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Negotiating

At some point in your life you are going to do all of these things at least once:

Buy a car
Purchase a home
Apply for a job

These are all critical points in your life that should involve negotiation and can end up costing you a great deal of money if it isn't done well. Unfortunately, in the United States, we are not taught to negotiate in our primary or secondary education. Unless you take a special course on negotiation, you probably will not pick up these skills at a college either. The following pages will give you an overview of the negotiation process, including suggested strategies to follow. We will focus this discussion on issues surrounding negotiating for compensation when accepting a new job since this is one of the most critical monetary negotiations you will ever make. If you follow the suggestions below, hopefully you will experience positive outcomes to your negotiations.

Be Prepared – The first mistake many people make is being unprepared for a proper negotiation or starting negotiations before they are ready.^xxvi Successful negotiators arm themselves with as much information as possible ahead of time.^xxvii Therefore, even before your first interview, you need to know the value of your skills. Everyone is worth a different amount of money based on their experience, their training and their geographic location. If you are applying for an entry-level Java programming job, you need to know what other entry-level Java programmers are being paid in your area. Start with the contacts you built up while networking. They can be great sources of information. Ask them what starting programmers make at their company. Since the majority of folks in your network will never be interviewing you for a job, they will probably be more forthcoming about revealing salary information. The U.S. Bureau of Labor Relations (www.bls.gov) reports salary information on their web site. This site reports up-to-date information on salaries for a great many job categories. Also, check with college placement offices. They often survey their graduates and collect information on starting salaries. As you begin to interview at companies, ask the programmers you meet how much money they are making. You will be surprised at how forthcoming people will be. Review Internet job sites to gather salary information. If you have done your homework, you will have ready data available to back up any salary request you make of an employer.

Don't Reveal Too Much Too Early – Many employers try to steer candidates into salary discussions early in the interview process. My advice is do not reveal how much you are currently earning. It has no bearing on the job you are interviewing for because each company and each position is different. Also, never reveal the salary you are seeking before the company tells you that they wish to hire you. Revealing this information too soon could cause you to be knocked out of the running if the figure you name is too high. It could also hurt your negotiations down the road if you name a figure that is lower than what the company was prepared to pay. This is because once you name a number, the interviewer becomes fixated on that number and it locks you into a range. Before being offered a job, if you are asked directly what salary you are seeking, craft a reply something like this:

"I consider salary to be an important aspect of the job, but not the most important aspect at this point. XYZ Company has a reputation for treating its employees fairly and I am sure that if you decide to make me an offer, the salary will be based on my value to the company. I believe at this point we should continue to focus on my skill set and how it relates to your needs for this position."

Then ask a question that leads the discussion in another direction other than salary. Some employers will not let go of this issue and will press you for a salary number. Since you have already assessed your market worth before beginning the interview, if pressed you can answer with an accurate figure based on your research.

Another strategy for deflecting early questions about salary is to turn the question back on the interviewer by saying, "What is the salary range you have in mind for this position?"^xxviii

Do Not Fail to Negotiate – Surveys have revealed that 90% of employers make offers that are less than they are prepared to pay job applicants.^xxix This should not be surprising to most people. What is stunning however is that another survey revealed that 50% of job applicants had not negotiated their last job offer.^xxx Based on these statistics, there is a very high chance that you are throwing away money if you fail to negotiate when offered a job.

Why do so many people fail to negotiate? FEAR! The top fears about negotiating are as follows:^xxxi

Fear of employer perception – People seem to think employers will view them in a poor light if they try to negotiate. They think they will be viewed as greedy or ungrateful. In fact, it is just the opposite. Employers will respect you more if you negotiate since 90% of them are low-balling you with the first salary offer.
Fear of the employers' superior power – Employees seem to feel the employer has all the power. Actually, when the employer has offered you the job, you have all the power because you are the only one who can accept or reject the offer. This puts you in a strong negotiating position.
Fear of losing the offer – Offers are almost never rescinded due to employees attempting to negotiate. You have been through a series of interviews. Company employees have invested a great deal of time and energy in meeting with you. You did a great job of selling yourself and now the company wants to hire you – you are their choice! They have already made up their mind that you are the one they want in this job so they have a personal stake in making this happen. Negotiation will not offend them.
Fear of conflict – Most people seek to avoid conflict. A negotiation is not a conflict situation. It is merely two parties with a common goal, providing you with a job, working out the details of your value to the company. This does not have to be an adversarial situation.

So conquer your fear and plunge in with both feet. It is going to cost you money if you do not!

Look at the Entire Package – There are many elements of compensation besides salary. All of them are subject to negotiation. Possible alternatives to salary increases that are open to negotiation are:^xxxii

Performance-based bonuses
Signing bonuses
Profit sharing
Equity benefits (stock options, stock grants)
Waiver of 401(k) participation waiting period
Additional vacation time
Flexible working hours
Telecommuting part time
Increased benefit coverage or reduced out of pocket costs for benefits
Reimbursement for education expenses
Reimbursement for seminars and conferences
Paid membership in professional organizations
Agreement to a raise at a set time in the future
Relocation reimbursements for:

Green card and visa fees
Spouse job placement fees
Disruption allowance (bonus)
Moving expenses
Mortgage differential payments
House hunting trips prior to moving

Company car
Paid child care
Parking reimbursement (can be very expensive in major cities)
Cell phone allowance
Health/golf club membership
Laptop computer or other technology
Participation in management development programs
Access to technology at home (Internet access fees)

So why would a company that is not willing to give you more salary be willing to give you additional benefits? Both options will cost the company more money so this seems incongruous. The two main reasons are as follows:

Maintaining salary parity among workers – If all the Java programmers currently on staff are earning between $65,000 and $75,000, the company may be reluctant to pay you $80,000. The fear is that if they pay you more money the other programmers will find out and demand raises. Increasing your benefits or other perquisites is relatively invisible to other workers. Employees often discuss salary around the water cooler but rarely talk about tuition reimbursement.
Salary expense lines are tightly scrutinized – Salary budget lines receive a lot of attention from upper management. There is a great deal of pressure to keep salary costs down at most companies. Often, however, there is less pressure to keep other costs in line. Therefore, a hiring manager might be more willing to pay your dues at the local golf club instead of giving you that extra $4,000 of base salary you requested.

So, don’t just focus on the salary in your offer. Review all possibilities and do not be afraid to ask for the alternatives mentioned above.

Starting Negotiations – After your contact tells you that the company is offering you a position, many interviewees are uncertain how to get the negotiation process started. Try following these simple steps to get the ball rolling in the correct direction:^xxxiii

Thank them for making you the offer – This sounds like common sense but people do not always remember to do it. Let the manager know you appreciate all the time and effort everyone has put in on your behalf. It sets a pleasant tone.
Remind them of the value you bring – Start with a recap of your strengths and skills. Paying fairly for the value of your skills and the results they will bring is the point of the negotiation.^xxxiv
Find a personal connection to the person with whom you will be negotiating – People feel more relaxed with friends, or at least with people who share common interests. If you notice your contact has golf pictures all over the office and you love golf, strike up a conversation about the game. This puts people at ease and sets a relaxed tone for negotiations.
Be credible and sincere – Do not lie about anything! It can only hurt you in the end if the truth comes out. In addition, experienced interviewers can spot liars a mile away.

Review the offer and start trying to gather information right away about the negotiation points that will be important to the company. Ask questions about the offer in a non-adversarial way to gain information. Do not say, "I can't possibly accept this job offer without a signing bonus!" Instead use a why or why not type question. Try saying, "I was wondering why the offer did not include a signing bonus?" This sets a much less demanding tone and is more likely to elicit a straightforward answer.

Do Not Jump at the Offer and Accept It Immediately or Make an Immediate Counter Offer – Even if you decided you would be happy with $50,000 a year and they made you a $75,000 offer do not just accept it. It does not pay to be too eager since it hurts your negotiating position. Don’t forget, 90% of employers are not offering what they are ultimately prepared to pay. So after asking all your questions about the offer, thank them again and ask for a period of time to think it over (a day or two). You need time to assess the offer and decide which parts of the offer need to be negotiated and whether the job and the company are right for you.^xxxv

The Pause – An outplacement counselor taught this classic tactic to me. I have used it successfully in several interviews to increase salary offers on the spot! Most people expect an immediate response when they make an offer. Therefore, always pause and say nothing for 30 seconds to a minute after they tell you the salary. It is a natural tendency of human beings to want to fill silence with words. Many people take your silence to mean you are unhappy with the offer. They have made the decision to hire you and now have a personal stake in doing so. Often, the offer goes up while you are pausing. After I pause, unless the offer was insultingly low, I usually say, "Well, that offer is at the low end of the range of the other offers I have been considering. But there are still many interesting aspects to this job/company, so let's keep talking." You did not say no, so you are still keeping them interested. You’re just letting them know you will be negotiating up – and since they expect that anyway, you have not harmed your position.

Naming a Number First – Sometimes you will be asked to name the salary number first. You are told that you have the job and then are asked what you would like to earn. As long as you already have an offer of the job (i.e. you know they want to hire you), this still puts you in strong position if you have done your homework on your value. Be prepared to lay out an entire package with all your requested perquisites in it. Name numbers for the salary and perquisites that you would be happy with if they said yes. Moreover, make sure the figures are supportable based on your research. In this way, if they immediately agree to those terms, you have at least asked for a package you would be happy accepting. In addition, if they still want to negotiate, you have fixed a minimum package in their heads that is more than acceptable to you. Therefore, it can only be improved by negotiation.

Do Not Reveal Your Limits at the Start of Negotiations – If you state your absolute limits when negotiations first begin ("I absolutely have to have $55,000 per year in salary"), you are painting yourself into a corner.^xxxvi This sets a threatening tone that can upset the other negotiator and make it difficult to focus on the other issues.

Negotiate on Multiple Issues at Once – A successful negotiation, one where both sides feel they have gained something, needs to deal with at least two issues at a time. If you are only negotiating on one issue, only one of you can win in that situation. You want to discuss multiple issues so you can fight hard for the items that are important to you and be prepared to give on the ones of lesser importance. In addition, never make a unilateral concession. Always make sure you get something when you give something up. If you are settling for a $2,000 signing bonus instead of the $6,000 you wanted, make sure they give you that extra week of vacation you have been requesting.

Get the Final Offer in Writing Before Accepting – After the negotiations are over, often the company representative will say, "Do we have a deal?" and extend his/her hand to shake on it. Do not accept until you have the last offer in writing. Written offers avoid misunderstandings and confusion. Often people hear two different things in a conversation and think they are agreed on points when they are not.^xxxvii

So go out and follow these principles for your next job offer. I hope that the result will be a satisfying negotiation that garners you additional salary.