Ep#7 - Navigating the Art of Negotiating Compensation

So this recording is about a topic that a lot of people find it difficult to confront, and that is negotiating their compensation. Be that salary or bonus or both. A lot of what I cover in this video could in fact apply to asking for, or negotiating many things such as a promotion or change in title or flexible working of some sort, and may even apply to things you find difficult to ask for in your home life with friends or family. This video will focus on some aspects of negotiating that differ between men and women. But I should say, I know that it isn't just women that find this difficult, lots of men do too.

And possibly people brought up in the UK find this a little harder than for example, people brought up in the United States. We're just not a culture of bargainers or negotiators. We feel it's rude somehow. And we've all been brought up knowing what happened to all of the twists when he asked for more. I would also have to say that I probably wasn't that good at this myself.

So I completely understand how you feel if you find this difficult. I certainly got better during my career. And I wished I'd done some of the research that I'd done for this video earlier on in my career. So have a listen and hopefully you'll go on to negotiate fantastic packages for your life, right?

From the outset. That will compound and compound again, as you go through your career. As usual with my tools. I wanted to just start with some of the psychology behind this issue before moving on to more practical matters. So why do we find it so hard to discuss money and ask for more? And why do women in particular find it so painful?

So painful. In fact that they'll often give up the idea without even trying. I've tried really hard to think about what it is that causes me discomfort. When I think about it. So for me, it feels like something quite deep, almost primal. That's holding me back. I can't quite explain it. And generally that sort of feeling where you feel as a barrier, but you don't quite know what it is. Usually as a sign that it relates back to some form of childhood conditioning.

So it may be that, but I think there's also something about some concern about how I'm going to be judged for asking almost. Who does she think she is? She's so ungrateful. She should be happy with what she's got. How dare she. And hence the title of my video. Who do you think you are? Which also gives me a great opportunity to reference one of my favorite bands, the spice girls.

So maybe think about that as your, as your theme song for when you go to negotiate. Negotiate your salary.

I know that for some people also the idea of a potential, no, just not just the ask, but also the, no, it's very difficult. And I will come back to that later and talk about some ideas about how you could deal with that. But overall, I think it is something to do with how you value yourself and whether you believe that you're worth it or not. whether you're worth it to go through all the pain and discomfort of asking, because that's what you believe is right.

And this obviously comes back to the perennial issue of inner confidence and you actually believing in your value. So anything you can do, any other work you can do to bolster your confidence, to look at your achievements and really. I understand how fantastic you are, will also be really helpful when it comes to negotiating anything. And I'll come back to some ideas about how to bolster your confidence in this context a bit later when we get to practicalities.

But I wanted to just share with you some facts and figures that I've discovered. So, so one of the things that I'll hear most often and I've read about most often is that women don't just don't ask, they just don't ask for things. and I always remember this article in the financial times, a long, long time ago, when I first talk it started talking about gender differences. It was, a quote from a female lawyer who was passed over for partnership and was told, well, we, we just didn't realize that you wanted to be a partner. And her response was, I worked like a dog every day of the week, until late into the night, doing everything you asked, what earth gave you the idea that I didn't want to be a partner. But the issue is she didn't make it clear to the partners and that's what they were expecting.

And this concept was picked up by Sheryl Sandberg in her book, lean in, and she described it as Tiara syndrome. So basically you put your head down and you do an amazing job. And you really hope that everyone will notice what a fantastic job you're doing. And at the end of the week, They'll come with to you with a lovely velvet cushion, with a beautiful Tiara on it, and they'll give it to you and say, congratulations.

You've been amazing. Unfortunately, we know that just doesn't happen. and another example that I read about was a Harvard professor who was giving out teaching internships and he was questioned about why did he give so many to men all the time? And his response was I'm willing to give it to anyone who's suitably qualified and doing well in their course. But I never get asked for this by women.

Only the men come forward. There's a, there's a particularly nice experiment that I like in the book by Linda Babcock. women don't ask involving boggles. So the game with the letters where you press and they jump up and you have to, you have to make wise out of them. so they took some, some, subjects to be part of this experiment and said, if you play this game together, we'll pay you afterwards. So at the end of the game, they said to both of them, here's $3.

Is that okay? If the subjects then ask for more than $3, then they would give them 10. but if they just complained about it, they'd get nothing. And what they discovered was that nine times as many men, as women asked for more money, Which is just an incredible statistic. If you think about it, both genders complained if they didn't get paid more than $3, but that had no effect.

And interestingly, both the men and the women felt that they'd played just as well as one another. It's just that the women. Didn't ask some more. They complained, which is, if you think about it an indirect way. I have asked. Asking for more. But they didn't try to fix their unhappiness by going further and actually asking. And one particularly interesting thing about this and a number of the experiments referred to in that book. It's not just older women that were part of the experiment that experiment had women in their twenties in it.

So you would hope that women who've. You'll have the benefit of having had the feminist movement evolve and see increased representation of women in the workplace. Would have perhaps changed their response, but that doesn't seem to be the case. in another study in the same book, Linda Bob asked people who received MBAs. When you got your first job offer after getting your MBA, did you negotiate your salary? So 70% of the women did attempt to negotiate, but a whopping 57% of the men negotiated and all of the people who negotiated, they were able to increase their starting salary. By over 7%. So you might say, okay.

7%. So if the salary was a hundred thousand fees, then. Then they get $107,007,000 a year. Maybe that's not such a big difference. Is it really worth it for the pain? But if you extrapolate that out and assume that you and your colleague give them the same raises, same promotions. 35 years later. You would have to work eight years longer than your colleague to be as wealthy as them. At retirement.

So while $7,000 might not be a big deal. Perhaps eight years more work really is. And lastly, in a survey of several hundred people across the internet. 2.5 times as many women, as men said, they had a feeling of great apprehension about negotiating. And the words that we used by men when negotiation were, was like exciting and fun.

Whereas women were. We're describing negotiation as scary and metaphors used by men were things like a wrestling match, a ball game. And for women, it was going to the dentist. So why is there this? Why is there this big difference and does it matter? Does it matter why? In fact, so I, I think it probably does matter why. not just for women, but also for men as well, because if we can understand why it's there, then perhaps we can start to address it and behave in a slightly different way when we're dealing with things like compensation. most of the research that I've read attributes, why women find negotiating harder to first of all, the way we're brought up and socialized as children, and then the way society reinforces those attitudes that we've absorbed to us.

We have been younger. Obviously back in the midst of time, the gender roles were split by necessity. Men would go out, hunting, women would stay at home or they might forage, but they'd be looking after children. They'd be looking after the home. And then this, these roles were sort of continued by cultural tradition and they sort of seemed correct and appropriate to people.

So it carried on until quite recently, in history. And one of the interesting things to think about is that sometimes these rules, because children can see them grow whilst they're growing up. It can sometimes be a self fulfilling expectation. So they'll see the roles assigned to men and women. And then there's a risk that they will develop the skills and characteristics that they would need to perform. The roles that they associate with. Gender. Yeah, hopefully that's really changing because nowadays I think. Play for children is different.

And what they see in the world is different. And the games that girls play are less about dolls and tea sets, and the boys play less about tractors and trains. But you still have to look at the stories that we tell our children. So even recently, something like toy story. If you look all the male characters, go off on the adventure to try and solve a problem.

And all the female toys stay at home, sort of looking after all the other toys who are left. in the house. And generally even today, when girls are at play, they will tend to play games that involve some level of collaboration and looking after one another. And if any conflicts arises, they'll often end the game.

Whereas you'll find boys more often playing competitive games. And if there's some sort of conflict or argument. They'll often go to a set of. Of predetermined rules and then continue on. So some of the research in this area would suggest that. Sometimes there's a risk we're teaching girls to subordinate their needs to the needs of other. Whilst with. We're teaching boys to take charge of their environment.

And you can imagine how that plays out when it comes to negotiating compensation. The other thing is that men do feel this sense of discomfort often about negotiating, but they'll push through it. Whereas often for women, it completely overwhelms them and they give up. one of the other reasons why it may be different for men versus women is how much more important relationships and interconnectedness can seem to be for women than for men.

So the technical way this is referred to is that men. Tend to have more independent self schemers and women have more interdependent self schemers. So men worry less about the damaging effects of a conflict and you'll, and you'll see this sometimes with men, there'll be a huge blow up. They'll have a row.

but then they'll move on quite quickly. They won't take it personally. Whereas for women, they'll talk about it more and often they'll ruminate on it. so for women. Preserving relationships is really closely bound up often with their real sense of self that, that very identity. Almost. And so going and asking someone for something scary. Is going to be difficult if you're worrying about how they might regard you afterwards.

Of course, ironically, there is quite a lot of evidence to show that your boss or potential employer. May actually, regardless you more highly, if you do negotiate. And then if you don't and some evidence that. If you continue to have a low salary, and that's what people see if you, if it's low compared to the market that they may well, judge, you adversely. For that. One last thing that I want to mention comes out of a few, rather horrifying anecdotes that I've read, which I, I believe, would play out in life. And that's is that, is that often women believe that life should be fair. And we'll work quite hard towards making sure that it is fair.

Probably going back to the games they played as children. And I've read several examples of where a woman has said, I really don't mind what you pay me. I just really want this role. And then they've been really taken advantage of and put right at the bottom of the pay scale. In one example, it took a woman 10 years for her to fix the inequity in her salary.

And eventually she only did so. By changing roles. So just don't assume that someone will be treating you fairly. We hope they will. And will we hope they will try and put right. Any discrepancies if you're being paid a lot? A lot less than your peers in an organization. But don't assume that life will be fair. Unfortunately. people who do this, you take advantage of these discrepancies just to see the long-term damage that they're doing both to that organization, but also to society as a whole, in terms of not correcting those inequities. So let's get a bit more practical now, both in terms of combating some of these psychological barriers, but also actually getting down to how'd you go about negotiating. So as I hope you've heard, earlier on in the recording, the most important thing is that you just ask it doesn't really matter how you do it, what you say, but make sure you ask for more money, as long as you believe the context is right. Clearly, if the context is difficult in your organization, it's really struggling.

There's no money. And that's obvious then do take context into account, but otherwise just ask. All that can happen is that you'll receive a no. And if you don't ask you definitely won't get, if you do ask, you might actually be surprised actually, what is available or what was on offer. If only you did ask. one thing that I wanted to mention is that a common refrain that I hear when I'm coaching, my clients is well. They haven't asked me what I think I should be paid.

They haven't talked to me about compensation. They haven't talked to me about the promotion. They haven't come to me and talked about, do I, do I want to promotion? I would say just don't leave it to them to ask the question, please, please, please be proactive. You go and ask the question just because they haven't asked you if you want to be promoted, doesn't mean you shouldn't be promoted just because they haven't asked you if you're happy with your compensation doesn't mean that you should be quiet about it. So let's look at bolstering your confidence before you go into the actual asking.

So the first thing I want you to do is to sit down and draft an email to your boss. It really almost doesn't matter what you say at this stage, because you may never send this. So don't worry about it too much. Let's just sit down and start drafting. An email. eventually may decide to send this, and that will be really helpful because if you do, your boss will know what's coming and it'll be better for you because you'll have big, be really clear about what it is you're asking for. And you'll have written down all of the evidence that supports your ask and you'll have bolstered your confidence by writing this email. So one of the great things about writing it down is that the base of your brain that would be worrying about making the ask will be the limbic center of your brain. So the, the center where fight or flight reflex is stored. if you've read the Chimp paradox, it's where the Chimp is. If you write things down, you'll be engaged in your prefrontal cortex or the rational part of your brain.

And this will calm your Chimp down or calm your emotional brain down because it will see what you're writing. And we'll say. Well, yes. So actually you are great. You are fantastic. And this absolutely isn't. An unreasonable request. So what you might say by way of introduction is something along the lines of, I know that you'll be considering compensation in the next month or two. so I thought it might be helpful ahead of that to give you some information in advance about what I'd love, the opportunity to discuss. So keep it short, keep it upbeat, keep it light.

Keep it friendly. This isn't really a big deal. I'm just coming to you. No emotion attached to this. I just want to talk you through. What it is. I think I, I deserve at the end of the year. Then the next step is I want you to start writing a description of everything you've achieved this year, if it's part of annual compensation or, or in the last, however, you know, whatever period is appropriate. Write down every challenge you've overcome everything.

That's great about you. Everything that you've achieved, if you can include facts and figures and concrete evidence, that's always really, really helpful. And why not for this first draft, just exaggerated a bit because we can always turn it down. When you come to review. The email. and you can absolutely talk about your team and how great you've been as a team, but it's really important to bring out what you personally have contributed to that performance.

So I'd really like to see some use of the word I in here. and probably also add in. What you're looking forward to next year, what you're really hoping to achieve to give them a sense that you're looking forward and you're going to provide amazing value next year, as well as this year. So I want you to draft in that order.

we may actually switch around the order of the email towards the end. And I'll talk to you about that at the end of this session. maybe one of the things that might be worth doing, because at the moment I'm recording this at the beginning of the year in January. Maybe have a think about that at the beginning of the year. What it is you want to achieve or be involved in so that when it comes to the end of the year, you will have really great evidence to put in your email about why you deserve more compensation.

So don't just make it a last minute thing as you come up to compensation. I think about what it is you want to achieve the, what are people gonna value? And also make sure you make a note of things you do achieve because often it's really, really easy to forget them. So then let's get you ask. So what is it you want, how much base, how much competence, how much bonus, how much overall compensation be very specific?

Give them a number. If you give them a number it's much easier for the person that you're asking it does then become a negotiation. I'd say the only exception to this is really, if you're negotiating very, very large amounts and the. There's not really a market to benchmark you against. sometimes then it's better not to give a number, but generally it's much better to give a number and make sure that number is at the top of your range.

Having done your research, put it at the top of the range, but don't give them a range because if you give them a range, they're very likely to go. Down to the bottom. And then if you can bolster this with whatever evidence you've managed to find out about what the market's paying, what you believe other people are being paid for these sorts of roles, you may find that's actually really helpful for your boss when they're going and negotiating compensation pools for your overall team. And then I'd also suggest probably don't go back in time.

Even if you feel you've been treated unfairly in the past, it's rarely helpful to go back and use as evidence. The fact that you were paid, you weren't paid at the right level in the past, unless it's an extreme example. In which case I'd still, I'd suggest you raise it. Way before compensation time.

but otherwise I would stay away from the past and just look at the most recent achievements and then looking forward. Then I want you to put the email aside. So you've got, what's great about you. And you've got all your evidence about what you should be paid and your specific number.

And then I just want you to sit and think about what's the worst that can happen because often when we get these emotional feelings of fear coming from this limbic center, our brain, there's like a sort of black hole. There's just a lot of fear. It feels horrible. It doesn't feel good. So we're just going to shut it down.

We're not going to do that, but actually if you look up, what is the worst that could happen? Often it's really not as bad. As warrants that feeling. So, so what is the worst that could happen here? So, I guess your boss might think how dare she she's so big headed. That's so inappropriate. They might talk about you behind your back with other people. Might laugh at you.

They might say no. I can't think of much else that would happen. That wouldn't feel nice. But query, will they fire you? Well, they put your compensation down. Will they penalize you going forward is all very, very unlikely. So really the worst that can happen is they think, well, how ridiculous that she's asked for more compensation and all these bad things that might happen a very unlikely in fact, There's probably a little bit of your boss, whatever they think of you and your performance. That will think good on you because we all find this hard and it's likely that your boss will find it hard as well.

You might even inspire them to go and negotiate the compensation. And I have to say that I did use to have people in my team who would regularly come in like clockwork as we came towards compensation time. Just tell me exactly what they were looking for in compensation, in terms of compensation. And in fact, It was pretty helpful.

It was helpful information about how they were feeling. It was helpful information about how others might feel. And I have to admit for the people who were really demanding, I have to battle quite hard if I had some little bits of money, extra money to give out, not to give it to the people who I knew might make more noise if they didn't get what they were hoping to get.

I did battle it and I, and. And, but it, but it definitely was there. So it is worth making what you want. No. And being very clear about what your expectations are. and then what if they say no? So, so they say no. What would that mean? And I think often people think it means something terrible, but actually absolutely nothing has changed if you get the, no, nothing is different than before you asked.

It just means, you know, whether they're willing to pay more. It doesn't mean if they said no, that you're bad at your job, they think it's about performance. Nothing is different. So please really remember that. They'll also remember that you asked when it comes to comp round again? no one likes disappointing another human being, unless there's some sort of psychic pathways, hopefully you're not working for a psychopath.

So. They won't like disappointing you and that will build up in the system so when it comes around to next year, they're going to want to disappoint you even less. So just remember, don't take it personally. There'll be many things, influencing their decision beyond what they think of you. So as I've said before, the key thing is to keep the emotion out of both your ask. And also your response, just let your rational brain do the negotiating. I think sometimes when we've we have difficulty with an issue, we sometimes imbue it with a lot of emotion to maybe give us the motivation to do the thing that's difficult.

So we sort of wind ourselves up emotionally and that gives us the strength to go forward and make an ask or do something difficult. So. By all means, use that to get you ready to begin the process, but then put that emotion aside. And just leave all of the negotiating to your rational brain.

One last tip that you might want to consider is maybe to think about who you're doing this for.

So. Sometimes women have an issue with doing something that they feel is entirely selfish and sometimes negotiating compensation feels like it's very, very self-centered. so maybe see if you can develop some form of community of purpose. So who would benefit if you go through this exercise other than the new book, clearly your family, maybe your friends will benefit. What about other people in your organization, maybe they'll benefit from the fact that you've stuck your head above the parapet and made an ask. Certainly other women who you act as a role model for, will benefit.

And you may be surprised at who you act as a role model for. So you'll be helping women generally, by making this ask, you may even be helping society as a whole because how great would it be if we could get more women comfortable with the asking, but also more men and women comfortable with the fact. That it's a completely normal thing for women to ask for more money. So maybe give it an even wider context.

What's your purpose? What are you trying to achieve in your life? What are you trying to achieve this year? Is the money. and how, how much you paid part of that purpose, will it help you achieve what you want to do? So even taking it broader. may also help you. So now I want you to go back to your email. Read through it again.

See what you think of it. Take out any of those. Little qualifies of, I think, I think I did quite a good job. So any of those little things that sort of lessen the impact of the words you're using, what you're to get rid of all of those. And then let's change the order so that you have your introduction. You're clear asks and your justification and you want the whole email to be as precise into the, there. To the point as possible ask first, clearly stated followed up with the justification.

The reason for that is that often the justification is a bit longer. Try and keep it concise, but it's usually a bit longer. And what you'll find is the reader will get bored by the time they get to it. And it will lessen the impact of the asks. So start with the ask first, be very clear. And then go to the justifications. So that was all step one. step two is I'd like you to ask your boss for a meeting to discuss compensation.

And I know again, that may feel a bit painful or scary, but just book it just, it would really help your confidence. Just book it into the diary. You've done this email, which is your evidence that you're going to go through in the meeting book, a meeting, And don't, don't let them be put off if, if it gets canceled, go back to the PA, make sure it goes into the diary. You could even do this step first.

The reason I've put it in a step two is because by the time you get here with the way I've done it, you will have drafted this email about how great you are. And you hopefully will be feeling more confident. About making your ask , but just say to them, would you be okay if I put a meeting in your diary, there's actually some research that says that if someone says yes to a small request, they're more likely to say yes to a big request.

So you have, maybe that will work for you. And remember if you book it, it will happen. If you book this meeting, you will make the ask. So the very last thing you need to do. Is to press send on that email. And you could decide you don't want to do it. And hopefully even if you don't want to do it this year, going through this exercise has helped you in terms of your confidence.

But I would really say, just do it, just see what it feels like. Do it as an experiment, be curious. Let's see what the impact is. This isn't, this just, isn't a big deal. And do remember you're not going to make anyone think better of you by not asking. Even though sometimes it might feel like that's the right thing to do or the proper thing to do. You are not going to make anyone think better of you by not asking for more money. So I won't go into details about the meeting that you eventually have with your boss, where you talk through your email.

You've got a clear roadmap. It shouldn't feel scary. Just stay calm. Be confident and listen. Remember you don't need to respond to anything that comes up in that meeting. You can take it away and respond later. Keep it light to keep it on emotional. and you might want to have a look at my video on, public speaking, just for some of the prep techniques to get you ready to go into that meeting. And then lastly, just think about how you'll feel if you do ask. And you do get what you're asking for, or at least some of it just think about how fantastic that will feel well, and that'd be worth all of the discomfort that you've gone through.

And won't it feel easier next time you have something challenging to face. And if you do ask and you don't get, just think about how proud you'll feel that you've represented yourself, you stood up for yourself. You've done something challenging. You've been your own advocate and you set everything up beautifully for compensation time next year. So good luck go out there. Negotiate change yourself.

And while you're at it, change the world.