How to negotiate your salary and benefits You don't want to be thought of as a money grubber, but you don't want to leave money on the table either

September  1996

Negotiating your salary and benefits isn't easy, but with these guidelines you can survive your next bargaining session with a fair deal for you and your employer. (2,000 words)

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Dear Edgar,

How does one best approach the process of negotiating for a better job offer? It seems like you must go after either the salary OR amenities such as vacation. Obviously talking generally is most likely not going to get you anywhere, but then pushing it seems very difficult, especially since you will end up working with these people. I have heard that some companies give their best offer up front, but then others start out low purposefully. How can one best judge the situation so as not to offend and start off on the wrong foot?!

Signed,
Negotiating Novice

Dear Novice,

You want the job; they want to hire you. Everything seems on track. Now it's time to talk salary -- this is the final issue that can make or break the entire deal, set you into a higher income bracket, or put you on a path to financial stress. Handled incorrectly, salary can become a significant sticking point in the hiring process and result in counter-productive emotions, expectations, and pride issues.

My initial advice is to suggest that an experienced negotiator handle this for you. After more than 20 years of recruiting, I can shamelessly say salary negotiations are one of the most helpful and rewarding roles served by a professional recruiter. By placing someone between you and the salary dealings, you will never be perceived of as a haggler and will come out of the whole process unscathed -- regardless of what salary and benefits are settled on.

What's the goal?
If, however, a professional recruiter is not an option, here are some basic tips for the do-it-yourself job seeker. First, you must keep in mind that you have to work with these people. You want to strike the best deal you can, yet you don't want to spend your first day wondering if your boss is annoyed or feels "had" by you.

Remember that your future boss doesn't want you to encounter financial problems or feel manipulated by an unrealistically low offer. Your mutual goal should be to truly negotiate -- fairly, honestly, reasonably. That means:

1. Get rid of the ego issues (e.g., "Frank squeezed X amount out of that company last year and I know that I am much better than he is...")

2. Understand the areas where the company can be flexible.

3. Remind yourself of the key reasons why you want to work with this firm. (Hint: If salary is your top reason for joining this company, don't take the job -- you will hate the place within six months! I've seen this scenario repeatedly.)

The outcome should be that both parties feel they have achieved a win-win solution.

Let the manager initiate discussions
If you are handling the salary negotiation by yourself, there are several important points to keep in mind. First, always wait for the hiring manager to discuss the initial number. If the hiring manager asks you what you think you should be paid (which sometimes happens in a first interview), don't feel compelled to give a figure. A professional response can go something like,

"As we discussed on the phone, I really want to emphasize that my number one motivation is the projects and the opportunities here at XYZ company...knowing the reputation of XYZ, I know I will receive a salary that fairly rewards my skill set."

Remember, once the hiring manager feels you are the best match for its team, the company will make the first offer.

Fixed benefits
A common mistake we see among do-it-yourself negotiators is to jump right into discussing benefits and vacation issues prior to any agreement on salary. Our recruiters advise waiting until the hiring company has explicitly made a salary offer before you introduce other discussions.

Regarding benefits, it is extremely important that you not demand any unusual variances from company policy. Many candidates aren't aware that benefits are generally fixed by company policy and that a hiring manager has little power to modify them to suit a particular employee. For example, if there is no dental plan, that's life at this company -- don't start pushing for one. This line of negotiating will get you nowhere, except maybe back into the job market.

But there is a way to achieve win-win. For example, if high dental costs are indeed a genuine concern for your family, explain that perhaps you could factor your projected dental costs into a higher base salary, or a higher annual bonus, or even a possible up-front sign-up bonus -- all are factors that your hiring manager can control. The important lesson here is to make sure you don't disparage the company dental plan or try to change company policy -- it's just not going to happen.

This sounds simple enough, right? Yet time and time again I see these minor little issues derail a $50,000 offer with a $10,000 bonus. Without proper coaching, candidates seem to go crazy over some minor benefit issue and explode it into a major emotional argument. The results can be a total collapse in the trust that the candidate and company have carefully built. Always know what you can and can't negotiate.

Discuss vacation before signing
Unlike benefits, vacation is an area where there can be leeway in some companies. The amount of time a company will give you typically depends on your seniority and how that fits into the corporate structure. For instance, the company may reward people with five years of experience with three weeks of vacation instead of the standard two weeks. You can usually negotiate three weeks if you show that your previous years of experience are equivalent. And remember that American companies generally give between two to four weeks of vacation. It sounds basic, but this sometimes surprises our German and Australian candidates.

Many do-it-yourself negotiators make the mistake of not discussing vacation up front. If you come from a company that gave you four vacation weeks and this is an important point to you, be sure to bring it up during the negotiations. I have seen many situations wherein candidates waited until they accepted the job and then hoped that the company would do them a "favor" and match the prior company's vacation plan. That's a very bad move because once an employee comes on board, the hiring manager has very little control over vacation. If important, discuss vacation during the salary discussion -- and always before you accept the offer.

One good way to start the vacation discussion is to talk about your upcoming vacation plans. This approach gives your hiring manager a great deal of power to accommodate your wish. While some HR departments will say that vacation follows a strict company policy, I have seen the hiring manager quietly offer what I refer to as "tacit vacation time" -- an extra week or so arranged by the manager.

Lowballing
There is no way to tell if you are being offered the exact salary the company thinks you are worth or if you are being lowballed. Salary surveys like those found at the Pencom Interactive Career Center can help, but they certainly can't factor in such intangibles as your detailed experience, the stock potential of an exciting start-up, and the potential for cutting-edge assignments.

Remember, companies are made up of individuals -- some negotiate, some don't. Again, always wait for the hiring manager to advance the first salary figure. If you have done your homework and managed your career properly, you will have a general idea of what a person of your skill set should be paid. Start with your prior salary as a guide, and be confident that your new boss will lobby to increase your salary to make sure you walk in happy and enthused. If it is a start-up, you might encounter a slight pay cut coupled with lucrative stock options that motivate you to help the company succeed.

If the salary offer is more generous than you had expected, be happy and stick with it. Don't try and go for broke. Don't let greed get in the way just to see how high they will go. It almost always backfires. If the salary is lower than what you believe you are worth and you have other job offers, you may want to play hardball and reveal the salary figures that other companies are submitting to you. Just be aware that you are playing a dangerous game.

I have found that the toughest negotiations occur when the salaries fall somewhere in between what you are currently making and what you'd ideally like to make. For example: if you are making $50K, and you know others with your background and education are making at least $65K, and the companies offer you $55K, you may want to ask some informational questions like: "Do you think this is competitive? Help me understand the issues here," "Am I coming in at the top, middle or low end for employees with my experience?" If the company is firm about the offer, you might then negotiate a six month review dependent upon performance.

Never lie about past salaries
In a perfect world, the company with which you are interviewing will offer you a salary based purely on your skills and experience. In the real world it is gauged largely on your current salary -- its almost always the benchmark.

There is no way around this. While you might be tempted, I strongly advise you to never lie about your past salaries or bonuses. Salary figures are always verified and a lie will follow you for the rest of your career! It's just not worth it.

Going for goodwill
Let's summarize. Negotiating a salary is a very delicate process -- particularly if you are doing this all on your own. Arrive with a salary range in mind and a limit of how low you'll go. Hiring managers have ranges and caps on how much they'll spend. If you feel that you are pushing beyond the limit, you may not want to press it unless you have other options to fall back on.

Obviously, a professional recruiter can help with this process. As a third party, a recruiter can have a straight forward, one-on-one discussion with the manager and say with credibility statements like: "I know she wants the job and I'm sure she'll take it at $60K. At your standard offer of $55K, I can't say for sure -- she'll probably want to think about it. I also know that she has told me she has some major family dental expenses coming up and is also concerned about walking away from her annual bonus of $10K. If you are serious about hiring her, I think these issues need to be taken into consideration somehow." Perhaps more importantly, a recruiter can be frank with you and tell you when to stop pushing an issue.

Remember that there is always a high risk of coming across as a money grubber; a risk that is not worth the ill-will if the issue is a few measly dollars. As you mentioned in your letter, it's important to remember that these are indeed the people you will be working with soon. Be honest with yourself before you decide to negotiate. Listen to your instincts and not your ego. Salary is important, but goodwill is priceless.

Good luck. Let me know how it turns out!

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