by Trevor Davide Grant

The amount of salary one makes throughout their lifetime career and the subsequent lifestyle and quality of life as a result of that income depends a lot on the amount of salary a person negotiates before their first day on the job.

This could be considered whether it is one’s first job out of college or a mid career job change. Further, there are financial consequences when you are in a career working for a company that you are even very happy with, of not doing salary negotiation at the right time.

Throughout your career, you may earn pay increases or promotions within the company that you work for, but take as an example, when the company offers scheduled raises, as most companies do, the impact of your intitial salary with that company is measurable.

This not only applies to your first salary and subsequent incremental raises but also to salary market differentials when you changes roles within a company. You may move into a job requiring significantly more responsibility or effort, but the salary you had beforehand can influence the starting salary of 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.

Now imagine that same employee started at $55,000 or even higher. That same pay raise of 10% would provide the same person $5500 additional salary per year. With the first salary, the employee would still be under the $50,000 level after one full year of work and after a 10% pay raise, while in the second scenario the employee would be at over $60,000 per year after a 10% raise.

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 requesting a pay raise, if a person earning $50,000 earns a 5% raise without negotiating anything more, that’s not bad. But consider the impact if the person negotiates a 15% raise because they have outperformed in the job and they have all the supporting research and a track record to warrant it. That employee will have negotiated salary – $7,500 in a raise versus just accepting $2500. Multiply that by 10 years, and there is a $50,000 impact on the person’s earning potential.

Many experts feel it goes without saying that it is better to try negotiating a raise or an improvement to the compensation package than to simply accept what is offered. The first offer is usually the lowest offer and can be improved upon. This negotiation must be done with masterful skills and must be well founded with a supporting case for the 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.

However, when it comes to negotiating, don’t be afraid to consider asking for more.

About the Author:
Trevor Davide Grant is a project manager in the IT field and has extensive experience in salary negotiation. Trevor has worked for global telecom, power utililties, software 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 salary negotiating at www.HowToNegotiateASalary.com.

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Filed under: Business Online

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