Case Study: Negotiating a $16,000 raise doing what others will not
20 Comments- Get free updates of new posts here
Today, an in-depth look at the techniques that one of my readers, Will H., used to negotiate a $16,000 raise.
Before you read, be sure to acknowledge any psychological barriers you may have about asking for a raise.
For example, many people will say, “A raise? In this economy??” That is a barrier: If you are indispensable, and your boss knows it, you have a good shot at negotiating a salary increase in any economy. However, if you think the economy solely dictates your compensation, then you are, by definition, not a top performer.
Using the right techniques helps, too…like doing the homework and practicing a negotiation over and over — which 99% of people will not do.
Watch how Will did it.
“I’m not being paid what I’m worth”
Will is an interaction designer for a non-profit research institute in the Bay area. He loves his work.
He was also a self-described “personal finance nerd.” Will stumbled onto I Will Teach You To Be Rich when another blog linked to my post on weddings. We all know that weddings are expensive, but he was impressed by the analysis of why it might actually make sense. Looking around the rest of the blog, he found another idea that really struck a chord with him:
When it comes to increasing your net worth, you don’t just have to save money — you can also focus on making more money. Most people who read personal finance advice get so caught up in saving a few dollars every week that they miss out on the far more effective (and less punishing) method of bringing in more money.
One of the most effective ways to do this is to negotiate your salary.
Since Will had joined this firm right out of college, he’d quickly gone from doing junior-level work to giving presentations to important clients and taking on more and more responsibility managing his projects. Now he wondered if his salary reflected that growth in value.
He read some of my posts on negotiation and wondered, “What do I have to lose?”
“I’m not going to wait until my next performance review”
Working up the courage to pursue his raise, Will was inspired by the phrase, “Success in life is directly proportional to the number of awkward conversations you’re willing to have.”
He wanted to be very successful, so he was willing to skip the easy route and confront uncomfortable questions: Will this damage my relationship with my boss? How much am I really worth? Will all this extra work pay off?
Most people simply worry about these questions, letting low-level concern hold them back from taking action. Will wrote down the questions and potential answers, going from worry to constructive next steps.
He wasn’t willing to wait until his next performance review. He quickly decided that it wouldn’t be enough to simply browse a salary research website and come up with an average number based on his job title and geographic area. He wanted real leverage, to give himself as much power as possible in negotiating a significant raise.
He needed to find out how much he was really worth – not just his job title, but his whole package: his specific skills, personality, experience, conversational ability, and everything else that set him apart from some nameless aggregate on the internet.
How to determine how much salary you’re worth
In addition to the usual salary.com and payscale.com, Will wanted to get even more specific about how much he was worth.
He decided that the only way to learn his true market value was to the market and find out. He decided to respond to job openings in the area and to go into the interviews with an open mind. After all, even though he was perfectly happy with his current job, he would naturally be willing to jump ship if he found a much better fit somewhere else. And his research would help him determine his true market value, which he could bring back to the company.
At first, he was nervous about looking for another job while still employed. But he was able to convince himself that he had been providing so much value to his employer that he deserved to get some of that back. And, the best way to do that would be to get some experience interviewing, quantify his value, and to come back with the ability to say, “Rival company X thinks I’m worth Y — what can you do?”
Not only would this get him some valuable experience holding his own in nerve-wracking negotiations (which he’d be soon able to use with his manager), but this kind of real-world proof would be much more compelling than following the path of least resistance and simply presenting a number from a salary website.
Notice the difference between top candidates and mediocre ones.
- Mediocre candidates let others drive their lives — they let their bosses set the agenda, they let their bosses set the timetable for salary discussions, and they let their bosses decide their salary.
- Top performers respect their bosses experience and skill, but they are different in two ways: First, they provide extraordinary results for their companies (rather than being focused on process, like how many hours they worked. Who cares about that?) Second, they employ a mindset that THEY will drive their own careers, whether that means asking for the best work, asking to run projects, or even asking to discuss a salary increase. They run it — not somebody else.
Paradoxically, great bosses love top performers who run things.
Using The Briefcase Technique in Salary Negotiation
Will began interviewing with other firms with the goal to secure several high-salary offers, then take them back to his own boss.
But what kind of unique value could he provide to the interviewers? He couldn’t just sit there and answer their questions about his experience. Instead, he had to offer something so different from the other candidates that he would be sure to get the offer he was looking for.
His first interview was for a software engineering position. Sure, he could write code, but his real strength was interaction design. He would get through the preliminary phone interviews answering whatever questions they had about engineering; but, when it came time for the in-person interview, he was going to take control of the conversation.
His plan was to define the sort of work that he would be doing and convey to them that he was uniquely qualified to provide an amazing value that would solve specific problems they had.
Will came into the interview prepared. Spending about five hours total, he had evaluated the company’s website and made a list of 30 things they could do right now to improve it, even if they didn’t end up hiring him.
Having learned the Briefcase Technique from Earn1K, Will understood the value of presentation. He kept the “briefcase” in his back pocket during the initial interviews, waiting for just the right opportunity.
Finally, he found himself in an interview with the VP of Technology talking about engineering. Now that he’d made his way through the middle management guys, Will felt that this was finally someone with a high-level enough view that they could appreciate the value of good design. When the time was right, Will explained that while he could do engineering, he could actually provide them with far more value by improving the user experience on their website.
That’s when he pulled out the big white binder he’d prepared.
The interviewer was so impressed that he called a product manager into the meeting. It turned out that the company hadn’t even been thinking much about user experience, and Will had provided them with a huge amount of totally unexpected value.
Total cost? 5 hours of time and $5 for a few binders.
“Won’t They Just Steal My Ideas?”
As he’d prepared for the interview, Will had met a surprising amount of resistance to his idea. His friends worried that the company might just steal all his great ideas and hire somebody else.
But Will didn’t see it that way at all. He’d learned from this blog to just go in there and test assumptions. It doesn’t make sense to guess what someone will do when you have the chance to actually test it.
He understood that simply stealing the ideas didn’t make sense from a value prospect perspective. Presumably there was a lot more where that came from, and these 30 ideas were just a taste. Sure, the company could steal them, but they’d be a lot better off hiring the person who could execute them.
If you build real value for someone, they will want to forge a relationship with you.
Worst case scenario? If they simply stole his ideas, it was their loss and he could always try again at the next place.
Adapting with Changing Negotiation Conditions
Will got the job offer, but the salary was lower than he’d hoped for. (It was a startup, so they’d put a big chunk of the compensation into the form of equity.) He’d been hoping for a number that could inspire shock and awe at his current job, but he soon realized that is wasn’t so bad – after all, his current employer didn’t necessarily care about the exact amount of a rival offer — but simply the fact that a rival was trying to poach their employee at all.
(Notice how a top performer will roll with the punches, adapting as conditions change.)
With his new leverage in hand, Will now felt comfortable to negotiate a raise. At this point, he made one of his most important decisions: He didn’t speak to his direct manager. Instead, he targeted the influencer who would feel the most pain if he left: the project’s technical lead.
Meeting with her, Will framed his concerns not in terms of money, but from the standpoint that he’d been providing a lot of added value over the past year and wasn’t sure that it had been properly reflected back to him. The company just wasn’t properly structured to take full advantage of his skills.
When she asked if he had already made his decision to leave, he said no — he would rather work it out and remain there. He let her know that the rival company was more agile and that — over there — he would be able to give his input at an earlier stage and focus more on the user experience. “What can you do to match that and keep me here?”
This shifted the burden onto them, and it made the project lead consider what their company might be doing wrong. How might this rival company be doing better?
The project lead came away feeling that she was the person with the power to keep Will at their company. People respond well to pleasure, but even more so to pain, and she knew that both the company and she herself would feel it if he left. She took it upon herself to argue his case to the lab director.
One more thing: She was the one to bring up salary – “I don’t know what you’re making now, but I wouldn’t be surprised if it wasn’t enough… I think a title change might also be appropriate.”
The $16,000 Raise
The next day, she had scheduled Will a meeting with the director. While he wasn’t especially familiar with Will’s work, the project lead had primed the pump and explained that this guy is really valuable to us – we need to do whatever we can to keep him.
Once again, it was the director — not Will — who brought up the issue of money, “Salary – what are you thinking?”
Using the leverage of the rival company’s offer and his skilled in negotiation practice, Will first established his value (going over how much he had done and could do for the company), then explained that his current responsibilities felt more like those of a senior user experience designer. He threw out a number that he thought was really high, and the director responded, “I’ll see what I can do.”
At that company, raises usually only happened at the end of the year, but Will got his the next day – an increase of $16,000 (along with a promise from the lab director to focus more on user experience).
Top Performers Demand Their Worth
Nowadays, Will’s on the fast track. Sure it had been a little awkward to reveal that he had been interviewing at other companies, but the decision makers also respected him. Going in there and demonstrating his value got Will noticed by the senior management, and his project lead has now taken a vested interest in him and has been helping his career along.
The best part is that, even if he decides to eventually move to another company for real, the increased salary will stay with him. Once you start making more, you keep making more year after year.
And it’s all thanks to a couple of white binders.
How can you apply these lessons to negotiate a raise?
- Understand that top performers (1) drive extraordinary results and (2) employ a mindset of driving their own career — instead of letting a boss determine their future for them
- 85% of a negotiation happens before you ever set foot in the room, including deciding to negotiate, doing extensive research — including competitive intelligence, if necessary — and practicing the negotiation
- A large salary increase is one of the quickest ways to earn significant amounts of money. In fact, a large salary increase in your 20s or 30s can drive over $100,000 of income over your lifetime, since a newly negotiated salary will now be a baseline benchmark to work up from
- Whiny complainers about “this economy” are likely (1) not top performers and (2) looking for an excuse to do nothing
NEXT STEP: To learn how to use the Briefcase Technique to earn more money, including a step-by-step video and 3 case studies with real results, click here:
Get the Briefcase Technique Step-by-Step FREE
Hi, I’m Ramit Sethi, and I’m going to show you how to make more money. Legitimately (I’m ...Read More
How to travel the world, create a life that doesn't suck, and explore the happiness of pursuit -- with Chris Guillebeau
Last month, I was travelling in Asia and had some time to kill at the Hong Kong airport. I knew ...Read More