Life is a Mystery

28 July 2010

Anchoring yourself

I noticed long ago that our salaries tend to only be flexible at certain moments in time. One of these moments is the hire. I would always encourage staff, especially women, to ask for a bigger salary than they were being offered. There is no harm in asking, and there may be some flex in what you are being offered. Your employer will never be as flexible as they are at the moment of hire and all your future salary increases will be based on where you start. It is worth making some attempt to reset that starting point, I would counsel.

Today I came across an article that helps me understand the dynamic I was unconsciously tussling with: the anchoring effect. David McRaney describes it mostly in terms of sales and purchasing:

You walk into a clothing store and see what is probably the most bad ass leather jacket you’ve ever seen.

You try it on, look in the mirror and decide you must have it. While wearing this item, you imagine onlookers will clutch their chests and gasp every time you walk into a room or cross a street.You lift the sleeve to check the price – $1,000.

Well, that’s that, you think. You start to head back to the hanger when a salesperson stops you.

“You like it?”

“I love it, but it’s just too much.”

“No, that jacket is on sale right now for $400.”

Its expensive, and you don’t need it really, but $600 off the price seems like a great deal for a coat which will increase your cool by a factor of 11.

You put it on the card, unaware you’ve been tricked by the oldest retail con in the business.

It seems that we are wired to anchor our impressions of a number on a prior number we have associated with that item, whether or not that prior number has any basis in reality. This is what manufacturers suggested retail price is about. You may not be able to defend yourself from this anchoring effect even if you know about it. Read the article, I dare you to not succumb to the anchor.

But knowing about it, you may at least be able to use it to help yourself out from time to time. Be prepared to name a high anchor when it matters. And it matters when negotiating a starting salary. Aim high, it is your only real chance to do so, and they want you so they will at least entertain the notion. Value yourself, use the anchor!

Money. Some rights reserved by Vanessa Pike-Russell.

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Eric Celeste / Saint Paul, Minnesota / 651.323.2009 / efc@clst.org