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What is salary negotiation? |
A salary negotiation is a conversation between you and your current or potential employer regarding the salary (or rate of pay) for a specific job. The ideal outcome of this conversation is an agreement that both parties feel is fair. Salary negotiation is an agreement that considers the employeeâs qualifications, experience and value to the organization. The employer considers many factors, including budgetary considerations and alignment with their compensation structure.
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Salary negotiation is only one element of negotiating a job offer. In addition to salary, a companyâs compensation structure may include other benefits (e.g., health insurance) and perks (e.g., flexible working hours). Sometimes, you may wish to negotiate other benefits like these (e.g. vacation days, remote work flexibility, or a signing bonus) to offset a salary thatâs less than what youâre hoping for.
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Why negotiate? |
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Negotiating a fair salary before accepting a job offer can set you up for success in the long term because your future performance or cost-of-living based salary increases often build on your initial salary. By deciding not to negotiate an initial job offer, employees can end up being under-compensated by approximately 10 to 20 per cent (Back & Laschever, 2003). In many organizations, salary increases/raises are calculated from an employeeâs base salary, which means that negotiating at the time of a job offer can significantly increase earning potential over a lifetime. |
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Beyond the financial benefits, negotiating is important to establish your sense of worth to yourself, the employer and the work you do. Being fairly compensated has been linked to higher rates of job satisfaction and productivity (Sitorus & Hidayat, 2023). So, itâs in the interest of an employer to ensure their employees are being compensated fairly. In many industries, salary negotiation is an accepted practice/expected and an employer may become concerned if a candidate does not negotiate. For example, the employer may be concerned that you lack confidence in your own abilities or are unaware of industry practices. Preparation, research and practice can help you build your confidence to negotiate. |
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Research your industry and establish your fair salary range
Research the organization, whether or not they have a standard practice for salary negotiation and how pay increases are determined at the organization
Consider non-salary compensation (e.g., vacation time, health insurance, tuition reimbursement, working from home, pension and more)
The best time to negotiate salary is after an offer has been made or during an annual review process
Practice your response if the employer wants you to name a figure first, or seems unreceptive to negotiating
Practice explaining why the skills and experience you would bring to the position are worth what you are asking for
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Step 1: Determine your fair salary range |
Salaries vary depending on what (if any) other benefits are part of the overall compensation package, for example:
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Step 2: Establish your ânon-negotiablesâ |
After determining your fair salary range, itâs time to think about what youâre not willing to compromise or concede on during negotiations â these are your ânon-negotiablesâ. Depending on where youâre at in your life and career journey, what you need from a job can vary greatly.
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You may receive everything you ask for during a salary negotiation, but itâs common that this wonât happen. For this reason, itâs important to consider where youâre willing to be flexible regarding the compensation youâre asking for.
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TIP! Tip: Consider making a list of your desired compensation and benefits and rank the items by how important they are to you. You can use this list during negotiations to ensure youâre prepared and representing your needs effectively. |
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Step 3: Determine the appropriate time to negotiate |
As a jobseeker you may be asked to provide your compensation and benefits expectations to an employer in the job application, before the interview, during the interview or as part of a job offer. This question marks the very beginning of the negotiation process, and itâs why you need to be aware of your desired compensation and non-negotiables as early into your job search as possible.
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Considerations for negotiating co-op job or work-integrated learning (WIL) experience offers
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Though itâs not a requirement, employers submitting co-op/WIL job postings are encouraged to include information about the compensation and benefits they offer in their postings so that University of Waterloo students are able to make informed decisions when choosing where to apply. The information provided in the posting may answer all the questions you had about the compensation. If not, consider asking about compensation during the interview. In co-op, due to the fast-paced nature of the rank/match process, there is not a chance to discuss the salary after the employer offers a position and before the student accepts it. This is why discussing salary in an interview is recommended. When interviewing with an employer outside of the rank/match process, the standard procedure is to discuss the details of the job offer, including salary, after the offer has been made. |
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Asking about salary is not the same as trying to negotiate a higher salary. Students can negotiate co-op or WIL salaries after a job offer or match, but itâs important to note that negotiating involves some risk. Some employers may not expect salary negotiations when hiring for co-op jobs since the pay rate is already in the job posting. Typically, co-op/WIL employers have a set amount they pay students and most are unable to adjust this amount. It is possible that some employers may rescind offers based on negotiations that they feel are demanding or unrealistic based on the companyâs salary structure.
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Step 4: Defer! (as much as possibleâŚ) |
Generally, you should try to hold off on negotiating salary until an official job offer is made. This tends to be the best time to negotiate because the employer has chosen you as a preferred candidate, which gives you leverage. Waiting to negotiate until a job offer is received also buys you time to do your research. Youâll have more lead time to gather information about the industry, employer and position and make an informed decision about your salary expectations. Deferring a salary negotiation may be easier than you expect.
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If a job application includes a field that asking about salary expectations, there are a few options. Ideally, the application field is open and allows you to control the input. Here are some examples of how you might fill in an open text field about salary expectations:
In some cases, the form field may require you to input numbers before continuing in the application. If this happens, you will need to decide whether or not you will continue the application process and input the salary range that you feel is fair. |
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Youâre overqualified for the job.There are situations when you may benefit from discussing salary early in the hiring process. If youâre applying for a job that youâre overqualified for, an employer may fear that your salary range will not be within their budget. You can be proactive in addressing any concerns by explaining that youâre familiar with the fair salary range for the job and that youâre excited about the work itself and have no concerns about the compensation. If the job is a significant step down in salary or responsibility, you may want to reference the salary range in your cover letter, so that the employer knows you are fully aware of the potential drop in salary. The employer insists on discussing salary early in the process.Deferring salary discussions can be advantageous to you, but not always possible. Some employers are insistent on discussing salary early in the hiring process. If you have tried to defer but feel that you may be ruled out for not providing your salary expectations, you might choose to share your fair range with the employer. You can also add that the exact salary (within your fair range) would depend on the specific level of responsibility and the total compensation package offered. If the employer asks you to agree on a salary range early on, try your best to leave the conversation open for further discussion. You can use a response such as: âIf [the salary range] is fair, of course itâs acceptable. But could we please wait to discuss compensation until weâre both clear on what the job entails and what I can bring to the company?â. |
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Step 5: Negotiate other compensation, perks and/or benefits |
In addition to the salary, consider what other benefits are most important to you, acknowledging that not all organizations will offer every benefit.
Possible benefits you could ask about:
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Step 6: Make your decision |
The last step of the salary negotiation process is for you to decide whether you will accept whatâs being offered to you. Depending on the employerâs hiring process or the individual hiring manager, you may need to decide at different stages of the process â before or during the interview, before receiving a job offer or at the time of a job offer. If you have followed the previous five steps of successful salary negotiation, hopefully you are feeling confident in making your decision on whether to continue in the hiring process or accept a job offer.
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Do the best you can to honour your wants during salary negotiations and make a decision that feels right for you.
Common tricky scenarios:
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Sometimes an employer will make an offer and ask you to sign a contract or verbally agree to an offer immediately. If this happens, express your gratitude for the offer, your interest in the job and your desire to make important life decisions carefully. Ask the employer if they will allow you time to make an informed decision. Typically, the employer will give you a timeframe (e.g., 48 hours). If not, you can suggest one â be conservative and ask only for the time you think you will need to come to a decision. Make sure to stick to whatever timeline you have agreed to. |
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If you have more than one offer, itâs important to respect each employer, even while you decide on whatâs best for you. You may find yourself with an offer from your second choice (âCompany Bâ) while still waiting on an offer from your first choice (âCompany Aâ). In this scenario, when you receive the offer from Company B, you could ask for some time (e.g., a few days) to consider the offer, express your gratitude for the offer and interest in the role and let Company B know that you want to ensure youâre making the right decision. Next, you can let Company A know youâve received another offer. You can also state that you hope to work for their company, as theyâre your preferred employer but that you need to respect the timelines you agreed to with Company B. Close by asking if Company A can accelerate their decision-making process. This approach will usually go one of two waysâŚ
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If youâre relatively early in your career, you may feel you have little leverage in negotiations. Itâs true that a more experienced candidate can bring unique value to an employer, but remember â the employer is interested in you, so remind the employer of the value you would bring to the position and the organization. Also, consider negotiating for benefits that can help you advance your career, such as training and mentorship opportunities. |
If the employer cannot offer a higher salary, you can say that the salary is below your expectations, and that you would be happy to discuss an offer that is fair to both of you in terms of bonuses, increased commission (if applicable), vacation or professional development time or other benefits.
Even if you are tempted to say no immediately, say that you need time to think about the offer, and agree on a date by which you will get back to the employer. This will give you and the employer time to think. Be sure to follow-up with the employer when you say you will. If you must turn down the offer, state that you regret it and that you hope to encounter the employer in the future.
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If possible, try to avoid:
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- Explore: Success at work
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References |
Back, L. & Laschever., S. (2003). Women donât ask: Negotiation and the gender divide. Princeton, NJ: Princeton University Press.
Dodge, Matt. (2019, June 20). The average Canadian salary in 2019. Jobillico. https://www.jobillico.com/blog/en/average-canadian-salary/
Kaplan, Z. (2024). How to Negotiate Salary for Beginners (With Examples). Forage.
Sitorus, S. L., & Hidayat, A. (2023). The Effect of Compensation and Job Satisfaction on Employee Productivity. Journal of International Conference Proceedings, 6(4), 12â24. https://doiwww.researchgate.orgnet/10.32535/jicp.v6i4.2608publication/375103517_The_Effect_of_Compensation_and_Job_Satisfaction_on_Employee_Productivity
Smith, Jacquelyn. (2013, April 17). 7 things you probably didnât know about your job search. Forbes. https://www.forbes.com/sites/jacquelynsmith/2013/04/17/7-things-you-probably-didnt-know-about-your-job-search/