Salary Negotiations, Don’t be Tough, be Honest
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If you're not willing to walk away, you're not negotiating -- you're just having a conversation about salary. You've already decided you're staying; the only thing being decided is how much money your feelings are worth. Not a good spot to be in, for either you or your boss.
I like this author's advice to do a lot of research beforehand and have a realistic idea of where the market is. You should also have a realistic idea of what it would cost to replace you -- probably much more than market salary for a similar job. You need to have an honest -- and fun -- conversation about rates. To start that conversation, you need to be clear with your boss that the starting point is your leaving to find a better job. (But this must be a true statement!) Given that starting point, you both talk and share information about how to reach an agreement you both like.
Yes, the emotional part is the worst. That's why you make those tough emotional decisions before you walk in the door. It's also why you give your boss plenty of time to step back and think through things dispassionately as well. Coming in half-assed, with aggressive demands, is a good way to get fired. Coming in well-studied, with no pressure and just trying not to rock the boat, is a good way to stay at the same job and salary for the rest of your life. You have to learn the art of working between these two extremes.
It has always amazed me the lack of education we provide people in negotiation. It's the one business-related practical life skill that nobody can do without.
Much of the periodic blogosphere churning about salary negotiation should be eliminated by just posting links to this book.
I'm shocked that the book is not required reading for EVERYONE in the job market.
A thousand times yes, and worth reiterating: if you're not willing to walk away, don't even start.
At a previous position, I requested a pretty steep raise, but with the following in hand: a solid job offer from a competitor at the desired rate; and willingness to settle for a smaller raise but more time working from home.
The main thing, though, is to get something out of the negotiation, because settling for the status quo permanently weakens you in management's eyes and will hurt you in future negotiations. Better to just leave.
If you're not willing to walk away, you're not negotiating -- you're just having a conversation about salary.
I wouldn't go as far as to say this. As another poster wrote, you have to give the impression of walking away which is way easier to do when you do have other options.
I'd recruited an engineer to join my team, and he tells me his comp requirements (90K salary). For the position, we budgeted 96k. A stellar engineer and ideal team fit, I thought he was underpaid at that, but that's what he asked for so I prepared an offer.
In preparation, the CEO (who signed off on such things) sets our initial offer to 85K. I was surprised -- why would we not offer the candidate 90k salary? The conversation went something like this:
CEO: Offer him 85K.
Me: Why? He asked for 90K, and we've budgeted 96K.
CEO: I want to leave some room for negotiation.
Me: Room?
CEO: Yeah. I think we can get him to come down from 90K.
Me: You haven't met him yet. Why do you believe he would accept a lower offer?
CEO: I never take the first offer at face value.
Me: I've talked to him, and he earns 90K in his current position. He doesn't want to
take a pay cut.
CEO: Well, let's see how much he wants this job.
And while the engineer accepted and joined our team, I could tell that the offer negotiation made him uncomfortable and left a bad taste in his mouth. He did a great job for well over a year, until he left for a new position. He explained to me that he received a better offer, and that the other company was "more inviting".
After his departure, the CEO lamented how engineers seem to have no loyalty.
Indeed.
Why, as employee, you're probably getting played and that you should ask for more money.
Why, as employer, it's advantageous to be magnanimous and not lowball the employee.
And it illustrates the power imbalance.
As a side note, I originally wanted to offer the candidate 96K because I knew he was worth it (more, actually.) But, the CEO decided to press on an engineer who wasn't all that driven by money. A phenomenally poor decision.
I resigned from my position at a later date, and our hiring practices were not without consideration.
It was salary negotiation that made him take the second job (or so you think), but what do you think how would that person respond when you (or his peers) disagreed with his approach to development, architecture or other difficult people on the team (assuming that there are some). How did he react in other situations?
Don't get me wrong. I think that paying people what they are worth is very important. I recall a conversation with a manager from whom I inherited my team about a potential raise for one of the team members.
Me: Claire didn't get a raise in a year a half. Can you tell me why?
Former manager: She didn't ask for one. Why would we throw money at people.
Me: Because I value her work and given inflation and cost of living, she is technically making less now than she was when we hired her.
Former manager: I don't work that way. I don't give raises unless people ask for them.
She was let go and I inherited her new team as well.
In a nutshell, neotiating initial salary can teach you a lot about the candidate and the way they deal with difficult situations. If we, as managers, don't walk away from the table and hire the person, it is our job to be proactive and pay them what they are worth and what market will bear.
And that is what makes loyal employees.
> It was salary negotiation that made him take the second job (or so you think), but what do you think how would that person respond when you (or his peers) disagreed with his approach to development, architecture or other difficult people on the team (assuming that there are some). How did he react in other situations?
Very good question. We certainly conducted code reviews and we had some strong discussions about approaches to problem-solving, in which he was no shrinking violet.
For this given individual, he was confident in that type of negotiation (defending development code design.) I believe he wasn't interested in negotiation around compensation because he really was interested in the problem set and opportunity we presented, and was simply trying to keep his cost-of-living steady.
People like that are bullies. He was bluffing. He would have folded like a cheap camp chair. Point proven by the fact that you ended up at 90K, but not before the candidate got the bad taste of the CEO antics.
As a middle manager, I learned that sometimes it is absolutely necessary to beat my superiors for the sake of my subordinates. It's harder, but if you stand for nothing, you'll fall for anything.
Maybe it will cost me my job some day, but I highly doubt it will be a job I would want to keep for the long run.
You took the high road. I choose to fight fire with fire. :-) In the end, neither of us would probably be in that position for much longer, either way.
Your take is right -- the CEO was merely trying to exert some level of influence, for reasons I fail to understand to this day.
I'm now in an engineering-centric organization, and comp negotiations are the least of my concerns. Finding the best people continues to be the hardest to do.
I think you should be careful with sentiment analysis on a forum like HN. This place is overwhelmingly populated with people for whom the concept of salary negotiation is repellant. One could get a seriously skewed idea of what to expect from negotiations from comments on HN.
The fact is, a huge number of places that you'd actually want to work at are going to treat salary negotiation as the business transaction that it is. Not taking the transaction seriously is going to cost you thousands and thousands of dollars.
It's true: the worst places to work will be the ones who are most aggressive about negotiation. But that observation totally misses Patrick's point. You don't have to get screwed by a hard-nosed negotiation to lose out on thousands of dollars of comp. In fact, if you don't take negotiation seriously, you'll lose thousands of dollars without even noticing, because your social norms will blind you to what's happening. Patrick isn't just talking about how to handle stupidly tough negotiations. He's talking about all of them, even the nice and friendly ones.
The range between your negotiating floor and the employer's negotiating ceiling is the spread. Any dollar figure you accept below their ceiling is a dollar you gave them. From the way people talk about negotiation on HN, my guess is that 9 times out of 10, HN'ers take a number smack in the middle of the spread --- meaning, they've coughed up high 4 digits (and often 5) back to their employer. And they feel good about it! They write blog posts about it!
If you think you work on a team where you don't have to negotiate, because everyone's grown-up and knows the score and pays people what they're worth, seriously consider that you may (probably not intentionally, but still) be getting played.
As for naming any number first, meh? If you give a number first, you'll be negotiating your salary down from it; if the employer names a number first, you'll be negotiating up from that. You might prefer the theoretically unlimited upside of the latter. On the other hand, loss aversion is more powerful than gain seeking, making downward concessions harder won.
Of course, that assumes both parties in the negotiation are rational and sophisticated. A typical developer is brilliant at designing software, absolutely terrible at understanding markets, and devastatingly introverted, and so is likely to lowball themselves. You will very rarely do much better than the first number you give. If you think you're not up to the challenge, putting the first number on the table may be a bad move. It depends.
What doesn't depend is your current salary. Everyone is going to ask for it. There's nothing wrong with asking. But don't cough it up.
I've never answered that, but that should be entertainingly confusing, if you're not in any particular need of the job and have a strong bargaining position. (Or if they're really cool people.)
If they say 80k and then you say, casually, "Oh, really? I was thinking more like 175k." then I don't think you're going to be stuck at a 10-25% upward mobility.
You might blow the negotiation, but you aren't stuck at 80k+25% max. And you shouldn't be worried about blowing negotiation. If 125k would work for both of you, it's still possible after this start. If they are rational, and you are rational, there is no reason you can't proceed to figure that out.
Since you can always do something like this to totally ignore/invalidate/reject their first number, I don't think letting them give the first number is dangerous.
But if they say 80k and then you say "let's add 5k because reason X, and 5k because reason Y" and then after that you try to get another 5k for reason Z, repeat, then yeah you're going to have a hard time getting very far away from the 80k initial number.
Meanwhile if you say the first number and give 175k, then if they are terrible at negotiating they might not be able to lower it more than 10-25%, but don't count on that.
How many people are competent at negotiating and able to rejecting initial frames when appropriate I'm not sure. If you are terrible at negotiating, or you think the other guys might be bad at it, then in both cases I guess saying the first number is safer. But be warned: if you say a high number and they suck at negotiating too much, they might just not hire you. Sometimes there is a number you can agree on but they ask you to come down to a number above their max and then even though you say "sure" they still have to come up with a reason to cancel the deal. This is dumb, but it happens.
I'm not sure that's true. Google is a notoriously tough negotiator - not just for salaries, but for their food suppliers, data center locations, acquisitions, basically everything - but it's also a pretty good place to work. I've heard Warren Buffett and the Berkshire Hathaway properties are too.
The best people to do business with seem to treat negotiation as a business transaction that they will press every advantage they have on, but then once you're in, you're in, and they'll be loyal to you. And they expect you to do the same. It seems to be worth cultivating that skill - respecting the other party, but also respecting yourself enough to ask for what you want and be willing to walk if you can't get it.
Come to think of it, this is generally called "assertiveness" and is typically seen as a desirable quality in life.
You need to balance the risk of getting off on the wrong foot, with the potential that you can be leaving a lot of money on the table - I mean, on the order of quarter of a million to half a million dollars over the course of your stay with that company is quite likely if you don't negotiate well - not to mention a bitterness that can grow over time. And switching jobs may not even be a cure here; if it's a job you enjoy, it's not much fun having to leave it in order to get your worth on the market. It's best to get both.
At most larger corps this is very true, I was a VP at a large company and I would project my personnel need, I would also give a top end salary, which I would provide as market + 10%. From there I never heard about salary, I gave a go no go on hiring and HR worked out salary. It is a pattern that I have seen a good deal in larger orgs.
I earned my raise by first earning it in effort, but when it came time for the negotiation I know without a doubt that if I hadn't made it clear I was willing to walk away, I wouldn't have received the raise. The boss thought he could appease me with talks on potential numbers, but I stood my ground and said that I needed an answer within 24 hours. It wasn't until I, politely of course, demanded a yes or no that I received a yes.
Now, in the hiring process, I have a limited amount of money available to pay a new employee. I may be able to get another 10%, but not much more than that. I do ask candidates to offer a number, not to screw them on salary but to know how apart we are. If we're 20k apart, why should I waste their time stringing them along?
Now you have a way to both not string them along if you're $20K apart and to not let them accidentally undervalue their own worth by a significant amount.
http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewPodcas...
It makes the other guy squirm.
He's worried not just that you'll get more chips, but that the whole deal that he's worked hard to put together will fall through.
If you throw some number out at this point, they can just work you down. If they throw out a number, you can typically work up, and if the number they give is way too small you understand what you're dealing with.
You say "We can work up" and "they can work you down" - you'd much rather be worked down from a high number than work up from a low number.
It is hard to work up more than 15-25%.
if the number they give is way too small you understand what you're dealing with
This is where stating the number first can help you. Companies don't necessarily know your value and can't usually tell just from your resume. So when you are so far apart, you are suggesting the company just sucks. It could be that they just don't know what you're worth.
Bottomline: If a company has $70,000 set aside for the position, if you ask for $120,000 before they tell you the $70,000, you have a better shot than after they have shared and associated $70,000 with you.
Well, if you work is top of the market, your average base will be higher to begin with. It is already factored into the market avg.
The 10-25% flexibility is something you can extract purely from negotiation IMO.
Original poster said top, not average.
To illustrate my point, I will give you an example.
Let's say market range for a position is 60K - 80K. To me, that means that the best people are getting 80K to start with and those who are really good at what they do and have been in the same company for some time can be making up to 90K for the same job.
So, if someone comes off the street and asks me for 96K for that same job, it is going to look a little bit off. It tells me a few things: they do not know what is actually going rate for their job or that they have been overpaid in their previous position, or that they are pushing to see how far they can go, or that they don't actually want 96k, which goes against the original point of being honest.
My point is, none of the thoughts that pop into my head are positive about you. And I am not sure that it is the message you want to give a potential employee.
I say this from experience. I asked 100K for a job and the company came back to me turning it down and stating they only have 60-70K allocated for it. I countered with 90, told them how I am different from the other candidates, and got a favorable offer ... too bad it was a few hours after I had just accepted another offer.
However, even if I determine you're worth it, I will counter with a trial period and say (in writing) that you will get your top offer when and if you prove your worth to me and to the company. I am curious to know how would you react to that type of counter, if you don't mind sharing.
The original comment, though, lead me to believe that the poster does this as a rule, asking for 120% of the top and expecting to get 90%. And while it is often the case that these hiring managers do play the game, I am merely drawing the attention that there are people out there like me (albeit probably not very common) who are not going to look favourably at ridiculous salary requests.
I can't help my gut reaction. I do, however, make room to change my mind and if there is meat behind your request, I will readjust my thinking. If I catch you in a bluff, however, because you think it's what you're supposed to do...outcome - not so good. :-)
Remember that the negotiation is the 5-minute tip of the iceberg. I try to build the negotiation by knocking your socks off at every point of contact, using whatever resources I can muster. (Want to see code? Then I'll apply all the professional spit 'n polish. Want me to present something to your team? Then I'll consider all angles, including business angles and software engineering analysis, trying to make it as intellectually interesting as possible.)
If you give me the chance and a premium, I'll continue that game to your trial period. (Though I'd maybe try to slip in a higher number, because I'm assuming more risk. ;)
But yeah, if you accept my first offer immediately, then I'll feel I've failed at negotiating. (I believe there's something absurd and horrible about the whole situation, but that's the madness of a market economy, with its built-in antagonism between buyer and seller. Graeber's _Debt: the First 5000 Years_ explains why so many people are repelled by salary negotiations.)
However, if you prove with all the stops that you are worthy of the premium, I will know what you are capable of when push came to shove and that is what makes you worth it.
This can conflict with most management styles, those which favor uniformity. Hence my choice of companies I work with.
The reason is that, in 2012, 80k is a fair starting salary for a developer fresh out of a good college with no experience. It is not the top of a range for people with experience unless the company is third rate, pulling from the discards that couldn't find work at a decent firm.
(Two year old article on starting salaries for college grads: http://www.networkworld.com/news/2010/022210-computer-scienc...)
As far as the situation goes with being able to tell whether someone is in the top 10% or so, that's pretty easy since bottom 90% can't code at all and fail at fizz buzz. Slightly more tricky is separating the top 1% that are really good from that top 10% who can develop and design at all. Distinguishing these two levels of competency is easily and accurately accomplished by an interviewer who is a competent developer himself. And yes, it is much better to pay the top rate for the small number of developers that are competent and efficient rather than pay a few percent less than that for people who can contribute little to a project, which is unfortunately the case for most of the talent pool.
Numbers I used do not reflect the salaries I pay. Such is the definition of an example. Also, at no point did I say that these are examples of developers' salaries.
I actually purposefully used the example so far removed from developers' salaries because geography and availability affect the range. And I did not want to get into what should the salary actually be, since it was completely irrelevant to the point. So, instead, I used numbers I can quickly do in my head, if you are really goint to quibble about this.
I need to know first-hand if we're in the same ballpark. If the candidate's comp expectation exceeds the range we've selected, we can either move on or adjust our pay scale for the position. If the candidate's comp expectation is lower than the pay scale we've set, we need to evaluate if the candidate really meets the position (assuming lower pay = less qualified candidate.)
Not to say the strategy doesn't work for some people, but it definitely fails with me.
You should be hiring someone to do a job, not guess a magic number like a game show contestant.
It's not a game, it's a filter to ensure we're on the same page and to keep the process of candidate evaluation a waste of time.
When someone insists on a number "up front" with me, they get a high range. If they insist on a specific number, the get one in the stratosphere. They've forced me to price in all the risks. Without the interview I have no idea what your organization is really like on the inside (I'm interviewing you as well). By insisting on a number before the interview starts you send a very strong "bargain shopper" message. So I'm pricing in the likelihood of:
-crappy benefits -unpaid overtime -future trouble with raises -my peers will only be people who fell for your tactics
Ask yourself if you want employees that think ahead, and evaluate a situation like I do. You won't get them with your current mindset.
These aren't tactics, they're filters to see where candidates are in line with our evaluation and what we expect to pay them.
I can tell from your comments that you already assume I'm trying to screw you over and repress your compensation. If you ever dealt with me, you would know that's not the case.
Given the team we've constructed, I'm pretty sure we've got the right folks. Thanks for the suggestions.
Don't you think it's possible it can work the other way as well? An engineer could just as easily say to himself, and using the same reasoning, "If a company won't tell me what the position pays to start, there is no possibility I can interview there."
We could have a standoff with both sides adopting this philosophy. We could have transparency where both sides state their requirements. Or we could have a power hierarchy in which one person is required to disclose his hand and the other one gets to keep their position secret.
I believe in tit-for-tit. Why should a potential employee be upfront when the employer is not upfront?
Honestly, I haven’t tried it but I imagine it leaves the risk of getting a relationship off on the wrong foot. And, at the end of the day, a large part of your job satisfaction relies on the relationship between you and your manager.
If I had the feeling that my prospective employer was being dishonest, first I would try to find other employment. And if I couldn't at the time, I would build a bit extra into my request for compensation. Sure, sometimes extra money is worth less satisfaction at work. Usually, however, I'd like both fair compensation and a positive working environment.
Also, I don't want every decision at my job to be a matter of stating extreme options then settling for the commonsense one. I'd rather start with a sensible solution, whether it be in salary negotiations or in project responsibilities and timelines.
The last job interview I went to, I took with me the attitude that "if this job isn't exactly right for me, I will say so and politely walk away." I put on the table what I wanted to do, what my aspirations were, and how much money I wanted. I made sure I was scrupulously polite and scrupulously honest. It helped with the negotiations, and it helped now I've started the job - it removes a lot of the confusion about my role, because we agreed it in advance. (I've found too many people seem to think "sys admin" or "programmer" means "general-purpose IT skivvy", which is another thing which ruins the work experience for me. It still happens, but less so because of the prior agreement.)
Still, things aren't 100% perfect, but I feel the way I conducted the interview for this job is one I will use again, whether it be full-time employment, freelance or contract work: be honest, be polite, and be prepared to walk away.
The big point in the earlier discussion this week was that you don't know if the other party is being honest. They can do background checks on you, credit checks, employment history checks, etc (with your consent of course), but you have no idea about their background. With public companies you can read some info about them, but it's not personal, nor does it go in to departmental politics and budgets and such.
A potential employer saying "our hands are tied, we can only go up to $75k for this position" may be telling the truth, or they may be lying. You can't tell the difference. That was the gist of the earlier posts.
"Be prepared to walk away" is core negotiating advice for any commitment - marriage, car purchase, job search, housing, etc. Not having the guts to walk away means you will make decisions based out of fear, rather than out of a position of strength.
If I needed $80k, I would then say "I'm sorry, but I have expenses to pay, a family to keep. I can't work for less than $80k." If he insisted, that's when I would shake hands and walk. It wouldn't matter, in fact, if he was being honest or not. That's my limit. In this case, it's no different to bidding on eBay: I have $80 for this purchase, if it goes higher I will maintain self-discipline and drop out of the auction.
It's less so in the IT world right now, but in most other fields, there's much higher unemployment. People don't "just walk away", and often accept a situation that doesn't fit their wants/needs, because needing income ends up trumping everything else.
For someone not in IT right now, who needed a job, they're at a strong disadvantage because of the information imbalance during interviews. Congrats on you being a rather rare individual who actually does what is recommended (walk away) - most people don't. And it comes back to not being able to tell if the other side is lying. And in some cases, being desperate enough to work for/with someone who they suspect or know is lying, but needing the job bad enough.
You: I'm looking for $90k
Boss: Oh I think we can get you there, we start everyone at $70k then adjust based on performance. Perform well and you'll get there (you won't).
You: Oh, well I'd prefer $90k to start, and the position is worth $90k.
Boss: We don't make exceptions, and you don't really meet requirements X and Y for the position. But we'd like to give you a chance to learn here.
You: No I really deserve 90k, I might go 85k with the proper benefits.
Boss: Ok so will start you at 75k, and our normal benefits package of barely subsidized medical/401k/2-weeks vacation is easily worth 10k. Glad we could come to an aggreement.
You can be tough and honest. Negotiation isn't about being dishonest. You can negoatiate very well and be honest the whole time.
A one sided information delivery from you essentially makes you even less powerful.
The only way this works is if your boss decides to be fair or good for you for their own reasons.
When a recruiter/HR person/interviewer asks you about your salary requirements, ask them what sort of engineer they are looking for:
A) average (you don't want to work there) B) above average or C) way above average
If they answer "way above average" you can say "Well, there is your answer!"
When a company doesn't want to pay much, its a signal that they don't place much value on engineers.
It's really that simple.