This should be considered whether it is a first job out of school or a mid-career job change. Beyond that, there are impacts even when you are working for an employer that you are very happy with. Not engaging in salary negotiation at the right time can have real financial impact.
Throughout your career, you may earn pay raises and promotions within the company that you work for, but for example, when the company offers scheduled raises, as many companies do, the impact of the starting salary with that company is huge.
This is not only applicable to your first job salary and subsequent scheduled pay increases but also to salary difference you may get when you changes roles within an employer. You may transfer into a career requiring significantly increased effort, more duties, or higher responsibilities, and the salary you had negotitated beforehand can genuinely influence the salary you earn in the new job.
As an example, imagine a person starting a new job as a QA analyst in a high tech company somewhere in America. Suppose that person begins with a starting salary of $45,000. Most likely that person will have to put in 6 months to a full year before they are offered their first pay raise. Suppose it is a 10% raise which would be HUGE at many employers. The employee would gain an additional $4500 per annum based on that increase.
Suppose that same person started at $55,000 or more. That same pay hike of 10% would provide the same employee $5500 additional salary per year. With the first salary band, the employee would still be under the $50,000 mark after one full year of effort and after a 10% pay increase, while in the second situation the employee would be at over $60,000 a year after a 10% pay increment.
Imagine the compound impact of these two starting salaries on the person's earning potential. First let's examine a four year timeline, all other things being equal (that is, assuming no pay raises and no promotions). The employee earning $45,000 will have earned $180K in gross salary in four years. The person earning $55K will have earned $220,000 in 4 years. That is a $40,000 difference just because of where the person started in terms of salary.
Introduce the 10% raise after year one and consider the impact as the person continues through their career. The person with a better salary in the beginning will always be ahead of the person with the lower starting salary, ceteris parabis (i.e. same job, same performance). The person with the higher salary negotiation will be inching ahead faster than the person starting with the lower salary. This impact accelerates with each passing year assuming the same % annual pay raise for each.
When negotiating a pay raise, if an employee earning $50,000 earns a 5% raise without negotiating anything extra, that might acceptable. Now consider the impact if the person gets a 15% pay raise because they have been a superstar in the job and they have all the supporting market facts and a performance record to justify it. That employee will have negotiated compensation - $7,500 in an increase versus just accepting $2500. Project that 10 years into the future, and there is a blatant $50,000 impact on the person's earnings.
Experts feel it goes without saying that it is better to try negotiating a raise or an improvement to one's total compensation package than to simply accept what is offered. The first offer is often the lowest offer and can be negotiated higher. This salary negotiation must be done with tact and must be well founded with a supporting case for the pay increase.
One must also analyze factors such as market, corporate guidelines, and personal performance. However when done well, it can really pay off. Remember to consider the value of all factors of compensation when asking for a raise. Some people truly value free time, their quality of life, while others are willing to take a chance and maybe accept stock options in lieu of pay.
When it comes to negotiating salary, be courageous and consider requesting for more.
Trevor Davide Grant is a IT manager in the IT field and has extensive experience in salary negotiation. Trevor has worked for global telecom, power utililties, software development consulting, and a prominent social network. He has learned how to negotiate a salary in the most effective way. Learn great tips on the topic of negotiating salary at www.HowToNegotiateASalary.com.
View this post on my blog: http://travelnursesuccess.com/salary-negotiation-pros-and-cons
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