×

Got a Job Offer? Here’s How to Negotiate the Salary Higher

job offer
The following is a reprint of an article by Jeremy Anderberg that appears in the Art of Manliness web site.

So you put your best game on during the interview process and convinced a company to extend you a job offer. Huzzah! All that hard work has paid off and now you can relax and congratulate yourself, right? Only partially. First, you have to negotiate that offer so that you get exactly what you want and need in terms of salary and other benefits.

While companies almost always build some negotiation room into their benefits packages, only 1/3 of people actually negotiate them. This can be a costly mistake: if you could have successfully negotiated your starting salary $10,000 higher, not only would you have made $10k more your first year with the company, and every year after that, but your future raises, being proportional to your salary, would have all been higher too. By not negotiating your starting salary and benefits when you’re given a job offer — which requires simply opening your mouth for 30 seconds(!) — you can leave a ton of money on the table in the years and decades to come.

Given that, why don’t more people do it? Fear, namely. People feel too awkward (money talk always feels taboo), don’t know how to negotiate, haven’t much practiced it, etc. So the first thing to do is to bone up on your negotiating skills before you’re in the midst of a job hunt. It’s easier to ask for $100 off a TV at an electronics store than to ask for $10,000 more per year from a potential employer. Get some practice in with low-stakes haggling.

Once you’re a little more comfortable with negotiating in general, utilize the following job offer-specific tips — broken down into the different stages of the process — to get the best possible “deal” on your salary and benefits.

Interviewing/Receiving an Offer

The following tips should be heeded before and during the process of interviewing for a job and receiving an offer.

1. Do Your Homework

“If you walk into a salary negotiation without a number, you’re at the mercy of an experienced hiring manager.” —Ramit Sethi

Before you even walk into a job interview, you should know roughly what to expect in terms of salary and benefits, should you be offered the position. There are a number of resources that allow you to search based on position, industry, and geographic area (a very important, but oft neglected part of salary/benefits research): GlassDoor, PayScale, and LinkedIn are a few to get started with, and you may look for industry-specific resources as well. If you know people in the industry who you’re comfortable asking about what to expect, go for it.

Most companies aren’t posting salaries in their job listings, and as Ramit Sethi noted above, if you haven’t done your homework, you give the folks hiring total control over negotiations from the outset. Not a good move.

2. Be Non-Committal/Vague About Salary History and Expectations

In the past, even up to just a few years ago, it was common for hiring managers to ask a candidate about their salary history and expectations. It’s an awkward question, particularly for the job seeker. You might be embarrassed to share what you’ve previously been making if you think it will sound low. If you’re expecting a hefty bump over what you currently earn, you might be worried about answering with too high a number. The job seeker is really in a lose-lose situation, and is perhaps prone to fudge things a bit.

In the past couple years, though, the tide has turned, and some states and cities have started banning employers from asking about salary histories. The impetus behind this legislation has been to shrink the gender wage gap, but it really helps all job candidates. When that question is asked, the benefits package offered is almost always determined from what you’re currently making rather than from industry and market standards; if you’re making an unreasonably low salary now, that inequity will simply repeat itself.

Even in states and cities where the question of salary history is still legal, more and more companies are enacting internal policies to do away with it. This isn’t necessarily for the benefit of potential employees, of course. It’s simply that hiring managers now have access to better data than ever before about the types of salaries paid in a given industry and geographic area; they already have a ballpark idea of what you’ve previously been making, without having to inquire.

All that said, you might still be asked, “What’s your salary history?” or “What was your salary in your previous position?” Don’t you have to answer? Nope! In that case, stick with something vague: “I’ll be happy to discuss compensation details further once I’ve learned more about the position.” Or, “I’d rather not discuss previous compensation; I’m looking forward to the future and this company and position is perhaps part of that.” Might you miss out on an opportunity or two? It’s possible, but not likely. Not offering up a previous salary isn’t going to keep a company from hiring the person they want.

All of this advice goes equally well when asked about salary expectations: “What are you hoping to earn in this position?” “Do you have a salary range in mind?”

Again, keep it vague and give as much of a non-answer as you can: “I’ll consider any reasonable offer” or “I’d rather not answer that right now. If given an offer, I’ll consider the benefits package as a whole.” Whatever you do, don’t give a range; this is Negotiation Tactics 101: you never say the first number. If you do, you’ll most likely be offered the low end of the range rather than the top end.

3. Don’t Blindly Accept the First Offer

When you get an official offer in writing with your name on it, you might be giddy regardless of the details of the accompanying benefits package. Understandable! Getting a job offer, whether it’s your first or you’re moving into a new career, is really exciting.

But accepting the first offer given is lowballing yourself, plain and simple, and not only in the immediate future. Remember, you’re not only sacrificing money up front, but in the long-term as well, as raises are often calculated as a percentage of your previous salary. You could be losing out on hundreds of thousands of dollars over the course of a career simply for the mistake of accepting a low salary offer in your 20s. Ouch.

Further, most companies don’t actually expect candidates to accept the first offer, so what they present is lower than what is probably in the budget. In most cases, offers are made with wiggle room built in.

(Some companies, particularly very large ones, do have tight budgets for certain positions, leaving little to no flexibility. But, you should still ask — it doesn’t hurt to ask! — and they’ll usually be upfront that there’s a salary ceiling that they can’t go above.)

If you accept the first offer given, especially if you think it’s somewhat low or even mid-range, it’s possible you’ll come to feel resentful or that you aren’t appreciated enough, and that can ultimately poison your satisfaction in the job. But really, you accepted the offer! You only have yourself to blame for not asking for more from the get-go.

4. Take Some Time to Consider the Offer and Gauge the Value of the Salary/Benefits as a Whole

Rather than immediately saying yes, pump the brakes a bit and let the hiring manager or supervisor know that you appreciate the offer and would like a day or two to think things over. This is totally normal and expected. Even if it’s double what you were hoping for, take a couple days. To immediately and excitedly accept an offer shows the company that perhaps they offered you too much and that they could have gotten you with much less. You don’t want them thinking that.

Use this time to think about the benefits package as a whole. In order to know how close the offer is to what you want/need, and thus how to frame your counteroffer, you need to examine it from several angles.

First, you want to gauge the overall monetary value of the offer. A job with a lower salary but more benefits can actually be worth more overall than another offer with a higher salary but fewer benefits.

The monetary value of a benefits package includes not only the job’s starting salary, but its 401k matching plan and its raise/promotion/bonus structure as well. On the latter front, sometimes starting salaries are probationary/temporary in nature; for example, the first job I ever had started at $30,000/year, which wasn’t much to sniff at. But, turns out that starting pay was probationary for 6 months to make sure I stuck, at which point it was raised 50% to $45,000/year. Much better for a first gig. So it’s definitely worth knowing the entire salary structure, including bonus schedules and how raises are determined. Don’t forget to ask about what job-related costs (e.g., travel) your employer reimburses, too.

Insurance is another variable to factor in when computing the monetary value of the offer. Insurance plans offered through your employer cost money, but it usually comes out of your paycheck pre-tax, and many employers pay a portion of those premiums. They tend to be far better plans than what you could get on your own for the same amount of money. Do your homework on a company’s insurance benefits and learn how to read the fine print in order to calculate its real value.

In addition to assessing a job offer’s monetary value, you should also weigh its non-financial benefits. How many vacation days do you get? How flexible are the work hours? Can you work all or part of the time at home? Job offer negotiations aren’t just about salary; they’re also a chance to ask for more of these work/life balance benefits as well.

As you examine the entirety of the benefits package that’s offered, really think about what you value and want in life. Once you’ve got a handle on that, you’ll know exactly what to ask for in your counteroffer.

Counter-offering and Negotiating

Whether the salary and benefits package you’re offered is lower than you wanted, right around what you expected, or higher than you’d hoped, you should try to negotiate it higher. In the first case, it’s a necessity in order to get what you need/deserve; in the latter situations, you might as well try to nudge the needle higher.

Here’s how:

5. Ask for 10-25% More Than What Was Offered

When counteroffering, it’s hard to know exactly how much to ask for. If you were legitimately looking for a job that offered upwards of 30% more than what was offered, it’s quite possible this position isn’t for you.

Otherwise, in general, ask for more than what you actually want to make, so that the employer’s counteroffer — which should land somewhere between the two numbers — gets you right where you want to be.

Say you’re really hoping to make $60,000/year. You get offered $55,000. You want $5,000 more per year, so make a counteroffer of $10,000 more per year: $65,000 (just under 20% more). While not every company negotiates like this, your odds are decent of landing somewhere around $60,000.

Frankly, you might as well always ask for ~20% more, because you just never know. You’re not going to lose a job offer for asking for that amount. Worst case scenario, you’ll run into a situation where they actually can’t, for whatever reason, offer any more and they’ll ask if you can work for the amount originally offered. From there, the choice remains in your hands.

And remember, as noted above, you can not only negotiate the financial terms of a job offer, but its other benefits as well. While some benefits are pretty set in stone — namely health care — others are often flexible. Rather than asking for 20% more on your paycheck, ask for another week of time off or if you can work from home on Fridays.

6. Justify Your Ask

It can be tempting to bring up mortgages and childcare bills when asking for more money. “I have two young kids and daycare is crazy; any chance we can do more on salary?” Sure, it might inspire a touch of sympathy, but the reality is that everyone is dealing with that stuff. Every job candidate has bills to pay. That’s quite possibly the very reason they’re looking for a new job! Don’t play those cards.

Rather, justify your ask by citing market/industry standards, and most importantly, your value and what you bring to the table: “While I appreciate your offer, I believe my experience managing a team of 10 employees brings a level of unique value to your company that would be better reflected in a salary along the lines of __________.” Frankly, the hiring manager doesn’t care about your house or family; they care about what you’re adding to the company.

What Do You Do If the Potential Employer Doesn’t Accept Your Counteroffer?

If you present your counteroffer, but the company won’t budge and sticks with their original offer, you obviously have two choices: you can accept the offer anyway or decline. It’s possible that in walking away, the employer may suddenly find some money in the budget to meet your requests. But don’t count on them calling your bluff; only say you’re walking away if you’re fully prepared to do so.

Obviously, the decision to accept or decline will come down to individual factors: How desperate are you for the job? Do you have any other offers lined up? How close was their offer to what you wanted? How much do you want to work for this particular company? Might the outstanding culture of the company make up for a lower salary? Will taking this lower-paying job now ultimately set you up for greater success later?

Ultimately, negotiating, and then accepting or declining a job offer is all about finding exactly what’s right for you and where you’re at in life. Know what you want, don’t be afraid to ask for it, and heed this bit of advice from Ralph Waldo Emerson: “Nothing is beneath you, if it is in the direction of your life; nothing is great or desirable if it is off from that.”
/