Salary negotiation

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 employee’s qualifications, experience and value to the organization. The employer considers many factors, including budgetary considerations and alignment with their compensation structure.

The employer’s priority is to hire and retain qualified staff without unreasonable cost to the organization, and your role is to emphasize your skills and experience and to demonstrate that your value to the organization is reflected in the compensation you’re asking for and aligned with industry standards.

It’s not just about the money

Salary negotiation is only one element of negotiating a job offer. In addition to salary, a company’s 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 that’s less than what you’re hoping for.

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 employee’s base salary, which means that negotiating at the time of a job offer can significantly increase earning potential over a lifetime.

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, it’s 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.

There are laws that govern pay equity in Canada including the federal Pay Equity Act and provincial pay equity acts such as the Ontario Pay Equity Act. Pay equity means equal pay for work of equal value and is a complex and long-standing issue in Canada. Employers have obligations to institute pay equity, but it can still be beneficial to advocate for yourself by researching typical compensation for the roles you’re applying for and asking for what you believe is fair. Racialized individuals may encounter lower salary offers compared to their non-racialized counterparts, perpetuating wage gaps (Statistics Canada, 2023). Racial biases may also influence how recruiters and hiring managers evaluate the qualifications and potential of racialized candidates, which can lead to unfair treatment in job offers.

Key negotiating principles

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

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:

Local cost of living
Availability of talented workers
The size and financial success of the organization
The job itself including your level of experience

This means that salary ranges, range! Typically, when it comes to salary negotiations a fair range includes a gap between the low end and the high end of between $5,000-$10,000 depending on the scenario (Kaplan, 2024) For example, if based on your research you’re expecting to earn $55,000 per year in salary, a fair range might be between $50,000 - $60,000.

When and how to establish your fair salary range

It’s recommended that you establish your fair salary range at the beginning of your job search. Doing so will help you focus the job search on suitable positions and to be prepared to discuss salary if it comes up early on in the application/hiring process.

If you’re planning to negotiate your salary with your current employer, you may already know what a fair range is for the position based on the organization’s internal salary scale, industry standards or other sources. If not, you will want to conduct some research and establish a rationale for why you deserve an increase in your salary. Your rationale may be based on factors such as:

Industry standards
Pay equity
Years of experience
Skillset
Enhanced education
A combination of factors

Resources to establish your fair salary range

Industry/trade journals may devote an entire issue to salaries.
Salary surveys can be based on broad research but sometimes draw on salary information from only a few people – make sure you use surveys in which you can see that a reasonable number of people were surveyed, and that the information applies to the geographic area in which you are seeking employment (e.g., manufacturing salary survey Toronto, Ontario).
Professional association websites may offer free information about salary ranges, or you may need to be an association member or know a member who could provide this information to you.
Company/organization websites sometimes publish salary scales (e.g., Canadian public service pay rates).
Information interviews: people already working within your field may be open to sharing a fair salary range for someone with your level of experience.
Networking: ask people you know —friends, family, professors, alumni, present and past coworkers — about fair salary ranges (avoid directly asking about what they themselves earn).
Direct requests: people in similar jobs or the same job at a similar organization may be willing to share information about salary ranges – again, ask about the fair range rather than about their own earnings.
Union representatives (e.g., Union representatives/staff).
Faculty associations (e.g., a committee or council representative).
Staff associations (e.g., a director or staff representative).
Recruiters and employment agencies: recruiting or employment companies often have current salary information, they are more likely to help out with your request if you are registered with them.
Human Resources departments: keep in mind that the goal of HR departments within an organization are typically to recruit workers at a favourable cost to the organization, so unless they’re in an organization with set salary ranges, it may not be in their best interest to share salary ranges with you.

Not sure where to start? Check out the following salary resources:

After determining your fair salary range, it’s time to think about what you’re not willing to compromise or concede on during negotiations – these are your “non-negotiables”. Depending on where you’re at in your life and career journey, what you need from a job can vary greatly.

You can start by considering the lowest salary you can or will accept – this may be the number at the low end of the fair salary range you’ve already established. Next, think about perks and benefits – what’s acceptable and what is “non-negotiable” for you based on your needs at this point in your career and life journey?

Establish where you’re willing/able to be flexible

You may receive everything you ask for during a salary negotiation, but it’s common that this won’t happen. For this reason, it’s important to consider where you’re willing to be flexible regarding the compensation you’re asking for.

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 it’s why you need to be aware of your desired compensation and non-negotiables as early into your job search as possible.

You may also be looking to negotiate additional compensation, benefits or perks while you are currently working in a job. This may be part of a standard, recurring performance/salary evaluation process with your employer or you may be looking for an ad hoc pay increase.

Most salary negotiations take place in-person or over phone/video call. However, it’s becoming increasingly more common for salary negotiations for new job offers to take place over email. Approach salary negotiation with the same strategy through email as you would in person.

In any scenario, the most important thing for you to remember is to be prepared before engaging in any conversation about salary, benefits or any other aspect of compensation.

Considerations for negotiating co-op job or work-integrated learning (WIL) experience offers

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Though it’s 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.

If the employer has not already mentioned salary in their posting and/or by the end of the interview, it’s okay to ask about it. Asking about salary will allow you to make an informed decision and will help you determine whether you’re able to accept the offer based on your budget, living expenses or other factors.

If you decide to ask about salary in the interview, it’s best to ask it towards the end of the interview. Usually, following the interview questions the interviewer(s) will ask you directly if you have any questions for them. This is your opportunity to ask any questions you have about the position, the employer and the salary. If the interviewer(s) do not provide you with an opportunity to ask questions towards the end of the interview, you can decide what you would like to do next. If you’re comfortable with it and salary is important to you, ask the employer if it’s okay to ask a question. Use this opportunity to ask about salary, and if appropriate, any other questions you might have. If you are uncomfortable doing so and/or the salary is not a major determining factor in terms of whether you accept the job offer or not, you may choose not to ask about salary.

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. You’ll 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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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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The last step of the salary negotiation process is for you to decide whether you will accept what’s being offered to you. Depending on the employer’s hiring process or the individual hiring manager, you may need to decide at different stages of the process – 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.

Just as each job seeker is unique, each salary negotiation experience is likely to be unique. There are many factors you might base your negotiation and decision-making process on, and these factors will change throughout the course of your career journey.

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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Explore: Success at work

Back, L. & Laschever., S. (2003). Women don’t 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), 12–24. https://www.researchgate.net/publication/375103517_The_Effect_of_Compensation_and_Job_Satisfaction_on_Employee_Productivity

Smith, Jacquelyn. (2013, April 17). 7 things you probably didn’t 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/