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No Budget For More? How To Counter-Negotiate When The Other Party Says They Can't Pay

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When you tried to negotiate for more money – a raise at your existing employer, a higher offer at a new employer – did you stop when the employer said they just can’t pay any more? At a recent negotiation workshop, one participant insisted that he caved because the prospective employer had no budget. Another participant decided not to negotiate at all because he heard his target employer was hiring more junior, less expensive people. In both cases, the candidate took a constraint for the employer as immutable fact, when it is never that cut and dry. Even if the other party says they can’t pay, they still might. Here are four ways to counter the “no budget” negotiation play:

There is no "can’t." There is only "won’t." So find out why.

The other party might sincerely believe there is no budget. They could have no authority to go higher. They could have pressure from their boss or HR to stay below a certain amount. However, it doesn’t mean that everyone else in the company is similarly constrained. Therefore, every time you hear no, find out why not. Every time you hear “cannot” recognize they are really saying “will not” – companies absolutely can and do make exceptions, so find out why they will not make one for you. One of our clients politely asked why the salary couldn’t be raised and was told that the budget for the year was already closed. Turns out, it would re-open in six months. Our client negotiated for a pay adjustment after six months instead of having to wait the full year. It’s not the same as more money right now, but offering to wait and therefore remove the company’s constraint to paying more is one way of turning a no into a yes. Find out what the constraint is, and solve for that.

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There is never only one budget.

Another client was bumping up on the maximum base for her level, and the company was concerned about pay equity with existing employees. But they were able to give her a higher share of the performance bonus pool – that was a separate budget. Other places where employers can add money are the relocation allowance, equity grants, or expense budgets (e.g., for training or travel). When the other party says there is no budget, they may only be thinking of the salary budget or their department’s budget. Encourage them to think more creatively by asking about other pools of money. Even an open-ended question like “Is there anything else we can do?” can prompt the company to think more broadly.

More money is only one way to get more.

Unless you’re angling for more money so you can actually hold onto piles of cash, you’re probably negotiating for what the money will buy you and not the bills themselves. Depending on what you’re trying to get, the company may be able to buy it for you, while keeping your salary the same. I have seen salary packages where school tuition for dependents is included – for example, in an international relocation situation where the moving family has to enroll in an international school. If this is already being done for relocations abroad, could the company cover your dependents’ tuition even if you’re not relocating, but as extra compensation outside the base salary? Other expenses a company might cover include graduate education, training and conferences, and car or other transportation. If you were going to pay for this out of your salary, having the company pay these expenses essentially gives you more money without any more money exchanging hands.

This negotiation is only one way to get more money.

Just as “can’t” really means “won’t” no really means not now. If you try to counter and you’re not getting anywhere, you may have to accept that the current answer is no. (This doesn’t mean you have to accept the offer, since you can still decline, but it does mean you accept that the other party is not changing their no position and the offer stands unchanged.) If you still decide to accept the offer, remember that not now means you can ask again later. The no position, while couched as no budget, might also have been no to how you asked or no to when you asked (others were also lobbying for a raise same time). Take a step back and think about what you can change. Then set a reminder in your calendar to ask again.

Learning how to counter the no budget argument respectfully but firmly is an important negotiation skill, and not just for job seekers. In an increasingly contingent workforce, you’ll be negotiating hourly fees, project fees, or a salary for a temporary role. Entrepreneurs and freelancers also need to be mindful that multiple budgets exist (more than one department can share a consultant!), that perks and benefits are available to contingent staff and can be as valuable as money, or that companies can be quite creative when they really want and need you. The “no budget” claim is a statement, not a fact. Don’t let it stop your negotiation prematurely.

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