- Posted by Stephen White
- On November 1, 2018
- 0 Comments
- how to negotiate a salary increase, negotiate your salary, negotiate your salary like a pro, salary negotiation, tips on how to negotiate a salary increase
What does professional sports teach us about the salary negotiation process? As I am writing this star NHL forward William Nylander is in the midst of contract negotiations with the Toronto Maple Leafs for a contract renewal.
For those who don’t follow hockey religiously, William Nylander is a hot 22 year old player and and former first round draft pick. In 198 NHL games he has logged 143 points, and was third on the team last year in points. The Toronto Maple Leafs have indicated they want to sign him. Both sides want a long–term deal. According to news reports, Nylander wants between $8 and $9 million per season. Maple Leafs’ management is purportedly willing to go as high as $6 million.
For those of us whose income is substantially less than a professional athlete these amounts seem staggering. However, watching this exercise unfold is important as a learning experience. For those who may be contemplating approaching their manager for a salary increase, or who may be considering leaving their present role due to salary issues, it can also be insightful.
Take a Strategic Approach
So, what lessons does this experience provide for those seeking to negotiate or renegotiate a salary? Here are some thoughts:
- Be Strategic. Don’t go into a salary discussion without having done your homework. Doing so is not only extremely risky, but it will work to your detriment in the long run.
- Let the other side make the first offer. Think of a salary negotiation as a piece of land between you and your employer. That land mass could be small or vast. You don’t know. Until you learn the other side’s starting position you cannot effectively determine the distance between you and them. Knowing that, let them make an initial offer.
- Take time to do your research. The internet provides multiple venues through which one can ascertain what comparable positions pay. Websites such as Linked In, Glass Door and Indeed have tools that provide a general idea of what positions similar to yours may pay. As well, Human Resources professionals who are involved with salary surveys are also an excellent source of information. Similarly, if you are able to get hold of salary surveys published by major consulting firms these documents yield a treasure trove of valuable information.
- Understand your market value. The circumstances surrounding Nylander are helpful in illustrating this point. By all accounts Nylander is a promising performer. Unfortunately, on a team in the second year of a major re-building program he isn’t the only promising player. Those who follow hockey will tell you the Maple Leafs are laden with talent this year. Auston Matthews, Matt Marner, Zach Hyman and John Tavares are just four of a bevy of talented young players in the Leafs’ organization. In this case as in yours the laws of supply and demand and competition play a role.
- Understand your organization’s needs. Right now, the Leafs have a number of extraordinary young forwards. Where they are weak is on defence. They lack one or possibly two experienced defencemen. If Nylander were a defenceman it is possible his value to the team may be heightened. Again, the laws of supply and demand come into play here. If you have a unique skill, insight or ability then perhaps it will command a premium rate.
- Know the other side’s bargaining position. It is fine to identify what you want, what you will settle for, and what you won’t accept. However, the converse of that is also true for your employer. In the case of the Leafs they have a salary cap, and that salary cap is a determining factor in identifying their bargaining room. So, if the salary cap is, for example, $55 million, and the total salaries of players under contract, minus Nylander, is $48 million, that tells you that the bargaining room is up to $7 million. That suggests there is still room for the Leafs to increase their offer. If the bargaining room were $6 million, that may indicate the team has made its final offer.
- Recognize that your worth can change over time. In Nylander’s case, he has been trying to negotiate a deal since the summer. Training camp has come and gone, and the NHL season has already commenced. At the time of writing the Leafs are sitting atop not just their division but the whole league. Several other Leaf players, including Matthews, Marner and Kapanen, are off to a terrific season. The longer Nylander sits out the rustier he gets, the more his credibility diminishes, and the less apparent his value is to the team. From an employee’s perspective, the longer your manager balks at making meaningful salary increase the less likelihood you have of getting what you want.
- Know your BATNA. BATNA stands for “Best Alternative to a Negotiated Agreement”. Essentially, it means this: what is your alternate game plan assuming the other side doesn’t budge? In the case of Nylander, he could open negotiations with other teams. He could sit out the year. He could go and play in another hockey league like the KHL. In the case of the Leafs they could trade him. All of these other options may be acceptable to one or both sides, or perhaps not. Knowing the alternatives provides options on how to respond.
- Think outside the box. When two opposing sides in a salary dispute reach an impasse one way of breaking the deadlock is to offer something of value that doesn’t increase the annual salary budget. In the case of Nylander, it could be a signing bonus or a longer contract length. In the case of an employee it could be one of several options. For instance, an employer could provide a signing bonus. They may agree to a bonus that is not pro-rated to an employee’s start date, or does not require a waiting period. They may consent to providing a monthly travel allowances, or depending on your level, a company vehicle.
Salary negotiations, like any form of contract negotiation, requires one to put aside their personal commitment and differences, and to examine the issues dispassionately. This is often difficult for people because salary equates to our sense of self-worth and the value others ascribe to our work. All of us want to feel valued and appreciated, and that implies we also want to be compensated well and make more money. If we are honest, most of us likely feel we are deserving of more. Unlike NHL players though few of us have an agent working on our behalf. That being said, anyone involved in salary negotiations needs to be strategic, plan their approach, and ensure they are armed with reliable information and a realistic understanding of their market worth. If they don’t, they could find themselves in a weakened position both personally and financially.