The 8 Costliest Errors During Salary Negotiation

So, you’ve dreamed of working for a big tech company, and now, they’ve just given you an offer.  Your first instinct is to happily accept the offer right away, but you know you should probably think about negotiating.  Moving forward quickly and accepting the offer without first educating yourself about salary negotiation could end up being a very costly mistake.

Salary Negotiation is a High Stakes Game

Salary data shows that compensation for the same role, for the same company can differ by more than $250,000 per year. When you multiply that amount by ten years of working, it adds up to millions of dollars in salary differences, for identical positions.  Some have said that negotiating their salary earned them their early retirement. Others have told us that by not negotiating, it set them back in their career goals and affected their salary arc for years to come

So, how does a company get away with paying such different salaries for the exact same position? There is a straightforward answer: Not knowing your value, and not knowing how to negotiate is what determines where you fall on the compensation spectrum for your position. 

You may be worried that you will lose the offer, or doubt that negotiating will work. Luckily, none of these fears hold much water.  The facts prove that by equipping yourself with effective salary negotiation strategies you can get the job you want, while earning more compensation than you might have thought possible. 

Negotiating your salary is not simple or easy, but it can have such a far-reaching impact on your career and life goals, it has to be taken seriously. You have to understand the pitfalls that have caused many people just like you miss out on millions of compensation.

I’m the founder of Moonchaser.io, and we specialize in software engineer salary negotiation. We’ve negotiated $400M in salary increases this year, and have used that data to tell you the 8 mistakes you must avoid during your upcoming salary negotiation.

Salary negotiation

 1. Sharing Current Compensation or Compensation Expectations 

During the interview and offer process, recruiters will often ask you something like: “What does your salary look like right now, and what would it take for you to make the move to our company? It’s best not to answer this question with anything other than a vague answer. This question has a clear purpose. They want to anchor you to a certain number for your compensation. It’s easy to miss this question, and just answer it forthrightly, but that will tie you down later in the negotiation process and give up a key piece of leverage. 

Answering this question can box you in. If you provide numbers related to your current compensation or desired compensation, the offer you receive will probably be based on the amounts you provided (unless you provide a very high number, but more on that later). So, providing your recruiter with that anchor will sometimes prove to be very costly, especially if you were likely to receive a higher offer before they knew your current salary and salary expectations. 

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Recruiters are good at what they do, and they are often incentivized to get you to accept the lowest offer they can, even if they actually have permission to offer you more. Don’t give them any more leverage than you have to. There’s no reason to answer this question with a number. Instead, deflect with something like “I’m not comfortable sharing the amount right now, but am happy to continue this discussion after interviews finish.” and leave it at that. You are not obligated to provide a number when asked, so if you are pressed remember: it’s actually illegal in many states (e.g. California) to ask for your current compensation.

2. Letting it Slip That You Aren’t In the Interview Process with Other Companies

When you interview with recruiters, they’ll often ask a variation of this question: “Are you currently interviewing with any other companies?”

Here’s the key when answering questions like this: You want to show that you are actively searching for jobs at companies similar to theirs and that you could potentially receive offers from other companies. 

An answer like this would be a good one. “There are other positions I’m looking at with other companies, but, I’ll always be sure to let you know how things go.” Then, you would close on a positive note by saying something like this:  Overall, I’m really happy to be considered for this role and would love to discuss it further.” 

Sometimes, it’s okay to share what other companies you’re involved with, like telling Amazon you have a Facebook interview, but it’s always best to just keep it general and not give too many details. 

3. Telling Them That Your Offer is a Different Role, Level, or Location 

There’s a trend with our negotiation advice, as you may have noticed. Don’t give up detailed information, especially if it’s negative. Only share general positive information about yourself and your job search situation. If you have another offer, don’t even let a recruiter know that you aren’t happy with elements of it.  That just gives up leverage and sets the bar lower for your offer. 

Whether there are differences or not to the two offers you have on the table, like salary, position, level, location, etc… you don’t have to tell your recruiter. Companies hate getting into bidding wars with salaries, so they’ll use it as an excuse not to negotiate. As an example of this, Google will refuse to match an offer in a lower-cost area because it wasn’t an exactly comparable offer, in spite of the fact they were hiring for a Bay area position, a place where the offer should have been much higher.  

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If pressed for details about your offer, just be vague.  Try a vague answer similar to: “There is a lot left to figure out. We’re still working on the specifics.” 

4. Negotiating in Emails

If you get this far, you’ve already sunk a lot of time into your negotiation. Even if you hate verbal negotiations, you will get much better results taking a little bit more time and working things out over the phone, vs. using email. 

When working with senior candidates, negotiating over the phone vs. email  usually changes the outcome by around $100k. Put a little more time into talking on the phone and it will be worth it. 

Also, it’s really easy to screw up negotiations using email. It’s way harder to fix mistakes using email than during a phone call.  For example, we had a candidate who was interviewing with Google. He told them via email that he would consider reneging his $450k Amazon offer if Google offered $400k. Unfortunately, they used the specific wording in the email to claim that the Amazon offer wasn;t actually a competing offer, as he had already accepted it. Therefore, they would not go above $350k. Google is crazy with these kinds of shenanigans, but it happens often.

Plus, it’s way easier for recruiters to avoid negotiating over email. In our data, we find that negotiating over the phone usually results in about 40% better outcomes for our clients. Many of our clients reached out to us for the first time after their first attempted email negotiation was rebuffed.  

5. Fabricating an Inflated Offer from a Different Company

It’s tempting as a way to try to gain leverage, but don’t fall for it. Bigger companies will always have compensation data on their competitors and if you give them an out of range number it will cause them to request you prove the offer in writing. If you can’t, you’ve just given up your leverage and breached their trust. 

Our advice is consistent: Don’t give them any numbers at all at the beginning of the negotiation. Keep the impetus on them, and make them come to you with a number. It’s a lot like playing poker. Just stay calm with the knowledge that regardless of what they come up with at first, there will be room to go up.  You will get to the upper range for you position as long as you keep a cool head and don’t give up your leverage. 

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6. Not Understanding Compensation Elements

An annual salary number is easy for most people to understand, and this also goes for signing bonuses. But, companies will often use stock options, especially pre-IPO companies, and mislead you on their value. Make sure you do your own research and don’t just accept the value they place on their stock compensation. It’s easy to make errors when calculating equity values and misunderstand what they’re really worth. 

7. Coming Off as Too Excited, or Not Excited Enough

It’s easy to mess this part up, as the usual trend is for candidates to be either way too positive an offer, or too negative. The key to doing well with this element of the negotiation is to be sure to act positive and enthusiastic about the job, while also being a little bit disappointed in the overall compensation. Here’s a great example: “This is a great opportunity, and I am ecstatic about being able to join the team. I want to pursue my passion, and this is in line with that. I’m excited for what I’ll be able to achieve here. The numbers are a bit lower than I expected though.”

 8. Thinking You Have No Leverage Without Competing Offers

You might think that you have to have competing offers in order to have leverage, but that isn’t the case. Even if you’ve only received one offer, you don’t have to accept it. There are a lot of ways to gain leverage even when you don’t have another offer. One example of this is the interview process with other companies. You can easily enter the application or interview process with another company and use that as a point of leverage. 

Sometimes, you can even ask questions about compensation during the interview process with other companies, then use that as negotiation leverage with another company. 

You can also use your current compensation, future promotions, or other unique elements to build leverage. Never sell yourself short just because you only have one offer on the table. Sometimes, just staying at your current job is a solid point of leverage.

Avoiding These Slipups During Salary Negotiation 

There you go! You’re up to speed on some common errors that can cost you big money during your salary negotiation. Just know, there is a lot more to learn, and if you really want to do well with your upcoming negotiation, we hope you’ll feel empowered to continue learning. As always, we want to help. We’ve negotiated millions in salary increases for our clients and we can do the same thing for you. 

Rose

Rose is a technology enthusiast and a writer. She had the interest to write articles related to technology, software, Mobiles, Gadgets and many more.

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