The Secret to Making the 1st Offer

I hope my readers are all making good use of the tight labor market to re-evaluate your current compensation or, if you’re unhappy where you’re working, to think about that move you’ve been putting off for so many months or years.

Just a Head’s Up before moving into today’s topic ~ when negotiating compensation for a new job or seeking a raise and promotion , should you put the first proposal on the table?

“When negotiating compensation for a new job or seeking a raise and promotion, should you put the first proposal on the table?”

I asked this question on LinkedIn last week and here’s the breakdown I got:

Good for the 25%! A solid B for the 46% and “you’re not making enough money” for the 29%.

Let me explain.

Back in 2009, the Harvard Program on Negotiation voted for “it depends” when “the other side has much more information than you do about the item to be negotiated or about the relevant market or industry.”

In that dark age, PON was right to note that “recruiters and employers typically have more information than job candidates do,” about competitive market compensation.

No longer true! There are dozens of resources for employees today to determine how much the market is paying someone just like you!

This means you should be the one making the first offer because it sets one end of the bargaining range (the “anchor”) and will draw your bargaining partner in its direction throughout the course of the negotiation. The psychological effect of anchoring is dramatic, even when you don’t have data to support it.

It’s that simple. Pick the highest number being paid for what you do. Say “I’ve benchmarked competitive compensation and people in my role doing what I do are making” around $150K with a year end bonus and equity or whatever package you can reasonably support.

Remember, you’re entitled to be paid market or something near it. The issue isn’t how big a raise that will be - it’s what your employer would have to pay someone to replace you.

Learn your value and the go get ‘em champs!