Mistakes are great teachers, but very costly in salary negotiations. Let me share with you my biggest mistakes so you can avoid them.
Six years ago, I started a new job in a new field and totally bungled my salary negotiation. I knew next to nothing about this new field or how to effectively negotiate for myself. If someone told me then that I would one day be leading “Hands-on Workshop for Negotiation Prowess,” I would have responded with a blank and befuddled look.
In 2008, three months before the Lehman Brothers went kaput and the stock market had a heart attack, I was offered a position with “unlimited growth potential”, a junior analyst position with a boutique hedge fund. After two rounds of interviews, I was enticed by this “unlimited growth potential” and the image I had of rich and well-heeled finance professionals. I had no idea how the stock market or a hedge fund worked. I was young and naive.
At that time I was just a few years out of college and working as a buyer at a small beauty company. I made just enough to pay my share of the rent at a fourth-floor walkup apartment in the gritty part of Brooklyn.
When the hedge fund manager asked me for my current salary, I told him the exact figure without hesitation or questioning. I had this vague notion that this hedge fund manager — a complete stranger just two weeks prior — who picked me out of thousands of potential candidates, would see my unproven value, care about my career, and compensate me appropriately. I had confused his intentions with those of the many kind and thoughtful teachers I encountered in the sixteen years of my schooling. His only intention was to hire for cheap.
Then he asked for my minimum salary requirement. With little thought and no research into the matter, I blurted a figure that was just a hair more than what I was making at the beauty company. I lowballed myself.
Immediately, my minimum salary requirement became my starting salary. Only then, did I ask whether it was possible to negotiate. Asking a yes/no question at this point certainly didn’t help my cause. I got a prompt no. I was given a deadline to respond to the job offer, and I didn’t press. I failed to see and assume the power I had in this negotiation. Plus I was eager and impatient to leave my buyer job and start a new one in finance. My misplaced confidence had me thinking I would unravel the mystery of hedge funds once I got there.
So I took the low salary with a vague promise of annual bonus and started the job. Before I even had the chance to resent the long hours, the stock market crashed and I thought the world was coming to an end. For a couple of weeks, every day felt like a horror show. I was afraid to lose my job, so I kept my head down and barely spoke up. I continued to work with little sense of ownership and fulfillment. Gradually the stock market stabilized.
The silver lining in this story is that I managed to keep a finance job throughout the Financial Crisis. I stayed for two years and quit to pursue a new career with tech startups.
A recap of my mistakes for you to avoid:
1. My biggest mistake was failing do my homework. I was ill-prepared. I did little research into the field, the fund, and appropriate salary range before taking the offer. If I could go back in time, I would ask people I know or in my alumnae network for advice. Those who work in specific industries are generally open to sharing industry insights to newcomers and young professionals. I would also ask both men and women for salary advice, to avoid falling victim to gender pay gap. Do yourself a favor, at least know the going rate for your position in your specific industry and in your geographic area.
2. When asked for my current salary and minimum salary requirement, I gave the wrong answers. Only in hindsight did I realize that the best answer was to not answer. If I could go back in time, I would dig deeper to try to see if this was really a good mutual fit (it wasn’t). I would try to establish my value based on the new job description (in an ideal world, I would help write it, too, based on my research), not a previous and unrelated one. The value I delivered at the beauty company as a buyer doesn’t compare to the value I delivered as a hedge fund analyst. It’s like comparing a banana to turkey dinner, completely two different things. Do yourself a favor, don’t let your past limit your future earnings potential — especially if you’re entering a new field. If you can, avoid answering the minimum salary question, because your minimum will become your starting salary.
3. I hadn’t yet shaken my honor-roll student mindset. I thought that the manager would “take care” of me and reward me for my hard work. All I had to do was keep my head and voice down. I was wrong. Have you seen Scorsese’s latest film, The Wolf of Wall Street? Okay, so the hedge fund I worked at wasn’t that bad, but it had the similar ethos of a “wolf pit.” Every man and woman for him/herself. The hedge fund experience gave me the rich lesson that I am ultimately responsible for my own career. It’s up to me to assume power I already have, speak up, and articulate my value. No one will do it for me. So do yourself a favor, don’t pass up the opportunity to take charge of your career and negotiate for yourself.
If switching careers is something in the works for you in 2014, I wish you good luck. I wish that you avoid the mistakes I’ve made.
In the spirit of MLK Day, I challenge you to dream big. Go bold. Take action. Ask for it.
P.S. Gwen Taylor and I are working on an e-book on salary negotiation, full of useful insights and practical guidance to help you achieve negotiation success. So please stay tuned!