The importance of salary negotiation
I have a good friend who recently graduated from MIT with a PhD in something I can’t even pronounce, let alone do. Even in this rocky economy, he has competing job offers. That’s a great position to be in, and I’m happy for him.
But when he told me about his options, I was surprised to hear him say he didn’t plan to negotiate his salary. One company offered him $10,000 less than another for a comparable position. “It’s okay,” he said. “That seems like Enough. Besides, it’s not a conversation I want to get into.”
I encouraged him to rethink his position.
My advice boiled down to one sentence: No matter how much money an employer offers you, it’s never Enough. Ask for more.
Money Isn’t Everything
In my own financial life, it’s a constant struggle to balance finding ways to live more frugally while trying to earn more money. I believe there is some amount that’s Enough; infinite money won’t make my life perfect. It’s not how much money I have, but how I manage that money. And it’s how I manage my expectations about what I can do with the money, and what it can do for me.
J.D. is fond of quoting Charles Dickens from David Copperfield:
Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Translated into modern financial language, that’s:
Annual income $40,000, annual expenditure $39,000, result happiness. Annual income $40,000, annual expenditure $41,000, result misery.
This is the heart of mind over money: understanding that your financial happiness rests on what you make of your dollars, not how many dollars you make.
That said, making more dollars doesn’t hurt. Having more money to work with expands your options for everything from where you live to how you travel to what charities and causes you can support.
More Is Generally Better
You wouldn’t leave a crisp $100 bill lying in a gutter, would you? But you’re walking away from a lot more than that if you don’t negotiate your salary properly when starting a new job.
Perhaps the first thing to understand is that your salary is negotiable. I’ve never yet walked away from a salary negotiation empty-handed. Often, more money really can be had just for asking. In other cases, the salary has turned out to be a fixed point, but by starting a conversation about it I’ve been able to pick up higher paying contracts with the same clients or negotiate for additional vacation time and other benefits.
Every salary negotiation is crucial, but your first one matters most of all. Your starting salary determines the number that all of your future raises will be based on. If you get a 3% raise each year, each of those raises will be larger if it’s based on a higher starting salary. Over even a few years, that can add up to a lot of money.
Your first salary is also the basis for your salary history. When you change jobs, that salary history becomes part of negotiations with your new employer. If you talk your first employer into a 5% during the initial negotiation, that increased salary will stay with you throughout your life.
Another reason to negotiate your first salary is that you’re probably starting more than just your career. The moment in your life when you take on your first Grown-Up Job often coincides with other major life changes: getting married, buying a home, having kids. These things are expensive, and a lot of the expenses are front-loaded. You want money to pay for a wedding, a down payment, and all of the expenses associated with setting up house and welcoming a family sooner rather than later. A higher salary gives you a jump start on those goals.
Doing Your Future Self a Favor
It’s awesome that I have a decent income and good savings habits now, but I’ll never get back the chance to earn a good living in my early years. Instead, I’m still repaying debts incurred in my 20s. Over my whole life, I’ll have less saved for retirement and pleasure because I’m paying interest on the start-up costs of a grown-up life, instead of having saved for them ahead of time. Having a higher salary from the get-go might have helped me better handle some of these expenses.
Asking for more money can be tough. In my friend’s case, he’s moving from being a grad student on a stipend to a highly-paid professional. His salary will increase by nearly an order of magnitude. It’s hard to ask for more when the numbers already seem big.
But remember: In a few years, those numbers won’t be so big. They’ll be your new normal. Whatever salary you accept today will become the money you expect to be earning. Hopefully, in a year or two that salary will still feel comfortable, but it won’t be a surprising amount of money. You’ll have gotten used to it. Your lifestyle and expectations will have grown to match your income level. And if you’re at all like most people, you’ll wish you had a little more.
So, do your Future Self a favor and ask for more money when you’re negotiating a new job offer — especially if it’s your first time doing it.
Reminder: Last year, J.D. wrote about how to negotiate your salary. He’s a big fan of the book Negotiating Your Salary: How to Make $1,000 a Minute by Jack Chapman, which you can download from the author’s site.
Become A Money Boss And Join 15,000 Others
Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)
There are 76 comments to "The importance of salary negotiation".
If I had two offers and one was higher than the other, I think I’d jump on the highest salary for sure! Either that or let the low-ball company know that I got a higher offer somewhere else. More than likely, they’ll match it.
I actually get this a lot. When I consider switching jobs, I either have zero offers OR I’m littered with 2 or 3. It’s just odd. Most of the time, I’ve chosen the job that shows the most promise for future growth in my career field. This choice has always shown me the most money as well.
Wow! I should have read about this 5 years ago when I had my first job. I was fooled to believe that what my employer gave me was enough. In some cases, it was. Looking back, I really should have negotiated even just a bit. I totally agree that my first salary affected the other job offers that followed, even after being with 5 companies already. Now that I realize I need more, that first salary just makes it harder to negotiate. Prospective employers rarely ask my first salary, but they are always interested on my current/previous ones. It’s like a ladder. That’s why I’m hopping from one big company to the next, so that my current salary increase significantly.
I am a PhD person as well and just recently secured my first “real” job in academia. I heard this from everyone and I did it. I negotiated a salary higher than anyone I know starting out and also negotiated quite a few other things (moving expenses, reductions in teaching load, higher start-up funds, etc.).
Remember, everything is negotiable!
@Sierra – How much negotiation did you do with JD before accepting this gig? 😉
J.D.’s note: Believe it or not, Sierra negotiated. Kind of caught me off guard.
And the one point that I really never understood/thought of before, was how much easier that is than cutting coupons and skipping out on getting a latte every so often – not just easier but much more profitable.
Even those of us on the lower ladder can negotiate.
In elementary teaching you can negotiate in the West. The East has unions (and much higher wages). If you have a Math, Science or SPED background- negotiate that salary with your interview committee.
I am working a part time job for the next six weeks. At the training I learned that people were being paid a range of $12- 22 an hour for the same responsibilities. I should have negotiated!
Right about now, aren’t most people just happy to get any job they can find?
I would love to see more posts from Sierra on things involving finances and children or finances and family matters.
My wife negotiated her income and is getting more than employees who have been at the job for 10 years.
All you have to do is ask! What’s the worst that could happen… They will say no, but most likely you will get something out of negotiating.
I heard this from my sister’s previous boss, Dan Kennedy (author, consultant), “You don’t get what you don’t ask for.”
I’ve never negotiated for jobs because I’m not a professional with a degree. I’m just an average person working average jobs, so I pretty much accept that their offer is the most they’re willing to pay. I have a hard time just selling myself in the interview. I don’t know if I’d ever have the nerve to ask for more money.
“When you change jobs, that salary history becomes part of negotiations with your new employer.”
I know this is the way it is, but why? What does my old salary have to do with my new one? This is no way advantages the job seeker. It’s a way for the employer to justify paying as little as possible. I’ve listed my salary history on applications in the past, but I’m considering never doing it again in the future.
Granted, for some highly skilled jobs (or those where you have competing offers) it sounds only sensible to negotiate your salary.
However, I suspect that for vast swathes of people it’s frankly not an option. Minimum wage jobs will always be just that and a wide range of white collar professional and civil service/government jobs will stick rigidly to payscales.
That said, if you’ve been offered the job you must be the current first choice of employee and I doubt a potential employer would write you off just for asking…
Hey, maybe I’ll try negotiating when I go back to the private sector (we librarians can be a timid bunch!)
It is a difficult balance right now because there are a lot more applicants than jobs. Employers will always try to low-ball those college graduates, and many graduates just do not know any better. I ended up getting $1600 more a year than they offered, which doesn’t seem like much. However, that was 20 years ago, and I guess it just felt good to feel like I ‘won’ a little bit.
Also, why does everyone always reference Dickens?
Not very suitable for the PF bloggers, but I always liked the comment from Oscar Wilde “Anyone who lives within their means suffers from a lack of imagination.”
Fast forward two years – it turns out my boss (who interviewed, and made the recommendation to hire me) doesn’t like when people negotiate their salary. In fact, it offends him, as he thinks his offers are fair, and when he has a choice does not hire negotiators. When he has to (because it’s a specialist position), he holds a grudge against them.
On the other hand, he gave me a 10% raise followed by a 6% raise (in a down economy, mind you), and now pays me about par for my industry.
TL;DR – don’t blindly negotiate because of the compounding effect – you are probably a commodity. Read your circumstances.
J.D.’s note: Interesting, Nate. You make a good point. I’ve always heard that you’re supposed to negotiate your salary *after* you’re hired, though. That’s not going to stop your particular boss from being resentful, of course…
I was hired with a company as a temp employee in summer ’09 and brought on full-time after about 6 months. They made an offer, I did research, wrote a well worded counter-offer letter and then was told that they didn’t negotiate with entry level employees (I was 1.5 years out of college). I asked about more vacation time, but got the same response.
I think I was at a disadvantage because I was already an employee of the company and they knew I didn’t have another offer. Also, even though I had been there, doing basically the same thing for a year, they didn’t give me the full annual bonus since I hadn’t been a full-time employee for at least 6 months when that time came around.
I was all ready to wheel and deal but was rather bummed to be shot down with no chance for wiggle room.
I wish I had enough confidence 5 years ago to follow this advice since I have been behind ever since. Big companies act like you are lucky to even be offered a position, so I didn’t even try to push my luck. Good luck to recent graduates on starting off with a bang!
a.) Not every salary is negotiable – e.g., law firms and other industries with large incoming “classes” of new hires from college or grad school tend to have very clear salary rules that they absolutely refuse to deviate from (or else everyone else would feel upset / would demand a pay raise).
b.) Being too pushy in asking for a higher salary can absolutely poison you career start. There is a thin line between reasonable and expected salary “banter” vs. hardball negotiation. Keep in mind that you have to work with these people in the future – its not like they are the schmucks buying your house that you will never see again. These are the same people who will decide on promotions, pay raises and your general success. So don’t do something that would ruin that relationship. Don’t make them feel like they made a mistake in offering you a job.
c.) Frankly, much more important than earning a few more measly bucks on day 1, is nailing down what the progression after that will be. Have them outline and commit to a career progression – what do you need to accomplish to get promoted, get the next big pay raise and by when would you be considered for that.
d.) Finally, if the offered salary is so much lower than what they should be offering you, consider telling them no thanks. Low balling bosses are not likely going to be fair to you down the line. So skip it.
I work in a fixed pay field so I don’t have first hand experience with negotiating salary, but I do have a lot of negotiation experience high dollar sales. One thing I’ve found is that willingness to ask and be forward about what you want exudes a desirable level of confidence. Even if they just say no (which is the worst that could happen), you still gave it a shot and that shows you’re willing to go after what you want. That’s good business in general and will be noticed if not acknowledged. Just remember to be confident and polite instead of sheepish or arrogant.
Great advice!
“civil service/government jobs will stick rigidly to payscales”
Been with a govt agency since 2006 and never had a raise. The only path to a “raise” is to transfer to a higher postion through self-promotion and start at the lowest pay rate for higher position.
$200,000 is definitely the magical income for MAXIMUM happiness. Try and negotiate to earn up to that point. After that point, your happiness plateaus and it doesn’t matter as much b/c of government persecution on taxes, and the masses who are upset.
After $200,000… just let the market dictate your salary and don’t get too bent out of shape.
The message I always received was: “Always try to negotiate your salary, but you only get to do it once.”
If you have a decent salary gap between positions, the solution is simple. Negotiate up the position you want least (regardless of salary) FIRST. Then, take that number to the position you want more, and they will typically meet or beat that salary. (At least relative to local norms.)
Ideally, the position you want most is already offering you the higher salary. Then, you just use the bidding war approach. Take the salary for the position you most want to the second choice place and ask for a higher salary offer. They should give you a number meeting or beating it. Then, take the new higher number to the first choice job offer. The result is that you make *2* salary negotiations worth more money, and you get the job you want.
The bidding war approach is comfortable because you don’t have to try any high pressure tactics. You’re just telling the employer that you have other offers, and want them to sweeten the pot if they want you. The employer has no way to know if they’re your first choice or not. This method got me $2500 more per year on my first job. In fact, I was only asking for $2000 more, and all it took was one phone call.
Great post Sierra, and best of luck to your friend as they choose their path. If you have two offers, I would definitely do what Derek (comment #1) mentioned, which was go back to the lower offer and see if they will match it. This way you are making a decision on quality of life, work balance and benefits over just salary.
While having the highest salary at the start of your career is a good move, I would counter by asking the question if you are in a field where you plan to be with the same company for a long period of time.
Using the Advertising vertical as an example, people jump from agency to agency on a regular basis. Because of this, you may want to consider taking a job that pays less if you know you can gain more exposure and experience quicker. In the end you will move up the ladder faster and see raises in the 10% vs 3% range.
In my own experience, I also had two job offers at the beginning of my career and turned down the offer that was $15,000 more for a position with a company that I knew I would have a chance to grow faster and work with closer with the executive team. While it forced me to live a very frugal life at the start, within 9 months I had gained the skills need to increase my salary with a new company by 5% more than the initial higher offer.
While this path can be rare, it should always be considered. A good company can do wonders for your career even if they can’t pay you as much as you hoped for.
I am going up for promotion in the next few weeks and I am considering asking for a little more than they offer me. I found out that when I was hired they offered me the base of the tier I was hired at (which i didn’t care about because at the time I was happy to have a job). My boss worked hard to get me more than a 3% merit increase this past year because she sees how much work I do above my responisbilites. Now that myself and a few colleagues are going up for promotion and I clearly do more work than the others I should get more. Is there more helpful hints for asking for more during a round of promotions?
The biggest problem with not bargaining for a higher salary is how much it affects your retirement. Remember, every dollar you make directly impacts how much you are saving for retirement, if you are using a percentage of salary to save. Even if you are maxing out your contributions annually, your company might have a match, and that is definitely percentage based.
I didn’t accept the initial offering from the employers. If they have decided that they want you there is always room for negotiation because you are number one in their ranking of the candidates. If not in the salary in vacation days etc. In my second job they where impressed by the negotiation. As someone said the company will have a limit of how much they can pay, so you also have to feel how far you can go. You can’t ask 50% more than the normal level for example.
Sierra said:
“My advice boiled down to one sentence: No matter how much money an employer offers you, it’s never Enough. Ask for more.”
I disagree. As everyone knows, there are no hard and fast rules that apply to every situation. I urge you to be careful with blanketed advice such as this. Take this example…
When moving up from an entry level job earning about $50k, the potential employer finally pressed me into naming the salary range that I was looking for. I had done my homework, so I name a range that was at the top of the market for the position I was interviewing for ($68k to $75k). They offered me $80k and I gladly accepted this 60% pay increase.
I would have looked greedy and foolish for asking for even more in this situation. If they make a fair and strong offer, why press for more? In this case, they exceeded my expectations (which I had revealed to them).
When I started my current job, I negotiated a $3k increase over what they were offering. It was a good move to do that because I’ve been with the company for 17 years. When I have my annual performance review, I continue to renegotiate my salary and increase. They prefer to give the increase in bonus rather than salary, but I’ve been pushing for an increase in base. About 10 years ago, I had another job offer and I gave it to my boss and asked him to counter it. He did!!
All of this talk about linking money with happiness, reminds me that the community with highest “happiness score”, based on some scientific survey, is found in Amish communities. They don’t make much money, but happiness is about a support system. sure you hear about the occasional renegades, that renounce the community, but overall that’s just not the norm. They don’t have the latest buggies or ipads or a consumerist culture, which definitely helps.
I am not certain if JD did the Dickens translation, or Sierra. But I believe the point was that Ebenezer Scrooge was so TIGHT with his money that he wouldn’t share it. As a result, he was miserable. So, the income vs. expense would be: $40,000 income – $1,000 spent = MISERY.
J.D.’s note: Sierra had the Dickens quote in her post, but I added the modern translation. What I didn’t do, however, was double-check the quote itself. We had it wrong. I fixed that. Sorry!
It is hard to talk about money with friends and family, let alone strangers during a job interview. But it is absolutely imperative. Thank you for reminding us all of the importance of being assertive in salary negotiation. Just remember, “you are your best and only advocate”!
I once had 2 job offers and I accepted the lower paying job due to some work benefits they offered. When I told the 1st company that I accepted another position they offered about 10k more to entice me to take the job.
I’m terrible at salary negotiation. I think most technical people are like that.
I graduated with an MS in Engineering. When I came out of college in 2009, I narrowed down my choices to two companies. The first was a very small (14 people) company that had HUGE room for improvement. Because of the small size, I would gain experience in all areas of running a business. The 2nd was a huge (60,000 worldwide) company where I’d be groomed. I didn’t really have to actually make a decision at the time because the large company had a hiring freeze and cancelled the position.
When I got my offer from the small company, it was well below my expectations. It was near the bottom of what would be expected for a BS, and I had an MS! I asked for a higher amount, and NO DICE. I got an email back saying that it was not possible and good luck. I responded (especially once I lost the other job opportunity) with a “fine, I’ll take it (in a much nicer way).” I started and my boss was “pleasantly surprised.” He thought it was going to be a lot worse since by negotiating, I seemed ungrateful. I guess this was because they had such a small company and didn’t have a lot of wiggle room.
Lo and behold, 2 months later, large company comes back and asks if I’m still interested. I felt terrible ditching the smaller company, but I couldn’t ignore the 50% pay increase! I didn’t negotiate with the large company because I had such a horrible experience the first time I tried it, plus the increase in pay was astounding.
Great post – because I was in this exact position 6 months ago. For my background – I am a technical person.
I negotiated my salary with the company that had given me the BEST job offer, and was still able to get more than a thousand extra per month.
Here’s the thing that many people don’t know – and I wasn’t aware of this UNTIL I started asking around: it’s really difficult for companies to find talented people to hire.
Companies will get over several 100 resumes for a few positions. They will interview a fraction of this. They will then extend an offer to less than 6 people. On average, less than half of those people will accept the offer.
So if you are someone who received an offer, and will accept that offer if they give you an extra 10K per year, then you have statistics on your side: they WILL give you more money, because the hiring process is just so difficult.
You know, people think they have to tell employers their old salary. There’s no rule. In fact, you may be violating your non-disclosure agreement by giving away your company’s compensation information, which, in many industries, is sensitive information. When I was still in the working world (as opposed to the self employed world), I generally avoided telling my past salary. “I’m under non-disclosure and I take that pretty seriously. I’m sure your company does too and I want you to know I will take your privacy just as seriously. Let’s focus on this position and the value I can bring to it.”
As for salary, a lot of people don’t realize that they can build a personal brand that can help them increase their earnings. Negotiation certainly helps and you should jump on it. But taking the time to build your expert status can help you present your “personal brand” to the employment world in a way that shows you’re high value. I have a report that I send out when people subscribe to my newsletter. It’s meant for people who want to go into self employment, but, honestly, it’s just as good if you’re trying to build up your professional/career brand.
But, yeah, always try to negotiate, if you can. Just sitting there silently for a moment or saying, “Hmmmm” can cause them to counter.
If you include the original salary negotiation and count it as a “raise” over my initial job offer, then over the course of time I’ve been with my employer (well, technically also a previous employer that was purchased by my current employer) the numbers work out like this:
Annual salary increases that I’ve gotten by asking: 71%.
Annual salary increases that I’ve been given without asking: 22%.
(based on my original job offer as 100%)
The “asked” category also includes a salary increase associated with a promotion that I asked for.
My company makes on average something in the neighborhood of three times my total annual compensation per year per employee. I’m not going to feel bad asking for more once in a while.
I’m also not one to settle for “being grateful you even have a job in this economy”, and I’m frankly kind of sick of hearing about it. Just because things have gotten harder doesn’t mean you should just stop trying.
I also have fairly specialized knowledge in a technical field, I don’t think I’d have these sorts of results if I unloaded trucks for a living or something.
Edit: replaced specific numbers with percentages, because I got uncomfortable with those being posted, in case someone from work sees this page.
I work in HR and I couldn’t agree more. While there are exceptions listed above (law firms, minimum wage jobs, etc.), I can tell you from experience that in my world (jobs that require an AA or a BA), those that don’t negotiate lose. We base our offers on past salary, and we routinely end up paying more than the initial offer if someone asks. Not always, but often. AND, once you’re hired, merit raises are small.
It’s not fair, but there it is.
I also agree with #17 that you don’t want to play hardball – just one round of negotiating, please. I’ve had folks go back and forth and it did start out the employment relationship out on the wrong foot.
For most of us, doing this is hard. Try practicing a role play with a friend (or even your dog!). Saying the words out loud beforehand helps. 🙂
Merit raises are barely going to keep up with inflation, and in a recession as we’ve all seen, they are stopped entirely. So negotiating a bump up from your past salary when you change jobs or get a promotion is key.
My last 3 jobs (2 for one company, 1 for the company I am in now) have been new positions, so I had to do negotiating as the salary expectations were almost completely based on my prior jobs rather than the current job since it had no frame of reference.
It was actually JD’s posting last year that made me go for the salary I wanted (Thanks for that JD!). They offered what I had put down my expectations were, and I had the gall to ask for 2.5% more, and they gave it to me. And a signing bonus. I didn’t do this until I was sure I was the one they were hiring though, I think it’s pretty risky to do if you haven’t been made the offer yet and/or there are other candidates in the running.
Before you negotiate your salary, you should be aware of the average salary for your desired position, where you want to live, as reported to the US Bureau of Labor Statistics. If you can, you should also look up the cost of living. (Glassdoor is also a decent, if biased resource.)
I have heard stories of people moving from the coast, leaving jobs paying $100,000 annually, and trying to negotiate a 10% salary raise in the midwest where the average income was $60,000. So yes, obviously, it can backfire.
Other than for the Bureau, does anyone have any links to specific statistics on salaries and the cost of benefits? I suspect many of us would feel much more comfortable asking for more money if we knew we were underpaid by exactly X amount.
I negotiated my salary at my first ‘real’ job as an articling accountant.
Not only salary, but also study leave, and how much and WHEN the company was going to pay for all the courses I would be required to take over the next 5 years to become a Chartered Accountant (in Canada, but I understand the CPA process is similar).
My starting salary ended up being $5400 higher than the first offer, and my study leave a day longer per course, and the courses themselves were paid for up front and not ‘on successful completion’. For a student those things were all almost miracles!
I did have three offers, but it was still nerve racking to call my preferred choice and say “I’d love to come and work for you, but you need to match what this other firm is offering”. But I did it! And they didn’t just match it, they actually beat it by about $2000/year!
And all future raises were based on that increased salary… until I quit to start my own practice. But we are still on good terms, and I have lunch with my old bosses a couple of times a year 🙂 The negotiation was never held against me, I think it actually impressed them!
“Your lifestyle and expectations will have grown to match your income level.”
Why does your lifestyle have to grow to match your income level? If your goal is to save, then the better plan is to try to LIMIT how your lifestyle grows so that you can save more.
I never get why people seem to think that they HAVE to spend more when they make more. And yet, the people who pay off their student loans fast are always the ones who say they DIDN’T spend more.
@akajb:
Because it turns out that being kept up till 2:00AM every night by your neighbors’ parties in your college apartment sucks. So does using milk crates for furniture. So does living with roommates. So do a lot of things about the way we live in college.
Sure, you *could* keep doing that, but why would you want to if you had the means not to?
There are really only a few things people really strive towards — companionship, family, a sense of meaning, comfort. The easiest one to get when you’ve got extra money is comfort.
@Tyler
Sure, find a nicer apartment, get some decent furniture and stop living on mac and cheese. But, that doesn’t mean you have to choose the nicer apartment, new furniture, food budget, etc so that it maxes out your new salary.
Then again, I’m a lucky grad student. I’m not broke. I have no debt. I live by myself in a fairly nice place (no loud crazy neighbors). I prefer to spend my money on good fresh food vs alcohol (huge savings there :P). I don’t live off my parents or anyone else – just the stipend I make as a PhD Student. I could easily live like this and make a lot more. The year I worked between being an undergrad and going back to Grad School, I saved every other paycheck because I could, not because I needed to.
I guess, I really just feel like there is a middle ground that most ignore. Improve your circumstances as life lets you, but don’t go overboard such that the amount that 2 years ago seemed like Enough or Huge now seems so little that you feel as poor as when you were a student.
At minimum, I’d tell the company offering less you have another offer for $10k higher, perhaps they will match or go higher, or provide some other benefit – flex time, vacation time, etc. It doesn’t have to be a lose-lose negotiation, remember if the employer didn’t want you to work there, they probably would have fired you by now.
I used payscale.com in the past as a starting point to what I thought I should be paid.
When I was heavily recruited for a position about 15 years ago, it was for a non-profit position. I figured that the salary was not negotiable because they operated within a pretty tight budget. I kick myself for not taking the opportunity to be more specific with my needs. Not only did I take a pay CUT, I was working more hours. Even non-profits have some wiggle room, vacation or comp time, training, something, anything, if you know what you need. I know now that I could have done better and will do better the next time.
I probably should have negotiated when I started my job but I didn’t. I was honestly thrilled to get the job and the offer was more than I had expected at the time so I just said yes.
Generally I think that negotiating on wages shouldn’t hurt. If employers get upset about it then that is their problem.
Of course some jobs negotiating is not going to work at all. THey’ll have fixed wages or just not want to budge.
Signs point to that I’m overpaid. I never followed any negotiating tips. Instead of always negotiating, I’d say, never settle.
1. You are my candidate of choice. I want you as much as you want my position.
2. I only have so much money in my budget to pay you.
3. I start a little lower than where I will go knowing you may want to negotiate.
4. I have a maximum I will go to before I will withdraw an offer and turn to my second choice candidate. I will share that number with you if you think you want or need more than what my maximum offer would be.
So, my advice is always ask for more, but don’t be greedy!
This is nice, but I wish there was more stuff for the self-employed among us. Not just as “things to do for extra money”, but how to make more money when there’s no boss. JD and staff writers fit that category anyway, right?
@Wayne Mates
I think that just may be the most concise and best advice on this whole topic!
#47, Wayne hits the nail right on the head!! As an HR professional, I agree with all his points!
As a hiring manager in a Fortune 500 company, I’d like to comment on some of the items brought up in the article and in some of the follow-up comments.
Some things like vacation days/leave are really not items that can be negotiated. Most of the larger companies have standard amount of days and benefits new hires are authorized. So to make a blanket statement about everything is negotiable, it’s just not a true statement. It really depends on what company you’re seeking employment from.
Here’s a big tip. When you apply for a position on a company’s web site and create a “profile” on their web site, depending on the HR system they have, the hiring manager may be able to see all the other positions you’ve applied for currently and even ones in the past. The system we use shows me how many positions a person applied for, interviews they’ve had, rejections, etc. Bottomline, if a person is applying for a whole slew of positions (especially different ones), it makes me a little skeptical of the skills they have on their resume and more importantly tells me they are definitely desperate for any time of job/salary.
Great quote: “your financial happiness rests on what you make of your dollars, not how many dollars you make”
I like that one.
In terms of negotiating, ask for more in most cases. It’s very often a good idea not to just take the first offer provided. If you counter, and still can’t get more money, maybe they’ll make a concession in another area (vacation time, for example). It generally doesn’t hurt to play the game and ask.
Also keep in mind that in some cases, your future salary maybe based on where you start. For example, your raise will often be applied as a percentage of your base salary. Your negotiations for a new job may well be oriented around change from your current salary. These are reasons why it’s important to actively try to keep your head in the game and in most cases ask for a higher figure.
#28 Steve, the quote is from “David Copperfield,” as Sierra mentioned, not “A Christmas Carol.” The speaker, Mr. Micawber, is the opposite of Ebeneezer Scrooge: a friendly and affectionate man of big plans, words, and debts.
Oh, yeah. Salary negotion is particularly important if one is entering academia – which I assume is the case with your friend.
Faculty pay is traditionally dependent on fickle government funding; he may well be stuck in a salary strata for years that compares unfavorably with the private sector.
In addition, cost-of-living raises can become non-existent (I haven’t had one in 6 years – it’s starting to hurt). He needs to get what he’s worth up front. There won’t be another chance.
There are articles posted about this very topic at the chronicle of higher education: http://chronicle.com/section/Home/5.
Great advice you gave!
So true. With my first job, which I got during the “Great Recession” I was just so happy to have a job offer that I did not ask for much of anything more. I ended up very unhappy with the job, mostly because I did not figure out how certain events would be handled (mileage, benefits, etc). Moreover, most employers want to know that you are at least confident enough to ask for a little more. They are probably low-balling you to take that into consideration anyway.
I think its easy to look back and wish you’d done it differently, I know that I was just so happy to be chosen for a job in the field that I had studied in and it seemed on par with what my friends were getting.
Fast forward 6 years and 2 jobs and I am now earning 20k more than that first job. The problem is (in South Australia) is that to get any ‘real’ pay increases you have to shift jobs and that’s the only time you ever get to negotiate, so go your hardest and get the most out of them!
Funny that this post came to my attention today (via Consumerist.com). I am actually expecting an offer either Tuesday or Wednesday of this week for a promotion within my organization. In my current role I am underpaid compared to both my co-workers and to what I could make in the private sector. I didn’t attempt to negotiate my salary at all when I took my current position since I felt it was good enough because I didn’t have any experience in my field.
Now fast forward 4 years and I am the top internal candidate for a job that has significantly more responsibility but I probably won’t get as large of a raise as I would like since I didn’t attempt to negotiate the first time around. On my application for my new job, I requested a 27% raise, but I figure I will probably be lucky to get a 20% raise.
I didn’t negotiate for job #1, because it was a large company, and the offer sounded like a lot of money for an English major.
I did negotiate my offer with job #2 at a startup, because I already had a position with good benefits, so I had some solid data to counter with. I ended up with a bit more salary and a signing bonus.
With job #3 (a few months ago), I was fortunate to be able to “play dumb” and simply say what I had been getting working in California, rather than trying to guess a good pay range for a new city with typically lower pay. I ended up with a bit more money (I think) than they were planning to offer, and a additional week’s vacation. Since my current issues are more about time than money, vacation and flexible work hours and locations are more where I negotiate.
When I got my first job out of college, in fall 2008 (shortly after the financial markets started to heeave), I started out part time. I worked for 2 companies, one paying around $19/hr in a field I wasn’t really interested in, and one paying about 20% less in the field I wanted to focus on(engineering).
When my boss at the engineering company started to ask if I could come on full time, I was honest. I told him that I wanted to, but the other place paid better. Eventually I said that if he could match what I was making at the other place, I would give my 2 weeks notice to the other job that afternoon. He accepted, so I quit the other job ($8k/yr raise plus great benefits for about a 2 minute conversation).
Later, my boss started asking me when I would get a car (so I could go to meetings and site visits etc, since previously I just biked to work). I was honest once again – I told him that I couldn’t afford a car with all of the student loans I had to pay. When he kept asking, I told him I needed a raise to afford it. He agreed, gave me a raise, and I bought a car.
There were a few other small raises over the past two years, mainly cost of living increases and a small bump when we merged with a big company, but those were based off of the negotiated increases.
Just by asking, and being honest, I managed to get an extra $20,000/yr (new salary ~ 170% of my starting salary). Negotiating (stalling?) works!
@ #57 Aaron B:
“In my current role I am underpaid compared to both my co-workers…”
How did you find that out?
@Vanessa
Our salaries are all public information since I work at a publicly funded college.
My first job offered me $19 / hour, so I asked for $2 more, hoping to get $1. I got $2. That is $4k more per year in one minute. If he would have said “no”, I still would have taken the job. But yes, it is nerve racking.
Does anyone have any ideas about how negotiable positions with pay grades are? I am a postdoc in the sciences and have witnessed three situations:
1) postdoc at a national lab where ‘specialty’ (e.g. engineering vs. science background) dictates pay with the salary incremented up by years of experience.
2) postdoc at a private university that happens to use the NIH formula for salaries based on experience. I.e. you put in your years since Ph.D and out pops a salary that then gets adjusted once a year.
3) Postdoctoral fellowships that automatically dictate the stipend amount based on experience or available money.
In these cases, I perhaps wrongly assumed that salaries were not negotiable. I later found out that someone in case #2 had negotiated for an additional ‘bonus’ added on of about $1000/year to cover transit expenses.
So, is there really a lot of freedom in #1 and #2 to negotiate for how much one will get paid even when it seems as if there is a prescription? Does anyone have any suggestions for negotiation in these cases?
Negotiating salaries or putting in a counter-offer are not just for top or specialized positions. I’m a receptionist and I negotiated my salary.
Once I got on board with the company I saw on our HR management website that the first offer I got was at the very very bottom of the salary tier for admins. I managed to negotiate a salary somewhere in the middle. All companies have a budget, they’ll always kind of low ball you.
Always negotiate or counter-offer at least once when you are offered a position.
I know of an ex-friend I’m not particularly fond of who negotiated this way, “Give me a raise or I quit! Because I’m worth it and I work hard!” She was unemployed for a few months after that. Don’t do that.
#32 – Chris P wrote something I can agree with. If you can’t get what you want, you can always settle and jump ship when something better comes along (to paraphrase).
I was laid off from my position, interviewed and was offered a position for ~20% less (15-20k). I told the manager that was too far from what the going rate for someone with my skills and backed it up with hard data (from various websites). I was able to obtain $2k and review in 6 months. I accepted the job with expectations of getting decent bump in salary at review time (6-8% increase). It did work out in my favor. I got the bump. But in the annual review they froze salarys for the next year. Then from there we only had 3% raises. Eventually I got a promotion and I’m back up to where I was 3 years ago. However, that is 3 years of less salary. The one thing I will warn of is if the company low balls salary they are probably tight on everything else (needed equipment, upgrades, etc.). So, be wary of going to a company that won’t budge–unless you are willing to keep your options open and jump ship. Because eventually another opportunity will come along paying that 20% or more you deserve. Then you’ll need to decided what to do.
I definitely plan on negotiating my salary when the next position comes up
Well I do agree that you have to negotiate. I have a friend who recently graduated with a bachelor’s in accounting and got hired for $20k, with his degree according to payscale and other salary sites he should be hired around $45,00k.
Its too bad he didn’t negotiate. There are times when negotiating is appropriate and when it isn’t. I’d like to add that not everyone wants a house with a 30 year mortgage, yes if you want that then be sure to go for the high paying job.
But don’t work at a high paying job if you don’t want those things and you don’t care for those types of careers. Not everyone wants kids and not everyone wants to get married either.
This article assumes a lot, it assumes that most people want to do similar things. I also think that no matter what you make 10k or 100k you need to save, invest, be savvy with your spending (frugal).
I mean in the media you’re hearing stories of how people with 100k incomes now have to struggle just like people from working class incomes. Why is that?
Because they had debt, and never saved. I read an article on Yahoo a few weeks ago about the baby boomer retirement crisis, they interviewed this guy in his 50s who is just starting to save. He had never been on a budget before in his life.
That was pretty shocking.
I do think going to college can help, right now I’m earning my associate in accounting, then I want to go for the bachelor’s and then maybe the masters in accounting. Not sure about the masters in accounting just yet, I’m still debating if I want to become a CPA.
People have that marketable degrees such as accounting, nursing, programming (computer science), have a much better say in the job market than someone who was an English major. Yes there is the odd liberal arts major who can make it in the real world with their English degree but most people can’t.
When an HR person knows you don’t have any college degree, not even a 2 year degree they know they can take advantage of you by paying you less, knowing that you have to take whatever you’re offered. I hate this about my life which is why I’m in college.
I would also like to know if anyone has negotiated for a pay-scaled job. I work for a fully unionized university and there seems to be no wiggle room—everything from benefits to pay is standardized.
@eva – I also work in a university (although not unionized) where there are pay scales – when I was promoted they put me almost at the dead bottom of the next scale (which was barely above my salary at the top of the previous scale). I did ask for more and got it – which was surprising to me because I am actually 100% funded by grants (I had my bosses approval but needed HR’s) it was probably helpful that my boss had my back. i’m also not faculty, just administrative/research staff. each situation is completely unique – but as people have said, if they want you – they will negotiate within reason (even if they meet in the middle)
I just had in interview on Friday and I believe/hope they will offer me the job on Monday. During the interview, I was told the amount what I will be offered and that it was the most they can give me for the position. The amount was the exact amount that was my salary goal.
If I get the offer, what move do I make? Do I ask for more even though I’ve been told it’s the most they can offer me and it’s already what I wanted to make?
The job interview came up suddenly and I have not had time to properly research salary negotiation.
You gave your friend some good advice. My wife is an engineer who grew up in Thailand and it goes against her culture to negotiate a raise or ask for more money. I challenged her to try. What’s the worse that could happen? She got her raise and now she negotiates everything!
Look at it from the business owner’s perspective. They:
–>want to reduce costs and increase revenue;
–>know that employees are the biggest expense to their company;
–>want to keep productive employees who add value to the company.
So, no matter what the economy is like, when asking for a raise, you need to ALWAYS demonstrate your value to the company, and talk directly about that value.
Like the article said, don’t worry about what others make; likewise, personal reasons for wanting more money are irrelevant. The only thing to focus on is the value you provide to the company.
Maybe you’ve reduced costs, or increased revenue, or lowered employee turnover, or expanded a product line, or expanded sales into new markets. Whatever you’ve done, talk about it specifically. Think like a business owner. Ask yourself: if you were the owner, why should you pay this person (yourself) more?
Now that you’ve laid out the reasons WHY you should be paid more, you can talk about HOW MUCH you think you should be paid.
Some people think that whoever gives out the first negotiating number loses; I disagree. Instead, YOU should be the one to set the salary anchor (the “anchor” is the number around which the negotiation takes place), and make that number significantly more than your currently salary, but justified by your value to the company. Maybe a 40% increase is warranted, so ask for 50% (since it’ll likely be negotiated down). Whatever the number, say it matter-of-factly, and don’t blink. You’ve laid out your case and you know your value. Don’t be emotional. Practice your meeting with a friend or spouse.
Back when I had a corporate job, I did this, and boosted my salary about 25%, when the typical salary increases at the company were 2%-4%.
People are often reluctant to ask for more–especially if it’s a big jump in salary. That reluctance boils down to not valuing yourself; it’s fairly common, creeps into other situations and life choices, and can be extremely limiting. I talk more about it and how to overcome it on my blog.
Greg Miliates
http://www.StartMyConsultingBusiness.com
This situation may not apply to your article, but here’s a question…
Say you’ve applied for several jobs over the course of a few months, and you finally get an offer. Isn’t that kind of a tough position from which to negotiate? This company didn’t track you down and beg you to work for them. You applied and met their requirements. What if they’re just as satisfied to take the next best candidate who will take less money? Isn’t that risky? If they say no to a higher wage, do you still accept the job?
Al,
Yes it is risky which is why you need to determine ahead of time what you think you’re worth (and if you’re going to be under-employed, what the job should be worth). In this economy, some unethical employers will lowball candidates knowing that there’s always someone out there desparate enough to take the job.
For example, if you’re an office manager and you typically make between 50k to 60k per year, you should think very hard about positions that offer only 30k for what’s essentially the same work.
If you counter-offer and they say no, you could always frame it in the context of the job duties and responsibilities. It’s possible that while they’d like you to have a broad range of skills, they only need you for a small subset and will be willing to give you a raise when those extraneous skills are needed.
Again, you want to work for someone who will at least openly and fairly discuss what your options are. An employer who refuses to discuss the compensation package is someone you’re likely to leave before the year is out and in my personal opinion, having multiple jobs each only lasting six months or less, is a black mark.
I think this advice should be taken with a grain of salt in this economy. I tried this last year at my law firm. I had my offer revoked for their perceived ungratefulness and I spent the next 7 months looking for work because of this.
Proceed with caution.
Why should your first Salary dictate what you earn for the rest of your life? Your new job should be based on what the company is offering and what you bring to the company. Past salary is irrelevant.
My first job was overpaid as I was still in university and an intern (but they treated me like a full employee and paid me accordingly.) I kept that job after Uni and subsequently didn’t increase the value that much with minor pay rises (was grateful for the experience.). Therefore after a few years people that got ‘graduate’ jobs earned more than me.
Then when I went for my second job, I had to negotiate accordingly, the amount I pitched for was some 55% higher than my current earnings, but I explained as to my reasoning and why Id benefit the company. Got the job and now Im in a position to move on again similarly with a substantial increase as Im quite underpaid for the field that I am in and experiences I bring.
Offers I am listening to are again some 30% higher than current earnings. Its down to what you can bring to the table and give to the company. They will try and use past salary as an excuse, but its down to you to push back with why its irrelevant.