How to Negotiate a Job Offer
blog.upstart.com
blog.upstart.com
Most job offers come with leeway for negotiation, regardless of your situation. All you really have to do is ask.
> You: This is a really great offer because [a sentence or two about why you want to work for them.]. But I was really looking for a little higher compensation.
> Then, this is the most important part: they need to speak next. You have to be silent until they respond. They will give you one of three responses:
At which point you list the three responses. But the most common (in my experience) response is missing: "Okay, what were you thinking for salary?".
The point is just to ask for what you want. Often people will give it to you just for asking. It took me a long time to figure this out!
If someone comes to me asking for 15-20% more, I'm going to offer them something below the low end of the range. You're essentially giving away 5% for free.
In a few cases, I've seen offers come back right in the middle of the range, when I was expecting the bottom. Free money!
Ideally, have 2 offers that are aware of each other and name the range. They won't both come back with the bottom number. At least, not in this market. They've wasted a ton of time and need to hire someone, so they're going to make their offer count. Internal recruiters have performance-based metrics too, and while I'm sure getting a better deal on a hire looks good, failing to fill positions is not good.
Absolutely. People who don't ask (esp by default) end up losing out. [1]
[1] http://www.reddit.com/r/TwoXChromosomes/comments/hvv2m/i_wor...
No, but if I know that you don't have another option, I'm not going to be as willing to give up more.
A known secondary option puts pressure (sometimes, tremendous) on your negotiating partner. The absence of such an option does not. That's what the article is saying.
That doesn't really make sense. The candidate has at least this much in their favor:
1. A recruiter has had probably 2-3 phone calls with them, a technical person (or two) has done a phone screen, and they've taken up the time of, say, 4-6 people for in-person interviews. The company has already spent a not-insignificant amount of time (aka money) evaluating this person, and losing them over a (reasonable) salary increase would be foolish.
2. Having evaluated the candidate, the company has decided they want this person to work for them. Assuming the candidate is great for the position, but the only sticking point is salary, why would the company go back to square 1 to save a little money? Hiring is hard.
Available comp for a particular position is usually a range, and the initial offer will rarely (if ever) quote the top of that range. If the budget is available, and the candidate is good, whether or not they have a competing offer isn't relevant, unless you know that they'll be forced to take your offer even if you don't budge (which in tech, at least, is pretty rare, I'd think).
Any company worth anything has an a, b, and c candidate (plus, often the option to wait) already in their pocket. While what you say is true, the assumption that your demands are "reasonable" is one you simply cannot make. Only the other party can define that. The cost of hiring is not assigned to you, it is a sunk cost that the company will absorb regardless of who they hire. It's pretty insignificant to keep an already posted position open.
Assuming the candidate is great for the position, but the only sticking point is salary, why would the company go back to square 1 to save a little money?
Budgets. Existing pay scales. Their evaluation of your value. There are numerous reasons. The idea is that you want to work there too, for the most they are willing to pay. That means pushing to the limit but not going past it. The easiest way to do this is to force their hand.
One of the best ways to force their hand is to generate a call to action that is time-based. It's a pretty basic marketing principle that I'm really surprised a lot of people don't seem to understand. This is just like saying "Act fast, quantities are limited!"
That hasn't been my experience (on both sides of the hiring table). From what I've seen, only 1 offer goes out at a time. Otherwise, both might say yes, and you can't retract it. Only if the offer doesn't work out does option b get an offer (if he's still looking by the time all of this is done).
For every day that a job goes unfilled, it's costing them lost market opportunity and delaying their launch.
When you get the chance to say "I do have one other offer that is expecting a response by $date, but I am really interested in this position, so I wanted to see if it was a good fit before committing to the other. Do you think that is enough time for us to meet?"
Suddenly, mountains start moving.
You can find numbers from glassdoor or look at what government salaries are for your job type in that location.
Just know that if you provide an acceptable range, they will lock in on the bottom of the range.
If pressed, have a number ready, that's somewhat higher than what you think is realistic. Unless you are so far out of the ballpark that you look ridiculous, a high initial salary demand is not going to knock you out of consideration if you're an otherwise good candidate.
I'm no expert negotiator but personally I think this depends on the situation. In more than one case I've underestimated my worth and received more than I would have though I could get away with asking for. Once they name their price, I know it's their lower bound, so I'm comfortable asking for even more.
I think negotiating a salary has different dynamics than negotiating a sale. For a sale, I would probably agree with the anchoring tactic.
Yes. But that doesn't make it useful. I recommend e.g. reading http://diplom.org/Zine/F1997R/Windsor/lawdip.html
> In more than one case I've underestimated my worth and received more than I would have though I could get away with asking for.
Of course the other rule is: Know what you can get away with.
You don’t ask, you don’t get.
[1] http://www.bothsidesofthetable.com/2013/05/15/the-one-word-t...
This is so, so true. Having a strong BATNA is 90% of negotiating. When I negotiate a package with someone, I want to do 2 things:
1) make sure I compensate them fairly. I've learned that skimping on salary is penny wise and pound foolish. If an employee feels slighted by their compensation they'll start looking for a new job immediately after starting working with me.
2) make sure I'm not over paying and setting myself up for resetting my entire salary structure. Raising salaries is part of doing business, resetting salaries downwards is darn near impossible to do.
In addition, everybody else in the company now has an incentive to look for a new job themselves since they see a short cut to get a raise.
Better to keep people happy by offering market-rate salaries in the first place.
Not to mention that accepting a counter offer is a bad move. The offer might just be to keep you until they find a cheaper replacement. Even if that is not the case you will be perceived as risky - no investment in you, first to fire during tough times.
On top of that it perpetuates the crappy tactic "pay peanuts until they threaten to leave". Nope, counteroffers are for suckers.
Is this referring to a counter offer after threatening to quit, a counter offer during the hiring process, or both?
Here's a thread from a while ago discussing counter offers: https://news.ycombinator.com/item?id=4970843
From what I gather when you dislike it enough to quit you start to resent little things. No more free coffee, no vacation, too many hours, office politics/culture. Not the money.
Not always the case but when you get to the tipping point it's because things went too far already.
On the other hand, it's absolutely routine in my experience to watch managers bend rules and ignore feedback to bring in very expensive "senior" people to the team (often based on nothing more than a resume). All the incentives are wrong for this: everyone wants senior underlings, there's the "prestige" value in buying expensive commodities, you want to feel like your team is in the "big leagues".
And if done badly it can do terrible damage to a functioning team. It's never good to bring on an unproductive employee. Unproductive architects will kill your product.
That is why they combine it with convincing their employees that they should be lucky to have their job. My former employer got a lot of mileage out of that. It was made easier because some of the people there were lucky to have a job (based on competence or specialty).
Add to that my personality (avoid confrontation) and the fact that my last job I fell into so I didn't have to negotiate (there wasn't a contract it was just spoken and my checks increased).
That excerpt kind of summed up what I had been thinking all along. It was all I could do not to shout YES right away (before I even saw the details).
My experience is probably more limited than I knew and the area I live in, while having jobs, isn't huge. That added frustration when the same companies had the same job pop up every 3 months (I applied for the new ones every time and never got a call).
I hope that I can prove to this new place I am worth taking a chance on. Just feels good to not have to worry that I am a failure (at least for now).
Success will depend on the company, but it can work.
I've been working for 8 years in three different companies: I found the first job (out of university) because a friend of mine worked there. The two following jobs were "found" because our manager moved and we (me, my friend and some others) move consequently as a team. I did some interviews during these years, never an offer. I really couldn't say if it was because of my salary (definitively above - italian sh###y - market) or because of me (my skills, my attitude, whatever). Of course Headhunters and HR are so kind not to give you any feedback (sometimes neither a response).
Now our last companies has failed, I'm unemployed and I've decided with my wife to relocate to Luxembourg where she can have a stable job (at least her..).
So here I am, unemployed and looking for a job[1] in another country (with the additional problem of the language: I'm a real novice in French, I don't speak German and my English should be far better..). I think that probably I'll discover which part of me was the problem...
[1] or coming back to university or learning coding (i'm more a sys/net engineer) or studying some online courses or trying to think if some startup ideas I have are feasible
Unless you sweated over a dictionary for an hour to write the above comment, or your speaking is much worse, please make sure to market yourself as fluent in English!
Good luck!
Obviously this means you need to do your research and have a realistic idea what your skill set is worth. Don't let ego get in the way of that research.
It's not true at all.
No other offer? Unemployed for a year? It doesn't matter. When you get their offer, flinch, flare your nostrils, make an 'oof' noise on the phone - whatever, do what you need to do to convey you're not impressed. Then say "you'll need to do better than that," and shut up until they say something.
Often you'll get an additional raise on the spot; most likely, they'll ask what you'll need, you'll throw out some ludicrously high figure, and you'll split the difference somewhere in the middle.
By the time a company makes you an offer, they're emotionally invested. They're already thinking about all the work you're going to do for them, and how much longer it's going to take to find another suitable candidate. They also know that many candidates negotiate, so they likely didn't lead with their best offer. In this situation, you are extremely likely to improve your position, strong BATNA or no BATNA - you just have to have the courage to ask for what you want.
Some people may be able to pull off something like what you describe, but all research I've read on negotiating indicate that knowing your BATNA and having a strong one is key to achieving good negotiation results.
It's always nice to have multiple offers to choose from, but sometimes you're just not in that situation. When that happens you can still master your own psychology, keep your feelings to yourself, and negotiate with confidence.
Oh, but it most certainly does.
It may not affect how you negotiate, but it will certainly affect overall outcome.
By the time a company makes you an offer, they're emotionally invested.
With the exception of rare cases and poaching, no, they are not. This is not reflective of 99% of job offers. If you have built up a reputation as a superstar that can write their own ticket, then fair enough, you already have a BATNA and didn't even realize it - play hard ball.
If however, you are like a vast majority of job applicants, you are really nobody special. Some talent maybe, but not enough to make me drool. In this situation, the negotiation is very similar to every other purchase of goods. You are the vendor and the employer is the consumer.
In a land of multiple vendors, the consumer is king. I don't care how much you think your time is worth, I've already got a value in my head that I'm willing to pay for, and I'm going to do everything I can to pay less than that value and get myself a 'deal'.
Suppose instead of effort hours you are selling bananas. You and about 20 other banana stands. The first thing I as a consumer do is figure out how the banana market is looking these days, and determine the average quality and average price that the vendors are offering. I'm a savvy consumer now, so I figure that in order to not waste anyone's time, I'll pre-define the quality of the banana I'm willing to purchase (let's say higher than the average, but not the gold standard banana) and publicly state my intention to buy a fixed quantity.
Seeing a sale, you (along with others) contact me I take a look at your wares. I like what I see, and I know the market value, so I offer you the average price and see how things go....
Scenario A) You counter 30% higher. That's still in my price range, but I've still not seen the other banana vendors yet. I probably want to talk to them before I just give you that extra 30%. What's the rush after all? Your's isn't a bad offer, but I'm not sure it's the best...
Scenario B) You don't really counter, but simply tell me that you only have 50 bananas until next quarter and there's another guy down the street that's already told you he'd give you 20% more for them. He's on the other side of town though, so you don't really want to go out there...
In what scenario is the banana vendor in a stronger position to get that extra 30%?
If the outcome in this situation is so influenced by said externality, how do you figure it does not equally translate into a job negotiation?
A good BATNA can be an existing job, a high degree of skill, or a lot of comfort in your current situation. Regardless, having one gives you a tremendous advantage in any negotiation.
If this is the type of person you're extending an offer to, it's no wonder you don't care if you lose them. You're absolutely right - if you're not being selective in your hiring, you're not going to mind overly much if you lose a candidate.
On the other hand, why would anyone want to work for a company that's not selective in their hiring? Now that I think about it - if the company won't negotiate your offer, that probably indicates they're full of B-players and you're dodging a bullet.
Employers (as one would no doubt discover if you looked outside of the echo chamber) are as practical as they are selective.
On the other hand, why would anyone want to work for a company that's not selective in their hiring?
Limiting yourself to the top .25% of available employees is a rather stupid way to do business. Being flexible does not mean you are open to everyone, just that you are will to accept, say, the top 5% of employees.
if the company won't negotiate your offer, that probably indicates they're full of B-players and you're dodging a bullet.
The company IS negotiating. You are the one who isn't. Negotiation, by definition, is not the act of simply stating your demands as an ultimatum. If you figure this is a practical way to live life, by all means, continue down this path.
I'm pretty confident in saying though that after 15 years in business with more negotiations of all sorts than I can count in my past, whenever I've come across a person with your view point, I simply walk. Dealing with someone that can't find win-win is, in 100% of cases, more trouble than they can ever be worth. (As an aside, you see this a lot more with B2B deals than you do with hiring. Most people applying for work are a little more reasonable to simply demand a salary. The only time you normally see this is if the person in question is being poached/recruited, which is a different equation)
Getting 100% of what you initially want is a great goal and a reason to celebrate. Expecting this outcome all of the time is a recipe for failure.
I'll offer a competitive salaray that fits within my companies budget and salary framework. If an employee really wants more then the burden is on them to show that they've got a better BATNA.
I do agree with you that asking never hurts, but if a company caves just because you ask it's a very telling sign that whoever you talked to doesn't really know how to negotiate.
I've spent a lot of time helping people negotiate job offers. The predominant theme is that offers will vary a bit, and some negotiation may be necessary, but the couple thousand dollars on the table during the discussion is virtually meaningless.
For most of the software devs reading this article, we're talking about a couple of percent of your overall compensation -- an amount that, given the demand of developers in the market today, will end up being taken into account during your first performance review anyway. If you’re good, your employer will want to keep you around and compensate you accordingly.
During negotiations your main priority should be getting the job that’s the best fit. If it really is the best fit, the company will be presenting you a fair offer. It may not be on the top end of normal, but optimizing for price is bad practice when negotiating salary (much like VC term sheets).
Truly enjoying your time at work and being fully engaged and happy with your job is worth tens, if not hundreds of thousands of dollars.
I’m not suggesting that you accept below market offers. Instead, I’m trying to illustrate that how much you will enjoy each hour of the day is part of the offer, though it’s not written on the document a prospective employer presents you.
Full disclosure: I’m the founder of Mighty Spring (https://www.mightyspring.com) and our aim is to help people find great fitting opportunities quickly and easily, while making these salary negotiations much simpler in the process.
Perhaps in relative terms? After living on a grad student's salary for years, it's clear that even a thousand dollars can be rather powerful.
Happier workers tend to perform better, which in turn make meritocratic performance bonuses greater, raising the overall compensation of those workers. Enjoyment of one's job and compensation are tied much more closely than some people realize.
I do think negotiating a job offer is very important. It doesn't benefit anyone if you are feeling undervalued/underpaid at a job. Work performance will take a hit, team dynamic will slowly shift, you will wake up every morning dreading to go to work.
However, I do think there is a need to resist the urge to treat negotiation like a game. Sure you may have gotten the best offer possible for your skills/experience, but how much do you need to be satisfied and do your best work? If you get hired having massively oversold yourself and the value you bring to the team, are you sure that would be a good start for your new job?
I recently negotiated a 7.4% increase on my base pay for a new job. I could have easily negotiated a 16% increase but I didn't. I want both parties to start the relationship happy. If either side feels like "did I just get cheated out of X?", that is a loss for me. Sure, any relationship may go bad, but why start a relationship if it's not going to be sweet to begin with?
The only thing being negotiated is how much of the surplus you get and how much they get. They won't hire you if you aren't going to be worth significantly more to them than they are paying you (thanks to sticky costs).
I treat these as monopoly money unless
I actually know what percent of the
company I'm being given.
If they don't up the offer, it's easy to just say yes after whatever they say next. So, you aren't really risking anything.
I have never felt so powerful in my life :)
I've always been one to just accept whatever -- "Yeah, that sounds good!" -- but I'm consciously preparing myself to avoid this tendency after I finish grad school.
The decision to hire is expensive, if they've already made an offer there is usually some room for negotiation either through salary or something else depending on the company (equity, time, travel).
If you were offered 100k and said that you'd love to work at the company, but would be much more comfortable at 120k they'll probably move a little bit just to close you.
Worst case is they'll get back to you and say that they're not able to move from their original offer in which case you can accept without worrying about it.
(Of course, saying "130k and we have a deal" is a pretty terrible way to negotiate. See patio11's blog at kalzumeus.com or Ramit Sethi's book for a substantially better approach to negotiating compensation.)
I'd never just say yes.
By the time someone has made the decision to make you an offer, they have invested time in you, and will be psychologically invested in their decision - nobody likes "losing out", and so they will look for reasons to meet you. As long as your counter-offer is not ridiculous (and tacking on 30% is not), they will negotiate.
Just don't across as making hard demands, and give reasons even if they're total nonsense. People yield more easily if you give them an excuse to.
The irony is that people also tend to feel they made a better deal if they have to fight for it, even if they end up giving a lot.
The post does a good job of walking the fine line between getting what you're worth and coming off like a conceited jerk.
There are more advanced salary negotiating techniques and ways to get into positions to negotiate your salary but those tend to be situation specific.
My excitement about my new job and salary lasted about 3 months, from that point i feel like i am being underpaid, is it worth to try to renegotiate my salary when i have been only 3 months in a company? Otherwise how long should i wait to ask for a raise?
Don't ask for more without an offer - it might work out but you risk compromising your current position without a having a backup.
Your current job MAY accept your pay increase but if they do, there's already a break in trust. And you're setting yourself up for being replaced. You may as well take that new offer right now.
Better option is to negotiate based on skills, experience, responsibilities, and other factors.
That has been my strategy 4 times in the last 6 years. You can get a much bigger raise if you switch companies than if you stay and wait for a raise. If I had stayed at my first programming job, even with generous 10% raises every 12-18 months, my salary would only have increased by 50-70%. Instead, by switching jobs, I was able to get 20-35% raises each time, and now my base salary is 113% higher than it was 6 years ago.
Don't claim value; create value. Can you demonstrate how you are underpaid, in that you have data that show what other people in similar positions are making? You'll also need to clearly outline how you have added value to your employer. Simply stating you deserve a raise will not be as effective and showing them why and what you have done to deserve it.
In the meantime, look at ways that you could improve how your company operates. If you are bored, create projects for yourself. Your employer will love you for it in the long term and provide you with a strong recommendation in the event you want to get a new job. Creating value now will also improve how you communicate when interviewing for other jobs.
This is super important. In business, everyone is trying to make money, and if you don't help others achieve that goal, you are a dysfunctional businessperson. And generally, leaving some value on the table translates to better relationships with people—a natural consequence of giving people what they want. An employer becomes a boss when he or she can't get you to pull your weight.
You need to deliver.
Note I'm interested in experiences from Europe, I think that there's lots of hiring "cultural" differences between the continents...
>The first part is very personal. People having mortgage and two kids just overvalue themselves. Immigrants in US (and I guess everywhere) just don't need as much money as they don't see the neighbour's grass. Can you explain what you are saying here? Are you saying that only immigrants are willing to take the offers you make, or that you make higher offers to people who overvalue themselves?
I'd walk rather than accepting an offer that truly can't be negotiated, because if the company is so inflexible that they can't even yield a tiny little bit, then that's a huge red flag to me.
Ahahaha, oh brother.
You need to care about how much I'd make at another company, because if you dramatically underpay me, I'm walking. I'm ok with fuzzy variance - a few K/yr isn't making or breaking me. But if you short me and give me <90% market average, I'm job hunting. I don't care about how much I like the job - you simply are not valuing me as much as other companies do, and that's unacceptable in my eyes.
Unwillingness to negotiate is a red flag: it signals you can't work with me, are inflexible, and are not interested in accommodating me if something comes up.
So no. Negotiate with me and offer at least 90% of market value. Or I will walk - either I'll join and quit as soon as I get another job, or I'll keep searching. Neither are good outcomes for you.
So you have to have something in back pocket when it is time to leave this job and look for new opportunity and use you current wage as a leverage to get more. As such, you should make sure you are compensated fairly. It is just like bonus vs. early salary increase. Higher base salary means higher base salary for the next job (and for current one higher bonus, higher annual increase, etc). Do not settle for bonuses/stocks/"unlimited" vacation and any other similar tricks.
Essentially, by using this technique, you've created a job for yourself, and given yourself value before you've even started there.
Then, when it comes to salary negotiation, you choose the highest available figure of their range and say with enormous balls that you're worth it because of all the things you can do for them - re your doc.
Works a charm for me every time.
Maybe I don't have a good enough imagination on what to analyze, though.
So far, this technique has gotten me 3 good paying jobs, because I'm not trying to please them in the interview, I'm trying to show them how I can help them become a more successful company. Plus you win the high ground. You just have to do it in a constructive and respectful way.