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Compensation Negotiations

As you move up the ladder, negotiating for raises or for salary in new positions will become even more important.

Developing this skill set now will be helpful. You may decide it is appropriate to negotiate salary or additional options for your first professional role. The following tips can serve as a guideline. 

Be Prepared

The first rule of compensation negotiations is to do your research. Use resources such as Glassdoor.com, Salary.com and the CRC salary resources to help you prepare. Note that you will find the same job in different industries will have different salaries. Geographic regions also pay differently. Just because the cost of living in another city is higher does not mean employers pay the same percentage in higher salary. Use a cost of living calculator to understand the differences. Look at what the company’s competitors are paying. Usually, your research will provide you with a salary range within about $5,000. It is appropriate to share that range during the negotiation.

Know Your Worth

Remember, your salary is not based on what you want, but what you are worth. Your rent, student loans, insurance costs, car and childcare expenses are of no concern to your new employer. The employer only needs to know if your performance can solve the company’s problems, satisfy customers or drive profits. If you can demonstrate that with your level of experience, education and relevant previous achievements, then you should be able to justify a fair wage based on the research you conducted.

Keep Comparisons Relevant

Do not look at what your peers in other careers, industries and cities are making. That is comparing apples and oranges. Consider only your qualifications relevant to this career, industry and location. Your peers in other careers, industries and locations are not peers in the employer’s eyes when negotiating. They are not relevant.

Handling the Salary Question in an Interview

Although the salary question seldom comes up in first interviews, and sometimes not at all, you should always be prepared with the answer. If the employer raises the question, emphasize that salary is not the most important issue and discuss other reasons for being interested in the job (role, company, what you can contribute). Try to dodge and deflect. Here are examples:

“Salary is not my priority for this job. I am more interested in making sure I can work with the new team and am the right fit for this role. I am sure you will offer a competitive salary. Can we talk more about the team environment here and the team’s expectations of me?”

“Fortune named your company one of the top 100 places to work last year. I am confident you will offer a competitive and fair salary. I’d much rather talk about the project I did in my internship at HSBC where I managed five other interns and expanded the Excel and project management skills you require.”

Do not be the first to bring up salary, but be prepared to state your salary expectations. It is usual to give a salary range of approximately $5,000. Focus on getting the job first; you do not want the company to feel your first interest is money.

Negotiate or Not to Negotiate?

Not everyone can or should negotiate, but there are many situations when negotiation is appropriate.

  • Your interest in the company and role is genuine
  • You have something with which to negotiate (preferred qualifications, skills, experience, degree)
  • Your research shows their offer is low

There are some situations when there is no negotiation. For instance, if the job is part of a development program in which every new hire starts at the same salary, or when the budget is fixed, as in some government roles. You may not know ahead of time if it is negotiable. Therefore, you should ask about the salary after you receive an offer since many recruiters expect questions about salary.

Beginning the Conversation

Simply ask, “Is this salary (or offer) negotiable?” Research shows that asking questions is a great way to get the conversation going. Questions such as, “What are your team’s biggest priorities right now?” and “What were you looking to have accomplished in the first year from this new hire?” will help you develop the conversation into why you deserve the higher salary. But when you ask, you must be prepared to state your case as to why you deserve higher than the original offer.

Making the Ask

Given the research you have conducted and your level of confidence, here are some examples you can modify to suit your needs.

"I am excited to work here and know I will bring a lot of value. I appreciate the offer at $58,000, but was really expecting to be in the $65,000 range based on my experience, drive and performance. Can we look at a salary of $65,000 for this position?"

“After you offered me the position, I did more research about the cost of living in the New York City area and learned that $41,000 is below average for this type of position in NYC. Is this salary negotiable?”

Employer’s response:   “I am surprised you find the salary below average as we have conducted research ourselves to stay current in our offers.  Can you elaborate?”

Candidate:  “The research I did on various government and public websites shows that a market research role in the NYC area for someone with one year of previous experience is between $48,000 and $52,000 at companies in your industry specifically. For example, company ABC paid two new researchers $52,000 and $51,500 this past spring alone. I would like to reiterate that I am very interested in this offer and your company, and I want to be sufficient in the NYC market and paid a competitive salary, especially if I am moving across the state. I am confident that you will find my dedication to your company and skill set to be a great asset.”

Employer:  “Have you looked at the entire package we are offering?”

Candidate:  “Yes, I did and I am very satisfied with the benefits. I had a chance to discuss the entire package with HR and I understand if the salary is fixed, but I am just wondering if there is room for an increase based on the research I have conducted. At this point, I am less concerned about the benefits and more about the salary.”

Employer: “Let me think about it and get back to you.”

“Thank you for offering me the sales position at Company Z. I am excited to begin making a contribution. However, I would like to discuss compensation before I formally accept the offer. While Company Z is my first choice, I have received two other job offers with higher salaries and more benefits. I would gladly accept your offer if you could match the competing offer of $63,000 and an extra week of vacation. I understand that not everything can be accomplished, but I am sure we can discuss the minor details and come to a mutual agreement. Thank you for your attention.”

“Thank you for offering me the Accounting II position in Portland, OR. I am confident I will contribute immediately and am excited to move to my new home. Before I accept, however, I would like to inquire if relocation assistance is available. While the salary you offered me is very sufficient, the cost of living in Portland is greater than in Buffalo. Could a relocation allowance be added to my offer to help ease my transition to a more expensive location?”

“I appreciate the offer of analyst in your Boston office. Before I accept, I would like to discuss my title with your company. After researching the structure of your firm, I noticed that the manager directly above me has the title of senior associate. This is a position I aspire to attain as my skills grow and experience warrants. I would like to request that my starting job title be renamed to “associate” as I believe my interactions with clients may yield more fruitful results. I am not requesting any salary increase or other benefits. I am confident that with my two years of previous experience, I can live up to this title, and your organization can be proud of the work I provide in this role.”

More Than Just Salary

Especially when salary is non-negotiable, consider other options in your negotiation that may be priorities for you. First, consider what you believe to be priorities, such as relocation assistance, amount of vacation time, geographic locations, frequency of evaluations, flex time, retirement benefits, start date, etc. If you get medical coverage from your spouse, perhaps sharing that information can have an effect on your base salary. Some companies are more flexible about these options than others. Keep in mind that you are not working in a vacuum; the company needs to weigh your requests against what others within your company and department receive.

Fair Negotiation Tactics

Use the same principles as when you are managing your job offers. Try not to share company names and do not pit two companies against each other. Be respectful because you will be working with the company you select and want to make a strong first impression. In addition, the employer is always free to rescind its offer. If you negotiate with one company to boost its salary offer solely to get your first-choice company to increase its salary offer, you are conducting yourself unethically, hurting your reputation and your school’s.

Be Willing to Walk Away

Part of your preparation should be considering your bottom-line number. What is your “walk away salary”?  Your research, intuition and level of financial need will give you a number that you should stick to during the negotiations. Talk through the negotiation ahead of time. “If you are offered $XX,XXX, are you willing to walk away?”

Yes, You Can Counteroffer

Getting a “no” from the employer does not mean the discussion is over. If the salary is still below your “walk away salary” level, it cannot hurt to try one more time. Try, “I recognize the department has set budgets and you have reasons for offering this salary, and I am enthusiastic about the opportunity to work for your company. But I think my background and skills are a perfect match for this role and I can be a great fit for this company. Is there any compromise to get us up to the $60,000 I was looking for?” 

Graceful Departure

You never know if you will apply to a company again. Just because a negotiation does not yield a positive result does not mean the bridge is burned. “Although I do not feel I can accept your offer at this time, I am very grateful for the time you have put into this process. I recognize a lot of effort goes into making offers and hiring, and I appreciate the chance I was given. I feel comfortable referring my classmates or colleagues who I think would be appropriate fits for your firm in the future. Thank you again.”

Accepting the Offer

Once you have successfully negotiated, it is time to formally accept the offer. Officially accept the offer verbally or via email, and follow up as appropriate based on the written correspondence the company is providing. Typically, you will receive an offer letter indicating what you have agreed upon.

Remember, once you engage in negotiation talks with any employer for an internship or full-time position, everything is on the table. The employer is at liberty to walk away as well, leaving you without an offer. So stay professional and ethical at all times. You want to begin your employment with this company with a positive reputation.