One of the most challenging aspects of managing our careers is trying not to flub salary negotiations. When you think about it, we're all salespeople in that moment - trying to sell our services to the employer. Thus, when it comes time to negotiate pay, questions like, "How much am I worth?" "Am I being paid fairly?" And, "How much more can I reasonably ask for?" occupy our thoughts. However, these are the very questions that make us dread the salary negotiation process. Why? The average person hates to haggle. Especially, when it comes to negotiating something as personal as your worth. However, when done correctly, studies show you could earn as much as $600,000 more in your lifetime due to proper salary negotiation.
3 Reasons Failing To Know Your Worth Can Hurt Your Career
One of the best ways to gain more confidence in your salary negotiation skills is to get a good sense of what the market is paying for your skill set. At any given time, you should know the current value of your skills sets based on your location, industry, and experience level. It doesn't matter what stage you're at in your career, you should be monitoring this at all times. Here's why..
#1 - Compensation is not linear. Just because you make $75,000/year now doesn't mean you'll always make that much. Supply and demand for skill sets changes dramatically from year to year. If you aren't paying attention and adjusting your skill sets to stay in demand (i.e. learning new skills employers want most), you could find your salary tumbling backwards unexpectedly.
#2 - Sudden economic shifts in your region. Unexpected layoffs at major employers in your area can flood the market with talented people willing to take a paycut to get hired. Not paying attention to the local supply and demand for talent with your skill sets can result in you pricing yourself out of the market overnight. Conversely, if you live in a city where talent is scarce, you can use it to your advantage by asking for higher pay. Just be sure to keep an eye on the scarcity factor. As more people move to your area to take advantage of the job openings, market rates will adjust down.
#3 - Pay increases require planning. To make more money, you need to map out a gameplan with your manager outlining what additional value you must provide the company in order to be paid more. Knowing what skill level is expected to earn a certain salary level in your profession can be the starting point for that discussion.
Solution? Try A Salary Estimator
Recently, Glassdoor launched a new, "Know Your Worth" salary estimator. You can find out how your current salary compares to those in your geography, industry, experience level. The tool is free and confidential. To use Know Your Worth, you enter a few basic details, including your current job title, employer, current salary, location and years of relevant work experience. When enough relevant data exists, Glassdoor uses its proprietary Know Your Worth algorithm to instantly calculate your personalized market value, which is the estimated median base you could earn in your local job market, right now. To make it easy to monitor over time, Glassdoor plots your 12-month market value on a chart, and compares it to the median pay of similar workers in your local market.
In the initial beta, Glassdoor expects it will be able to calculate an estimated market value for the majority (55 to 60 percent) of the U.S. workforce. When calculating a market value is not possible, users can use another new feature called Salary Explorer. This allows you to explore how a wide variety of factors can influence your pay for different types of jobs in the current market. For example, Salary Explorer can reveal what a few more years of experience could yield in your current field, highlight what a move to another city might mean to your paycheck, or find out what a career change could deliver.
NOTE: Salary is only one aspect of a good pay package!
The one caution I would give people who try this new tool is to remember salary isn't the only factor to consider when determining if you're being paid fairly. Employee benefits should weigh in on your assessment. Things like insurance, commute time, flextime, vacation, and other major benefits should be factored in. Even those crazy perks like snacks, dress code, office environment, the people you work with, and all those other things that define a company culture should be considered. Getting paid the most in salary but hating where you work is just hazard pay - it comes at a cost.
In summary, if you want to take better ownership and earn the most you can over the course of your career, knowing your worth and building up your salary negotiation skills are the key to success. Nobody is going to do it for you. Good businesses constantly look for a deal so they can save money - their employees are no exception. It will be up to your to prove your value and ask for the right compensation level.