Prepare Yourself
The key to success in negotiating a salary is preparation, practice, knowing how much you are worth and knowing how much the offer is worth to you.
Know Your Worth
To properly negotiate your salary, you need to know what you are worth in your market. To understand what you are worth:
- Take a look at the skills assessment that you performed on yourself at the beginning of this process and try to assess how well your skills and qualifications meet the needs of the company offering you a position. In most cases, you will quickly realize that they need you as much as you need them.
- Look at online salary surveys for IT professionals. These surveys will give you a good general sense of the range of salaries and where you may fit in.
- Look at industry-specific trade publications to get more specific information. Most of these magazines publish an annual salary review. You may need to search for last year’s salary review edition (or if you are lucky, this year’s salary review edition). If you are looking at a salary review that is more than 6 months old, realize that industry-standard salaries may have gone up or down some during that time.
- Take your location and the cost of living into account. Larger cities with higher cost of living and places with greater demand for your specific skill set will often see higher pay, while more inexpensive places to live and places where the labor market is awash in qualified job seekers will often see lower average pay.
- Establish the range of salaries for your specific position and location.
- If you will bring a lot of specialized expertise or experience to a position, push for the higher end of the range. If you are less specialized or experienced, you may have to settle for the lower end of the range.
Know the Worth of the Package
Next, you will need to evaluate the total compensation package being offered. Look to the benefits, if any, included with the offer and evaluate them as they relate to you and your needs. Discount those that are unimportant to you and value those that are important. Benefits come in various forms:
Vacation
Does the company offer floating holidays? An especially generous vacation package? The opportunity to accumulate additional vacation? Personal days in lieu of sick days?
Retirement Plan
Does the company offer a retirement plan? Do they make matching contributions each year? If so, at what level? If they do not currently offer a retirement plan are they planning to in the future?
Health Insurance
Does the company offer insurance? How much does the company pay for insurance? Are your family members covered? If they cannot offer you insurance when you start, will they pay you cash to cover your current premiums until their coverage begins?
Other Insurance
Does the company offer life, disability or even homeowners insurance?
Tuition
Does the company pay for continuing education? Courses that will keep you up to standard? Will they pay for you to get an advanced degree part-time?
Flextime
Can you set your own hours or work from home?
Equity
Does the company’s package include options? If so what is the vesting schedule? What is the tax treatment of the options they offer? What percentage of the company do the options they are giving you represent? What is the exercise price?
- For startups, do not fall into the age-old trap. Many people are very pleased to be granted 100,000 options because 100,000 sounds like a very big number. If the company has 500,000,000 shares outstanding, it is not as great an incentive.
- For public companies, it is easier to determine the value of an option.
Meals
Does the company offer free meals if you work past a certain hour? Does the company offer a subsidized cafeteria?
Perquisites
Does the company have a gym? Do you get discounts to local retailers? Does the company have a credit union? Does the company offer day care?
Practice
Negotiation is a skill and as with any skill, practice makes perfect. Practice negotiation tactics and strategy on your own. Get a friend to play the role of the interviewer and keep practicing. Videotape your practice sessions and critique yourself. You will be amazed at how quickly you improve.
Negotiation Strategy
Salary negotiation is going to be part of any successful job search process. Here are some tips to guide you through the process.
Negotiating at the Interview Stage with a Recruiter
If a recruiter arranges your interview, he or she may tell you not to talk about money in the interview. The good part about this is that you can make the recruiter the party who is only interested in money. The bad part about this is that the recruiter, if he or she is not a good negotiator, could cost you an offer or the salary you desire if he or she is intractable. If you chose a recruiter, choose wisely.
Negotiating at the Interview Stage with a Recruiter
If a recruiter arranges your interview, he or she may tell you not to talk about money in the interview. The good part about this is that you can make the recruiter the party who is only interested in money. The bad part about this is that the recruiter, if he or she is not a good negotiator, could cost you an offer or the salary you desire if he or she is intractable. If you chose a recruiter, choose wisely.
If you use a recruiter, be direct and tell him or her your expectations. Whatever you do, if you sign an agreement not to talk about salary, do not break your agreement.
Negotiating at the Interview Stage Without a Recruiter
At any time prior to receiving a formal offer, you should politely push off any salary discussions. If you tell the company the lowest amount you will accept, that is what you are going to get. Negotiating without an offer in hand would consist of you trying to set the highest possible salary with which begin salary discussions while the interviewer would try to set the lowest possible salary from which to start the negotiations. For a successful negotiation:
Negotiating at the Interview Stage Without a Recruiter
At any time prior to receiving a formal offer, you should politely push off any salary discussions. If you tell the company the lowest amount you will accept, that is what you are going to get. Negotiating without an offer in hand would consist of you trying to set the highest possible salary with which begin salary discussions while the interviewer would try to set the lowest possible salary from which to start the negotiations. For a successful negotiation:
Understand the game
Know that all aspects of your job offer are negotiable. The key to your successful salary negotiation is that you must understand upfront what your priorities and needs are and then be able to negotiate with these priorities in mind.
Avoid discussing salary before receiving a formal offer
Before you have a formal offer, politely push off discussions of salary. Giving a salary you are comfortable with only gives the employer a baseline to work with. Here are some responses to help you respond to questions about your salary expectations before an offer is put on the table:
- I would prefer not to talk about salary unless you are actually offering me a job.
- I am comfortable with the advertised range.
- I am comfortable with a salary commensurate with the position.
- I am comfortable with the most recent Tech Magazine survey of the ranges for this type of position.
- That is a good question. What were you planning on offering me?
Ultimately if you are forced to give a number, because you become too uncomfortable or fear losing the offer entirely, never give your real bottom line number. Add a cushion to your desired salary to give you room with which to negotiate.
Negotiating with an Offer in Hand
From your research you should know what you are worth. If you know your range and the company’s first salary offer comes within that range, do not feel obligated to accept it.
Negotiating with an Offer in Hand
From your research you should know what you are worth. If you know your range and the company’s first salary offer comes within that range, do not feel obligated to accept it.
Remember, employers and interviewers negotiate salaries for a living, and they would never put their absolute best offer on the table, first. (That said, this does not really apply to certain types of positions and companies who have lock step compensation structures. With these type of companies, you have a very limited ability to negotiate.)
Don’t be afraid to negotiate
Do not think negotiating makes you look pushy. Really, by negotiating salary and benefits you are making a positive impression on a company as to what your behavior as an employee will be like. It will prove you are a professional with good business sense.
Take Your Time
If you can, don’t accept an offer right away. To give you time to prepare for your negotiations, ask for a few days to consider the offer. If you don’t feel comfortable doing this, come prepared to negotiate.
Reinforce your interest
In your negotiations, reinforce your interest in the position, company, and industry. Let them know, throughout discussions, that you are interested in the job and the firm.
Be Honest
An employer will typically know when you are lying. If a prospective employer requests information about your latest salary and other benefits, do not inflate the truth in hopes of getting a larger pay package. If your salary is currently much lower than the salary you want, reframe the discussion by being direct about it and reselling yourself. For example:
“The chance to work in the chip industry really appealed to my academic interests coming out of school. I had the chance to take on more responsibility than your average grad at CAC Industries, so I was willing to accept a starting salary of $40,000. However, the experience I gained from this position really means I should be making closer to $85,000, which is what I am looking for.”
Negotiate beyond the salary requirements
Since you understand the worth of your total package from your research, if the prospective employer cannot match your salary requirements, try negotiating other items like your job description, title, scope of work, starting date, relocation expenses, retirement plan, vacation time, education expenses assistance, professional organization and gym memberships, stock options, bonus, and medical, dental, and other insurance plans.
Silence is Your Friend
Keep negotiations going by staying somewhat flexible in your demands and when in doubt pause and keep quiet. If one of your demands is met by silence, don’t panic; let your prospective employer make the next move. If you want to make a counter offer try:
“John, thanks for the offer, ABC Corporation is offering 25% more.” Say nothing and wait for them to respond.
Be Persistent
If the prospective employer cannot meet any of your demands, try negotiating long-term items, including an automatic pay increase after an annual review, fast track review for a promotion or an automatic benefits increase after your first six months.
Get the offer in writing
Once you agree to a total package, get the final offer in writing.
Remember, your negotiations for the best compensation package will help form the beginning of your relationship with the company. By researching baseline salaries, determining your priorities, and following the simple guidelines set forth above, you can successfully negotiate your way to the best compensation package possible.
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