Employment Contract Negotiation - 8 Tips you Should Know About
You were sufficiently prepared for your interview and it seemed to go really well; every answer you gave matched their expectations. On top of your successful responses, the hiring manager thinks you’ll be a great cultural fit as well. As a result, they have decided to extend you an offer.
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This is great news and you will undoubtedly be excited about the next chapter in your career journey. But before you rush into accepting the offer, it’s important to properly consider all aspects and whether you would like to negotiate anything on your job contract.
On top of your salary (you can check salary guides to find out how much you should be paid), you also need to consider the total package; bonus potential, the ability to work remotely, amount of annual leave, pension, healthcare and other benefits. These can all vary vastly from role to role. What aspects of a job are most important to you?
- How can you best prepare for a contract negotiation
- 8 important things to remember when negotiating your contract
- What to do if no negotiation is suggested
- [Video] Specific salary negotiation tips
- How to follow up after the negotiation meeting
It may seem obvious, but many people overlook the fact that they should prepare for any negotiations about their contract. Just like preparing for your interview, you should do a bit of legwork and carry out some research in advance of the meeting.
When doing this preparation for your contract negotiation, make sure you benchmark your salary expectations so you know exactly what you are worth in the current climate - this will allow you to be transparent throughout the entire process. If you know exactly what the going rate (salary if a permanent role or day rate if you’re a contractor) and standard benefits are for your role in the industry, you can use that information as a gauge of what is realistic to request. The individual you are negotiating with will most likely have this data, so if you try and go well above the market expectations, it could backfire.
No matter if your interview was the best the hiring organisation has seen for some time and you’re feeling particularly confident, if you ask for a salary that is significantly higher than average or benefits that are unrealistic, you will damage your reputation before you even start the new job.
8 key things to remember when negotiating your contract
There are a number of strategies and tactics you can use to help you address some of the commonly faced issues when negotiating with your future employer.
A contract negotiation has to be a real balancing act; it’s important to be upfront about what you want and unafraid to battle a bit for it as companies welcome someone who is capable of holding their ground, but you also have to be realistic about what you’re asking for.
1. Make sure you’re likeable and recognise who it is you’re talking to - Whilst this sounds like stating the obvious, being a nice, pleasant person truly does make a difference.
The individual you are being pleasant to will be one of the primary decision makers when it comes to whether or not your wishes are granted.
Whilst this is partly about just being ‘nice’ as a person, it is also a bit more than that - there will be tensions and intense questioning, it is important to manage these situations in the most diplomatic way. If you understand the person you’re speaking to, whether it’s someone from HR or your potential future manager, you can tailor your negotiations accordingly.
All in all, you should be mindful of how your requests will be perceived by whoever is on the other side of the table (or video call).
2. Clearly justify why you deserve what you’re requesting - This is potentially the most important thing to remember. It’s all well and good that you seem to have a strong relationship with the person you are in the meeting with, but if you don’t deserve the terms you are requesting, it will fall flat on its face as soon as someone else reviews your case.
Precisely explain why you think you’re worthy of a higher salary or how an extra day working from home will improve your performance - if you have supporting data, that’s even better! It’s a fine line though as you don’t want to come across as arrogant.
3. Don’t overplay the fact that other companies want you - It may not be applicable to every situation, but quite often job seekers will state how another organisation has offered a better deal or your existing employer has made a counter-offer and is using it as a bargaining tool. This leverage can work as it makes you seem like hot property, but it can also put hiring organisations off if it seems like you are just playing them off against competitors.
Giving ‘ultimatums’ in negotiations should be avoided at all costs.
Nobody likes being told what to do, so if you say “Pay me X or I’ll go to [another company]”, you could well damage future opportunities. If you do want to highlight the other options you have, make sure you balance it out by saying why you would accept their offer over the others.
4. Be mindful of any constraints there may be - You may think you deserve your requests and they may well feel the same way. But sometimes there are certain things that employers simply can’t budge on - salary caps, for example. Don’t throw your toys out of the pram - try and figure out where they can be flexible and channel your attention on those areas. When you understand any constraints they have, you can tailor your requests proportionately to improve your chances of success!
5. Prepare to answer tough questions - If you thought the questioning would stop when you completed your interview, think again. In a negotiation you are likely to be asked some hard questions - you have to be prepared to answer them properly otherwise you will lose your leveraging power.
“Respond to questions honestly and in a manner that maintains your attractiveness.”
6. Focus on the bigger picture - For many people, a job contract negotiation is their opportunity to secure a higher salary. This is true, but your salary is such a minor part of your work-life. Most of your job satisfaction will come from other aspects such as responsibilities, your hours, progression opportunities and other fringe perks - it’s counterproductive to be fixated on money.
Always be thinking long term; a slightly smaller salary but great career development prospects is better than receiving a bit more money first up, but then stagnating.
7. Avoid negotiating for the sake of it - Similar to knowing when they can’t budge on certain constraints, you should never negotiate any further if you don’t feel there is any point. If you’ve done a bit of bargaining and the revised offer seems fair and you are more than happy with it, why jeopardise things by pushing boundaries any further?
8. Never forget what has been discussed - Things do change - it’s almost inevitable. If some of your requests couldn’t be met in this initial negotiation, note them down. When it comes to your appraisal or performance review, bring them up again.
What do you do if there is no mention of a negotiation?
You can be fully prepared with all the necessary answers formed in your head and a strategic plan of attack for your contract negotiation, but what happens if there’s no mention of a meeting? Some organisations will give you an offer in the hope that you will accept it without any adjustments.
If you ever find yourself in this situation, how can you go about suggesting a meeting so discussions can be had? You can go about it in two ways
- You either go direct and ask whoever has been responsible for your application to arrange a meeting with the relevant individual
- You can ask your recruitment consultant to set up the negotiation for you
The latter is the recommended course of action because your recruiter will most likely have an existing relationship with the hiring manager - it is in their best interest to get you the job you want, with the conditions you desire or to terms which are fair. Ultimately, if you’re not happy to settle for the offer, you won’t take the job and this means the recruitment consultant will not secure the fee for your placement.
In most instances, timing is everything here. Because there are so many contributing factors, external and internal, to whether your prospective employer will consider your negotiation terms, you may have to be patient and bide your time.
If your request for a meeting is primarily rejected, mention how you want to have one in the near future and then when it seems to be a better time, bring it up again! Judgement and awareness of what’s going on within the business is key.
Specific salary negotiation tips
Whilst much of the above applies to negotiating salary as well as your job contract as a whole, there are a few key things to remember when it comes to discussing your pay.
Whilst this webinar recording is a few years old now, all of the points raised about salary negotiation are still relevant today! Watch the video for some expert guidance on salary negotiation...
In summary, the key salary negotiation tips are:
- Consider the total compensation package - Never forget that your offer is not just based around the pay package, there are a lot of other factors as well. Recognising this and how the various benefits measure up against the salary will give you more leverage on how far you can push the boundaries (although this is heavily dependent on your experience and the value you’ll bring).
- Don’t lie about your current salary - If you think sneakily saying you earn more than you actually do will help you get a higher salary in your new job, think again! Whilst we all want to be earning more, prospective employers can verify your earnings from your P45. Don’t get caught out lying!
- Benchmark against the industry - Whilst this is so simple, it deflects the discussion away from seeming like a purely personal demand and to more of an exploration of what similar businesses are paying.
- Use the 3 numbers method - Go into the meeting with 3 figures in mind: large, fair and walk-away. Stick to these boundaries and you know exactly where the cut-off is for an acceptable negotiation.
- Avoid being arrogant - Yes you might be really good at your job, and yes you may think you’re truly worth a higher salary than they initially offered you. But being arrogant and causing a confrontation is not good in a negotiation. Phrases like ‘Surely I should be paid more…’ will not go down well.
- Show your best poker face - As with many workplace situations, you should try and suppress your emotions in a contract negotiation. Whether the discussion is going in your favour or not, remember - you are a professional. Don’t get grumpy if they’re not acceding to your requests but, likewise, try not to beam with joy if they offer you exactly what you want - save that for the following celebrations!
How to follow up after the negotiation has taken place
You went into the meeting. You fought your corner. They listened. Whether you got exactly what you wanted, one of your requests or you just accepted the initial offer, there is a good code of conduct when following up after a contract negotiation.
- Thank the individual for their time and the discussion
- Send a summary email outlining the details of the negotiation
- Confirm your excitement about starting your new job
Once you’ve been in the job for a while, you will most probably have an appraisal or performance review. Any of your conditions that weren’t met in the initial contract negotiation can be revisited this time around - bring them up again and who knows, you may get what you want; especially if you’ve been performing well!