work in <insert one or two specific project or results>, I’ve able to add value to our team beyond the typical responsibilities of this position (repositioning yourself as a top performer).
End with a calibrated question
End your ask with a calibrated question, not a closed question.
Ending your ask with a close ended statement such as, “That’s why I think I deserve a raise,” will not work.
It will be the same as me telling my dad “I deserve a PlayStation 3 as the newer games have much better graphics.” (True story. He told me to leave him alone as it was a stupid reason >_<)
So rather than making a statement, end with a calibrated question.
So what is a calibrated question?
Simply put these are limited to What, How, and sometimes Why questions only! There is something about the way what or how questions hit the brain that actually makes people stop… and think. A great side benefit of a well placed calibrated question is it puts the issue of solving the problem completely on the counterpart. We need them making decisions if we are to obtain their buy-in.
Here’s a list of calibrated questions you can end with:
- How can we adjust my base salary to reflect my perfect performance with my goals?
- What are the ways that my ability to take on additional responsibilities successfully be reflected in my compensation?
- What are the other ways, beyond base salary, that my overall compensation can be improved to match my performance? (golden for when there is no possible movement on the base salary.)
After making the ask, “Shut up and listen.”
“He just doesn’t listen to me anymore.”
How many times have we heard this dialogue in a movie or reality?
There is a difference in passively listening to your partner (while you’re thinking about what will happen in the next season of Game of Thrones) vs. actually listening to what your partner is saying.
Being a good listener applies to this corporate interaction as well.
That’s the last part of the Triple-A Technique — Attention.
This step is simple but not easy.
All you have to do is — shut up and listen.
Don’t say another word until your counterpart makes a statement. It may take them 5 seconds to reply or a minute. Embrace the silence!
Scripts using the Triple-A Technique
Let’s take the most common objections of employers or HR and prepare scripts using the Triple-A Technique.
You can use these scripts below as-is, and you can supercharge them if you add specifics related to your situation. Like your goals, projects, tasks, and your performance towards those.
Common objections (irrespective of company size and type)
An objection makes us feel that there is no way forward. I was taught to reframe an objection to think of it as a start to the negotiation.
“Our budget doesn’t support a higher raise.”
“[Agree] I understand that we have budget constraints this year in deciding the raise for every team member. [Ask] Based on my performance review, I’ve been able to perform exceptionally well on all the projects assigned to me and fulfilled additional responsibilities to strengthen our team goals. How can we reflect my performance and going above my normal duties in my compensation?” [Attention]
Your manager is either giving this reason because he has seen it work (most people fold at this objection) or they are genuinely affected by the budget. In this case, you have to present yourself as a top performer for which an exception should be made.
Remember your manager is in your team, he may need a set of reasons when talking to their manager of the HR team to show that you’re deserving of an exception and a stretch in their budget.
“We don’t do a compensation review before a year.”
“[Agree] I understand. It is typical in our industry to have one-year review cycles for average performers. [Ask] Based on my presentation today, I’ve been able to perform at a high level by completing <insert goal 1> and <insert goal 2> well above the success level we set. What are the ways my salary can be adjusted based on the impact of my performance on these projects?” [Attention]
If your manager is playing within the boundaries set by the HR, then they’re again looking for reasons, or credibility markers, to convince the HR that you deserve a mid-term raise.
“You’re already earning the maximum salary for your job position.” Or, “We give all our employees in <insert your position> this much.”
“[Agree] I understand that our company has a standard salary for this position. It also falls within the market average for the <insert your position> position. [Ask] If you look at my work in <insert one or two specific project or results> I’ve able to add value to our team beyond the typical responsibilities of this position. How do you think we can adjust my salary to match the additional value I bring to this role?” [Attention]
This is a standard objection where you have to convince your manager that you’re not an average performer, and you take responsibilities beyond your official position to make the team look good.
“I can’t give you a raise right now. Wait a few months.”
This one needs more probing to understand the reasons behind the wait. So you can use a label to dig deeper.
“[Agree] I understand. [Label] It seems that there are deep reasons behind moving this discussion down the line.” [Attention]
Mostly your manager will give an objection based on the budget, company policy, or changes looming within the company management.
You can then say.
“[Agree] I understand that you have a constraint around <insert the objection that they gave>. I also want to reiterate my commitment to our team and the company during these challenging times. As I presented to you that the range of salary for this position is $X – $Y. My performance on the goals and the experience I add to our team place me to the top of my peers in this role. What are the ways we can close the gap at this point?
“I can only offer you a much smaller raise.”
In most cases, your manager wants to give you a small amount of what you’re asking for so that the both of you can move on.
If there is still a long gap between your salary and the market range for a top performer, you can stick to your guns on pay one more time.
“[Agree] Thank you for considering my performance and increasing my raise. Based on the market range for this position, there is still a gap between my salary and the market. Plus, by building stronger relationships with our key partners within the company, I’ve been able to add strategic value to our team. How can we close this gap in my compensation based on the market value and the strategic value that I’ve been able to add? [Attention]
If you sense your manager is just not willing to move further, (negotiation an art too), you can ask for other benefits beyond salary (see scripts below). It is not the end of the game.
Even if you get the max raise you were expecting, you can still ask for benefits that improve the team — such as additional training.
Objections unique to large traditional companies.
“Based on our standard procedures we can only give you a 2% raise.”
This objection is a standard response from the HR team. They have the leverage of being the decision makers and having all the knowledge of who earns what. And with that leverage, comes uncertainty from our part and we lose confidence in countering this objection.
To counter this objection, you first have to understand their side. An HR team has policies and procedures in place so that there is not a significant disparity between one person and another.
However, there is a secret that top performers know. Which is — if you’re able to show that you’re an asset to the company beyond an average employee, exceptions can be made for you.
Second, you can use a label to understand more of this “standard procedure.” Why? So that you can use specific credibility markers to convince your counterpart to make an exception.
“[Agree] Sure, I understand the importance of having standard procedures because you don’t want compensation disparity between your employees. [Label] It seems that a lot of factors are involved in this calculation.” [Attention]
You may already know what these factors are, but it is important for them to mention it so that you can use them in the next script.
Let’s say they say years of experience, responsibilities of the position and yearly performance.
“[Agree] I understand those factors are taken into consideration, and they fit well to the performance of an average company employee. [Ask] I’ve been able to show above-average performance in all my projects over the last 6 months. In Project A, I worked with highly experienced peers and was able to add equal value. And in Project B, I went above and beyond the responsibilities of the job position to strengthen our team’s performance. How can we reflect that top performance in my compensation?” [Attention]
“I’ve talked to my boss / HR, and they won’t agree.
This is an objection you want to avoid.
In this situation, your manager talks to their boss and the HR team and they are not able to make a strong case for you.
The way you can avoid this objection is by making sure your manager is in your corner and has all the tools necessary to bat for you.
Step 1, follow the Negotiation System.
By setting your goals together that make them and their team look good, you’re making sure they’re in your corner.
You also crush your goals and provide them the ammunition (reports, salary research) to make a case for your top performance.
Step 2, you can ask them to make sure they will fight for you.
At the tail end of your negotiation conversation, they may say, “Let me think about this and come back to you.”
Ask them, “It is standard procedure in an organization of our size to get the buy-in from the management and the HR team on compensation changes. Would it be the case in this situation too?”
Manager, “That’s right.”
Or, at the tail end of your conversation, they might say, “You’ve made good arguments about increasing your salary, let me talk to my manager and the HR team and get back to you.”
In any of the above two cases, you can say, “I’m happy to hear that you will bring up my performance and market research with your manager and the HR team. I believe that I’ve provided the right tools for you to have a data-backed conversation.” (ask that as a question).
You want them to say, “That’s right.”
You, “Great, I’m looking forward to hearing back from you.”
But what if they say, “I don’t think they (your boss’s boss or HR) will agree to it.”
Then it’s time to use a label to understand what those objections might be.
You, “It sounds like there are some particular objections that you feel might come up.” [Attention]
Your boss will give you one of the other objections, and you can use a particular script to convince them.
Okay, so now your boss is on your side, they have your performance reports with them.
“I talked to the management team and made the case that we built. But I’m afraid they cannot give you a higher raise.”
If you’ve followed the negotiation system, the chances of this happening are low.
What you can do next is to understand the objections.
The first step is to ask your manager, “[Agree] Thank you for taking my position to the management team. [Calibrated Question] What do you think were the reasons the team was not able to make a change this time?”
They will give you all the objections that the management had. Next, you ask them if it is okay to set up a meeting with their boss, not to ask for a raise, but to learn how you can improve for the next performance review.
“[Agree] I understand. [Ask] I am committed to being a top performer and getting recognized by you and our management. Would it be beneficial for me to have a chat with <insert name of your boss’s boss> around how I can improve for my next performance review?” [Attention]
They will say yes. Set up a meeting with your manager’s boss and prepare a report of your performance that answers the objections your boss shared with you.
We are still not going to talk to them directly about the compensation, but this report will make an impression that you’re willing to improve.
In the meeting, you can start by saying, “Thank you for meeting with me. My biggest goal was to become a top performer for our team, and I’m sure <insert name of your manager> talked to you about it. I want to continue to accelerate my goals and add more value to our team. What areas do you feel I can improve my performance for the next compensation review?” [Attention]
Once they talk about the areas you can improve (which will be tied closely to the objections they had), you can say.
You’re trying to show that you’re proactive and open to critical feedback. Which are credibility markers of a top performer. So even though you missed out on this compensation review, you will be in a better position for the next one.
And who knows, you might even get a change in compensation this time after a conversation with your boss’s boss.
You can have the same conversation with the HR representative too.
Case Study: Ajay
Ajay (name changed) works for a large, traditional F500 company with over 220,000 employees.
He got a 21% raise 3 years into his career by strengthening his relationship with his manager. And then a 15% down the line by using a competing offer.
I started my career at a salary well below market average, and for the first three years, I had a 0% raise in salary.
The times were tough, and I didn’t know how to ask for a raise in a big company with a thousand moving parts in the decision-making process.
In the third year of my career, I started hearing about how students out of college were getting 10-13% more salary than me.
By this time, I had developed a strong relationship with my boss. He was a mentor to me, and it gave me the confidence to approach him with the latest market data.
I brought him data from salary data websites and asked him for a salary that matches the market:
Ajay: (Boss), in our 1-1 today I wanted to discuss the value I’ve added to our team over the past three years. I’ve been a consistent performer, always on top of my commitments and I’ve gone above my normal duties to assist the research team to complete the testing of our component. As you can see (showing the market data), the market pays 20-25% more than my current salary for this role. Is there a way we can close this gap?
Boss: Sure, let me talk to the management and get back to you.
I had a 21% raise by the end of the day.
(Varun: In a big organization, if your boss is in your corner, and ready to fight for you, then you both are negotiating with the HR team and its policies. Plus, showing market data gives your manager the ammunition they need.)
(But what if you and your boss don’t share a close bond?)
After the 21% raise, things fell back to where they were. I was getting the standard two percent raises, but it didn’t match the hard work I was doing.
The team had changed. My manager had moved on, and I shared a normal relationship with my new boss. We were one person short on our team, and it became my responsibility to carry the workload of an additional person.
When I asked for a renewed compensation based on the new workload, my ask always fell on deaf ears.
I didn’t feel appreciated, so I was starting looking for other job opportunities. When I received an impressive offer from another company in the same industry, I was ready to take the offer and talked to my manager about it.
Ajay: (Boss), as you know from some time I am taking on increasing responsibilities and tackling the complex challenges our team faces. We have discussed ways in which my compensation can be adjusted, but the process hasn’t been taken further by the management team. I have a job offer that I am seriously considering, and it offers a 20% hike for the same role I am playing with our team. I just thought I would give you a heads up and understand what the process will be at this point on.
Boss: Yes, you have been working efficiently and keeping our team on track. I was hoping that your compensation would be raised but I have pushback from the management. Let me talk to them again and give me a few days before you finalize your decision.
Within a few hours, I had an email from my boss’ boss and the director of the group. It was made clear to me that the management doesn’t react to competing for job offers (which was different than what I had heard from an HR rep and my peers), but we are willing to make an exception.
In a couple of days, I was told that I had received a 15% raise.
The next day when I was talking to my boss about a competing offer and how it was not a play to get a high raise he said, “Don’t worry about it Ajay, I have used the same technique twice already.”
If you’ve given your best shot but still fall short of getting a raise year after year, then you have to think about your future at the firm. Or look at a lateral position in the company (especially if you’re an immigrant in the country).
Objection unique to immigrants
“We have your immigration costs to consider.” Or, “We have to go through your sponsorship process, and it is costly.”
If you’re like me, this objection must have deflated you in the past.
You know you’re an immigrant who requires sponsorship, and the company has significant leverage. However, as an immigrant, you have leverage too — especially if you’re a top performer.
The reason a company hires an immigrant is if the demand for a particular skill is high in the market and the supply from the local market is low.
So if you’re supplying that skill, in a high-quality way, you have leverage too.
So it is time to own up to your immigrant status and present the added value you bring to the table.
“[Agree] Yes, as an immigrant I’m aware of all the challenges that are involved in sponsorship and the costs involved. [Ask] It is this awareness that gives me the drive to perform beyond my abilities for the company. With Projects A and B, I’ve been able to bring skills to the table that are rare in our industry. How can we take the additional value I bring to the table, plus my performance in the past 6 months to adjust my compensation going forward?” [Attention]
Objection unique to small companies and startups.
“We are not a big company, so we need to offset the higher risks by keeping salaries manageable.”
This is a genuine objection (almost every time).
In a startup — especially bootstrapped — salaries are a direct cost. The management team is acutely aware of these costs because they want to continue to expand their business (by reinvesting profits) and continue to hire more people.
It becomes vital then to make a case for how you’re adding monetary value to the company’s bottom line. Your biggest leverage will come from either helping the company reduce costs or increasing revenue.
“[Agree] I understand that constraint on a startup like ours. Which is why helping the company grow is one of the objectives of I use for all my projects. [Ask] With Project A we have been able to develop a strategy that reduces cost by X% and with Project B we’re developing a product that will increase the company’s bottom line by Y – Z%. What are the ways we can reflect these improvements in the compensation?” [Attention]
What if you work as a contractor for another company.
Working as a contractor is common for immigrants. Company X hires Company Y to supply the workforce they need. Company X pays Company Y, and the Company Y pays for an employee’s salary.
Company X is paying twice or higher than the average market rate for this employee. So asking for a raise becomes trickier because you are negotiation with both companies.
In such a case, your relationship with a contracting company becomes a data point in your briefcase technique (a technique I learned from Ramit Sethi, more about this in Stage IV of the V-Negotiation System). Here’s a script you can use to get your contracting company (Company X) on board.
“Hi <insert manager’s name>, I’m planning to have a performance review and compensation discussion with my contract company (Company Y), and I was wondering if I could get your feedback on my performance. I will use this feedback in the review with my company.”
In the meeting with them use the briefcase technique (Stage IV) to show how you’ve added value to their team. Then listen to their feedback on your performance.
After the meeting summarize their feedback and get their approval of the summary.
Use this summary as a data point in your actual negotiation with the contract house.
How to move on to benefits if there is no further movement on salary
During the compensation review, there will come the point where you can feel that there will be no more movement on the pay.
At this point, we don’t want to bite our nails and have an awkward end to the conversation.
You can ask for improvements in the benefits offered.
Even if your salary was increased by a high percentage, you could still ask for better benefits.
Initiating a review of the benefits
“[Ask] Thank you for being open to talking about my compensation / Thank you for adjusting my raise this year based on my performance. Would you be open to talking about benefits?
Scripts for different benefits
A. Shorter review cycle [3-6 months]
- Reason to Ask: It is very easy for the management team to agree to it. They agree with another conversation, not a raise. You get another chance to position yourself as a top perform and not have to wait another year for improvement in compensation
- Script: “I understand that there is no more room to increase my salary. Once we set some ambitious performance goals for next six months, and if I perform exceptionally well, would you open to a compensation review discussion?”
B. Vacation days
- Reason to Ask: I love vacations. I’m sure you do as well. It helps you rejuvenate your body and mind (soul too if you’re into it).
- Script: “Thank you for the movement on my salary. As you can see, there is still a gap between my salary and the market range for this position. I understand that the current raise is the best you can offer. What are the ways we can use vacation days as a medium to close this gap?”
C. Paid training
- Reason to Ask: Paid training can add to your skillset and be further proof of how you’re an asset to the company. Training doesn’t need to be related to technical skills; it can be training to be a better presenter or be a better leader of projects and for a future in management.
- Script: “Thank you for encouraging me to take goals outside my technical responsibilities. In my conversations with the management team, I realized that sharing your work with a wider audience is a key part of this job. How can I take paid training courses that are a benefit to me as well as help me add value to our team?”
D. Be part of a rotation program or strategy teams
- Reason to Ask: Rotation program is where the company puts you in different groups within the organization. This program helps you get varied experience and knowledge of the capabilities of the company. Participants of rotation programs become technical specialists or part of the upper management team.
- Script: “I agree that you want to keep the salaries manageable. The last six months have shown me that our company has diverse functions which can round out my skill set and be more valuable to the company. How can I be part of a rotation program that can be mutually beneficial to the company and my career?”
E. Flexible work schedule
- Reason to Ask: Flexibility options change vastly between groups within the same organization. They also depend on your relationship with your manager. So if you can ask for work from home days or 4-day workweeks, you can use it improve your work-life balance.
- Script: “A big part of closing the gap between my salary and the market is by adding benefits to my total compensation. One of these benefits is flexible work schedules. What are the ways we can bring in that benefit to improve my total compensation number?”
These benefits are not the end of the list. You can ask for:
- Equity or company stock.
- Better title: Having a title can go a long way. Especially if you’re able to leverage that for a new job.
- Credit for gym memberships and other perks.
Stage IV: Positioning Yourself as a Top Performer & Preparing Your Briefcase (Kick-off meeting to the Negotiation Day
Before we dig deep in this section, let’s place us on the V-Negotiation System.
- We have built our mindset, and we are ready to ask for a raise.
- You initiated the kick-off meeting, and the manager has signed off on your goals and your intention to have a conversation about compensation.
- In your arsenal, you have scripts for every objection that the company can raise during the negotiation.
Now it is time for completing the goals you’ve set and build your case.
Positioning Yourself as a Top Performer
The first time I heard about Top Performance is from my mentor Ramit Sethi. In this article, he speaks about how top performers use credibility markers to separate themselves from other job seekers.
Credibility markers are characteristics that a person has that display how they are better performers, team members, learners, and givers than the average.
Michael Jordan is the top performer personified. Not only was he better at the performance of his work than his peers but he had a strong work ethic, was willing to learn, and open to feedback from a coach. We don’t need to be the MJ of the industry, but we need to be the MJ for our team and the company.
Here are some of the credibility markers that top performers display in their jobs:
- Top performers have a clear understanding of the responsibilities of their group and how they fit in with the goals of the company.
- Top performers step forward to accept more challenging projects or solve a complex problem facing the team.
- Top performers set specific, measurable goals and get the buy-in from the decision makers.
- Top performers monitor their progress on the goals and are proactive about communicating potential problems.
- Top performers seek constructive feedback from their peers, direct reports, and managers.
Completing your goals is just table stakes. The key is to communicate to your management that you are a top performer.
A way to communicate your performance is by using the Briefcase Technique.
Case Study: David
David has mastered the art of positioning himself as a top performer and backs it with the results he gets for his team.
His background has typically been working with high caliber “A-list” venture capital funded technology companies.
Here’s David explaining how he sets himself up to be a top performer for his team.
First, while working as an employee, I do everything I can to proactively stand out.
For example, I will always ask to work with the most high profile, difficult companies that provide the most revenue for the firm.
Resolving these situations puts you in the driver’s seat to set the stage for asking for additional money. Especially when you can quantify metrics, value, and ROI.
Second, I always set specific and measurable goals with my managers. At my last company, I got my manager to agree that if I accomplished three key performance indexes within 6 months time frame we could discuss a raise. I crushed those goals but the company was acquired, and the process fell off.
Finally, I also consistently work on maintaining the best relationship with our vendors and clients.
After the acquisition of the company in my last job, I shared some of the challenges with a vendor I had a great relationship with. After hearing me, they casually mentioned, “Why don’t you come join our company?”
Since I already knew what I wanted, he didn’t even balk at the salary. I also negotiated one month of up front PTO. This way I could take off after 1.5 months of work to get paid to spend time with my son. It was essentially a 40K increase in salary.
(Varun: If you are a top performer, you will be able to ask for more value as you deliver more value.)
Preparing Your Briefcase by using the Briefcase Technique.
The Briefcase Technique is also something that I learned from my mentor Ramit.
It is the physical act of bringing a briefcase to the compensation review, putting the briefcase on the table, and removing reports that support your performance and asks.
I’ll let Ramit talk about it in more detail.
This technique can create a positive impact on the negotiation.
If you can pull it off with confidence, awesome!
For some, however, it might be a bit weird to bring an actual briefcase to a raise negotiation.
In that case, you can carry a digital briefcase. Most of you are used to taking laptops to meeting and presenting a slide deck. We can use the same method to show our digital briefcase of performance reports.
So what are the digital documents you should carry in your briefcase?
Your briefcase will have three types of documents:
- Market data for salaries in your job profile and company type. (Screenshots, or reports.)
- Performance data such as results, project reports, team feedback, the impact on team goals, and impact to company goals. (Slide deck or progress report.)
Step IV-A: Start researching market data to determine where you are.
We millennials are so lucky that we live in the age of technology because finding market data is so damn easy!
There are multiple ways to find this data:
- Mine data from websites such as Glassdoor.com, Salary.com, and Payscale.com. There are other websites you can check out as well, but these three should suffice.
- Look for salary surveys in your industry by industry-specific organizations. For example, for the automotive industry, the Society of Automotive Engineers (SAE) comes out with a salary survey every two years.
But why is this information valuable?
- It shows that you did your research. You’re not just waking up from your slumber and asking for the first number that comes to mind. If you know your worth and are ready to back it with research and figures the company values you highly
- In today’s economy, if you’re a top performer, the company values you a lot because there is competition in the market. In this contest, companies take great care in making sure that they have salaries that are comparable to the market.
For example, let’s say you want to look for the salary of program managers in the Detroit area.
If you go to Glassdoor.com and do a search, on the top of the page, you will see the Average Base Pay.
As you have positioned yourself as a top performer, you can note down two data points — the average pay ($90,390) and the “high” salary ($126,000)
As you scroll down on the page, you will get the average salary based on the company type. The data by a company is critical because you use the name of the companies to highlight what a competitor pays.
Now, based on this information, you have multiple data points, and you can now modify your two numbers — average and high.
Based on these data points, and where you fall within the spectrum, you can use this range as a yardstick during the compensation discussion.
Bonus: Data points from your network:
I know what you’re thinking.
It is super weird to ask a friend their salary. Even among close friends, it is an odd topic.
You don’t want to ask for their salary, but you can still validate the range that you have calculated using the market data.
You can ask your friends or mentors who have either moved to a different industry (making it easier for them to share this information) or are more experienced than you (again, they are more willing to share salary information).
Here is a simple way you can ask the salary question.
Hi <insert name>, I was researching the average market salary for <insert job position> in the <location> area and my research shows that the range is from <average range in dollars> to <upper range in dollars>. Based on your experience in a similar job position, do you think this range is what the market pays or are there any offsets to the number I just shared?
Salary is just a starting point
Often, we will stop calculating our benefits at salary and feel that the other benefits that the company offers are not valuable.
No matter your company size, big or small, you can ask for other benefits.
Here are the most common benefits that can be negotiated (and the scripts to ask them are in Stage III of the V-Negotiation system):
- Faster review cycles (6 months instead of 1 year)
- Tuition or professional development reimbursement
- Industry related skills, software skills, presentation skills, anything that helps the group and the company
- Work flexibility
- Work from home, Timing choices such as 40 hours in 4 or 4.5 days.
- Extended vacation
- Stock options/Equity
- Transportation and gym reimbursement
- Better title
Step IV-B: Build your performance presentation.
In addition to the market data, you need to show that you’re a top performer.
There are different types of performance data you can gather for your briefcase:
- Results specific to the goals you’ve set in your kick-off meeting with your boss.
- An in-depth focus on the impact of your work on the project.
- A high-level focus on the impact of your work on the company and team goals.
- Ask team members and seniors for feedback on the work.
- Use the feedback to create a testimonial and ask each team member’s approval.
- Build mentor relationships:
- Every company needs inter-departmental coordination.
- Show proof that you asked and implemented advice from senior employees/peers of the company from different divisions.
Different data points without a common message can get lost easily.
In our performance review, we must make sure that the data is connected to a central message.
Which is, “My performance has helped us achieve our team goals, supported the company objectives, and improved our client performance.”
The client can be an external person/entity or an internal team within the company.
So how can you use the data to share your message? Ramit Sethi shares a few questions you can ask yourself while preparing your briefcase.
Some sample questions from the article are:
- Have you delivered specific results? Which ones? Estimate how much they were worth.
- Has your communication improved? How so?
- Are you more efficient than before? How do you know?
- Do you know the business better? How does this translate to the company’s bottom line?
- Have you developed new skills? What kind?
We can use these above questions to link the data to the message.
For example, let’s say an engineer uses a simulation tool to test a car engine and builds a report of areas where a car engine should not run. So when the company goes into testing, they can avoid running the engine in that area, thereby saving costs and production delays.
In this case:
- You have delivered specific results, and you can estimate how much it is worth to the company to avoid testing costs and engine breakdowns.
- You can help the testing team with these results. Improving inter-departmental coordination.
- You have developed new skills — a new way to test car engines.
You know your industry best, so you will be able to find patterns in your data once you start asking yourself these questions.
Put a bow on the presentation with an element of looking ahead and future steps.
Add an element of looking ahead to the presentation you share to show your manager that you’re committed to adding more value to your team.
To look ahead, we can use Ramit’s article on how to prepare best for a performance appraisal.
Sample ideas for the future steps from the above article are:
- Maybe there’s a new project you could lead?
- Maybe you’ve got an idea for a system that could streamline communication?
- Maybe you’re willing to get additional training and certifications to take on more responsibilities?
- Or any other ideas you have that could help your employer out.
Once you have some ideas, be proactive in getting some foundational learning on those topics before your review and present them during the meeting.
At this point I want you to take a moment.
What if we turn the tables?
Imagine being the manager and you have an employee who is trying their best to make you and your team look good. They have worked hard on achieving their goals and went above and beyond their regular duties to make your team successful.
How would you feel?
That’s how we want our manager to feel after we give them the presentation in the compensation review.
Stage V: Practice Practice Practice — Perfect! (1 month before negotiation)
We’ve reached the final step in the Negotiation System before the Negotiation Day.
You will notice that when we reach this point, we have already front-loaded 80% of the work, and we haven’t even stepped in the room. The extra preparation is what separates us from the average performers.
Just like you can’t expect a football team only to read the playbook and win games, you can’t expect to have a positive negotiation outcome without practicing.
You might roll your eyes regarding this step and say, “Ya ya I will practice,” and not practice until the last moment. I once skipped this step and fumbled through the entire negotiation even though I knew the exact script for each objection. You don’t want to put all your efforts down the drain.
Fortunately, there are simple ways to practice that suit each personality type.
Tip #1: Practice in front of the mirror. It is awkward but effective.
Let’s do a test.
If you’re at home, at work, or in a cafe reading this, get up and go to the washroom. Look in the mirror and introduce yourself out loud.
To get the maximum impact of this step, stop reading and do this quick test, I’ll wait.
Are you back?
What did you experience?
First, you might have noticed your body language while introducing yourself. Second, you maybe noticed your tonality. Third, you may have noticed places where you got stuck while delivering the introduction.
Am I right?
That’s what practicing in front of the mirror does. Without practice, your answers will be lackluster and low in confidence.
Take your prepared scripts from Stage III and go in front of the mirror to practice your answers. You will be more confident, and your body language will match the words coming out of your mouth.
Tip #2: Practice in front of a camera and recording yourself.
You can take the previous step further by recording yourself.
Don’t get stuck on how to setup your video equipment, or worry about whether to use your phone or a DSLR. Choose the easiest option.
The objective of the recording is to critique yourself and test different responses. You’re looking for smooth communication of your ask (no weird hesitations) and a positive body language (upright shoulders, smiling, relaxed eyes, and confident tone).
Tip #3: Practice with a buddy.
Remember a time when you wrote a lengthy report or an essay. You proofread it thrice and made all the grammatical and stylistic corrections you could.
You made sure that there are no mistakes and then you showed it to a friend, and they were able to point out a few more errors.
You’re like, “What! I completely missed this small error!”
We have blind spots and since you’re so invested in preparation that you can sometimes miss the most obvious things.
So practice with a buddy. Just one caveat, make sure you select the right person. A person who is a top performer like you, and has invested (even a small amount) in getting better at negotiating a raise.
You can ask them to play the role of your boss. At the end of the roleplay, you can ask them some questions like:
- How convincing was my positioning to you? Did I come across as a top performer?
- How was my body language? Was I smiling, relaxed, and calm in the conversation?
- Did you ever felt like I was adversarial towards you?
Yes, I know this seems more work than you have done in the past. That is the point. It’s like your confidence when you’ve prepared for a test vs. you haven’t. The result will be as different as night and day.
Case Study: Claudia Telles
Claudia works for a company with 12,000 employees in the healthcare industry. Claudia was taking a lateral position internally and was at the stage of negotiating a raise in her salary.
I was nervous because in the past I had failed at negotiating my salary.
I wasn’t where I wanted to be financially, and I knew I was worth more than what they were paying me.
In the past, my strategy was to “wing” the conversation, and I would know at the time what to say. Sad to say, my strategy failed numerous times. I knew I wasn’t good at negotiation and I knew I was being underpaid.
So this time, I did things differently:
- I had video and audio recorded myself.
- I wrote down and practiced my answers.
- I talked to a few people who had successfully negotiated their salary.
- I had read books on negotiation.
I felt a lot more confident in my ability but still nervous about the outcome.
To calm my nerves, I over-prepared for the negotiation. I practiced my body language, what I was going to say and how.
I reached out to people in the company that gave me some insight into the role, challenges, and pay.
Finally, I researched the market for the salary range, and I created an achievement portfolio to showcase my ability to address their challenges and concerns.
I got a $30,000 salary increase.
Stage VI: Negotiation Day
Okay, the scripts are great, but which one should I choose first and how should I start?
Yes, even though you have all the knowledge it can be overwhelming to think about what to say when to say it, and how to say it.
So let’s talk about what to say in the meeting.
Your manager enters the meeting room.
Remember, you’re meeting with your manager. The person you talk to multiple times a week.
So first relax, have a wide smile on your face, and indulge in some small talk.
“Hey <insert manager’s name> how are you today? How was your weekend?”
Add your own experiences to the topic and transition into the briefcase technique.
First, show your performance presentation.
You want to use this part of the meeting to position yourself as a top performer using the presentation and report developed in Stage IV of the V-Negotiation System.
If we hit the credibility markers top performers display, we can use it as leverage in the compensation review.
Once you end the presentation, don’t jump directly into the compensation discussion. Use “attention” and see how your manager or the HR representative reacts.
How to initiate the compensation discussion?
Once your manager has given you feedback, continue with the briefcase technique and use the market data to initiate the compensation discussion.
So <Insert boss’s name>, As you can see, I’ve performed well [exceptionally if applicable] on all my specific goals and received amazing feedback from my seniors and peers. In some cases, I’ve gone above and beyond the typical duties of this position.(Short pause, wait to see if they react affirmatively).(If your current salary is below market data “average.”)Based on the market data I’ve gathered for my position and our company type, page 4 in the report, you will see that there is a lot of room for my compensation to grow, to match the value I bring to the company. Would you be open to discussing ways to close this gap? (Shut up and listen.)(If your current salary is above “average,” even close to the “high.”)Based on the market data I’ve gathered for my position and our company type, page 4 in the report, my salary is consistent with an average employee. However, I have shown a track record of high performance and taken responsibility for a senior position. Can we discuss ways where we can reflect my performance in my compensation? (Shut up and listen.)
Now you’re off to the races. Based on the specific objections they have, you can use the scripts we developed in Stage III and practiced in Stage V to navigate your conversation forward.
Stage VII: Review and Return (after negotiation).
You will have multiple opportunities to use the V-Negotiation System.
After the negotiation has ended, thank your boss for the opportunity to discuss the compensation.
If you got the raise you were looking for:
Thank you <insert boss’ name> for giving me a significant raise. I am energized by the efforts you lead in presenting to the HR and the management the value I bring to the team. I will continue to work on being a top performer for the team and our company.
If you didn’t get the raise you were looking for:
<Insert boss’s name>, I want to thank you for the opportunity of reviewing my compensation based on my improved performance. I’m committed to accelerating my growth for our team and company. The reasons that limit you to making a change to my salary at this point are well taken. What would be a good time to discuss my compensation again if things change?
For your next negotiation, think about what went wrong and how you can use the V-Negotiation System better next time. You will have many chances of revisiting your compensation in the years to come. Take each opportunity as a learning experience.
Kudos! You’ve completed the V-negotiation system.