Workers negotiating their pay with their employer is always a sensitive topic. It’s tricky because it goes beyond raw dollar figures, touching on emotions, employee engagement and bottom line financial considerations. The results of a new study might prompt you to rethink some of the ways you hire new talent, and maybe even tweak your annual review processes.
The data, from research led by Harvard, Brown and University of California Los Angeles, came from over 3,000 job seekers looking for roles in the technology sector. Some survey participants were “encouraged” to negotiate their salaries with employers, with phrases like “companies expect you to negotiate,” while a separate group was offered an alternative discounted coaching option to help boost salary discussion skills, HRDive explains.
The results are startling: among the people who were encouraged to discuss different salaries (and who then landed job offers inside a few months) 61 percent of people actually proposed a different salary level to their initial offer. This led to an average increase in pay of over 12 percent, equating to roughly $27,000 extra annually.
But among the group who were offered merely a discount on a coaching class, very few people took up the offer… and among the 3 percent who did there was “no meaningful effect” on their interest or confidence in negotiating salaries.
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People participating in the study were still early in their careers, aged 31 on average, and they were paid around $220,000 a year on average — a figure that places them significantly higher than the U.S. average, which is about $75,000 annually according to the Bureau of Labor and Statistics.
At this point you may be thinking that this means the data won’t reflect onto the larger labor market, where non-tech jobs dominate and the average worker is making only a third of the salary of the survey respondents. But where the tech world goes, other industries tend to follow. Plus, as HRDive notes, the study’s results surprised experts in the field. The researchers polled 117 academics and asked them to predict the experiment’s outcome: most predicted the coaching option would be more effective.
What’s actually happening here is that the workers aren’t pushing for higher compensation because they feel like their employers simply won’t be open to the idea of a negotiation — not because they don’t feel like they have the right interpersonal skills to carry out the negotiation. If the latter were true, then the coaching option may have proven more popular. The fact that the encouragement technique worked simply suggests that people were wary of negotiating salaries, until it was pointed out to them that it was “normal.”
What’s the takeaway for your company?
Salary negotiation provides several indirect benefits beyond the obvious financial benefits to workers who successfully boost their earnings. First, if you’re seeking a new job and you handle these negotiations properly, it can signal that you’re a serious worker with confidence about your own skills — something that could boost your reputation with managers in the long term.
Second, being open to salary negotiation could contribute to your image as a good employer, among your current staff (possibly boosting your retention power) as much as incoming talent. A recent report suggests this may count more than ever when it comes to attracting top rank workers, with much more focus on a company’s reputation than before.
Another thing to be aware of as an employer is that AI hiring tools, which some people use to help them navigate the process of applying for jobs, are sometimes advising women and people of color to ask for lower salaries than for white men. It might be worth checking your HR processes to make sure your salary negotiations are fair and equitable.
