Great news, the company that I have been interviewing with for over six months is going to offer me the job! How do I manage the salary negotiations?
Congratulations, you are now at the stage of the interview process where the company is interested in extending you an offer.
While this is exciting, the prospect of negotiating an offer presents yet another stressful time within the overall interview process.
Salary negotiations take place rarely in a person’s career. When employees have their yearly reviews negotiations are generally not part of the discussion. Either you receive an increase or not.
Since this type of salary negotiation happens infrequently most people are at a loss for how to conduct themselves.
As a default mechanism, I notice that people tend to channel their inner Donald Trump.
The Donald, portrayed as the epitome of the alpha male businessman, proudly wields a take no prisoner attitude with respect to negotiations. He has to win every point, every time. He is not happy only with the victory but also needs the person on the other side of the negotiating table to feel beaten, humiliated and defeated.
A typical candidate who is a corporate guy most often isn’t involved with this type of negation so he emulates what he believes to be the accepted way to handle a job offer.
What I have witnessed over the years is that that Trump example is the furthest from what happens in the real world. Reality is like a negotiation that takes place between your family and friends except leave out all the drama, yelling, bringing up past arguments, screaming and the crying. In a typical routine negotiation about where to eat dinner, what movie to see, the destination of the summer vacation usually ends in a compromise. There is a give and take where instead of taking your kids to McDonald’s you at least get to go to Fridays and have a beer with dinner.
The biggest fallacy in negotiations is that you win every point and get exactly what you want. In actuality you most likely will realize 70% or 80% of what you desire.
Let me take you through the process:
The interviewing marathon is over: You have already met with the hiring manager, peers, human resources, your manager’s manager, your manager’s manager’s manager, underlings, business counter parts, the janitor, and numerous other people over a three to six months’ time period.
The company has you salary information: The company should have an application with your past salary history. Usually they will ask for the last three years of financial information to see the trending of your compensation.
If you have not provided this data the company will certainly ask for copies of your W2 form, pay stubs or any other documentation that verifies your salary and other remuneration.
Standard procedure offers: Companies use this information, in large part, to formulate an offer. Each industry tends to have a standard unwritten practice of how much above your current salary they could offer you. For instance, in the financial services industry, based on my 16 years of first hand data consisting of over 1,000 placements with hundreds of different companies, offers are generally made in the 10 to 20% range over your current compensation. Is this written in stone? No, but after seeing it happen time and time again it is reasonable to conclude that statistically an offer will be made within this band. Do some people earn more than this amount? Yes, however like anything that deviates significantly from the norm the amount is very small.
Nosy busy-bodies know-it-alls: Be prepared, everyone you know will chime in with their supposed expertise in salary negations. Your buddies and business associates will brag about how much they made when they took their new jobs. Your parents or spouse will push you to ask for top dollar.
Take their advice with a grain of salt. Everyone has an opinion and is a big shot with someone else’s livelihood.
Collusion?: The biggest challenge facing you is this unspoken salary band. It seems almost like collusion between the firms to keep the salaries down.
Yes, it is unfair. If you are qualified for a $200,000 job but earing $100,000 you will not get the $200k. base. Most like you will receive an offer of $110 to $120k base.
Do some homework: You should find out what the industry norms are by checking around. Consult with your friends, colleagues and conduct reviews online. Beware; many websites that purport to have relevant salary data are not accurate. The sites rely upon a small sampling of people posting their onions. In my experience with social media the people that post are at opposite extremes. They usually are either very positive or extremely negative. When was the last time that you gave a review that was middling?
Also, you have to critically look at the information provide by people you know. As a recruiter I have firsthand experience that people embellish their compensation Egos are at stake and no one wants to admit earning less than their peers. I have witnessed numerous instances where people blatantly lie about their compensation.
Prioritize what is important: You need to decide what is important to you.
1. Do I like the job?
2. Do I like the people?
3. Could I add value to the company?
4. Could I advance within the organization?
5. Will I feel challenged and rewarded?
6. Will I work well with my new colleagues?
7. Does management respect my role, managers and division?
8. Have other people moved forward within the company who has been in this job?
9. Will I be happy?
10. How important is money compared to the afore-referenced?
11. Will I be able to make more money in the future if I take this job?
12. What is the lowest amount I am comfortable accepting?
13. Does the firm offer benefits that are appropriate for my family and me?
14. How is their vacation policy, work/life balance?
15. Will I have an office, secretary, staff?
16. Is my role clearly defined so that I can meet and exceed expectations?
These items as well money needs to figure into your negotiations. Establish a list of items that you will be comfortable with. For example, I will be happy with a 15%, increase, an office, secretary, certain number of vacation days.
What should I ask for?: Often times the company will present you with an offer. Other times they feel you out for what you desire. Remember, since certain industries have preexisting salary thresholds it is inappropriate to commence with a number far outside the norm. It is the equivalent of going into a car dealership and offering $15,000 for a top of the line Porsche.
Start with asking for a higher dollar amount then you feel you will get (within reason). Use the same strategy for title, benefits and other remuneration. This way you leave a margin of room for negotiations.
Don’t get all emotional: You must not get emotional. I’ve seen it happen so many times where people forget the end goal is getting the job. Fragile egos are hurt and candidates get sidetracked. “What?! they are only going to pay me such and such? How dare they! I can’t believe it!”
The negotiation now transcends business into an awkward uncomfortable personal battle. The emotional baggage doesn’t help anything rather it often derails the chance of you getting the job.
It’s very hard to separate yourself from the business negations. None the less you have to put yourself outside your body and think of the process in cold, critical and rational terms.
Support your numbers: You need to have evidence to support your demands. Additionally, you need to sell yourself by reminding them of why you are the best candidate including all your awesome attributes, skills, education, and relevant experience.
You want to have your pitch of why you are worth what you are asking for ready. You can’t naively just throw any number out and say “Hey I’m worth 100k.” You have to have some context “I’m worth 100k because of what I can bring to the table, and be able to itemize the skills and expertise you possess that the company needs for the role. You should also include relevant market data that supports your request.
Haggling: It is important to know the firm’s view on extending offers. Certain firms subscribe to the belief that they will extend the best offer and that is it. No negotiations basically take it or leave it.
Other companies may put forth an offer with the knowledge that there will be some negotiations. They’ll throw out a number and there will be a little room for discussion. Let’s say you are asking for 110k and they say 100k; it’s easy for you to react “What? they know I want 110k and offered 95k?!” They’re negotiating, so it’s perfectly well within your rights to go back and ask for 105 or 106. You may then meet in the middle.
Some firms may toss out a low ball number to see if you are desperate. Once again, don’t get discouraged. Keep you cool and come back with an offer you believe is more fair and appropriate. Remember that it is a negotiation and they are not assailing your character or trying to hurt your feelings.
Unfortunately, at times the process is not too dissimilar to arguing with a vendor at a flea market over a piece of junk.
We like to think that we are so advanced and sophisticated with technology but at times like this we are still locked in another bygone era.
Let’s regroup: Always keep in mind that negotiations are a give-and-take compromise.
Do not allow your feelings to be hurt and get side tracked by emotions.
Remember what your priorities are.
Sort of happy: At the end of a successful salary negotiation both parties will feel comfortable but not necessarily elated.
Since there is the inherent compromise the company is happy to have you come aboard but also disappointed that they couldn’t get you cheaper.
You are excited to have the job but have a lingering nagging feeling that you should have received a little more money.
These are good feelings; it means that you both reached a middle ground where each party feels they received most of what is important to them.