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You had your best-laid plans and then COVID-19 came along and hammered the entire economy. But you’ve got this – if you have the right information. Join Rob Carrick and Roma Luciw on Stress Test, a podcast guiding you through one of the biggest challenges your finances will ever face.

ROMA: You’ve just landed a new job and you’re so excited. But what’s the salary? All of a sudden, you have to become a negotiating expert.

ROB: But what can you negotiate - and how do you get what you want? Or, maybe you’ve thought, negotiate? I have no idea how to do that! Well, you’re not alone. That’s what today’s episode is all about. Today, we are attending class - Salary Negotiation 101.

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ROMA: Welcome to Stress Test, a podcast about personal finance in the pandemic for Gen Z and Millennials. I’m Roma Luciw, personal finance editor at the Globe.

ROB: And I’m Rob Carrick, personal finance columnist at the Globe.

ROMA: So Rob, today we’re talking about salary and negotiations. And I think for a lot of young people, it feels like a privilege to land a job. I mean, you finish school, you probably have some student debt, job market’s tricky. There’s not a lot of full time roles. Lots of people are employed in the gig economy. And all of a sudden, you have a job offer. And so money might not be the first thing that’s top of mind. I mean, do you remember when you got your first full time job?

ROB: Yeah, I remember it really clearly, you know, I was so darn glad to have a job. I was in journalism was a really nice job. I was a reporter-editor at the Canadian Press. And I was not walking in there negotiating. I thought, just tell me what it is. And I’ll do it. The salary happened to be pretty good. And I had no issues with that. And to be honest, I barely looked at anything else that was part of my compensation. It was just pure gratitude to have this opportunity.

ROMA: And it’s interesting, too, I don’t remember going through school, really focusing on what the salary was going to be -- you pick something because you think you want to do it, and you’ll be good at it. And so it makes sense that it feels awkward to start talking to a potential employer, when you’re so happy to get that job about what you’re going to be getting paid. But you absolutely should.

I read a quote somewhere that said something along the lines of not negotiating the salary on your first job can cost you hundreds of thousands over your career. And the financial repercussions of not negotiating are huge, right? Because over a lifetime, they can really build up.

ROB: Are you a good negotiator?

ROMA: I feel like I’ve negotiated in some parts of my life. I started off negotiating when I traveled, but I also feel like I negotiate on different buy and sell networks that I’m on, things like that. In other elements, I’m not really that comfortable negotiating. So I think it really depends on the situation. What about you?

ROB: You know, I don’t really like doing it. But I have found that if you ask you sometimes get and it’s worth trying. And I have, you know, I can’t say I’m an ace negotiator, but I do feel like you know, whether it’s buying cars or having work done on various things that sometimes you ask and sometimes you get so it’s always worth doing and I think it is always worth doing employment wise.

ROMA: Truth is, many of us don’t feel comfortable negotiating salary. In a survey by staffing firm Robert Half, only 36% of Canadians negotiated for higher pay with their last job offer.

In another by Mint.com, when people were asked why they didn’t negotiate, 1 in 4 said it was because they didn’t know how. 1 in 10 said they were scared of negative consequences.

ROB: But this same survey showed that when you do negotiate, 43% of people got what they asked for. And 30% said the employer met them in the middle. All together, three-quarters of people who negotiated got more than what they were first offered. That’s not bad!

ROMA: It seems like negotiating a salary is hard at first, but can get easier as you move further along your career path. If you have the right support network in place.

ROB: That’s right. When we were thinking about this episode and how hard it is to talk about money and salary, we decided to look for a group of friends who tell each other everything. And we found one. That’s next.

PRE-ROLL: This podcast is brought to you by CPP Investments. Take comfort knowing the Canada Pension Plan Fund will be there for you. We invest to help ensure the CPP fund remains resilient over the long term, sustainable and secure for millions of Canadians. Learn more at CPP Investments Dotcom.

FRIENDS: My name is Tara. I’m 28.

I’m Julia. I’m also 28.

I’m Lisa, I am an engineer in Toronto.

I’m Cheryl. I live in Toronto, but I’ll be moving to the UK at the end of the month to be a lecturer at the university.

ROB: When Cheryl was offered a new job at a university in England, she turned to her group chat.

CHERYL: I was looking at jobs in Canada and the UK and Europe. And British universities pay far less than Canadian, but they’re also much more competitive. So I was looking and kind of saying, you know, like I could make $200,000 in Canada versus in the UK, I make the equivalent of, you know, $75,000 and if people you know, people asked, well, can you negotiate? Can you discuss in the UK? And I wasn’t afraid to negotiate. I just didn’t know if you were supposed to?

ROB: Meanwhile, Cheryl’s friends talk every day in their group chat. And everyone knew how relieved Cheryl was to land this job. This is Cheryl’s friend, Tara.

TARA: The big thing was Cheryl was really looking for a meaningful position. And so as soon as she got the offer, we were all just so excited.

And then you know, from there Cheryl was sort of asking, How do I do this?

ROB: HOW do I do negotiate but also when do I negotiate? Here’s Cheryl again.

CHERYL: I got the job offer on Zoom. And I was so shocked to get the job because it was my first interview. And I basically just said, thanks. And he said, you have any questions? And I said, No. So then he said, Oh, now, most people asked about the salary. And I said, Oh, right. Okay, what’s the salary? And he told me the salary and I thought, Okay, well, that’s more money than I’m making now. But not as much as I wanted. So I said, Okay. End the call. And then I was like, Did I miss my opportunity to negotiate?

ROB:

All the friends in the group chat talked about it. And no one was really sure. Here’s Julia.

JULIA: Yeah, it’s almost like there’s this taboo on talking about it and asking you about it that really makes it hard for you to approach those conversations. And so you do end up talking to your friends being like trying to figure out, Is this normal? Do I do this? Like, what can I ask for it? What’s going to be insulting?

CHERYL: I think one of the things that’s really difficult about negotiating and salaries to is that because we are all quite young, and I’m in an incredibly competitive field, you know, I’m just happy to have a job.I’m not about to be like, hey, pay me X amount more.

ROB: Even though all four friends have done a lot of school, they’ve never had formal education on how to negotiate. And what about the workplace? Well, negotiation has never come up for both Julia and Tara.

TARA: Julia and I are not in a position as government employees to negotiate. And so when Cheryl first mentioned it, I went, we negotiate our salaries? Some people can do that?

And then it actually kind of prompted the conversation of, Well, when do you do that?

ROB: Right. Back to this question of when. Let’s get back to Cheryl’s story and her job offer from the university in England.

CHERYL: So they then sent me a contract. And I screenshot and sent it to the group. And I was like, I just received this with the salary. Can I accept it conditionally, and then negotiate later?

And my partner was like, I think you missed the window. And I was okay, when was the window? And I had no idea. And I guess I did miss it. So I didn’t end up negotiating.

TARA:I remember Cheryl saying that she had gone through sort of the email chain with her partner and looking at what point should I have negotiated. And it was like five emails before that she should have mentioned it. And I thought, well, how are we supposed to know that?

I felt so bummed for her. Because I think that Cheryl’s skill set and knowledge, you know, deserves, you know, a set salary, or at least the opportunity to have that conversation. And she didn’t even get that chance.

ROB: The opportunity for this group to discuss salaries came up again with Lisa, who is an engineer.

LISA: Searching for a job in the pandemic was really stressful. I had finished a master’s and I needed a job. Like, I needed money. I was paying rent in Toronto, so I needed a job. ASAP.

ROB: A few months into her job search, Lisa was lucky enough to land an offer. However, it wasn’t her top-choice company. In fact, her top choice was talking with her, which was great, but it was only for a temporary co-op placement.

LISA: But the other firm had offered me a full-time job.

ROB: She didn’t want that job. And yet, that offer pushed her to be bold with the company offering her the co-op.

LISA: I had to kind of ask for, you know, I’d really love to pick you guys, but it would be hard to turn down a full time position in this pandemic situation. And then in that same conversation is when I asked for the salary. So I’m going from talking them into bringing me on as a co op student to trying to convince them to pay me like a whole bunch of money.

ROB: Lisa decided to go for it.

LISA: What I had asked for was like low to mid 90s. And what I ended up with was $85, 000, which I was very happy with.

ROB: Lisa didn’t get exactly the number she asked for but she’s getting paid more than she was before and overall, she’s very happy with where she landed.

Now Tara is about to move to Chicago, which means looking for a new job. And Cheryl is pushing Tara to get the salary she deserves as an occupational therapist, or OT.

TARA: When Cheryl first mentioned it, I thought, I don’t know, Cheryl. OT’s don’t negotiate. And she came right back with, Yes, they do! And so I’ve already been researching, there’s a website called OTsalary.com, and it’s a database of every OT salary, who’s willing to put their information in. And I’ve already filtered “Chicago pediatric occupational therapist.” And so now I can see how much experience these people are coming with, where they’re working, and what they’re making.

ROB: Research, in other words! Gotta say, that website sounds like magic. That’s the kind of information people need to negotiate.

TARA: I’m feeling pretty kind of fired up to have these conversations in an interview and say, you know, I’ve looked at, I’ve done my research, What are you offering? And is there room to have a discussion around that? So I’m really thankful for having these conversations, because it’s just allowed me to do my own research to see what is my position worth.

ROMA: I love listening to this group of friends, talking and sharing. I sincerely hope that a lot of people are going to be doing this in the coming years and more importantly that people have groups like this that they can confide in.

ROB: I think they’re lucky to have each other, as a support group and to compare notes and all this. It makes me realize I never had this in any of the jobs I’ve ever worked at. We’re all in silos, keeping our personal compensation and salaries private.

ROMA: It’s very common to try to sink or swim in a negotiation based on some internet research and the support of your friends. But what if I told you that you can actually learn this stuff? Like, in a class? We’ve got a professor of negotiation on the show today. That’s next.

MIDROLL: This podcast is brought to you by CPP Investments at CPP Investments. We never lose sight of the long term. We invest the Canada Pension Plan Fund to help provide financial security for generations of Canadians. We diversify the CPP fund across geographies and asset classes to access the best investment opportunities and generate sustainable long term returns. The fund is now more than 400 billion dollars. To learn more about our investment performance for Canadians, visit CPP Investments. Com.

HADIYA: My name is Hadiya Roderique. And I taught negotiations for several years. I also was a lawyer, and so had to negotiate as part of my daily practice.

ROMA: We’re talking to Hadiya Roderique today because she taught negotiation to commerce students at the University of Toronto. Here’s our conversation.

Okay, we’ll get to the negotiating salary in a bit. But, typically, what level of negotiation know-how do you see among the students when they walk into your class?

HADIYA: Usually not much. I mean, people have had to negotiate in their lives, you know, you’ve tried to buy something on Craigslist, you’ve negotiated with your parents for later curfew, these types of things, but most of them haven’t had to do intensive salary negotiations or any anything, you know, buy a house or buy a car or something that involves a lot of dollars. So I’d say generally, their knowledge is a bit minimal.

ROMA: Okay, so what are some of the common misconceptions around this?

HADIYA: I think that people think that you have to be a born negotiator. That you negotiate based on instinct, and that you either kind of know how to do it or you don’t. But really, a negotiation is a skill that can be developed. And I’d say the best negotiators are truly made not born. I think a lot of people think that negotiating means that you have a loud voice and you comment and you’re slamming your hand on the table and you’re making a lots of big demands. And you’re sort of making the other person cower with your, with your knowledge and your force. But you don’t have to be the sort of big blustery person to be a very skillful negotiator.

ROMA: Is there a lack of awareness around negotiating? You know, I’m thinking especially for people that are starting off in their careers.

HADIYA: I think there’s a lot of misconceptions and a lot of misinformation. And I think this leads people to make several kind of key mistakes. So the “winners curse” where they’re either often settling for too little. The mistake of agreeing just for the sake of getting to an agreement, where people sometimes feel obligated to reach an agreement even if they have better alternatives elsewhere. And another mistake is often walking away from the table or what we call hubris. You know, when they reject terms offered by the other party, they’re actually better for them than anything else they could get. And then leaving money on the table is another big mistake that I think people make without sort of knowledge about the process and how they can do better.

ROMA: Okay, so let’s talk specifically about negotiating salary. Because salary is not the only thing, but it’s certainly a very big thing. And Stress Test is about money. So how do you go about negotiating what everybody wants, which is more pay?

HADIYA: I think one important distinction to make is that I think a lot of people believe that negotiations are really just what we call distributive, that I, if I win, you lose. If you win, I lose. And some things are distributed, you know, if I’m bidding on a shirt, on Etsy, it’s purely about dollars, right? It’s one issue, dividing the pie, opposing interests. But a lot of negotiations, including job negotiations can be integrative. And so integrative negotiations involve multiple issues, there’s opportunities kind of for enlarging the pie for all.

So I don’t know if you’ve heard the story of the sisters in the orange?

ROMA: I have not

HADIYA: So there’s two sisters. They both wanted the only orange left. At first they tried to bargain. You know, one sister offered money the other person asked kindly. But ultimately, they decided because they both wanted the orange, they compromised and split the orange. One sister then ate the pulp, and threw away the peel, while the other sister used the peel to make her cake and threw away the pulp. And so the lesson is, if they’d talked to each other about their interests,, they both wanted different parts of the orange -- and so they both could have actually had the whole peel or the whole pulp.

ROMA: Well, I would imagine there’s also a huge benefit to both of you being on the same page in terms of expectations, and having laid out what the requirements and bonuses and pros and cons of the job could be in addition to that.

HADIYA: Yeah, I mean, generally a willingness to share information will help you get to more integrative solutions. So emphasizing the commonalities between the party, minimizing the differences and searching for solutions that kind of meet the goals and objectives of both sides. I think for young people kind of starting out, things that are really important are to know what your walkaway price is like your reservation kind of bottom line, know what your alternatives are. So the best thing you can do is to improve what’s called your BATNA and this is your best alternative to a negotiated agreement. This is your biggest source of power in any negotiation. because if you have a very strong alternative, you’re not relying on this party for a good outcome and that gives you a lot of power. So one of the best things you can do is actually have multiple options. Your BATNA is important but sometimes it isn’t just determined by your will and sometimes you may have very limited options. But in that situation, you want your counterpart to think that you have a strong BATNA. You shouldn’t lie about BATNAs that doesn’t exist, because you know, you could have actual legal consequences, but you can choose to only give positive information about your BATNA.

ROMA: One of the issues that we see a lot in personal finance is a reluctance to talk about money. Right. And I think that really extends to a reluctance to talk about salary.

So the question to me seems like how can you realistically but ambitiously calculate how much you’re worth? nSomething you know, that’s not too low? But that’s not so high that it takes you out of the running?

HADIYA: It’s interesting, because employers don’t want you to know what others are making. Because what happens when there’s an inequity, there has to be an upwards correction is not the person that’s making more money is now going to get their salary cut, you’ve got to make things fair for the person who’s making less, you know, I’ve had, I’ve heard of women who found out that their subordinate, the person reporting to them makes more than them. Right? These kinds of situations exist, especially for women, and people of color. And I think that we have to have a culture or embrace a culture where we talk about these things where we’re not afraid to share because we know that it’s collectively good for all of the employees to have that power to have that information. You’ll have some companies who will ban try to ban their employees from speaking about salary because they know that anytime people start speaking and start sharing that information, that information is power. And that power can be used for the employees benefit instead of the employers benefit. One thing I think that’s been really helpful is the sort of invention of websites like Glassdoor.

A lot of people are contributing to those kinds of sites, you know, kind of do your research, go on Reddit, go on web boards, go on job boards and and come with that information. I think this is particularly important for women and people of color. Because we are we are low balled a lot of the time I was reading a story about a woman who applied for a role she was going to be the accountant at this firm, got a job offer, and they accidentally sent her the contract of the man who had been offered and turned down the job before her. He was getting $17,500 more and an additional week of vacation. She crossed out his name, replaced it with hers and signed the contract. So that’s what she did. It was a great baller move. I was very impressed.

I would say that information is power options are power.

ROMA: Is that ever okay to say, what are people at my job level earning?

HADIYA: If I’m given a number, I’d say, how would this position me with respect to the other people of my level of my department with this? Would I be at the lower end? Would I be in the middle range? Would it be at the top?

And then say how do my skills compare? Would I be at the lower range or the middle range at the top? If you’re telling me that the salary is at the lower range, yet my skills are at the top range? That’s something that doesn’t make sense, right? So, having a match between where you fall position wise and skill wise experience wise in the group, versus where your salary should fall.

ROMA: Okay, what if you’re listening to this, and you’re thinking, well, this is my first entry level job, and it’s my first salary. And I’m just so excited to have a job. Do you have any leverage as someone who’s walking into their first position to negotiate,

HADIYA: The best is to have multiple first positions that are available to you. So have a few different job offers. But even if you don’t, one thing you can do is to sort of negotiate a package. So they present something to you. And if you want to counter, counter with three different options, that are all sort of equivalent to you, but that have different priorities. Because that will allow you to assess what’s really important to the company, right? So one may have more vacation, one might have a higher salary, one may have more professional development opportunities.

Generally a multi issue or package approach also lets you come across as as less competitive or aggressive. When there’s one issue and you’re just fighting over salary, the negotiation is more likely to seen as as adversarial kind of win or lose.

ROMA: Okay, so what happens if they come back to you? And they say, Sorry, no, that’s all we can do. Yeah, this is our best offer. And you really do want to work there.

HADIYA: Yeah. I mean, then it depends. Is it above your sort of baseline, your reservation point? So you should walking into a negotiation, preparation is incredibly important. So when you prepare, you want to figure out what’s my reservation price? What are my best alternatives and why are my goals? So if that offer is above your bottom line, and you have no other options, then you take it. But if they come back with an offer, and you have a second job offer, that’s going to give you more of what you want. And it’s a place where you’d want to work as well, then you sort of weigh that calculus, but you should know ahead of time, sort of what’s important to you. Then you won’t just be swayed by one thing, because I think what happens is people fall in love with the place or they fall in love with the house or they fall in love with the thing. And then the emotional part kind of takes over and disregards the practical part.

ROMA: Okay, are there any things to steer clear of in a negotiation, like something that you could do that could actually damage your position?

HADIYA: I would say, making a completely unreasonable first offer, right? If you’re, if you’re starting out somewhere as a junior employee, and you ask for $300,000, probably not going to go over well. And so the more prepared, you are sort of looking like you’re someone who knows what they’re getting into knows the industry has done their research, it’s going to be impressive, right? And so by asking for concessions, you often will make your opponent more satisfied. They will actually think more positively than if you didn’t say anything and just accepted the offer. So don’t be afraid to ask for things, especially if you can back it up with research.

ROMA: Okay, I want to go back to something you said earlier. You we know that women often get paid less than men. We know that racialized people are underpaid. So how do you overcome that when you’re negotiating?

HADIYA: You prepare fully. Like I cannot overemphasize the importance of preparation. Preparation is half of the battle, I’d say it’s more than half the battle is like three quarters of the battle. Have data. If you gather salary data from Glassdoor other reliable sources, you are armed with information and then they would have to provide information that is counter to that for you for that to no longer hold weight or have sway.

Having information …information is power, especially for people who are underrepresented in the workplace.

ROMA: Are you seeing more companies coming out and being open with what they’re paying employees? Because that seems to me to be a large part of this puzzle?

HADIYA: Not really. Not that I’m aware of.

ROMA: Yeah, I’d love to see that.

HADIYA: I think it would actually go as well to correct a lot of the racial and gender imbalances we see in workplaces. There was one experiment where the company published by department, the average salary of people of colour versus white individuals. And within one year, that salary difference disappeared. Because when you put people publicly on the spot, they either have to confront that there’s bias going on, or they have a management issue or performance issue. So it was actually just a bias. And so that ended up correcting those salaries.

ROMA: I think this episode is going to be so useful. I’m so happy we did this topic.

HADIYA: Thanks yeah.

ROB: I think Hadiya had some really solid material here for people who are thinking they’re not happy with how much they’re making and what avenues might be open to them to ask for more. I think she’s really opened some minds here. What about you Roma?

ROMA: I love the take that negotiation is not about conflict. I love the take on how if you go into a negotiation properly and say these are the things I need and the employer is clear, you can come out of there in a mutually beneficial situation. And I think that’s such a positive takeaway. Doesn’t have to feel like a conflict or a war, it can feel like a win for everybody.

ROB: I think we have to acknowledge that some people don’t have the leverage in their job or industry to ask for more money but there are always ways to better your position in the workforce, it could be more vacation time or a different benefit package. Always think about how you can be working with your employer to put yourself in a better position. I think that’s a great lesson to takeaway from this.

ROMA: And that brings us to our takeaways for the day.

  • Be prepared. Do your research, talk to people in your field, get on the Internet. Start negotiating from a position of power, armed with reasonable but ambitions expectations.
  • Have a fallback plan. If it’s possible, negotiate with more than one potential employer at a time. It will make you more attractive and leave you with more options.
  • Negotiation is not just about salary - you can ask for more vacation time, further training, flexible work arrangements, better benefits or other perks – whatever it is you value.
  • Not negotiating means you could be leaving money on the table, money that could be used to pay off debt, save for a downpayment or start investing. Don’t make that mistake.

Thank you for listening to Stress Test.

This show was produced by Hannah Sung and Latifa Abdin

Audio post-production by Kyle Fulton and Carlay Ream-Neal.

Our executive producer is Kiran Rana.

Thank you to our group of friends for sharing their story with us: That’s Cheryl, Lisa, Tara and Julia in Ontario.

ROB: If you like what you heard, let the world know! Leave us a rating and review at Apple Podcasts.

And if you know someone who wants to figure out how to stay on top of their finances, send them this show.

ROMA: You can find Stress Test at Apple Podcasts, Google Play, Spotify or your favourite podcast app.

And find us at the GlobeandMail.com, where we cover all things financial.

Thanks for listening, now get out there and negotiate.

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