The Joys of Salary Negotiation

Salary negotiation often begins when someone from human resources calls to screen you for fit and asks what salary you’re looking for.

This is where it gets tricky. It’s a game of chicken – salary negotiation, 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 salary 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 salary negotiation. 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 salary negotiation for counter-offers with your current employer. It’s not recommended – find out why here.

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.