NEW YORK (MainStreet) — When it comes to annual salaries (not to mention bonuses), career professionals tend to leave a lot of money on the table. It sure doesn’t have to be that way – and you can earn $600,000 over the course of your career, one study says, if you learn to haggle better with your employer over your starting salary.
The number is based on a recent George Mason University-Temple University study. Michelle Marks, the study’s co-author and a business professor at Temple’s Fox School of Business, says that employees who negotiate their starting salaries automatically increase their starting paychecks right out of the box – by an average of $5,000.
That additional $5,000 in starting pay turns into $600,000 over the course of an entire career. She says an employee whose starting salary is $55,000 instead of $50,000, and who earns a 5% raise annually, would earn the extra $600,000 over a 40-year career.
"In today's economic climate, raising your annual salary is highly uncertain,” Marks said. “However, our study results highlight the significance of effective salary negotiation and why it’s important to be up front with the issues, enabling both parties to consider creative ways to find win-win solutions.”
Leaving $600,000 on the table because of a decision not to negotiate can really cost you. Think about it: If you invested $600,000 during a 10-year period at an average interest rate of 8%, that would yield $1,295,355.00. Granted, the $600,000 mentioned in the study does not come all at once, but you can see how that extra cash can contribute to a person's long-term finances.
Successful salary negotiators should use five negotiating strategies laid out in the study: Accommodating, avoiding, compromising, competing, and collaborating. But the latter two are most important. Marks says that collaborating and competing strategies, which are based on a lucid, open discussion of the issues, relying on the perspective of negotiating parties, can bring the most money to the employee’s side of the table.