Negotiating

A common fear is that negotiating a job offer will erode the goodwill you have built with the employer during the interview process. You might be afraid that raising concerns about the offer will turn the employer off and cause them to rescind the offer.

In reality, that is extremely unlikely. While you might not have much experience with negotiating job offers, the employer typically does. So, negotiating will not seem so unusual or awkward to them. In fact, it will likely be expected. And would you really want to work for an employer who was offended by the fact that you made your needs known in the mere effort to meet them?

With a bit of forethought, you can avoid the pitfalls and successfully negotiate a more attractive offer. For example, if you approach the negotiations as a mutually beneficial problem-solving process, you are unlikely to behave in a deal-breaking way. If you demonstrate tact, flexibility and the ability to listen and understand the employer’s needs, you can actually reinforce in the interviewer’s mind that they have selected the right person.

Negotiating is simply identifying the gaps between the offer you would have liked to see and the offer you received and sharing those gaps with the employer. It’s really that simple! It’s not making demands or issuing ultimatums; in some cases, it’s not even asking for things. It’s simply mentioning where the offer falls short and  exploring how those gaps can be filled.

There are several compelling reasons to negotiate a job offer:

• You are the very best candidate they have. If you weren’t, they would have made the offer to someone else. This  encourages employers to be flexible in order to get you on board, and  gives you leverage.
• They may be expecting you to negotiate. Except for jobs with low levels of responsibility and compensation, there is usually room to negotiate and the employer might be surprised if you don’t!
• Their first offer is probably not their best offer. Given that they expect you to negotiate, they will have built wriggle room into the initial offer.
• They have more that they are both able and willing to give you. Some people adopt the philosophy that if the initial offer meets their needs, they take it as is. But the above facts mean that the employer is actually willing to give you more money; why not let them do that?
• They want to make you happy. If an employer is smart, they want you to join their team happy with your decision. That leads to greater motivation, loyalty and performance.

The bottom line is that, if done properly, there is little downside to negotiating. Unless you behave in a way that is pushy, arrogant or demanding, the employer is unlikely to rescind an offer. Typically, the worst-case scenario is that they will simply say no to your requests, but the latest version of the offer will still be on the table for you to accept or reject.

• Don’t accept right away – virtually no employer expects that. Just say “thank you” with whatever sincere enthusiasm you can. Even if the offer is underwhelming, express interest in the job itself.
• Don’t be offended by a low offer. Realize that the first offer is only a starting point and the employer may simply be trying to get the conversation started. They can use your reaction to the offer to craft a package that meets your needs while not giving away resources unnecessarily.
• Say you’ll get back with an answer – one to four days is generally reasonable. If you ask when they would like an answer, their urgency to get this settled may lead them to give you an unnecessarily short timeframe. If the timeframe you suggest is too long, they will let you know. Of course, with more complex executive compensation, the entire process could take several weeks versus a few days.
• If they don’t offer it upfront, you may want to ask for benefits information such as health insurance and retirement/401K plans. If you neglect to do this when you receive the offer, you can ask for this later. Factor these items into your thinking as they can make a significant difference in how much cash ends up in your pocket.
• If you need additional information to evaluate the offer, check back with questions. Keep this conversation separate from the negotiation as it keeps the discussions cleaner and you can consider how to incorporate new information into your strategy.

• Conduct salary research to help you feel confident that your expectations are in line with the market. Ideally, you should have done this at the start of the interviewing process, but if you did not, do it now.
• Take time to carefully evaluate all aspects of the offer. Do you want this job? There is no point in planning out a negotiation strategy for a job that you don’t want.
• Work out the financials to whatever level of detail you are comfortable with. Decide which components of the offer you would like to see enhanced.
• For some aspects of the offer, especially at executive levels, you might want to consult with trusted advisors, such as your financial planner or attorney, to be sure your interests are fully addressed.
• Craft a strategy for presenting your concerns to the employer. What are you willing to compromise on? What could be a trade-off? And though you will likely never share this with the employer, know your walk-away point – a scenario that is clearly unworkable and which will compel you to turn down the offer. If the offer has already exceeded that threshold – great. You are in a perfect position to make the offer even better.

Most aspects of the offer are negotiable, depending on your responsibility and compensation level. Of course, not all of these apply to every situation.

• Base salary
• Bonuses: sign-on and performance-based
• Commissions
• Stock options, profit sharing, equity
• Vacation
• Relocation: moving expenses, house-hunting trips, temporary accommodations, closing costs
• Tuition reimbursement: amount or eligibility
• Working arrangements: flexible hours, work from home

If you are at a senior-executive level, compensation plans are often customized, so just about everything is negotiable. For others, less is up for discussion. For example, health insurance and retirement plans/401Ks are typically not negotiable. Once the company agrees to a contract with the provider, all staff other than the senior leadership will be bound by that agreement. But even for gaps in these areas, there could be work-arounds.

A company or hiring manager might make it a practice to not negotiate on certain points, but that will be their choice rather than an iron-clad rule. As much as “company policy” sounds unbendable, items that are simply internal policy versus a legal requirement or contract with a third-party provider are often the most negotiable.

• If early on the employer has indicated they have little to no room to negotiate, you might still want to give it a try. After interviewing you and learning of the value you bring, they could be more flexible than they originally anticipated.
• It’s best to negotiate with the hiring manager versus HR. The hiring manager knows best what they need and how well you fit. It’s also their budget.
• If HR gave you the offer, go back to the hiring manager and say you’d like to discuss the offer with them. If their policy dictates that HR conducts negotiations, they will tell you.
• Contact the hiring manager and tell them you’ve carefully considered the offer and would like to discuss it. You don’t need to use the word “negotiate.”
• Start on a positive note by expressing your interest in the job, team and/or company.
• Start by sharing positive aspects of the offer. This signals you will not be negotiating every single point. If the rest of the offer does not meet your expectations, you can revisit these points.
• Let them know what falls short. It’s often best to start with base salary – it’s the biggest piece of the package and other things are based on it, such as future raises. Let them know it was less than you anticipated. Then you can stop talking; they will typically jump in. Or you can inquire whether they have flexibility with it.
• If they ask what you want, even at this point, avoid a specific figure. Once you state a precise figure, you cap the salary. They have absolutely no reason to go higher. Naming a specific figure robs the employer of any incentive to pay you more.
• Instead, present your expectations in general ranges: “… from the mid 120s to upper 130s,” or “in the 70s or 80s.” These kinds of responses give you wriggle room.
• Whenever they make a move towards your desires, express gratitude. Interviewers will appreciate the positive feedback.
• If they increase the salary figure a lot in one step it could mean that they have more room to grow than you thought. Or it could mean that they are eager to close the deal and they exhausted their options in one step. How to tell? Thank them and inquire about the possibility for more movement. You don’t need to guess or psych them out; they will let you know if they maxed out. Typically, it’s best to inquire about a particular item only a time or two, so that it doesn’t come across as demanding.
• Most people understand that we all want to make more money, so you might not need to rationalize your requests. However, it can be an effective strategy. The key is to negotiate from a position of strength, not need. Justify your requests on what you bring to the job and what you will be able to accomplish for them, not your personal needs. Your needs are critical to you, but it is not the employer’s job to fill them – it is their role to appropriately compensate you for your contributions.

If you are faced with certain limitations that concern you, whether a salary that does not meet your target or a non-negotiable item, there could be ways to fill those gaps. Employers will often jump in to fill an identified gap, such as a signing bonus to fill a salary gap. But it’s perfectly fine to suggest your own solutions.

For example, perhaps you are between jobs and currently paying for your own health insurance. And perhaps there is a 30-day waiting period before you are eligible for the employer’s plan. You might inquire whether the employer would be willing to cover your health-insurance premium for those 30 days so that your first month’s salary is not eroded by that expense.

Similarly, if you just missed the enrollment period for their 401K plan and you have to wait months to participate, you might ask if they would provide what would have been the company match, so that you could put those funds into an IRA to keep up with your retirement savings.

If salary falls short, there are several strategies you might employ. One is to suggest a sign-on bonus. This will only last a year or two, and it does not figure into calculations for future raises. But it can help sweeten the deal in the short term.

Another option is to ask for a salary review sooner than normal. In most organizations, salary reviews are conducted annually. But you could ask that your performance be reviewed ahead of schedule, perhaps after six or nine months, and that you would be eligible for an increase based on your performance. Often, employers are more flexible on performance-based comp as they only need to pay more if you are delivering value. In this case, you may want to discuss exactly what goals will serve as criteria for a raise.

Once you have discussed all the aspects of the offer that you want to improve, two things might happen. One is that you are ready to accept it. Thank the employer, agree on a start date, and ask for the final offer in writing.

The other is that you are still not 100% sure the package is acceptable, in which case you will need a more time to consider the final offer. Typically, you won’t have as much time as you did the first time around, given that you have already evaluated the opportunity. But if the offer falls short of your expectations, the employer probably realizes that you need to mull it over. Again, express whatever sincere interest you have in the job and company to reassure them – you don’t want them to assume you will decline the offer, only that you need to be sure you’re totally comfortable with the package. And be sure to get back to them with an answer by the agreed-upon time.

For executive-level positions, this entire process can be extended while you work out the details of a more complex package.