Salary Negotiations: The Initial Offer and Your Response
When negotiating salary or other benefit, you are also negotiating the foundation of a relationship, so you want to get off on the right foot. You and the employer must come to an agreement that you both feel is fair.
If you have multiple job offers, you can sharpen your negotiation skills. Practice with a company you are indifferent about working for. If you are feeling confident, try for the company with the best offer. Remember, if they are negotiating, then you are the leading candidate. Use this power to your advantage.
The following are the best steps to take when negotiation begins:
1. Do not negotiate until you have an offer in writing. Let the employer go first with the offer. However, if they ask you first, tell them your salary range (that you determined with the Considerations in this handout).
2. Restate their offer, and then process it. Keep an honest yet non-emotional response (including body language) based on your research.
3. If it is less than you expect, indicate that it is lower than you expected per your research. Be prepared to verify the sources of your research.
4. Counteroffer with your research-based response and desired range. Remain objective, optimistic, and polite.
5. Never accept an offer right then and there. Ask when they need to know your decision. A respectable company does not ask you to respond immediately.
Their Response and Your Arguments
They may have to consult with the company and get back to you. Rarely do they withdraw an offer because of a counteroffer, but they may if the company is reorganizing or downsizing. Hopefully the employer returns with a satisfying offer. Otherwise, they state their objection and the offer that stands.
Numbers always work in salary negotiation just as they do in your resume. Never give subjective or emotion-based arguments like, “My co-workers really like me” or “I deserve it”. Give undeniable business-related numbers such as, “I increased annual sales by $25,000” or “As vice president, I’ve reduced my department’s employee turnover by 40%”.
Handling Common Salary and Raise Objections
You may hear the following objections. Here are some methods for overcoming these:
Their Objection and Your Response
1. “That’s not within our budget for the job.”
“That’s all we have allocated for the job.”
• Communicate your value to the employer.
• Convince them to revise the budget allocation for the position.
• Point out that the amount is below market value, using your researched range (not an exact amount).
• Show your interest in the job, but mention that you cannot justify accepting less than the market value.
2. “Other employees with similar qualifications and experience aren’t paid that much.”
“You’d be earning more than others in this type of position.”
“No one else has received a raise, so why do you think you should?”
• Persuade them that you should earn more because you are worth more. Give specific examples to support your argument (e.g., more advanced degree or more experience than others).
• Suggest that they give you a different job title so you fall into a higher salary bracket. Offer to take on additional responsibilities to offset the higher salary. Usually big companies are not quick to blur job titles and salary levels. But smaller companies not using formal pay-grades may be more flexible to this.
3. “Your salary history does not justify such an increase.”
“That’s a lot more than your last salary.”
• Stress that you expect to be compensated for the value of your work and what you plan to achieve within the organization. Help the employer realize that previous salaries are unrelated to this job. Try using these responses in terms of your situation:
• “Yes, I earned less at my last job. However, I held that position for 3 years and the experience I’ve gained certainly warrants an increase.”
• “What I’m paid is below market rate. That’s one reason I’m looking for a new job. Because of my skills and recent degree, I don’t want to accept anything less than market value for a new job.”
4. “You haven’t been working for a while.”
• Do not let them assume you are willing to work for less, need retraining or are desperate for a job. Let them know that you offer as much as those with current experience.
• Stress that your endeavors away from work (training, education, volunteer work, personal projects) enhanced you as an employee.
• Accept a lower salary and request a performance review in 6 months. Ask for a guarantee that if you meet your goals, they will increase you to the market value.
5. “I’m sorry, but it’s our policy not to negotiate.”
• Look into whether this is true about the company. If it is true, you may have no choice. If might not be true, say, “I understand you don’t normally negotiate salary. But I am an exception, because…”
• Negotiate for better non-cash benefits.
Know when to quit. If you sense the employer getting frustrated with your proposals or states that this is all they can do for you, stop and evaluate the existing offer. Do not give the impression that you are impatient or greedy. You may annoy the employer if you push beyond their limits, and they may withdraw offer.
When they come back to you with their final offer, be ready to evaluate and decide to accept or decline. Once an offer and package is agreed upon verbally, always make sure they are going to mail it to you in a signed, written document (an “offer of employment” letter).
Salary is not the only area to negotiate. If the employer rejects your desired salary or in certain jobs, industries or companies where salary is non-negotiable, you still have other options. These other options may be more important to you and might be negotiable.
To better prepare and negotiate, you may want to ask their HR department for information about benefits and options available. These can include:
• Bonuses (performance-based)
• Performance reviews (including timing and percentage)
• Health, dental, life and disability insurance
• Retirement or pension plans
• Vacation and sick days
• Work-from-home days
• Tuition reimbursement
• Overtime policies
• Profit sharing plans
• Stock options
• Employee discounts
• Company car and expense accounts (like commuter expenses)
• Relocation/moving expenses
• Termination contract
• Professional association or gym memberships
• Sign-on bonus