Last year, I made a video “Why you should not negotiate for salary.” In the video, you’ll find some ground rules and best strategies for negotiation, and, of course, the reasons why you should not negotiate for salary.
Today’s article is about negotiating counteroffers. Counteroffers create chaos in people’s decision-making process. The way people describe their mental state often reminds me of an abyss. You don’t know what it is. But all of a sudden, you are emotionally sucked in.
Detach Your Emotions From The Counteroffer
• When we are disappointed about a counteroffer, we tend to wrap up the ongoing negotiation for a new job offer way too quickly.
Don’t attach too many things to that counteroffer to keep your sanity.
Don’t get me wrong; a counteroffer can reflect how much your employer appreciates you. Still, this appreciation can be exaggerated by how much they need you now or be limited by how many constraints they have on hand.
Negotiate Only When You Need To
• You are open to staying, but the current salary is below the market. In this case, the negotiation is to do justice to your value.
• You are open to staying, but there’s a superb offer elsewhere, giving you a pay rise and a higher position plus other good things. In this case, the negotiation is to do justice to your opportunity cost.
We usually only start counteroffer negotiation after getting a concrete offer outside? Is it a good approach? Think again.
To Begin Negotiating, You Don’t Have to Resign.
Here’s the conventional process which I will call the “Resignation” approach: 1. we interview with the new company; 2. get a job offer; 3. negotiate and finalize the offer in complete detail; 4. inform our current employer with a resignation; 5. sometimes, a counteroffer gets triggered.
When I was a headhunter, I used to tell my candidates, “NEVER resign until you get the offer letter signed.” Thanks to fellow headhunters and myself, most people know it by heart today. It still holds — if you want to resign, you better make sure you have a place to go.
But who says that we must negotiate with a resignation?
Negotiate, Don’t Resign.
Employers often get caught by surprise when a “resignation” happens. By then, they have minimal time to respond creatively, such as re-designing the role or getting more budget approved. In the end, a counteroffer is what they manage to scramble together in that short period.
As mentioned earlier, this could mean two things: you might get a better offer if your replacement is tough to find in a short time frame. Or you might be missing a great offer that your current employer would have provided if given more time.
Need a Salary Correction? Ask Your Current Employer First
If your current salary is below market, you desire a “salary correction.” Don’t jump in right away when a company offers you such a correction. Let’s do a simple maths here:
Say your current salary is 25% below market. (I’m assuming that you have enough evidence to support this statement)
Imagine your new job offer gives you 20% above your current salary. Most likely, you find it hard to negotiate further — after all, 20% is a reasonable percentage. You will still feel shortchanged because you started with a lower base. You think that you have no better choice.
So you go ahead to get the final offer and shoot a resignation letter to your employer. If they immediately express interest in working out a counteroffer, it’s great. But if they are painstakingly slow and inefficient (usually also the reasons you didn’t love them), you suffer emotionally. Remember, you have a job offer pending. You have asked the new employer for some time to get back to them, but they can’t wait forever.
Now, imagine that you initiate this discussion with your employer before the offer, e.g., during the final stages of the interview process.
You politely tell your employer that an opportunity is “at the final stage” and “may come through.” Many things are still “unclear,” but based on what you know, “many things are exciting,” and, oh, by the way, they are looking at the region of “20–25% increment,” although not confirmed.
Nonetheless, you still see “many great things” in your current employer. You feel like staying but torn. You want to talk to your employer about this and ask them what you should do; You are open to what they propose; You want things to work out between them and you, and this relationship deserves a good chance.
If you get a counteroffer, whatever the X% increment is a bonus. Give this number to the new employer to make the new job offer based on your revised salary number.
What if the offer falls through? Well, remember you did not resign. You were not even determined to leave your current company. You were merely discussing a possibility of you leaving them. But now that they have revised your work condition, you have become more comfortable and committed to staying.
How To Manage Relationships When Negotiating
We aim to optimize offers from the prospective employer and your current employer in the example above. At the same time, you don’t want to appear as a “tough-negotiator” who wants to extract value and has no sincerity; You don’t want to burn bridges.
Negotiation is complex. Negotiating with two parties at the same time is even more complicated. We need to manage the communication very artfully. It would require a separate article to go into those details, but in principle:
1. Be Reasonable: Always stand on a solid ground of why you are asking for more.
2. Respect Constraints: If they really can’t bend something just for you, respect it.
3. Don’t Haggle Everything: Focus on the critical piece of what you want, and go after that.
4. Provide Clarity: “I don’t yet know what my salary expectation is” also gives clarity.
5. Be Gentle but Firm: Your tone and attitude to be gentle while your message to be firm.
We often match the tone with messages in communication. In negotiation, it could be the opposite. Be very firm about what you need. But be very gentle and use bonding language. It’s not about sugarcoating your message but about reminding the other party of the purpose of negotiation. The ultimate goal of negotiation is to create a new relationship, not fight over something.
The ultimate goal of negotiation is to create a new relationship.
Remind the other party (and yourself) of the vision of a partnership; Express your keen interest in growing that vision; Use bonding language to draw people closer. Only then can both parties better endure the pain of a temporary separation (negotiation).
The Best Decisions Are Made Before Offers
Negotiation is a dynamic process where many pieces of the puzzle float around and evolve all the time.
The best decisions are made before offers come through. In simpler terms, if you know what you need and want, no decision is too hard. Here a good decision is a set of measurements. It should at least consist of:
• A bottom line below which I will walk away
• A moderate line which will make me happy
• What matters to me the most in just any job
If you can anchor yourself against these, you will also be more predictable and reliable for others. You will be more determined and not easily swayed by the moving current in the negotiation process.
Check out the video below 👇 for fundamentals. If you face a complicated scenario and need a salary negotiation coach, reach out to me. My personal best record is helping a client get $38K more through negotiation.