At last! You applied for a new position, went through an interview (maybe even several), and now have an actual job offer. Like most successful applicants, you are thrilled and excited. However, you might be thinking the starting pay offered should be, well, a bit higher. What do you do now? You may be very skilled in your particular line of work, but negotiating salary might be way outside your comfort zone. Plus, you don’t want to appear ungrateful or mess up this opportunity over a few dollars, right?
Relax. Catch your breath. Negotiating an acceptable starting salary is usually just a normal part of the overall employment process. Nobody is going to be shocked or appalled if you try to bump up that dollar amount – so long as you do it reasonably and professionally.
Remember, the interviewer and Human Resources (HR) department have a duty to find and hire the best possible employees at the lowest reasonable price. Plus, employers expect some level of salary negotiations may take place. Therefore, they might lowball the first salary offer a bit so there is wiggle room to offer you more… if you ask. This way, in the end, you feel like you’ve negotiated a great salary deal and they’re still happy with what they have to pay. Sounds like a win-win to me!
Should I Have Discussed Pay Earlier?
No, probably not. Unless an interviewer starts actual salary negotiations, it is usually best to wait until a position is offered. Think of it this way. When the employer finally decides that YOU, out of all the other applicants are the one they want, you actually gain some leverage in the negotiations. They also now have something to lose if they cannot successfully negotiate a starting salary. They have invested time and money to find exactly the person they want to hire. Now, like you, they too don’t want the deal to fall apart over a few bucks.
During the job interview, be careful to not confuse obligation with negotiation. For various reasons, some organizations require their interviewers to mention the usual starting pay or pay range. They might say something like, “This interview is for a Technician II position which has a starting pay level of $19.81 per hour.” Such a statement is typically NOT an invitation to begin salary negotiations right then and there. Again, wait until an actual offer is on the table which gives you a better bargaining position.
Evaluate Your Bargaining Position
Being successful at negotiating a higher starting salary also depends on what YOU bring to the table and can offer the employer. Consider an entry-level position which requires little or no experience and has only modest education requirements. If you meet just the bare minimum requirements, you really have little negotiating power as you offer nothing more than any other qualified cookie-cutter applicant. Plus, the other similarly qualified candidates might gladly accept the starting pay offer – and the employer knows it.
On the other hand, when you bring valuable experience, skills, or education beyond that minimally required which other applicants do not likely possess, you become more desirable to the employer. The question is really whether you can justify asking for more. And yes, sometimes you can.
According to the article How to Negotiate a Salary Offer for a New Job by Dona DeZube on Monster.com, “When I was a corporate manager, I rescinded offers when people tried to negotiate salary without sufficient justification,” says Gwen Ward, a principal at Fish Out of Water, a professional-development company in Leesburg, Virginia. “This revealed another view of their analytic skills that I apparently missed in the interview process. But in other cases, I met their counteroffers if their request was well-thought-out and leveraged their previous accomplishments to the department or company goals.”
If the organization really values the extras you possess and wants those on board they will be willing to pay more. Within reason, of course. So, what is reasonable?
Do Your Homework
I will assume you have carefully researched the going job market salary for the position you seek. You did this, right? If not, how do you even know whether the dollar amount being offered is fair and reasonable? Suppose they offer $34,000 and you were thinking $65,000. In this situation, one – or perhaps both – of the parties obviously have very unrealistic expectations. You may have heard the expression “knowledge is power.” Having a solid knowledge of the going salary rate for similar positions in your industry in the desired geographic area may provide just the power you need.
In the article Dos and Don’ts for How to Negotiate a Salary on LiveCareer.com, Jacob Share says, “As you learn how to negotiate a salary, hear this loud and clear: you can only get what you’re worth if you know what you’re worth. With the number and variety of salary resources available online, you only need to put in a little effort to know your current market value and what recruiters are likely to offer.”
The point is that before throwing salary numbers around make sure you know what you’re talking about and how desirable you really are as a candidate. Then, just as in poker, you must try to “read” the other party. Can you get a sense of when they have reached their limit? However, you must know your own limits as well. At what point are you willing to turn down a job over a weak salary offer? You will negotiate with more confidence, think more clearly, and feel under less stress if you consider this matter in advance.
The Employer Has Limits Too
Negotiations are all fine and well, but keep in mind most employers have limits and restrictions placed on them. The person with whom you are negotiating may or may not have the authority to decide the final starting pay level. Most every position has an established pay range, low to high. Pay ranges are usually tiered in increments (often called steps) based on some factor, such as years on the job. The starting salary will be somewhere within that range.
The hiring manager may have some wiggle room within the low range of the pay scale, but it is not uncommon for Human Resources to have the final say. Not all managers are good negotiators, so HR may require justification if they want to offer you a higher starting salary. The hiring manager may even ask you for some time to discuss this with HR; that is normal.
HR departments have a duty to ensure salaries are reasonable compared to the job market, are handled equitably throughout the company, and are not in some way discriminatory. In heavily unionized organizations, bargaining contract restrictions regarding pay may exist which the employer must observe.
Flexibility of starting pay may also depend on whether you are applying for a promotional position with your current employer. HR departments often have a prescribed formula to use to determine the new pay level for someone transferring internally to a higher level position. In this case, there may be less room for negotiation.
Let’s Blame the Budget
Then there is the matter of the budget. Management develops and approves an annual salary budget which assigns dollar amounts to every position. Do not be surprised if the budgeted dollar amount is used as a negotiating tactic to avoid initially offering more money. The employer may try the excuse, “Oh, we only budgeted $46,000 for that position so I don’t see how we could offer the $48,000 you are asking.” In reality, if the organization has a large number of employees and the overall budget for salaries is sizable, there is almost always some wiggle room. Don’t fall for that trick, especially if the pay difference is small.
Do Salary Negotiations Always Work?
Every situation is different and things can go either way. I remember getting a job offer for a position I really wanted but the salary was just too low. Despite my efforts to negotiate, the employer would not budge from the initial offer. Not even a penny. So, I declined the job and walked away. What a disappointment! However, turning down that job was the best thing I ever did. I kept searching for a similar position and soon after found one with better pay, one which also opened the door to many more future opportunities.
Another time, I was offered a position and pushed back a little on the initial pay offer, citing my experience and credentials as justification. Much to my surprise, the employer responded with a new offer considerably higher than what I ever expected. One thing is for sure: if you merely accept the first salary offer, that’s all you’ll get.
Look at the Whole Compensation Package
Consider the compensation package as a whole and don’t get hung up on just the per-hour or per-year salary dollars. Benefits may play a significant role in the offer. For example, spending less out-of-pocket for healthcare coverage than you currently do can boost your take-home pay. Some companies offer incredibly attractive 401k or similar programs with generous matching funds. Employers typically define available benefit packages so these may not be negotiable. However, a great overall package may be a sound reason to accept a slightly lower per-hour salary amount than you had initially targeted.
What Do I Say?
So, perhaps you agree you are really worth more than the current offer. Although it may be uncomfortable, you’re even willing to try to negotiate a higher starting salary. But, you are likely not a professional negotiator (unless your job involves that skill). On the other hand, unlike you, the company representative negotiates salaries with applicants all the time. How do you pull this off?
First, separate yourself from the emotional aspects of the conversation. Think of this like any other business discussion, even though it is about you. You must remain objective, polite, and professional. Keep your voice cool and calm. Although each of you may push back a little – after all, that is how negotiations work – neither side should try to threaten or bully. If the professionalism breaks down, the negotiations are over and will fail.
Still wondering what to say and how? Check out the interesting article The Exact Words to Use When Negotiating Salary by Robin Madell on the U.S. News and World Report website. Her article offers a realistic scenario of how a sample dialogue might go between an applicant and hiring manager. I suggest you think about salary negotiations in advance and even rehearse what you might say. Doing so will help reduce stress and avoid being caught off guard.
Ready to go for the Big Bucks?
Let’s summarize some of the critical points regarding salary negotiations:
- Recognize that negotiation of starting pay is a normal part of the hiring process.
- Accept that you will likely need to engage in such negotiations.
- Discuss salary when you have some bargaining power, such as when an actual job offer is in the table.
- Know your actual desirability as a candidate.
- Do your homework and know the market pay rates in your field and geographic area.
- Receiving a job offer is exciting, but don’t let it cloud your judgement. Know your bottom dollar limit and at what point you are willing to walk away from a poor salary offer.
- Recognize that while hiring managers and employers have budget limits and authority levels, they also usually have some wiggle room. They may need time to get approval to offer higher pay.
- Keep the negotiations polite, professional, and objective at all times.
- When deciding on an acceptable starting salary, look at the compensation package as a whole.
- Think about what you will say in advance so you are less nervous and the words come easier.
- Remember that salary negotiations may not always be successful in terms of dollars, but if you are still happy with the final job offer, you win.
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