Once you’ve gotten an offer, your work is almost done, but not quite! In any major sale, price is always negotiable, and so is compensation. Read on to learn how to give yourself a raise before you accept the offer.
First of all, let’s take a look at the components of a job offer. There is a lot more to it than salary:
If you got a job offer, you are in a position of power. You are the employer’s preferred hire, after they’ve done all their painstaking screening work. They don’t want to lose you. Now it’s time to talk compensation, but not before.
Six Secrets of Negotiating
1. The purpose of negotiating compensation is to uncover the most that an employer is willing to pay you.
The employer will have a budget for this position and usually will have a range to work with. Your goal should be to get them at least to the top of their range, if not higher. You shouldn’t think of negotiating as impolite, greedy or combative. It’s a normal business process. If you do it professionally, your prospective employer will respect you, and may even value the fact that you are a good negotiator. If your position is fairly high level, requires negotiating skills and you aren’t negotiating, the employer may wonder why you aren’t negotiating. Are you really the right person for this job? Are you desperate for a job?
2. Don’t discuss salary until the end of the interviewing process, when the employer has indicated that they want to hire you.
Most candidates make the mistake of revealing their compensation requirements too soon. The rule of negotiating is he or she who speaks first loses. By giving your requirements first, you give the employer the upper hand. What if your number is well below what the employer is willing to offer? You’ve left money on the table. Conversely, if your number is too high, you might scare the employer away before they have interviewed you and you have demonstrated your value.
If you are applying for a job via an employer’s web site, a job board or a recruiter, they will always ask you for your current and/or required salary. Try not to provide this if possible. Of course, this is yet another reason that these search methods aren’t the best (see Job Search Methods). If you are applying online, simply try to enter “Flexible” in the compensation field. If you talking with a recruiter, you can verbalize the same. If you are absolutely pushed to provide a number and you want to consider the position, I recommend you give a range. But only do so after you have researched the right number, based on what you want and need, and what the market will bear. Be careful with your range. I would suggest erring on the higher side. Remember the bottom number in your range is the amount the employer will think they can hire you at.
3. Try not to be the first to mention a salary figure.
The focus of the interviewing process should be on understanding each other, including your background, capabilities and interests, and the employer’s goals, needs and position requirements. If those important items don’t align, then compensation is a moot point. It’s a two-way discovery process. If you are focused on salary, it sends the wrong message. And as indicated above, he or she who speaks first undermines their negotiating power.
4. Do your homework on how much you want before you start negotiating.
You have to know what your goal is before you start negotiating. Know your end point. What is your ideal compensation? What is your minimum that you might be willing to accept for an outstanding position and/or company that has other positive attributes that might outweigh compensation? What is the market rate for your potential position? Check out www.salary.com or www.glassdoor.com for market compensation by position. If you are working with recruiters or have contacts with those not involved in the company that has given you an offer, you can also ask them for compensation information.
5. Define a range that the employer likely has in mind and then define your overlapping range.
During the course of your process with the prospective employer, you might have uncovered the employer’s range. This might have come from a recruiter, the HR people or less frequently, even the hiring manager if you have gotten an offer and were lucky enough to get them to open up about their intended compensation plans. If you have this intelligence, choose your range so that your low end is within their range and your high end a bit above theirs. If you don’t have any intelligence on this, then you need to go with what you came up with in item 4 above.
6. Know what to say, how to say it and how to bring the negotiation to a close.
This part is art form. There is no standard script on negotiating, but I will show you a sample conversation below. The key is to be professional, constructive and reasonable. It’s a sales process. This is something you can learn and practice. Your emphasis should be on what business benefits you can deliver to the employer. Show how you can generate a return on your compensation. Examples:
- Sales position: Show your track record of revenue generation and how you will generate revenues that more than justify your share in the form of salary, commission and bonus.
- Administrative assistant: Show your breadth of skills, productivity and attention to detail and organization, saving your employer time, as well as expense of additional help that costs them money.
- Financial manager: Show how your analytical and financial management skills have saved and will be able to save your new employer money by better cost management and expense reduction.
This part is hard. It takes some thinking and creativity. You need to think in terms of ROI to the employer, not just skills and activities you perform. You need to quantify past results where possible. If you can project potential results for the new employer, even better. Show them how you are different and better than the “average” person for whom they developed their offer range.
- Know your value through research.
- Commit to win/win solution.
- Compromise when necessary.
- Accept stress as part of the process.
- Identify gaps and offer constructive solutions.
- Acknowledge the offer without negotiating. Thank the employer and show your enthusiasm. Clarify the position responsibilities, salary and benefits. Request more complete information in writing. Express why the job and company are appealing to you. Ask for time to consider it and indicate you will get back to them within the agreed time frame.
- Analyze the offer and collect any missing information, e.g. position responsibilities, company benefits detail, reporting structure, offer letter details, etc.
- Evaluate the offer and determine your goals and walk-away point. Is the offer ideal or too low? What is missing if anything, based on the components in the table above?
- Develop your negotiating script and how you intend to handle possible responses. See below for example.
- Repeat steps 2-4 as necessary.
- Walk away or obtain agreement and ask for the final offer in writing.
Let’s say you received an offer for a Financial Manager position and have completed steps 1-3 above. The employer likes you and you want the job. The employer offered you a base salary of $75,000, with two weeks of vacation and a start date of 2 weeks from now. You want $80,000 and 3 weeks of vacation, with a start date 3 weeks from now. What do you do?
Ideally, you want to negotiate with your prospective boss. It is coming out of their budget and they are the one who really wants to hire you, not HR or the recruiter. Work with the decision maker if possible. So you approach the prospective boss, Mary, and get a meeting or phone call. Either is fine. It might go something like this (perhaps after some small talk to warm up the conversation):
You: Thank you again for the offer and opportunity to work with XYZ Corporation. I am excited about the potential and would like to make this work. I have thought a lot about your offer and wanted to discuss a few things with you.
Mary: Ok. We are excited about having you come on board with us also. My team and I all agreed that you would be a good fit with us. What aspects of the offer are we talking about?
You: Well, there are a few things. First, the base salary is a little bit below what I was hoping for. Also, in my current job and for the last five years, I have had three weeks’ vacation and would appreciate that if possible. Finally, I need a bit more time to transition between jobs and was hoping you might allow me to move the start date back one week from your desired date.
Mary: I see. Well, I think we can accommodate you on the start date. That shouldn’t be a problem. I can look into the vacation issue, but we do have a policy for new hires at your level, that they get two weeks. As to the salary, what were you looking for? The offer we gave you is very competitive and works within our budget.
You: Well, based on my skills and demonstrated ability to drive financial performance improvement, I am confident that I will be able to help the company reduce expenses, as we talked about in the interviews. I would suggest that coupled with my ability to be productive quickly, could perhaps warrant a little more than your offer. Do you have any flexibility with the base starting salary?
Mary: We might have a little bit of flexibility. How much more base are we talking about?
You: Based on my research from several credible sources, my past compensation and performance, and the responsibilities of this position, the range I had in mind is $80,000 – $85,000. But I certainly respect and appreciate you having a budget and wanting to manage this carefully.
Mary: Well, you do have good credentials, but I also have to manage to a budget and need to be fair relative to other employees. How about if I see if I can do anything, and get back to you later?
You: Of course, thank you for considering it. Once again, I want to emphasize that I am excited about the potential of working with you at XYZ and hope we can come to a mutually beneficial agreement.
Mary: Thank you. I appreciate that. I’ll get back to you by tomorrow at the latest.
You: Thank you, I look forward to speaking with you.
Mary: Good bye
You: Good bye.
The outcome of this or any negotiation is uncertain. You may or may not get what you ask for. But if you don’t ask, you certainly will not get anything more than what the employer floats as their trial balloon, and it usually is just that. There is usually room for negotiation, however minor. I recommend that unless the offer is perfect, you negotiate. But it must be professional and well thought out.
There are loads of resources out there on negotiating. A good career consultant can help, including role playing, which I highly recommend especially if you haven’t negotiated much.