The Joys of Salary Negotiation

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After you've sent a resume to a company, somebody in human resources will call you up to screen you for fit. They will invariably ask you what you will are looking for in terms of salary.

This is where it gets tricky. It's a game of chicken – salary discussions, especially at the beginning of the process, are especially difficult because the first party to give away their position loses their leverage to negotiate.

Your goal here is not necessarily aligned to the company's goal in terms of compensation. Assuming the position is a good match for both parties, here's where your interests diverge.

Your goal: To get the best salary offer you can.

The company's goal: To get the best candidate into the position in the most cost-effective manner possible. Less money is better.

The actual figure you agree upon is the reality.

Before getting into negotiation strategy, let's discuss a few facts about how corporate salaries are determined (by the way, this is a simplification, so I'm certain the compensation professionals out will have information to add):

1. Companies - especially larger ones - usually have salary bands in which employees need to fit. For a particular position, there is an assigned salary range. For example, the company may have determined that they are willing to pay between $15 and $20 per hour for an administrative assistant. They don't want to have too large of a salary discrepancy between several individuals doing the same type of job, but they also want a bit of wiggle room to offer more money if necessary for the right candidate.
    
2. Salaries are usually driven by market data. A company will subscribe to (and often provide information for) compensation studies tracking what the market will pay for a particular job. This data take into consideration several factors - skill sets, nature of the market, geography, and what competitors are willing to pay.
    
3. A company selectes a compensation philosophy. This goes back to the market data described above. After looking at the data, executives make a decision about their compensation philosophy as to how it relates to their own company. A company looking to aggressively hire high-performing talent or that competes in a fast-changing market like technology tends to extend offers at the higher end of the range. Other companies may look to hire at the general market salaries, tending toward the average.
    
4. Companies often have less flexibility on salaries for recent graduates and entry-level hires. This applies to your newly minted MBA just as much as it does to your nephew who recently received their bachelor's degree. Companies often have a concrete salary structure for these recent grads, with adjustments up and down for work location and the ranking for the school from which they graduated. In other words, a graduate with an Ivy league degree can often fetch more than the local state school.
    
5. There's a lot more to consider in the offer than just salary. Benefits matter. A lot. Companies often pay a great deal of money to provide a competitive benefits package. You know that health insurance the company's offering? Not every employer subsidizes the same amount to cover that, often leaving you - the employee - to pay a larger share of your premiums or co-pays.  There are other benefits, too - dental insurance, life insurance, disability insurance, tuition reimbursement, vacation time, holidays, company car, 401(k) matches and so on - into which companies can pay dearly. A richer benefits package leaving more take-home money in the employee's pocket may give an employer a real incentive to offer a lower base salary, while still enabling an employee to make ends meet.
    
6. Variable compensation matters, too. I'm referring to bonuses, profit sharing, commissions, and long-term incentives. Not every job offers an incentive beyond the base salary. A bonus is real money, and a company's philosophy may direct them to offer a lower base salary in exchange for a desirable bonus target.

Here are some considerations when negotiating salary:

• It's to your advantage to avoid giving a specific expected salary figure – until it's essential.  It's not always possible to hold off on showing your hand. A recruiter may push you to give a specific number to ensure that you fit within their salary structure. But if you can hold off without coming across as confrontation, it's worth trying. The best scenario is to see if the job itself is a good marriage before locking down a specific number. You'll keep your leverage.
   
• Sometimes ignorance can work in your favor. This isn't always true, but in certain cases it absolutely can. If you're a recent graduate (or been at the same company for a very long time) and an employer is asking you what you are looking for in terms of salary, it's okay to say, "I don't have a specific figure in mind, I am looking for a compensation package that is in line for a recent graduate with an MBA from my university." A similar approach also works well if you know you've been underpaid against the market, you can say something like, "I'm looking for a salary that is in line with my experience and education."
   
• The employer may push hard to find out your salary expectations. In which case, you may wish to consider taking a slightly different approach with your answer - "In my current position I have been earning $x, I am looking for a salary that will take into consideration the accomplishments and experiences I gained in my present role." You're not telling the employer that you're asking for a specific figure - you're giving an idea of where you've been.
   
• Sometimes it doesn't matter what you want. See #4 above - the company may pay everyone the same salary for a certain job. In which case, you have the option of taking or leaving the offer.
   
• Ask about the benefits. A rich benefits package has real cash value. Consider all the non-salary components of the offer as part of the total compensation.
   
• A sign-on bonus may make up any difference. The company may really want to get you on board, but their salary bands (or some other reason) may prevent them from offering a higher salary. Or perhaps you are walking away from a bonus at your current job. A sign-on bonus might help close the gap during that first year.
   
• Be sincere in your negotiations. Tell the corporate recruiter that you really want to make this work and that company x is clearly your first choice (assuming this is true). Perhaps you are willing to meet somewhere in the middle of what was offered and what you asked for. The more you can make the recruiter feel that this is a partnership designed to meet a common goal, the better.
   
• The choice is ultimately yours. You don't have to accept the job at the salary offered just because the company offers you the position. If you've negotiated in good faith, then you should be able to walk away from an offer with no hard feelings. Which leads me to one last point...
   
• Avoid getting into the negotiations for counter-offers with your current employer. It's not recommended - find out why here.

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Scott Singer is the President and Founder of Insider Career Strategies Resume Writing & Career Coaching, a firm dedicated to guiding job seekers and companies through the job search and hiring process. Insider Career Strategies provides resume writing, LinkedIn profile development, and career coaching services, including a free resume review. You can email Scott Singer at scott.singer@insidercs.com, or via the website, www.insidercs.com.

Employers Yell: 'Show me the Money!'

There was an interesting article in the Wall Street Journal this week, "High Salaries Haunt Some Job Hunters." The upshot of the piece was that recruiters and corporate applicant tracking systems (i.e., where your resume goes after you click "submit" on the website) are getting more aggressive about asking candidates their salary histories and requirements early in the process.

Corporations are using this information to decide whether to move forward with a candidate. Basically, if your last salary is higher than what the company was planning to spend, you're often out of consideration. Candidates - particularly unemployed candidates - are getting priced out of the market.

The article asserts that, during the last recession, the practice became more prevalent as a way for recruiters to quickly cull masses of applicants. Employers had the upper hand - at the time, there were more candidates than there were jobs - so companies had their pick of job seekers. Their philosophy: "You want too much money? Forget negotiation, I've looked at the market data, and I'll move onto the next guy who's willing to take what we're offering."

I worked as a corporate recruiter for 19 years, and I'm now on the other side of the fence helping job seekers. I see and understand both sides of this issue.

Companies need to manage costs, and salaries comprise a massive part of G&A, so why not ask what the job seeker is looking for up front? And job seekers have accumulated valuable skills and experience, which should probably count for something in the salary negotiation process.

Let me be clear - not all companies are in salary cost-containment mode. Many organizations are willing and quite eager to pay highly competitive salaries to attract top talent.

But a trend has indeed emerged. Companies have gotten used to asking about salaries, and job seekers have gotten used to sharing what they've made. This squarely puts the power in the hands of employers, who essentially "pre-close" an individual before they have a chance to engage in any sort of salary negotiations, and before a job seeker fully understands the scope of the role. For example, an employer may be looking for senior-level skills, but has budgeted based upon a more junior role.

As a job seeker, you need to keep the following in mind:

• Systems play a role. Applicant tracking systems have automated a great deal of the hiring process, allowing recruiters to use keywords, quizzes, and assessments to search through candidates based on a broad variety of topics, then filter the results. It's an easy way to cut through the swaths of applicants - often more than 500 people will apply to an open position - rather than review every single resume.

• But not all applicants are qualified. Yes, more than 500 people may apply to a job, but not every one is going to be qualified for the job. In fact, there are individuals out there who will apply to any job posted regardless of their qualifications or interest, in the hope of getting noticed. But when employers are receiving that many applicants against open jobs, they often think they've got the upper hand and that there has to be at least some qualified applicant who's willing to take the money being offered. That's not always the case: I can say from experience that reviewing all the applicants against an open position is a slog, but sometimes you really need to dig into the resumes - even the poorly written ones - to find that gem of a candidate.

• Employers often hold the best cards. They already know what they can and will pay for a job. They're usually not going to tell you what that actual number is, even if you ask nicely (as a job seeker, you'll be criticized for being rude and too focused on the salary). It's a guessing game for candidates.

Here's what you, as a job seeker, can do to try to overcome these obstacles:

• It's best not to give a salary. The ideal scenario is to wait for salary negotiations after receiving an offer, but that's not always feasible. If pressed, give a very broad salary range you would consider, then hammer out the details at the end, after the company has fallen in love with you. And remember to consider benefits, bonuses, and other perks.

• Do your homework. Learn what the market will bear for your skill set and experience. Sometimes job postings will even include a range. Examine a broad variety of related job postings so that you can get a sense of the market. And, if you happen to know somebody inside your target company, hopefully he or she can give you an idea of the organization's compensation philosophy.

• Sell the hell out of yourself. Even companies that tend to nickel and dime on salaries may be willing to negotiate if you can clearly show that you'll enhance the bottom line. Be polished. Submit an outstanding resume filled to the brim with your accomplishments. Know and explain the value that you can add to an organization, preferably illustrated with metrics and examples. Prepare for the interview. Know everything you can about the organization. Send thank you notes right after the interview. Get your recruiter and interviewers excited about you as a candidate.

Insider Note: Employers fixated on controlling salaries may be fostering turnover. For example, let's say you were earning $75,000 at your last company, and the company you're interviewing with is willing to pay you $50,000. They expect you to apply the same level of expertise as you did at your last company, but for 33% less pay. Even if you accept this as an employee, how do feel about the company - or about yourself - for having been offered and accepted such a cut. Sometimes the hit to the ego may undercut an employee's sense of loyalty. Likewise, if the organization is filled with individuals who are compensated at a low salary but expected to perform at a high level, competitors will identify the company as a feeding ground for talent.

Scott Singer is the President and Founder of Insider Career Strategies Resume Writing & Career Coaching, a firm dedicated to guiding job seekers and companies through the job search and hiring process. He is a Human Resources professional and staffing expert with almost two decades of in-house corporate HR and staffing firm experience, and is a Certified Professional Resume Writer (CPRW) and Certified Professional Career Coach (CPCC).

Insider Career Strategies provides resume writing, LinkedIn profile development, and career coaching services, including a free resume review. You can email Scott Singer at scott.singer@insidercs.com, or via the website, www.insidercs.com.