Avoid this COSTLY salary negotiation mistake!
Read time: 4 mins
This simple salary negotiation mistake can cost you dearly. Let me explain how.
I recently spoke with a coaching client, Dan, who was suspiciously behind in compensation for his level and years of total experience. When we dove into his background, I discovered a crucial error…and one he was about to repeat again.
Dan had been working for the same employer for the past 10 years before an untimely layoff.
One salary negotiation mistake cost him for years.
Diagnosing why his most recent compensation was so low, it turns out that his issue started 10 years ago with a small salary negotiation mistake.
His original offer was low.
With his original offer, the employer determined his pay. No negotiation, no clear sense of what he should be demanding nor an understanding of what the market was paying for similar work.
He simply let the employer make an offer and he decided to accept it, confiding “well, it seemed okay at the time and I really needed a job”.
(In other words, he lowballed himself during the process.)
As a result, his low wages followed him throughout his career.
It cost him $100,000’s in “lost” compensation in the end.
Worst of all – he was interviewing for a new job and making the same mistakes with the recruiter.
Here’s an all too common scenario.
Imagine you’ve been working for the past 10 years for the same employer in the same role. Suppose when you started, you didn’t negotiate the right salary – let’s say you were at $50,000, when the rest of the market was at $65,000.
As you progress through your 10 year career, you received the industry-standard cost of living adjustment of 3% each year.
Your salary progression would look something like this:
Year 1 – $50,000
Year 2 – $51,500
Year 3 – $53,045
Year 4 – $54,636
Year 5 – $56,275
Year 6 – $57,963
Year 7 – $59,702
Year 8 – $61,493
Year 9 – $63,338
Year 10 – $65,238
It would take you 10 years to reach the compensation you should have been earning to begin with.
But let’s break it down even further. Let’s look at the person who started at $65,000.
Year 1 – $65,000
Year 2 – $66,950
Year 3 – $68,959
Year 4 – $71,027
Year 5 – $73,158
Year 6 – $75,353
Year 7 – $77,613
Year 8 – $79,942
Year 9 – $82,340
Year 10 – $84,810
So, after 10 years, candidate 2 has an annual base salary $19,572 more than candidate 1.
But if you factor in total compensation during the same period, the numbers are even more skewed.
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The impact of compounding income
The total 10-year compensation – candidate 1: $573,190
The total 10-year compensation – candidate 2: $745,152
That’s a staggering difference of $171,962!
This doesn’t even account for bonuses, 401(k)s, or other salary-related benefits paid out during the same period of time.
As you can see, negotiating the right starting salary can have a massive impact on your long-term earnings.
Learning how to negotiate your salary effectively is a MUST.
Dan’s situation wasn’t an easy fix. There’s no changing his past compensation, but he could address his strategy going forward.
We taught him how to value himself properly, using techniques to determine the proper salary range for his experience-level. Additionally, we also worked on a strategy to upgrade his resume and networks to attract higher quality employers.
And we created a job search strategy to target pay leaders in his industry.
Finally, we taught him now to negotiate his next job offer so he wouldn’t leave a dime on the table.
Armed with this new strategy, Dan managed to land a new job earning 22% more than his previous role.
While he won’t be able to earn back all of the lost income, going forward he will maximize his total compensation.
Start off with the right income level
Starting off with the appropriate salary impacts all aspects of your compensation. You’ll earn more, have larger salary increases, bigger contributions to your 401(K), and more significant bonus potential.
So, learn how to value yourself properly to set yourself out on the right foot. And master salary negotiations so that you don’t leave a dime on the table.
A final note on compensation – Act Like An Owner
To act like the CEO of your career, you must take command of compensation. There’s no such thing as an “agent” to do it for you.
I do offer tools to help you attract the right kinds of opportunities, and how to negotiate the best possible salary for yourself.
The investment may seem sizable. Consider that an increase of even $1000 in base salary will pay for itself 10x over the course of decade.
It seems like a worthy investment to me.
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Whenever you’re ready, there are 2 ways I can help you:
1 – If you’re still looking for traction in your business, I’d recommend starting with an affordable course:
Resume Rocketfuel: My best-selling course will teach you the exact system I developed to help over 1000 people write resumes that land great jobs, myself included.
The Ultimate Jobseeker Bootcamp: This A-to-Z guide takes you from job search all the way to offer negotiation, provided detailed, recruiter-proven strategies.
Unlocking LinkedIn: This course teaches how to set up a profile for maximum discoverability, techniques for accessing the hidden job market and how to cut in front of the long application lines!
PS…here’s a special discount for newsletter readers: Use code “TAKE15” for 15% off any course or bundle!
2. Gain extra personalized clarity with private 1×1 coaching
Have a specific question or strategy that requires more tailored help? I offer limited private coaching sessions. My clients have had too many “ah ha!” moments to count.
Happy hunting!
-Bryan
