Negotiating on salary is important, particularly since that tends to be many (but not all) people’s main priority. As one would expect, salary plays a big role in defining the relationship between employers and employees. Salary also motivates people at work, although the relationship between pay and job satisfaction is far more complex than you may think. For example, people often care more about how much they earn in relation to their peers rather than what they actually earn.
Failing to negotiate a salary can also be costly to job seekers. Research suggests that if people negotiated a $5,000 increase in their starting salary, this might lead to half a million in additional earnings over the course of their career, compared to those who did not. Inept negotiations on salaries can be costly to employers as well. For instance, even when people accept a job with a stringent salary, the unmet expectation of salary can trigger their premature turnover. In that sense, Don Corleone’s “offer you can’t refuse” approach to negotiation may be best.
While we do acknowledge the importance of negotiating on salary, we challenge the assumption that getting a higher salary should always be the actual focus of job negotiations. There are some important nuances underpinning the surprising behavioral science of goal setting that could apply to job negotiations.
Advice on job negotiations often overlooks that a job can mean different things, depending on the individual’s unique career and life goals. For recent college graduates, salary can be the focus because they must repay their student loans. In this case, typical salary-focused tips, such as researching the industry’s salary norms or matching aspired salary to one’s talents and skills, would be helpful.
For those in more advanced stages of their career, a job can be something larger and more complex than a mere source of income. For example, if a person ultimately aims to be an entrepreneur, the potential job on which he/she will negotiate can be an opportunity to hone related expertise through engaging in challenging projects. Or for those who will eventually inherit the family business, a job in a large corporation can be a chance to experience established systems, practices, and governance in the organization. In these cases, salary-focused tips may not necessarily help them shape a negotiation to serve their unique and longer-term career goals.
If we regard a job as part of an ongoing, long-term project to fulfill our unique career goals, it becomes obvious that we should consider such goals when preparing and negotiating. Successful people and organizations have clear goals and reflect them in their key decision-making. Steve Jobs’s goal and vision on Apple dated back to 1984, and this played a huge role in the evolution of Apple’s business models that drove long-lasting success.
If you don’t have clear career goals, you should spend time on making them. Try to make your career goals broader and deeper than attaining a certain title or salary. Think about what you really want to do and be in five and 10 years—is it running your own business, moving industries or countries, or progressing to the top within an organization? With an answer to this question, you can reverse engineer your goal to figure out what skills, experience, and resources you need to achieve the goal. These exercises will help you design your own career development map.
Map your career path
Adding issues is one of the most often used integrative tactics. Research on integrative negotiations has shown that when negotiators bring more items to their negotiation table (e.g., bring up payment terms to leverage them against the price of a product), they are more likely to reach a mutually beneficial agreement. This applies to job negotiations. For example, compared to negotiating only on pay, you can do better by bringing up additional issues, such as paid leave or medical insurance, because additional items increase room for leverage for both parties.
But we don’t believe that there can be a one-size-fits-all configuration of which items should be brought up in a job negotiation. We encourage you to be goal-specific and creative in adding issues by identifying something that actually helps you hone the skills needed for your specific career goal.
For example, if your career goal is to accumulate tangible assets, consider not only a salary but full compensational factors in your job negotiation. If an employer is unwilling to increase your salary, negotiate for better terms in health insurance, paid leave, or meal subsidies.
But if you need diverse and challenging experiences in a job to facilitate your journey to be an entrepreneur, compromise on compensation (including salary) to get better terms in non-compensational factors such as being located in a global city or working on an interesting project from the outset. Depending on your goal, there are many things you can bring up in job negotiations other than salary and compensation; for example, mentoring or training opportunities, freedom to pursue other business activities or hobbies, flexibility in roles, flexibility in joining and developing new projects, job crafting and working mode.
A contingency contract is another strategy often used to make a negotiation more integrative and win-win. This strategy leverages differences in beliefs between the two parties. For example, contingent on whether a home renovation completes on time or not, a homeowner can offer an interior designer a bonus for earlier completion but charge him or her a penalty for delays. We see a couple of ways to apply this concept to job negotiations.
But as in the strategy of adding issues, your own career goal should be a guide in designing the details of a contingency contract in job negotiations. If your career goal is on money and if a potential employer does not allow an immediate increase in your salary, you can propose a performance-based bonus. For example, if your performance exceeds their expectation in one year, the employer can offer you some bonus. We also have seen that some employees negotiate for a salary review in two years in the hope of bridging the gap between their salary aspirations and offers.
On the other hand, if your career goal is more about building up great contacts or expertise in a given job, you can use a contingency contract in a different way. For example, contingent on whether you perform well in a specific period, you can propose that the company offer you more mentoring and networking opportunities. Or rather than asking for an additional salary review meeting, you can ask the company to organize an additional career review so that you can discuss various aspects of your career development with key decision-makers.
It helps to play the long game in negotiating your job. Think and act as the designer of your own career even from the first step of entering your new job. Define your specific career goal and design your job negotiation such that you can discuss multiple aspects of a job that serve your goal. As much as salary matters for due reasons, remember that other things, such as developing your learning, gaining valuable experiences, and broadening your network, can matter for your ultimate career goal.
This way, you will land a job that pays well—not just with money, but with opportunities to become a more valuable contributor to the job market and thrive in your long-term career. The surprising science behind the pursuit of higher and larger goals is that it often brings you much more things than you aim. As the former CEO of Zappos and many others have said, “Chase your goal, and the money will end up following you.”
Sunny Lee is an associate professor of organizational behavior and head of diversity at the UCL School of Management.
Tomas Chamorro-Premuzic is an international authority in leadership assessment, people analytics, and talent management. He is the chief talent scientist at ManpowerGroup and a professor of business psychology at both University College London and Columbia University. His most recent book is Why Do So Many Incompetent Men Become Leaders? (And How to Fix It).