The internet is brimming with stories and advice about the importance of negotiation. It is common sense to think an offer will be initially presented to you on the lower side of the salary scale. That is not always the case.
We see plenty of guidance on how we must push to get no less than what we deserve—our market worth, or the highest we can achieve. While it is usually safe to engage in one or two rounds of negotiations before signing the offer letter, remember that a job offer is not a one-off transaction.
It is the start of a potentially long-term relationship that often succeeds when it is sustainable for both parties, considering the tricky dynamics of the job market including supply and demand of talent at any point in time. There are situations in which you should not negotiate, or at least be cognizant of the extent to which you may safely do so. I’m not talking about take-it-or-leave-it situations.
On the long-term, securing your desired package may cost you your job. Here are some useful lessons I learnt first-hand.
Better off not negotiating
• Perceived value: Sometimes you may have to skip negotiation not because you may create a sense of conflict with your potential employer. It is usually fair to negotiate—sometimes lightly and sometimes firmly.
However, say you received a job offer and you believe the package is lower than your market worth. Push for a better package and you end up getting what you wanted. A few months later, the management starts questioning your value, and whether you’re delivering the level of work that justifies that pay. If you’re highly paid compared to colleagues or industry average, you will be stuck in a probing, all-eyes-on-you situation.
- Change management: Say a new management comes on board and reviews expenses, and realizes that they can replace you with a less senior resource or with one on the same level for 20 per cent less your salary. They may conclude that you are overpaid not because of the work volume or quality being delivered, but because a colleague with the same job description is getting paid less.
Remember, decision-makers in these matters are often not aware of your unique value proposition compared to colleagues, and it wouldn’t matter even if they get positive feedback from the line manager. After all, cost-cutting measures at the corporate level spare no one.
- Others like you may accept a lesser salary. Even if the employer understands that you have a unique skillset, they don’t believe it’s hard to find someone as competent who would accept a less competitive salary.
This is especially true when you are not part of a core business function within the company. It also happens in situations where the company unexpectedly goes into cost-saving mode because it is not doing well, the industry is in agony (e.g., think of the cyclical nature of sectors such as real estate) or due to unfavorable macro-economic conditions impacting business performance.
- You’re fired: The risk in such situations is that your employer won’t likely negotiate with you to reduce the salary because doing so may affect your morale and performance. They may fire you and replace you with a more affordable resource.
- Cost-saving mindset: Even without a reason, a hefty salary always raises questions. Understandably, companies, like people, don’t like to pay and always strive for optimal savings. They may have believed they made an exception at the point of hiring given your skills, but the cost-saving mentality will inevitably bounce back soon enough.
I have also experienced similar backlash as a result of negotiating with suppliers and vendors for ongoing services. And it goes both ways. `Say you signed a monthly retainer agreement with a PR agency, and you negotiated so well to ensure getting the lowest retainer possible.
The agency went for it because they desperately need a new client, or they want to build their credentials. Three months later, the agency realizes they are giving you services worth more than your monthly retainer fees.
Time spent on handling your account is simply not worth it from an agency business perspective. The agency is now faced with a situation where they either give you less attention as a client—allowing them to shift resources to their key accounts who are paying more, and consequently the quality of service you are receiving will suffer, or they would request a raise, or even fire you as a client, especially if there is a new management, a merger or an acquisition of a boutique agency by a global firm.
No one advice fits all
The key to making the right decision is to know when to negotiate intensely, when to tread light and when not to negotiate at all. Your decision should factor in the employer’s culture and established policies, the extent to which you need the job, how long you see yourself with the company, how low the initial offer is, the job market in general, the stability of the industry you’re in, among others.