Written by Isaiah Hankel, Ph.D.
“I’m sorry, that’s the salary cap for this position.”
What’s a salary cap?
I mean, I’ve heard of a salary cap before, in sports.
But these were for professional athletes making millions of dollars.
How could a job in industry have a salary cap?
I had applied to a product manager position in industry.
I went on a series of interviews and finally got a job offer.
That’s when the negotiating began.
I knew from past job offer negotiations that if I didn’t negotiate, I would look like an amateur.
If I didn’t negotiate, the hiring manger would start to question their decision to hire me.
So I countered the company’s offer with a slightly higher offer.
That’s when the hiring manager said my counter offer was above the salary cap for this position and she’d have to ask for approval.
I knew what she was doing.
She was appealing to a higher authority, which was a very common negotiating tactic.
But still, this particular version of the tactic threw me off.
Was there really a salary cap?
Was the hiring manager mad at me now?
What did she mean she had to ask permission? Who was she going to talk to? Would they would be mad too?
I’d better accept whatever second offer she comes back with.
This is what I thought and this is exactly what I did.
I had been outplayed.
As a result, my starting salary was thousands less than it could’ve been.
Refusing To Negotiate Limits Your Career Trajectory
There’s no harm in asking.
You’ve probably heard this saying before and it’s true.
But more importantly, the opposite is also true…
There’s harm in NOT asking.
If you’re too afraid to ask for a higher salary after you get an industry job offer, you will be left behind.
In particular, refusing to negotiate your first industry salary contract could cost you hundreds of thousands of dollars over the course of your career.
A Houston Chronicle poll of over 800 people found that only 31% of respondents always negotiate salary after receiving a job offer.
This is down from 37% a year earlier.
It gets worse—20% of respondents said they NEVER negotiate salary.
Similarly, a report in the Harvard Business Review found that only 57% of highly educated men negotiate their salary.
The report also found that only 7% of highly educated women negotiate their salary.
That’s right—only 7%!
Why are so many people afraid to negotiate?
12 Tips To Help You Negotiate A Higher Salary Contract
Whether or not you understand how negotiating works, it is being used against you.
This is especially true when you’re applying for an industry job, interviewing, or vying for a promotion.
The problem is that most people, especially PhDs, don’t know how to negotiate salary.
These people don’t understand how negotiation works or why it’s important so they refuse to do it.
The problem is that refusing to negotiate can severely limit your career success.
Being willing to negotiate, on the other hand, can push your career forward.
This is, in part, because your starting salary and career trajectory are tightly linked.
Here are 12 tips on how to negotiate a job offer to increase your starting salary…
1. Realize your starting salary determines your career trajectory.
“What was your starting and ending salary?”
“What was your starting and ending job title?”
These are two questions that nearly every hiring manager or recruiter has the right to ask you and your previous employer.
Of course, as a graduate student or postdoc who has never worked in industry, these questions won’t affect you much.
But once you’re in industry, they will affect you.
Once you’re in industry, the answers to these questions will determine your career trajectory.
The reason is simple, your past job title and past salary will be used as anchors to limit future job offer.
Why would a new company offer you $150,000 to work as a high-level manager when you’re currently making $80,000 as a low-level manager?
Instead, they’ll offer you a low- to mid-level management position for $85,000 and put the impetus on you to negotiate the offer higher.
This is why it’s absolutely critical that you start your first job in industry at the highest possible job title and salary.
2. Create leverage before the negotiation starts.
Imagine you and someone you don’t know are part of a simple experiment.
As part of the experiment, researchers give you $100 and ask you to give a proportion of the money to the other person.
If the second person accepts your offer, both of you keep the portions you allocated.
If the second person rejects your offer, neither of you keeps anything.
The only rules of the study are you only get to make one offer.
The power over dividing up the money is solely in your hands and the power over keeping the money is solely in the other person’s hands.
What would you offer?
If you are like most people, you’d offer $37.
Decades of research, summarized nicely in this Journal of Mathematical Psychology article, show that this is what the average person offers.
The same research shows that if the second person receives less than $30, he or she, on average, will reject the offer.
If you think about it, this is ridiculous.
The rational thing to do would be for the first person to offer $50 and the second person to accept it and for both to walk away happy and richer.
But this doesn’t happen.
The reason this rational conclusion doesn’t happen is because the second person sees the offering party as having more leverage, even though, technically, both parties have the same leverage.
In any negotiation, options are levers.
Whoever has more options and therefore is less reliant on any one option, wins.
In most hiring situations, the interviewing party seems to have all the power.
They seem to have all the power because they’re holding the money.
They’re interviewing multiple candidates and reserving their offer for only one of these candidates.
The only way to put yourself in the driver’s seat of any hiring situation is to create more options for yourself.
This means going after multiple job opportunities at once.
The more companies you have interested in you, the more companies will be interested in you.
This strategy is often referred to as pre-selection, or social proof.
Never go to an interview unless you have other interviews lined up.
The goal is not to brag about all the other employers interested in you, the goal is to put yourself into a position of psychological power.
The other side of the table can always tell if you have options.
If you’re confident in yourself because you have other options, they’ll know it.
If you’re desperate because you only have one option, they’ll know it too.
3. Anchor as high as possible before receiving the first offer.
A University of Idaho study reported in Fortune Magazine shows that making a joke about earning a million dollars influences employers to offer you a higher starting salary.
In these experiments, industry job candidates requested salaries of a reasonable $29,000, an unreasonable $100,000, or a ridiculous $1 million.
The latter two requests were accompanied by a joking explanation such as, “Just kidding—I know a million dollars isn’t possible but I thought I’d ask anyway!”
Even though the heightened salary was known to be a joke, those who requested the absurd salary were offered salaries averaging 9% higher than those who requested a reasonable amount.
Psychological anchors work, even if they’re presented as a joke.
The key here is to make a joke about an impossibly high salary prior to the employer’s initial offer.
4. Make the hiring manager or recruiter give you the first offer.
“Any reasonable offer will be considered.”
This is what you say when asked how much you expect to get paid.
It may seem counter-intuitive but you should always gently pressure hiring managers and recruiters into giving you the first salary offer.
Just make sure you anchor really high before encouraging them to give you an offer (see #3 above).
There are three reasons for this—first, you don’t want to exclude yourself from consideration.
Many hiring managers and recruiters are given specific instructions not to consider people who ask for more than the company’s initial offer.
Second, by coercing the other party into giving you the first offer, you put yourself in a great position to bracket your counter offer and then to split the difference later (see #8).
Third and finally—the first person to bring up money in a relationship always looks selfish.
It’s human nature.
The only way to avoid seeming greedy is to subtly urge them to make the first offer.
5. Do NOT be impressed with the first offer.
“Wow—I’ve never seen so many zeros before!”
“I can’t believe you’re going to pay me THIS much money!”
“Thank you thank you thank you thank you!!!”
These are examples of what NOT to say after getting the first offer.
Yes, everyone knows you are a poor PhD.
Yes, everyone knows that you’ve never received a real paycheck.
But this doesn’t mean you should accept table scraps.
No matter how high the salary is in the first offer you receive, do NOT act impressed.
Instead, stay neutral.
Or better, act unimpressed.
Simply say, “I appreciate the offer” or “thank you for the details.”
The less impressed you act, while still maintaining a polite and positive demeanor, the stronger your negotiating position becomes.
6. Appeal to a higher authority at home.
“Can I take two days to discuss this at home?”
This is what you should say whenever you receive a job offer.
Recall from the above story that hiring managers will often appeal to a higher authority as the reason they cannot pay you more.
They will say there’s a salary cap, or they have to talk to one the department managers or “a colleague” to get approval.
This is just a negotiating tactic.
The good news is, you can use this tactic as well.
Again, just say something like, “Thank you. Let me discuss it at home and get back to you in two days.”
It doesn’t matter if you live at home alone with nothing more than a plant, or if you are married with 10 kids.
Either way, you can always ask to “discuss it at home.”
The hiring manager is NOT going to ask you, “Who are you going to discuss it with!?”
That would be far too personal.
By keeping the higher authority vague (in this case simply someone or something at “home”), you make it nearly impossible for the other person to pinpoint who is making the salary decision on your behalf.
7. Ask open-ended questions by phone, not email.
When you come back to the negotiating table two days later after discussing it at home, you’re in a strong position to ask an open-ended question like…
“I’m really excited about this offer but after discussing it at home, I was wondering if there was anything more we could do in terms of salary?”
The key here is to keep the question open-ended.
Don’t say something like, “I’m really excited about this offer but after discussing it at home, I was wondering if we could agree on a slightly higher starting salary?”
Now, you’ve left them open to put the impetus back on you by saying “Yes, we could go a little higher, what did you have in mind?”
Similarly, don’t say, “I’m really excited about this offer but after discussing it at home, I was wondering if we could go $5,000 higher in terms of the starting salary?”
When you do this, you leave it open for the other party to either quickly agree (which means you’ll never know how much money was actually on the table), or to meet you in the middle by saying “How about we settle halfway at $2,500 more?”
A better strategy is to ask something open-ended like, “Is there anything else you can do?”
This puts the impetus on them to propose a higher offer.
Importantly, whenever possible, have these open-ended discussions in person or over the phone, not by email.
In fact, try to get as many people on the phone together as possible.
Push to do a quick conference call with the hiring manager and whoever else is part of the decision-making process.
The more fully you can get the other party to engage in real-time, the better your chances of getting the salary offer increased.
Sure, you might feel a bit more uncomfortable asking for more money over the phone.
But guess what—they’ll feel more uncomfortable saying “no” too.
8. Ask for double the amount you expect to get and back it up with research.
Once you’ve anchored the other side really high and gently encouraged them to make a first offer (and maybe even a second offer), it’s your turn to ask.
The key here is to ask for more than you’re willing to accept.
The biggest reason for doing this is simple—you just might get what you ask for.
But there are other reasons too.
First, asking for more than you expect to get allows you to increase your salary without looking greedy.
It also helps you make the other side feel like they won (see #12).
Second, by asking for more than you’re willing to settle on, you give yourself space to make concessions.
Let’s say a company offers you $80,000 per year and you were really hoping for $90,000 year, which is about 12.5% higher.
Under these circumstances, you should ask for $100,000.
By asking for $100,000, you make room for the other side to meet you in the middle by lowering your proposed amount to $90,000.
This technique is called bracketing.
Human beings love to split the difference when negotiating because it seems fair.
But humans also love doing things for a reason.
As such, you should always express the reason WHY you’re asking for a higher salary.
The simplest way to do this is to research the highest salaries given for the position you’re interested in.
All you have to do is go to Salary.com, PayScale.com, Glassdoor.com or similar websites to find an URL you can reference.
Don’t make the mistake of not giving a reason for your counter-offers.
If you don’t provide a reason, the other side will assume the reason is because you’re a greedy jerk.
9. Be overly positive and polite the entire time you negotiate.
Too many PhDs make the mistake of thinking that salary negotiations should be tense.
It’s you versus them!
Either they win or you win!
This kind of thinking can quickly derail any employment opportunity.
Getting angry and tense does not strengthen your negotiating position, it weakens your position.
The worst thing you can do during a salary negotiation is try to get your way by acting firm, condescending, or annoying.
These foolish tactics will just make the other side either fight harder to get what they want or not want to work with you at all.
A better strategy is to stay overly positive and polite.
If you think you’re being too polite, you’re not being polite enough.
In this way, treat negotiations like networking.
Always be polite, especially by phone and email.
You never know who else is on the call or who is being forwarded your emails.
Never, at any time during a salary negotiation, decrease your enthusiasm for the job.
Enthusiasm will not only keep the conversation coming back to you and the work you can do for the company (see #10) but it will also inspire the other side to pay you more.
10. Bring the conversation back to the value you will add to the company.
There’s one cold hard truth that you should always keep in your mind when negotiating a salary contract—the other side doesn’t care about you.
Not really anyway.
They don’t care that you’ve been working 18-hour days in your lab for a principal investigator that treats you like an indentured servant.
In fact, they will use this against you to offer you a lower starting salary.
They don’t care that you’re getting paid less than a librarian or custodian either.
Instead, they care about the work you’re going to do for them.
Never negotiate from a position of weakness.
Always bring the conversation back to your professional strengths and overall value you’re offering to the position.
Make everything you say about them, not you.
11. Secure the salary first before negotiating other benefits.
For most biotechnology and biopharmaceutical companies, offering a benefits package is standard.
Many of these companies get tax write-offs for perks like company cars.
Most of these companies are also required to offer you healthcare benefits and vacation packages.
On the other hand, they get nothing for giving you a bigger paycheck.
As a result, they want you to focus on negotiating your benefits over negotiating for a higher salary.
Don’t let hiring managers and recruiters muddy the waters by negotiating your salary package and benefits package at the same time.
Don’t let them mix and match job offer items.
Instead, ask them to “set aside” the benefits package until you come to an agreement on the salary package.
Once you’ve secured your salary, you can start negotiating for a better benefits package.
You may not be able to convince an industry employer to sign with a new healthcare provider just for you, but you can get them to increase your signing bonus or give you an extra two weeks of vacation.
The key is to use the same above negotiating strategies, including bracketing and asking open-ended questions, to increase the size of your benefits package.
12. Leave the other side feeling like they won.
When you’re negotiating for a new job, time is always on your side.
It might not seem like it, but it is.
This is especially true if you’ve created leverage by going into the negotiation with more than one option.
Your goal should be to get the other side to invest in you as much as possible.
Get them to send you as many emails as possible.
Get them to talk with you on the phone as much as possible.
Get as many people from the company involved as possible.
Request a second tour of the office or to see one of their satellite facilities.
The more you get them invested, the more leverage you’ll have when it comes time to talk about your salary.
Spending this kind of upfront time also helps the other side feel like they won when they finally do get you to sign, even if they had to increase their salary offer.
Find as many ways as possible to help the other side feel like they won.
Remember, you’re going to be working with the people you’re negotiating with.
This is another reason why bracketing and asking open-ended questions are so important—it helps the other side feel like they won.
Most importantly, as the negotiations draw to a close, don’t go in for the kill.
Do NOT try to squeeze every last penny out of them.
If you’re down to negotiating for an extra three paid days off for a wedding in June, let it go.
Let them feel like they won.
They’ll repay you by making your first few months at the job more positive, productive, and rewarding than it might have been.
Negotiating your salary is a marathon, not a sprint. Take your time writing good emails and following up with detailed questions. Engage the other side on every level. Stay polite and enthusiastic and keep bringing the conversation back to the great work you’ll do for them. Draw out negotiations over your salary. Then draw out negotiations over your benefits. Make concessions, but make them small and always ask for something in return. At the end of all this, the other side will be too invested in you to turn back.
To learn more about transitioning into industry, including instant access to our exclusive training videos, case studies, industry insider documents, transition plan, and private online network, get on the wait list for the Cheeky Scientist Association.
Isaiah believes that if you feel stuck somewhere in your life right now, you should make a change. Don’t sit still and wait for the world to tell you what to do. Start a new project. Build your own business. Take action. Experimentation is the best teacher.
Latest posts by Isaiah Hankel Ph.D. (see all)
- Industry Transition Spotlight: Morgan Bye, PhD - November 16, 2017
- Transferable Skills (Cheeky Scientist Radio) - November 9, 2017
- The Top 6 Most Difficult R&D Interview Questions Every PhD Should Know - October 28, 2017