“Don’t leave money on the table,” is the advice of negotiators, and applies whether you’re investing, navigating a business deal, applying for financial aid, making an offer on a house, wrangling over the sticker price on a new or used car, haggling with a market vendor, bartering over your allowance or negotiating your starting salary, benefits, perks and other fine points of your newly-minted job offer.
That’s the next step after you’ve received — but before you accept — a job offer. Upon receiving the offer, you usually have a few days to a week to accept, depending on the position. Thus, you should immediately review all items in your job offer package (often referred to as your total compensation package) and within a day or so contact the employer to discuss the terms, starting with the salary.
You were well prepared, did everything right and beat out all the competition to nail the interview. It follows that you should be confident and well prepared to sail smoothly into salary negotiations.
But, that’s not usually what happens. According to a survey by CareerBuilder, nearly half (49%) of American candidates accept the salary offered with no negotiation. Most of the candidates who did not negotiate were women and new college grads. They left salary money on the table. And guess what happens to that money on the table: someone else gets it.
The survey also discovered that nearly half of the employers surveyed were willing and prepared to negotiate with job candidates. That so many candidates fail to negotiate indicates to me that confidence is a key factor in whether or not a candidate negotiates. And one of the keys to being confident is being prepared.
To prepare to negotiate your starting salary, start by comparing the salary offered with the following points:
- The market value of the position you’ve been offered. To determine your market value, find the salary range for your new position. The range will include low, mid and high points; decide based on your education, experience and skills where you should be in the salary range.
- Your current or previous salary. Generally speaking, you’ll want to exceed this figure. But even if the salary offered does exceed your current or previous salary it still might not be at the appropriate level based on your qualifications.
- Responsibilities of and expected performance in the new position. This is a key consideration, especially if the new position requires more responsibility and a higher level of work than your previous or current position. For example, going back to the market value point, the mid-point salary for your new job might be higher than the high point of your previous position. There might be some variables if you’re changing industries or the type of work you do. Whichever the situation, be sure to take into consideration your new responsibilities as well as salary fluctuations among industries and job types when planning your negotiation strategy.
After completing your research and taking all aspects into consideration, decide on the lowest figure on which you are comfortable to accept. This might be the initial salary offer or slightly above. Alternatively, if the employer cannot provide a reasonable counter offer — or in some cases none at all – review the other items in your total job offer package (which can add or subtract from your total compensation) to determine whether they are competitive with those of other similar companies and if adjusting one or more will offset the lack of an acceptable salary increase. Based on your findings, present your counter offer and make a reasonable request that the employer might have the flexibility to accommodate.
Such items in your job offer package might include:
- Health Insurance
- 401K plan with Employer Contributions
- Pension Plan
- Work Schedule
- Flex Time
- Sick / Personal Days
- Parental Leave
- Ability to Work from Home
- Expense Account
- Complimentary Gym Membership / Other Discounts
- Use of Company Car
You already researched the employer and the industry for your interview, so you have an idea of the culture and customs, and know what to expect in this regard when you sit down to negotiate. You’ve also developed a rapport with your potential new manager and impressed him or her enough to get the job offer. Therefore, you need to continue this rapport and pleasant atmosphere as you enter into the salary negotiation. Following are some tips to keep in mind:
- Smile. Negotiations, while expected and commonplace, can be uncomfortable for both parties. Smiling reassures the employer that you are still the upbeat, very professional candidate she liked so much for the position. Smiling also relieves tension and helps everyone to relax.
- Stay the course. Continue the same confident posture, perfect etiquette and personable approach that you used to nail the interview. You’re still in character! Don’t fold now; you’re almost across the finish line.
- Maintain a respectful, empathetic attitude. Many candidates lose their edge by becoming demanding and aggressive. You wouldn’t behave this way in the interview, so certainly don’t start now. Use a friendly, persuasive and confident conversational tone. Simply make your presentation as you have researched and prepared. Your goal regardless of the outcome is to remain on good terms to facilitate a pleasant relationship whether or not you accept the offer.
- Acknowledge the employer’s position. It’s important in any negotiations that you show your understanding of the other person’s position. You are two professionals with the same goal: to get you on board in this job in a way that will make you both happy and satisfied. That doesn’t mean that you should give in easily; it just means that you should try to understand the issues with which the employer is dealing.
The Employer’s Side of the Table
The culture of the industry and particular company or organization will in part determine whether your prospective employer is willing or able to negotiate with you over salary and other issues. But here are issues with which most if not all employers struggle:
Budget: For each position a budget is established, usually within a range to allow for negotiation and / or merit and other increases within the current calendar or fiscal year (the latter of which varies among industries and sometimes among companies). Usually when negotiating an employer will be able to offer a higher starting salary but offer a lower salary increase later; this is done so that the business unit that is hiring you can stay within budget while keeping the candidate happy at the start. Other times, the budget is fixed and cannot be changed without really rippling the pond, which is unwise unless you are at a very high level. This is often true at smaller companies and positions at certain levels within large corporations.
Fairness: The manager might not agree to a starting salary increase that is disproportionate to others in the same position category, the feeling being that violating a policy or practice might adversely affect the company as a whole.
Precedence: If negotiating starting salaries is not a practice of the company at large, or within a specific business unit, the employer might not want to set a precedent by starting with you.
Perception: Your prospective boss might conclude that you are not focused enough on the job opportunity and perhaps are not the right fit after all if you’re prepared to haggle over salary. In a close race, she might decide to rescind your offer and instead extend an offer to the runner up candidate. Other bosses might admire you for negotiating and feel that you will bring the same assertiveness and thoroughness to the job.
Join me next week as I address the special challenges faced by women and new college grads conducting salary negotiations.
Until next time,