Negotiating a salary can be an uncomfortable process. You want to get what you're worth but you also don't want to offend or scare off your future employer. This situation is only more complicated in a tough job market. When offers are few and job seekers are plenty, you might be tempted to take whatever is offered to you. But, that's rarely the smartest thing to do.
What the Experts Say
Regardless of the state of the job market, you should always negotiate. "You don't ever want to just say thank you," says Katherine McGinn, professor of business administration at Harvard Business School and co-author of "When Does Gender Matter in Negotiation?" Getting a new job, or a new role, is an opportunity to increase your compensation, one that doesn't come around that often. John Lees, a career strategist and author of How to Get a Job You'll Love, says that people rarely get to re-negotiate the terms until after two years on the job.
Prepare for your next salary talk by following these principles.
Know your alternatives
"The advice I got when I was graduating from college was try to have the offer from your second best choice in your pocket when you negotiate with your first," says Danny Ertel, a founding partner at Vantage Partners, LLC, a negotiation consulting firm in Boston, and co-author of The Point of the Deal: How to Negotiate When Yes is Not Enough. Of course that's tougher in a difficult employment environment. When you don't have alternatives — either other offers or a current job — you have a lot less power, McGinn acknowledges. "So you have to be creative about demonstrating the value you'll bring to the company," she says. For example, you need to explain why you are the perfect person to fill this specific job, with the necessary skills and experience, not just a solid candidate. "In a time of full employment, employers are looking for a person who can do the work. In a time of unemployment, they are looking for the absolute best person to do the job," she says.
Do your research
Employers set salaries based on what they currently pay people to fill similar roles and what they believe competitors are paying. They may also have a certain budget or a predetermined range. Information is power in negotiation so the more you know about these data points the better. Do some sleuthing. Search websites such as salary.com, vault.com, and payscale.com to gather information about the organization and what it pays. Use Facebook and LinkedIn to reach out to people who might know what an appropriate salary is. Maybe it's someone you trust inside the organization, a career advisor, a search consultant, or contacts in the same industry. It may be uncomfortable to ask directly how much your friends in similar positions (or near strangers) make. Instead you can say, "What do you think the organization would pay for this position?" Then compare the advice you get. Don't rely on one piece of data or one type of source.
Use that information to set your own expectations and the hiring manager's. A good recruiter will ask if you have any base salary requirement. If asked, answer the question honestly. The employer needs to know that you're in the range they're hoping to pay so they don't waste their time or yours. If you're the top candidate, most employers are willing to do what they can to make the numbers work.
When the offer is too low
If the initial number is lower than the reasonable expectation you set, feel free to respectfully disagree. McGinn suggests you say something like, "Maybe I haven't conveyed enough the value I think I can bring to your organization because that sounds like a number you'd quote for someone who—" is much more junior, doing a different type of job, has less experience, etc. Then back up your statement with the information you've gathered. Even if you're pleased with the initial offer, Lees recommends you negotiate on some aspect of the job, if not the salary. Most employers assume you will. "If you don't ask for anything you're missing an interesting opportunity," says Lees.
Focus on "we"
Throughout the discussions, be aware of how you are coming off to the hiring manager or recruiter. Ertel says you don't want to appear like you're giving a list of demands. Instead, show that you're trying to come up with solutions that meet your needs and those of the employer. Use positive language. Demonstrate that you are open to other proposals aside from your own. It's a tricky balance; you want to push just enough. "You don't want to negotiate so hard that people are sick of you before your first day," says McGinn. The key is to know what you care most about — whether it be money or other aspects of the job offer — and stick to those points.
Negotiate for more than the money
McGinn says that most people make the mistake of negotiating for compensation rather than for a job. Candidates often focus on money because it is tangible but what makes a position attractive is not just the dollar amount assigned to it. Think about the aspects of the job that will make it satisfying: opportunities for advancement, exciting assignments, the chance to work with senior executives, etc. McGinn suggests asking yourself, "How can I build the biggest job I'm interested in having?" and then negotiate with your potential employer about those non-monetary elements, in addition to salary. Once you are in a position, McGinn says: "It's very hard to negotiate the basic structure of your job. People have to leave employment to do that."
Principles to Remember
- Reach out to people — friends or colleagues — who can tell you what the employer might typically pay for the role
- Be reasonable and honest with yourself and the hiring manager about what salary you're willing to accept
- Offer solutions that will meet your needs and those of the employer
- Negotiate on salary alone; the other non-monetary aspects often have more impact on your job satisfaction
- Accept the initial offer made to you even if you don't have other alternatives
- Go into the negotiation with a list of demands
Case study #1: Get the inside scoop
Anastasia Henderson* had a year left on her contract with a San Francisco-based tech company when her manager asked if she would consider a salaried job. Three years earlier, after having her first child, she became a contractor because she wanted part-time work and a flexible schedule. But, she was ready for more and told her boss she would be interested depending on the offer. Her job description wouldn't change — she would just go up to full-time. She felt she was in a good negotiating position because she had already proven herself and was well liked by her group and the leadership team. However, she still anticipated a low offer. "I knew that my salary would go down because I would be getting other benefits like vacation and healthcare," she says. But the salary Karen*, the company's COO, provided was much lower than she expected and she was disappointed. Karen explained that her last full-time position involved managing a team, this was more of an individual contributor role. Anastasia asked for time to think about it.
Then she sought the advice of the company's CIO, Ted*. "I hadn't worked with him directly but he had a reputation for being a good, upstanding guy. He was a straight shooter and I knew he respected me," she says. He told her that first she needed to take the emotion out of it and focus on what the company needs. He advised her from staying away from "I" statements so she wouldn't come off as demanding. He also gave her the inside scoop that they really wanted her for the position and the COO would likely work with her if she had reasonable requests. Anastasia took this information to heart and came up with a number that she felt she could live with. It was $10K more than the initial offer. She proposed this number to the COO and explained that while the job didn't include managing others, she was adding more value now than she had before. There were also parts of the offer that didn't matter to her. For example, she was already receiving healthcare benefits through her husband. She made it clear to the COO that these were not perks. The COO agreed to take these under consideration and would get back to her.
Within two days, Anastasia's boss told her that her counteroffer was accepted. While the final number was lower than what she initially wanted, it was a number she felt comfortable with. "I was willing to make some compromises for the job security. I knew they could terminate my contract at any time," she says.
Case study #2: Be honest about your alternatives
Keith Ellerman* was moving to New York City with his partner and wanted to find a new job. The first position to get to offer was with a New York City department. He was excited, but disappointed with the initial salary offered. "It was a classic case of misaligned expectations," he says. He had applied to the job through a friend rather than in response to a formal posting with a stated salary band. Throughout the interview process, he had been looking at other city jobs with similar titles and job descriptions and assumed the compensation would be comparable. It turns out there wasn't a correlation.
He decided to ask for a higher salary. "I didn't have formal offers but I knew I was one of two top candidates for two other opportunities and I knew the salary ranges," he says. He explained to the chief of staff who had been running the process that he expected to have other, more lucrative offers. "I had to be careful about what I said. I didn't want to lie," he says. He was clear and upfront. "I told them I'm really excited about the substance of the work. All things being equal I would prefer to join the team but because there is such a discrepancy in salary, it's a difficult decision," he says. He then proposed a salary that was 15% more than the initial offer. If the department would meet him at that amount, he would accept. The chief of staff agreed to take the request to HR. He soon came back and said that HR could meet his proposal. "In retrospect, I could've possibly gotten a higher offer had I had that initial conversation about salary in the earlier stages of the interviews but I was happy with the outcome," he says.
*not their real names