The Single Biggest Misconception About Negotiating Salary

Why giving is so important in salary negotiations

Reid Hoffman, the founder of LinkedIn, has an excellent book for managers and leaders of companies on how to manage their talent in this new era of labor. He calls businesses to think of employment as an alliance with their employees. This alliance is a mutually beneficial deal with clear outcomes, where both sides benefit. 

This idea can also be applied to workers on how to manage upwards. When you are talking about your salary with a company, you are negotiating a deal. The most effective way to negotiate this deal is to think of it as an alliance. 

Most professionals have a win-lose paradigm when negotiating with a company. They believe if they “win” a salary negotiation, the company has agreed to pay them a higher rate in exchange for the same amount of work. 

This is actually never true in the tech industry because promotions come after impact. To get any meaningful compensation increase you have to perform at the next level for a period of time before you get the promotion and compensation increase. 

Therefore instead of asking yourself how you can get a higher salary, reframe the thought process and see how you can create more value for the company. If you’re willing to think differently, your future compensation and raises will increase exponentially, not to mention the autonomy and respect you get from your employer.

What happens when you make a company your ally?

At Rora, our most successful negotiations with the greatest compensation increases occur when we negotiate the level of the offer. By increasing the level of the offer, we have increased the work output that the manager can expect (a win for the company) and we have automatically increased the candidate’s compensation and title (a win for the candidate).

To negotiate the level of your offer you first need to understand the challenges the manager faces and then show your manager how you can solve those problems. We have our clients create an Impact Roadmap outlining the impact they hope to create and collaborate on this with their manager. When you make it clear that you will require less training and/or have more impact, your negotiation request will be much better received.

Here’s an example of the uplevel at play. One of our clients got an offer at Microsoft that was a level below what we believed she should be based on her years of experience. The recruiter was not helpful, they had no understanding of the proper level. What was required was negotiating with her manager and setting clear expectations about the impact she wanted to have and problems she could solve. 

This process took an additional 1.5 months but ultimately they changed her level and increased her compensation by 40%.

One Example of a Long-Term Alliance

One of our clients was employee 50 at a Series A startup. He began as an entry level engineer. In 4 years, he went from Senior Engineer to VP of Engineering and  grew his compensation 10X, by millions of dollars.

How did he do this? He focused on giving and creating value rather than consistently pushing more more compensation. He actually barely negotiated his initial offer.

Sure, he joined a growing startup, which was a stroke of luck, but he also made sure to do three things:

1. He did good work. He also understood that good work on its own wasn’t enough to get promoted so quickly.
2. He “ran for office” inside the company. He built relationships with the right decision makers in the company to understand the company’s definition of impact and make his work and influence known.
3. He was not afraid to leave. Given the great feedback he received and results he delivered, he would have left if promotions weren’t given regularly. He made the company ask itself, “Do we want to promote him to do more, or do we want to potentially lose him?”

When you focus on giving and creating impact first, you put yourself in a strong position to get a better title and raise—even if that happens elsewhere.

Everyone should negotiate their salary and advocate for their worth, it’s a necessary skill. However, it’s not sufficient just to ask for more compensation if your goal is a 10X change in compensation. 

This is because the most meaningful changes in compensation only come from a long term focus (3-4 years) rather than 10% changes which can come every year in the form of a raise. The most successful negotiators are the ones who give first – and they negotiate for important projects and impactful teams first, not compensation.

The biggest takeaway? Negotiate your work before you negotiate your compensation.