Salary negotiations usually lead to a lot of needless stress and anxiety, especially for young professionals working at early to mid-stage startups.
For young professionals, their first time discussing salary leads to a little panic, paranoia, and antagonism. They have had minimal guidance and preparation, zero first-hand experience, and it’s easy for them to lose focus on what’s most important to them while receiving well-intentioned but ultimately bad advice from friends and family.
For leaders of high-growth startups, it’s easy for the process of how to best determine and communicate your employee compensation packages to fall down the pecking order. How you handle salary negotiation at 10-15 employees is not going to work at 50, 100, 200, etc. and if the business is growing like you want it’s easy for internal systems to slip a bit.
Here are three things to keep in mind for both employees and employers dealing with early-career salary negotiations.
For High-Performing Employees
Assume good intentions: It’s way too common for young professionals to quickly flip a switch from excited and grateful a company has taken a chance on them to developing an antagonistic and entitled edge. Businesses want their employees to succeed and reward them for creating value.
It seems easy to lose sight of this for some reason. Don’t.
Gain a greater understanding of your value: Determining an exact dollar figure that aligns with the value you create is difficult. Generating revenue for a business is a complex process and no matter what your role is there are a lot of known and unknown variables at play.
Instead of trying to calculate how much revenue you’re responsible for down to the penny, focus on determining the cost to replace you. Arguing that your efforts lead to $500,000 in revenue and therefore you should be paid an arbitrary percentage of that amount will make you look unaware of all the factors in play.
Gain a sense of how much you cost the company compared to their next best option.
Play the long game: Do not lose social capital and increase expectations by haggling over a few thousand dollars at this stage of your career. It’s not important, especially if you’re particularly ambitious.
Maintaining a growth mindset, learning new skills, building valuable professional relationships, and everything else that goes into setting yourself up for big-time opportunities in the future should be the priority.
Optimize for your long-term earning potential.
For Employers
Make it obvious they’re a priority: Social pressures make it easy for young employees to view salary negotiations as adversarial. You can set the process up early on to combat this. Schedule salary discussions far out in advance, 3-4 months is good, and have an actual sit down to make the offer.
If you take the initiative to communicate and show that it isn’t something you’re trying to avoid, you’ll help them ease the tension and anxiety leading up to offer time.
Spell out the decision-making process: Don’t just send them an offer and wait for them to accept or reject. Take the lead on discussing what factors went into the decision and highlight their strong performance that led to the offer.
Understanding how their value is determined isn’t simple for inexperienced employees. Take the time to educate them and show it isn’t an arbitrary process of trying to get them to agree to the lowest possible salary.
Focus on more than salary: Getting employees to accept initial offers will be much easier if you can 1) highlight the non-financial benefits of working for your company and 2) outline the path to increase their earning potential over time.
Compensation time should also be a time to discuss how their professional development goals align with their role at your company. Taking the time to discuss this will remind them why they’re here in the first place and also give them new challenges to focus on.
Ideally, you can connect some of those goals to future salary bumps and make it clear their earning potential is in their control.
Below is a selection from the Praxis apprenticeship curriculum on the subject.
