Negotiating Your Job Offer
By Jim Healy, Artesient

Clearly, finding the right opportunity and convincing your future employer that you are the right fit, is the most important part of your job search.  But is the search over once you've accomplished that?  Not by a long shot.  One of your most important tasks remains:  agreeing to the terms under which you will fill your new position.

Not all positions are necessarily fair game for extensive negotiation.  However, depending on the job market, your level of talent, and the hiring authority's level of interest, nearly every offer is open to some negotiation.  At the staff or middle management level, your room for negotiation is slight and limited to base salary and perhaps a sign-on bonus.  At senior executive levels, however, nearly every aspect of an offer is open to discussion and, depending on your level, negotiations may be expected.   A word of warning however: every employer reacts to candidate-generated negotiations differently.  Most companies extend generous offers to the most talented candidates.  When a candidate responds less than 100% enthusiastically, some hiring executives react emotionally, not unlike a spurned suitor.

While most of the negotiations will take place after you have a firm offer, your actions during each phase of the job search will impact the offer you are presented, as well as the success of any negotiations you may choose to pursue after the offer is presented.

Initial Contact

It is always in your best interests to be honest and candid throughout your job search.  This starts from the very first contact you have with an employer or recruiter.  After briefly describing the opportunity and getting a feel for your interest, the recruiter will almost always ask about your current compensation package.  You may be tempted to inflate your current pay in an effort to get more from the prospective employer.  Don't.  Someone will eventually check with your current employer to confirm the information you've provided.  Neither you nor your new employer want to see your offer withdrawn because you lied about your current salary - no matter how "white" your lie may seem.  Complications may also arise if you lowball your current pay in an effort to meet what you believe are the new company's expectations.  Any employer is bound to have qualms if they find out they are offering someone less than they have been earning.   Even if you are willing to earn less in a new opportunity, it's always best to get that out in the open so that you can address it during the interview process.  

During Interviews

If the subject of your salary expectations comes up during interviews, it's always best to gracefully sidestep it with a comment such as "I'm sure we can reach an agreement once we've both determined if I'm the best person to fill this position."  Again, be candid if asked about your current comp package, but do your best to delay discussion of your salary expectations until you are in a position of knowing whether they want you for the job.

Initial Offer

Most firms will give an initial offer that covers salary, bonus, vacation and signing bonus, if any.  This typically is extended verbally and then in writing.  At this point, things get interesting.  The next step is up to you, and you need to be prepared on at least three points:

  • Decide what you're worth
  • Know what's important to you
  • Understand your position in the negotiations

Decide What You're Worth

In order to judge the adequacy (or generosity) of your offer, you need to know what you are worth in the market.  In most cases, your current salary package will give you a reasonable baseline.  Unless you are significantly changing career paths or industries, it's always reasonable to assume that you are worth at least as much as you are now being paid.  But what if you are making a big change - one that puts you in a position or industry that is substantially different - or it's been a long time since you tested the job market?  As we'll see below, it's also important to know the pay components that are commonly offered to employees in your target position.

You can tap a number of different sources for this information:

  • Peers and acquaintances
  • Recruitment sites
  • Industry surveys
  • Recruitment firms

Your industry peers, and acquaintances within your network, can give you advice about current pay trends.  Since it's a bit awkward to ask someone directly about their own pay package, it's probably best to focus on people that are in positions above or parallel to the one you seek.  

Online job boards will sometimes have information related to positions they have available.  You should triangulate this information with what you learn from peers and industry surveys.  

Industry surveys can be useful, but you run a few risks in using this information.  One, it takes most publications six months or longer from the time they conduct their survey until they publish it.  A lot can change in six months.  Two, few of these published surveys are tailored to geographic areas.  Your offer should differ significantly between New York City and Omaha.  One resource we can recommend is www.salary.com.  This site updates its averages in real time and sorts results by metropolitan area.  Besides providing  detailed analysis of staff and middle management positions, salary.com provides information regarding specific executive compensation packages at many publicly held companies.

Finally, one of your best sources for information on salary trends is a recruiting firm like GMR.  We often provide information on current demand and salary packages to candidates - even when we are not the firm placing the candidate.  Recruiters are in the best position to know what is happening in the market right now and most are happy to share that information in an effort to both help recruits and to build good will.

What's Important to You

As you research what you're worth, you should also know, or decide, what elements of compensation you find most important.  Are you in a position to have a significant portion of your compensation dependent on personal or company performance, or do you have obligations that stress the importance of a steady salary?  Are signing bonuses common in the employer's industry?  What about car allowances, stock options, relocation costs, and the rest of the components of your potential package?  Separating your "must haves" from your "nice to haves" is the most important information you take into negotiations.  

Understand Your Position in the Negotiations

How the negotiations will proceed depends a lot on the level of your position, and whether you are dealing directly with the employer or with a retained search firm.  Most retained search firms, including GMR, will act as an intermediary between the employer and candidate.  For the most part, this works to the candidate's advantage.  It allows candidates to explore the various components of the pay package with the search firm acting as a buffer, protecting the candidate from looking too demanding to the employer.  Should a candidate ask for something that's out of line, the recruiter - who is usually well versed in the employer's payment policies - can bring them down to earth without needlessly alarming the employer.   

If you are negotiating with the employer's human resources representative, you must be more circumspect.   Even more difficult is the situation where you as a candidate are negotiating your pay package with the person who is going to be your direct supervisor.  In each of these cases, you need to be mindful not to become perceived as "high maintenance" by making too many exploratory demands.

Remember: you walk a fine line whenever you ask companies to revisit a compensation package to which they have already given serious consideration before presenting it to you.  Keep your negotiations reasonable.  Only ask for things that truly matter.  And realize that when you choose to negotiate, anything can happen, including the retraction of the offer itself.

The Main Event

Negotiations will begin in earnest once you have your offer.  In many cases, your offer will only spell out salary, bonuses, vacation allotment, and a high level overview of benefits.  Be sure to ask for the details on everything else that is important to you:  401K matching, insurance, retirement, perks, etc.  This information is usually addressed by HR, rather than a hiring manager or your recruiter.  Once you have the complete picture, start covering your requirements.  Some brief rules to follow:

  • Begin with your most important requirements
  • Backup your requests with justification
  • Recognize your limitations
  • Don't argue - move on
  • Quit while you're ahead

Begin with your most important requirements

You should first address the requirements that are most important to you.  You want to get these addressed early - before you run the risk of asking for too much.  

Backup your requests with justification

Before asking your prospective employer to sweeten an offer, make sure you have a good reason for making that request.  The best reason is almost always "That's what I'm getting now."  When you can honestly say this, it takes the greed factor out of the equation.  It is, after all, reasonable to expect that your new employer will do its best to make you whole when you come to work for them.  If you are making a big jump, however, you may have to fall back on your research showing that your request is reasonable given prevailing practices throughout your target industry.  

Know your limitations

Some of your requirements may not be open to negotiation.  Your prospective employer will likely have no flexibility in areas such as 401K matching, vesting periods, and insurance options.  You also need to recognize that some items, such as stock grants and options, require board approval, which will not occur until after you have started work.  This means that none of the people with whom you are likely negotiating will have the authority to grant your request.  

Don't argue - move on

If your list of requirements is a long one, we suggest you pare it down before you even begin negotiating.  Once the discussions begin, don't dwell on any single point for very long.  If the company has some flexibility, you can try to come back to it.  If not, don't belabor the point.

Quit while you're ahead

Getting the right package is important.  Losing the offer is a disaster.  Unless your requirements are deal breakers, they aren't worth arguing about.  Try to read your new employer as well.  You need to be able to tell if your list of requirements is becoming exasperating.  If so, stop immediately.  If you've covered your most important points first, anything still open should be relatively minor.

Who Speaks for You?

In almost every case, you will be the one representing you.  Lawyers are generally not needed unless you are a C-level candidate, or there are unusual contract stipulations.  Even then, you should be seeking their advice behind the scenes and doing your own representation.  Lawyers do represent the candidate in some industries (e.g. entertainment), but only at the very highest levels.  In most cases, the employer wants to evaluate your negotiating skills, especially when those skills will be called upon in your new position.

As mentioned above, the negotiations will be much more low-key if a recruiter acts as middleman.  The recruiter can ease tensions by telling the candidate when their requests are unreasonable and telling the employer when they aren't.  But can you trust the recruiter?  They are, after all, paid by the employer.  In a word:  yes.  Every search firm wants to fill the position.  Every reputable search firm wants to make sure that all parties are happy.  It doesn't do the recruiter any good for either the employer or candidate to experience buyer's remorse soon after a placement.  Therefore, it is in the search firm's best interests to make sure that you, the candidate, get a fair and equitable salary package.

Dealing with Multiple Options and Counteroffers

If you are fortunate to have multiple offers or more than one employer with whom you are discussing opportunities, do not make the mistake of attempting to play them off each other.  By all means, be candid that you are looking at multiple opportunities, but do not give the impression you expect them to bid against each other.

What's the best way to stall your decision if you have an offer from one employer but need time for another opportunity to play out?  Be candid.  Tell them you are excited about the opportunity but still have one or two other options you need to evaluate.  Ask them to give you time to make a final decision and be prepared to make that decision within two weeks.  This two-week period is significant.  First, remember that the employer is looking to fill the position quickly.  If you try to string them out for more than two weeks, they are likely to decide that you really aren't interested and will start negotiating with their second choice.  Second, by only asking for two weeks to decide, you make it less likely that the employer will retract its offer and fill the position with its 2nd choice candidate.  Finally, you owe it to the employer to give them a decision by the date you requested.  This may require that you respectfully decline the offer, but trying to stretch it any further is going to adversely reflect your relationship, even if you eventually accept.

Once your current employer finds out you are leaving, they may tempt you to stay by presenting a counteroffer.  Do not take it.  It is a well documented fact that 85% of all job seekers who accept counteroffers end up losing their jobs within 6 months.  Most employers will do this solely to ensure that you leave the company under their terms, not yours.  They will generally keep you on long enough to ensure that they can cover your position and then ease you out. You have committed the sin of disloyalty, after all, and can no longer be trusted.

Wrapping Up the Deal

Get all the details of your agreement in writing.  This is an important step, even if you don't have an employment contract.  Carefully review the agreement for accuracy and completeness.  It is important that you correct genuine differences between what is in writing and what you thought you agreed to - but do not look at this as a final opportunity to wring more benefits out of your new employer.  

If you have been negotiating through your recruiter, it is always a bad idea to try an end-around and start asking for further concessions directly from the employer.  The recruiter has been your biggest advocate.  You don't want to jeopardize that support.  Also, the recruiter has already voiced your requests to the employer.  Hearing them again, or any new issues, is not going to endear you any further and could get you placed in the dreaded "high maintenance" category.

Summary

Here's a brief checklist to help you through your negotiation.

  • Be candid throughout your job search.  This starts with giving an accurate picture of your current salary and benefits package.
  • Delay salary discussions until after you have an offer.
  • Decide what you are worth.
  • Prioritize your requirements.
  • Understand which points are negotiable.
  • Negotiate through a recruiter whenever possible.
  • Don't put yourself into the "high maintenance" category by making excessive demands.
  • Be prepared to make a decision in two weeks.
  • Get your agreement in writing and limit corrections to decisions already made.
Reject any counteroffer from your current employer, and simply make a graceful exit.