Salary Negotiations: How To Ensure You Don’t Leave Anything On The Table

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John Gates: Most people are leaving at least 10% on the table. So that’s a lot of money. If you figure out your last pay package, you could do a 10% calculation and say, wow, what could I do with that? It’s life changing money for some people. And in some cases, it’s a lot more than that.

David Rice: Welcome to the People Managing People podcast. We’re on a mission to build a better world of work and to help you create happy, healthy, and productive workplaces. I’m your host, David Rice.

My guest today is John Gates. He’s a corporate recruiting executive, pay negotiation coach, and the author of Act Your Wage. We’re going to be discussing wage negotiations and how to ensure you don’t leave anything on the table when you take a new position.

John, welcome.

John Gates: Thanks, David. I’m grateful to be here. Appreciate it.

David Rice: Yeah, it’s awesome to have you.

So first, tell us a little bit about you, how you got to where you are and what led you to write Act Your Wage?

John Gates: It’s an interesting story, David. I was not always the dashing executive that you see today. I was once a starving college graduate and when I graduated, I was wanting to be a financial analyst. And I had a job all lined up with a tech company in Portland, Oregon, where I lived at the time. And three weeks before I was supposed to start, they rescinded all the job offers.

And I was suddenly thrust into unemployment with a newborn son, and I was just terrified at the time that I was not going to get the career that I had trained for. It was a real big disappointment. I tried really hard to find something new, and I ended up working for a recruiting agency. And they hired me because I had a degree, and I looked good in a suit, and I could speak Spanish.

That’s how I fell into recruiting. I kind of got there by accident, and I think most people who are recruiters end up in it by accident. So I started doing that, and I found out I was really good at it. But David, they paid me $16,000 a year. That was my salary coming out of college, and it was starvation wages.

I drove a 1971 Volkswagen Super Beetle with a flat spare tire. And I was sure if any of the other four went flat, I was not going to get to work. It was just a bad situation. So I kind of worked for these agencies for about five years and starved the whole time. Finally got a job with a tech company in Portland as a technical recruiter, my first corporate recruiting job.

And I got laid off from that job about three years later. It was right after I had bought my first home, like six months after. I lose my position because the marketing department kind of messed up the product line. And so here I was with a very light severance plan, like a lot of people, maybe some of the folks watching today.

I was terrified that I was going to lose the house I just bought, that I wouldn’t be able to feed my young family. All those fears and insecurities came up. And so I cast the resume to the four winds to see where I would land. And I started getting phone calls from people like me. Like, I’m a recruiter, so I do this all day long.

I call people and I say, So, I think your application looks pretty good, but tell me about your pay requirement. And that would kind of make my blood run a little bit cold because I knew if I answered it wrong, I wasn’t going to get the chance to interview. So I would typically lowball myself a little bit at that step just to get the chance to interview.

And I got an interview with Capital One in Richmond, Virginia, which is about as far away from Oregon as you can go. So I flew out to Richmond and I discovered the most difficult selection process I had ever seen. There were over 20 behavioral competencies that I had to pass.

And if I failed even one of those, I wasn’t going to get an offer. They had three different tests that I had to take, and if I failed the cut score on that, I wasn’t getting an offer, and I had to do a business case interview, and if I failed that, I was out. So, I went through that process, and after I was done, I was like, wiping the sweat off in the interview process in that room.

And the recruiter that I was working with came in and he sat down. His name was Chip and Chip said, John, I’m going to level with you. Our process declines 90 to 95 percent of the people who interviewed. It’s designed that way. We’re very picky. I’ve interviewed 23 people, brought 23 people on site for interviews.

Only 2 have passed the process and the other guy just withdrew. So tell me what it’s going to take to get a yes out of you today. We really want you to join us and so can I please tell the hiring manager that you’ve accepted the offer? What’s it going to take? And he put an offer down and it was already a pretty good offer.

But I realized the immense leverage, like, he just about wrote me a blank check. And so I said, well, $10,000 extra in salary. I want a different incentive plan. And that was a big deal at Capital One moving up the incentive plan ladder. I got the relocation plan. That’s usually reserved for executives. And it was amazing and I was so excited. I flew home and told my family that all this stress that we’ve been under as a family was now gone, but we’re going to have to move to Richmond, Virginia.

They were all on board, but I spent the next three and a half years at Capital One wondering what I left on the table. It just haunted me. And so I thought, well, how could I have done that better? And I started doing two things. I started tracking how much candidates were leaving on the table. I would get offers like pre-approved for a certain level, and if I could close lower than that, I would track that as negotiation savings.

And through that, I started to realize how much money candidates were leaving on the table. But I set a goal just for my own job security, because I’d just been laid off. I wanted to cover my own annual salary every month, just in negotiation savings. And I was able to do that. And the second thing I started paying attention to was the mistakes that candidates were making in the negotiation process.

Sometimes they were a little too soft with me, and they let me push them around a bit. Sometimes they lowballed themselves just like I did, or they’d come across as desperate, and that was a clear signal that I could probably close lower with them. So I started tracking those things and putting it together in my mind, and the lightbulb just started coming on that maybe I could help people in this process.

So I started with my inner circle, my family and friends. Started helping them for free, and I realized, wow, I was helping them to scoop up all this gravy that was left on the plate, money that the company would normally just give them happily, that they were just going to leave on the table anyway.

Eventually, I launched Salary Coach, and you know, the reason why I wrote the book, Act Your Wage, is because I know that there’s a huge risk that if people start to negotiate their pay at the offer stage, there’s a huge risk that offer might be pulled. And I put together the Salary Coach method, which reduces that risk to almost zero.

And I want people to have this information. So I’ve got the book, I’ve got video lessons, and I personally coach people. And so that’s how I’m bringing this message to the world. Needs to be there.

David Rice: You start out the book talking about some winning principles, and that starts with understanding fears and what they’re costing you. What are some of the things that drive people’s fears? And how much would you say it ends up costing the average job seeker?

John Gates: The fear starts with a misunderstanding of what negotiation is. And I think most people think that negotiation is high conflict, high risk. It’s oppositional. It’s confrontational.

It’s like strapping on a suit of armor and walking into an arena and dueling to the death with some other person that’s in there. There’s a winner and there’s a loser. And that’s, if that’s what people think negotiation is, then they’re typically afraid of engaging in that because they know the person that crossing swords with is somebody like me, a professional duelist, and they’re just a beginner at all this.

So it kind of pushes them into the corner. But I think the other thing is just the fear of loss. They know that if they answer the screening question wrong, what’s your salary requirement, for example, that they might lose the chance to interview, and they don’t want to lose that. Sometimes the biggest fear probably is that if they negotiate at the end, that it’s a game of chicken, a high risk game of chicken, and there’s a good chance maybe that offer will be rescinded at the end. And that’s the biggest disaster of all. They don’t want these risks. And so, because they don’t want the risk or the fear, it pushes them into a very conservative place.

I think most people based on my own tracking and also the track record of my business, most people are leaving at least 10% on the table. So that’s a lot of money. If you figure out your last pay package, you could do a 10% calculation and say, wow, what can I do with that? It’s life changing money for some people.

And in some cases, it’s a lot more than that. When you get into the C-suite, there is more than that left on the table. Six figures often is left behind.

David Rice: You don’t work that hard to get to that far to leave all that behind, right?

John Gates: Exactly.

David Rice: Now you go on to introduce some key concepts here, and the first I want to talk about is this idea of gentle leverage, and how to sort of work your way toward what you want in a way that builds some momentum for yourself throughout the process.

So take us through that, and how you sort of set a pace and tone for building a case for yourself.

John Gates: Sure. I think early in the process, like when you’re an applicant and then you go into the phone screen, that’s a point where you don’t have much leverage yet because the company doesn’t know who you are.

They don’t know that they want you quite yet. And so when I think of leverage, I think kind of the of a teeter totter. And early in the process, the companies holding most of the cards, it’s easy to push you out of the process because people haven’t fallen in love with you yet. So the leverage is against you and you can feel, you can kind of sense when the leverage is coming your direction when you feel like the power dynamic has shifted in your favor.

They want you, a little bit more than you want them, and that’s how you build it over a period of interactions. From the phone screen all the way through, you’re talking about how you are in an active job search and you are interviewing with other companies. And if you’re interviewing with other companies and other people want you, then that shifts the power dynamics slightly toward you.

When you’re interviewing, you have to connect yourself to the value of the company. Most people just, when they interview, they answer the questions that come at them, but they don’t sell themselves as a high value candidate. And the higher your value, the more they want you, the more they’re afraid of losing you.

So that’s the momentum that I’m talking about in the book. You have to go from them not caring about you over a period of time to now they’re afraid that you’ll say no. And that’s a transition that happens over the course of several conversations.

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One of the things I thought was interesting in your discussion of pay transparency here and the use of salary information and job descriptions, you know, it’s something that we hear about all the time. We’ve all been hearing it in recent years. There’s now laws in place in some states, though. I sometimes wonder how much teeth they have in terms of enforcing those things. But but there’s still, there’s been this public push for pay transparency, right? And you’re saying in the book, it’s not necessarily a good thing.

Take us through kind of how you see this issue here and how it impacts people’s ability to know what they’re worth.

John Gates: I think it does help to some degree for people to know what they’re worth, but the problem here that I see for job seekers is that some think that this is a silver bullet that’s going to solve this negotiation stress that everyone feels.

Like, as soon as somebody starts asking you what your pay requirement is or what you’re worth, it puts you on the defensive. And folks think that if this is posted out there, if the range is posted out there, that now they don’t have to have that conversation anymore, but it’s just not true. I think what people would prefer mostly would be to say, this job pays exactly X.

Take it or leave it, and then people can say, well, I like that or I don’t like that, but that’s not how the real world works. Even in the pay transparency laws, they’re going to be posting a range, but you don’t know if they’re posting the salary range or the range that includes the incentive plan. Most companies have an applicant tracking system that automates this, and they’re working it through a high volume of job postings.

So they’ve got a data field in the ATS that says, what’s the pay grade for this? It’s going to connect to a table that says it’s between A and B. And then that gets automatically imported into this thing. And it’s probably salary, but it might just be minimum to midpoint. You don’t know, for example, as the job seeker, you don’t know if there’s a grade above that they could offer.

If you’re interviewing for a director level position, could you come in at a senior director? They’re probably only going to post the lower of the two ranges, if that’s possible. So, don’t be so reliant on this range, thinking that it’s going to solve the whole problem. You’re still going to end up with a point on the range somewhere, more than likely. The recruiter is used to people saying, well, if the range is 150 to 225, and I ask them what their pay requirement is, they’re gonna say 225 or 220 or 218 or something like that.

Recruiters are used to pushing expectations down in that case, and they’ll actually use the range that’s posted to reset your expectation lower than it could be otherwise, if there was no range at all posted. The reason they want to push your expectation down is because it’s easier to close you at the end if there’s a slight surprise to the upside. It’s harder to close you.

If the offers a little below what you discussed early on that you become disappointed and it could be the same number in both cases. But recruiters are trained, and I train recruiters, I’ve trained hundreds of recruiters to set the expectations lower and then surprise on the upside because you’ll have a much easier time and offer acceptance with that.

David Rice: So the negotiation, you argue in the book, it goes on, like you said, throughout the recruitment process from the time you start filling out an application, right? What’s your desired salary box? So what are some of the biggest things people do wrong in those early stages and how do they fix it?

John Gates: By the early stages, I’m going to focus on the application and in the phone screen. So some of the biggest mistakes they make in the application process is sometimes that pay requirement box that you have to fill out will allow text, not just a number. And if people put negotiable or open or something like that in there, it’s a mistake. A lot of people say that’s what you should do.

This is bad advice, and I’ll tell you why. Recruiters are incredibly busy people. The average corporate recruiter might have 30, 35 open positions they’re working on. They have 40 hours a week, so you can do the math and figure out how many hours per position they have to look at resumes, to look at 200 applicants, to figure out who they’re going to call, to spend 15 or 20 or 30 minutes on a call with somebody, screening them.

It’s not much time at all. So if there are 85 applicants on a job and 15 of them are these ones to look good, I should call these 15. The recruiter has to cut that down even more because they only have time to call 4 or 5 or 6 people at the most. So who are they going to call? And who are they going to put in the maybe later pile?

They’re going to call the ones that check all the skill boxes that meet all the requirements that have the right industry fit that pay is a big screening thing. They want to see that you’re kind of in the kitchen there. If you put negotiable, it’s annoying to them. It opens up a point of risk for the recruiter that they’re going to commit their calendar to something that’s in the first few minutes, it’s going to figure out it’s not a match. So, that’s the application.

Now, in the phone screen, I think there are a lot of mistakes people make. The first and biggest one is that when they get that question about pay, they answer with a number. And that’s what most recruiters want you to do, and that’s what most people will do. They’ll say, So David, got your application. I’m glad that we made time to talk together today. First, let me just ask, what’s your pay requirement? How much money do you need to make? And your knee jerk reaction is probably to say, well, I’m looking at maybe a package of 185. Something like that would work for me.

If you give them a number like that, it’s either too high or it’s too low. If it’s too high, you don’t get the chance to interview. They’re going to screen you out before you can advance. If it’s too low, and that can be the case, you could say, Well, 185 would make me happy. What if they were willing to go to 220?

Or 187? Or something like that, right? You just left money on the table right there. And so, another mistake that people make in the phone screen is again being ambiguous about their pay requirement and some people coach folks along these lines and I think it’s a huge mistake. They coach people to say, well, it’s too early in the process to really tell you.

I think I need to interview first and then we’ll talk about pay once I understand the scope better. And that’s partially a good answer, but the worst thing that can happen to a corporate recruiter is that they recommend that someone interviews someone, you tie up a short staff team with an interview, and then you discover after all that, that the person’s way out of your pay range.

Recruiters don’t want to take that risk, so they will likely screen you out if you take that approach, unless you’re a unicorn, and even in that case, a well trained recruiter will press you before they will schedule the interview. So how do you get past this? That’s the next question. How do you get past this stuff? In the application, I’ll put a medium low number in there. You’re not going to be stuck with that. But if the application requires you to put a number, you got to put something in. If it’s text, you could still put in a medium low number. Purpose here is to get your phone ringing. But like I said, you’re not going to be stuck with that.

In the phone screen, you want to transition into a range and I go through an exact script in my book for how to do this. But instead of saying, 185 would make me happy. You can say something like, I’m interviewing with several companies and the range that I’m discussing with them is 180 to mid twos. And I realize that’s a broad range, but we can narrow that down a little bit later.

That’s the range I’m discussing with other companies. As long as the recruiter feels like they can get you, they’ll advance you. They might want you to narrow this range down a little bit, or they might want to have more substantial discussions, but that’s good for you at this stage. Stick with a range early on. That’s what you want.

David Rice: You lay out a cool example of someone kind of improving their value in the interview process. And one of the things that really comes down to is connecting what you do and what’s valuable for the business, right? What advice do you have for identifying what a business will value most and how to connect yourself as sort of the solution to that thing?

John Gates: I think that there are two points of value connection that you need to make here. One is you’re interviewing with a person. They’re not on the interview team unless they are a stakeholder in the position of some kind, like they’ve got stakes. And you want to try to understand for them what does a high value hire look like?

And an easy way to do that is to ask them something like, if you were to make a hiring mistake on this position or if you were to hire the wrong person, what’s the worst thing that could happen? And that’s an easy way for them to start talking about what’s the downside of a negative hire. The opposite of that is what they would expect a high quality person to deliver.

And when they start describing the worst thing that can happen, and you can ask another question, and you can say, well, what would happen to the business if that happened? Maybe you don’t make that product launch on time, or maybe the company’s reputation is damaged or something like that. Okay, the next question after that is what would that cost the company if that happened?

Let’s try to put this in dollars and cents. And if you’re the person who can solve the personal problem of the stakeholder, you’re the solution to their biggest fear, and you can solve a $2 million problem for them, then asking for an extra $20,000 at the finish line seems justifiable in their mind already.

David Rice: One of your biggest pieces of advice in the book is to not accept an offer immediately. Now we know this is where a lot of folks, they get sort of nervous, right? What are some of the tips and techniques that you have to help navigate it and sort of how they need to think of it philosophically? Because you say in the book, the goal here isn’t to twist arms. So what is your advice here?

John Gates: I think it’s important to realize that if they’ve offered you the job, they want you to say yes. In fact, you get a lot of pressure to say yes right away. They might even craft the offer in a way that this is what you said you want. So we’re giving you what you want. We expect a guess out of you.

The recruiter wants to put this requisition behind them. They want to move on to the rest of the stuff on their plate. The hiring manager really wants to fill that gap on the team. Maybe they’ve got people threatening to quit. They want you to say yes. So the thing to remember is when we talked about leverage.

You have the most leverage right now between the time that you say or that they offer you the job and the time that you say ‘yes’. Most people make the mistake of saying ‘yes’ immediately. And I know I’ve made that mistake myself. As soon as you say ‘yes’ you give up all the leverage that you have to ask for something else.

So if there’s anything that you want, whether it’s a better pay package, a better incentive plan, a different relocation plan, you want to work remotely instead of on site, you want a few more vacation days, whatever those things that you want, you need to ask for them in this window. So you’ve got to be careful not to say ‘yes’ right away and instead ask for a couple of days, tactfully and carefully, ask for a couple of days.

If you do it right, it’s not going to put your offer at risk. Then you can start asking a bunch of questions about the offer. That positions you to collaborate with them on what it’s going to take to get you a yes. You both want the same thing. You want a ‘yes’. They want a ‘yes’. You’re just telling them your obstacles.

Here are the few things that are in the way of me saying ‘yes’. Can you help me to address these obstacles? And you invite them into a collaboration with you. That’s the safe path.

David Rice: Well, before we go, there’s a couple of things we’ll need to do. First, I want to give you a chance to tell people more about where they can connect with you, find out more about what you’re doing by the book, all that.

John Gates: Great. Okay, so to connect with me is fairly easy. LinkedIn is always a good place to connect with me and you can follow me there. I have a lot of content that’s coming out on this topic. So if you’d like to stay in touch with me, that’s a good way to do that. You can always reach me directly at john@salary.coach.

So if you have a personal question you want to ask me, you can do it that way. You can also check out the Salary Coach Academy, which is SalaryCoachAcademy.com.

David Rice: Alright, and the final thing that we do on every podcast, a little tradition here where you get to ask me a question. So I’m going to turn it over to you. Ask me anything you want.

John Gates: Well, I was excited to hear, David, that you read the book and you wrote out a lot of questions based on the content of the book. And that’s great. So you’ve had an amazing career. I looked at your LinkedIn profile. You’ve been a writer and an editor for a lot of different places. And just like everyone else, you’ve changed jobs every once in a while.

I’m curious about how the pay discussions have historically made you feel and how reading the book may have addressed some of those feelings?

David Rice: So, historically for me, I came out of school, my job was seemingly devalued very quickly. Like a lot of older millennials, I came out to an economic crisis, right?

And people in my field, we’re getting laid off left and right all of a sudden there was a ton of journalism talent around and it made having any sort of paid discussion a little difficult in that sense. I became very nervous because I hadn’t proven myself. I hadn’t gone through the whole cut your teeth phase and so I felt like I was starting three squares back.

John Gates: The balance of power like we talked about in the leverage?

David Rice: Yeah, I felt like I had none for a long time. And it wasn’t until a few years ago that I started to realize that I had some skills and some experiences that could allow me to require more of an employer and to bring that into the conversation. It was nerve wracking because I didn’t know how to do it.

John Gates: Most people don’t, David. Yeah, you’re not alone there, for sure.

David Rice: So, you know, you realize that you have value, but now how do I communicate that in the right way and not just come off as demanding or even confrontational, right? So that’s been a journey and I, as I read the book, I, there was a lot of things where I thought, okay, I’ve been guilty of that before.

Oh, I did that. You start thinking about, did I leave a lot on the table when I did these other ones? I also liked the idea of building value through the interview because I’ve gone through a few interview processes where I’ve had to essentially do that. And it’s been a great experience and it does make you feel a little bit more comfortable when you get to the final stages and you’ve developed this relationship and they know what you can do.

There’s a reason I’m here kind of thing and there’s a reason that you’ve got me to the point that you’re now showing me numbers. Right? So that’s, all of that is something that I think you kind of learn with age, but as certainly when you’re younger or and as you go up the ladder in the more senior positions, it’s not something that maybe comes naturally. Right? So…

John Gates: Yeah, I think most people are paid discussion beginners, even if they’re experienced hiring managers and they’re used to dealing with that on the other side of the table, like when it’s your house, when it’s your deal, when it’s your family’s budget, the stakes change when it’s your deal.

Some of my clients are recruiters that negotiate this stuff for a living and still they’re not quite sure how to do it on the other side when the shoe is on the other foot. That’s great. I’m glad that the book was valuable to you. And I hope that if there’s a future job change at some point, David, that you can use this and get everything that’s coming to you.

David Rice: Well, thank you. I appreciate that. And I appreciate you coming on the show today. We enjoyed having you.

John Gates: Sure. I enjoyed it too. I appreciate you.

David Rice: All right listeners, until next time, do go on over to peoplemanagingpeople.com/subscribe. Get signed up for the newsletter if you haven’t already.

And until then, get ready for winter. Temperatures are dropping.

John Gates: Winter is coming.