How I Earned a 36% Raise
“That’s impossible,” my recruiter boyfriend said when I told him the salary offer for my new job. “There’s no way you can get a $15,000 raise at your income level.”
Actually, my raise at my new job would be $17,500, or 36% extra of my previous salary. It was enough to save an extra thousand a month, after tax. It would bump me up into a new tax bracket. And it was long overdue, after years of being underpaid.
The First Negotiated Number Matters
I didn’t negotiate well on my first job, and it would haunt me in every other role I applied for. The recruiters wanted to know what I earned now, and would add 10% on top of that- not much. It was a struggle to get meaningful pay increases.
I now know a secret to negotiating, after having negotiated hundreds of settlements in my line of work, insurance claims. The first number you give matters. It forms what is known as an anchor. Too low, and you’re never going to be able to get the price up, no matter what you do in subsequent negotiation rounds. Too high, and you have a lot of room to come down if you’re bluffing. This is why you never want to give the first number; you don’t want to be the one setting the anchor.
If you are forced to give the first number, in a salary discussion, it should be a range. Your minimum salary (taking a raise into account) should be the lowest number. Your dream salary should be the highest number. You’ll likely get something in the middle. My next salary negotiation will be for $80,000- $90,000.
You Have to Switch Companies to get a Meaningful Raise
I have learned this from my recruiter fiancee. Every time he has been let go, he has obtained a better job at an increased salary. Here I was hopping from job to job within the same company, staying loyal, and earning 5-10% raises. Staying within will rarely get you a big raise. They already know you’re not going anywhere, and they are not as competitive to hire you.
When you apply, consider external jobs. If a recruiter is searching externally, they are willing to pay a premium to entice you to come over. Don’t forget to mention all your bonuses, credits (ie fitness credit), and other benefits (ie education tuition), so that the recruiter will present a strong offer to cover all these extras.
Nothing Beats a Confident Bluff
I am not above bluffing when it comes to a settlement negotiation. The other party is going to negotiate from their best position, so why don’t you as well?
Adding time as a factor can get things moving along. Let them know you have other interviews or offers. Are you going out of the country for a few weeks and will be unreachable? Let the recruiter know. My fiance has rushed to get job offers out because he didn’t want to “lose” a good candidate.
This was the reason for my success when I negotiated a 36% higher salary. I overstated my previous salary. Was it wrong? I don’t think so. The company went through my pay stubs and could have called me on my bluff at any time. However, they either did not catch it, or felt it was not worth saying something. By overstating my previous salary, I created a higher anchor, which left it to my recruiter to create an offer to entice me.
When I got my higher job offer, I was happy for weeks afterwards. I kept thinking to myself, that very soon I’d be earning $17,500 more. That’s insane! It was this job and raise which allowed me to get serious about early retirement and saving. Since my work retirement accounts are a percentage of my income, earning more means my company was matching more in my RRSP as well. Consider how to negotiate a higher salary the next time you look for a job. It’s worth pushing to see how high you can go. If you are unsuccessful, you still have your current job.
How will you earn more in 2018?