This is a sensitive time and process. You want to make sure to get the best situation you can while not putting too much value at risk.
First, a few caveats:
- I’m NOT talking about experienced professionals debating a job switch. Many of the same considerations apply, but the alternatives and your leverage are very different.
- I’m assuming you are seriously considering an offer in question. If not, why negotiate?
So how do I approach thinking about potentially negotiating my offer? Let’s lay out a few principles to guide your thinking and preparation:
“The offer” is much more than the salary
I STRONGLY urge you to think comprehensively about what is being offered. This includes concrete factors like salary, bonus, health-care and retirement savings. But you also need to think seriously about softer considerations like what you will be doing, company reputation, possibility for advancement, culture and other hard to quantify features.
Understand why you are negotiating
I see students every year default to feeling they need to negotiate. Negotiating is fine, but understand in your own mind WHY you are doing it. If you don’t think through your motivation it’s hard to know exactly what to ask for, how hard to push and when to be done.
Common reasons I see are:
Expectations: “Because I’m supposed to”
Peer pressure/ego: “So and so got $XX and I’m a stronger candidate than them” Below “market” offer: The school’s median salary is X and I’m 15% below that which seems unreasonable”
Competitive offer: “I really like Company X, but Company Y is offering me 10% more”
Why not?: “What have I got to lose. Let’s see if I can get more?”
Develop a clear picture of the hiring process/position at your offering firms
Having a discussion with a company hiring into its national leadership development program in November is very different than negotiating with a company hiring you in May from a pool that includes experienced hires.
A regular and prominent national recruiter often has a uniform offer and limited flexibility. As a hiring manager at 3M SBD (a program like this), I was very clear with candidates; “the offer is the offer” from a compensation and benefits package standpoint. 10-20 people from a massive pool were getting the same offer. Period. I could flex on start date. That was it.
I also had a very clear picture of the market for graduating talent and knew our offer to be in a reasonable range. If you wanted to be at 3M, we were respectable. If you were looking for the max offer, then you were barking up the wrong tree.
Students of mine who have gone for specialist jobs that relied on their skills and prior experience as much or more than their MBA have a different situation. The hiring manager is looking at a more diverse pool and may have no sense of the salary range expected by new graduates. This creates opportunities for bigger gaps and misunderstandings. It also offers more room for negotiation. You are often dealing with a hiring manager with a department budget (and thus some flexibility). She won’t care about setting precedents or creating internal equity issues.
Be clear about what hiring managers find persuasive
What employers care about: Your GENUINE interest, other offers, beating competition, market rates for RELEVANT benchmarks and whether you have desirable alternatives.
What employers don’t care about: “What everyone else is getting”, “making you feel good” and issues with aspects of the position that were clear during the recruiting process (eg: incentivize me to move).
Employers are utilitarian. They want to get you, but don’t want to overpay or yield precedents they’ll have to live with. They also don’t want to feel like you’ve shifted from excited to “needing to be convinced” as soon as the offer was in hand. So as you prepare for a discussion, be clear about what your potential new boss cares about.
I remember my negotiation coming out of school like it as yesterday. I prepared my list of arguments and practiced my delivery. In the end the only point the consulting partner found compelling was the market rate for MBAs. (Due to my academic rather than corporate prior experience, they were considering me a candidate with no prior experience and had made a low offer.) The substantial gap between me and my peers with 3+ work experience was dismissed as irrelevant. The feedback was something like, “we like you a lot, but you’re not in the same pool with them in our system”.
In the end, they made a bump that got me to the median for my class but weren’t willing to push me to my classmates level. They recognized the preliminary offer was unfair and I legitimately might turn it down. Once I understood the process and they moved to something I thought reasonable, I was OK with where we ended up and I accepted.
As I became a hiring manager, I’d smile at students wielding all sorts of arguments that boiled down to “I’d like you to give me more, but I don’t really have a good reason why.” That gets a pat on the head, not more money.
A note on “relevant”. It is unpersuasive to a manufacturing firm to wave your iBanking offer and expect to get too much. They are totally different things. You want banking or you don’t. The offers will likely be significantly different in salary and work environment. You might use one to get a little more out of the other, but when I was confronted with this from a candidate, I’d push back and say “pick.”
So if you are going fishing, at least understand what bait employers find interesting.
Understand your own risk profile
There is generally not much risk in beginning a conversation on your offer. But there is a big difference between “could you explain the offer, I was expecting XX% more and I’d like to understand the gap” and “I can’t accept for less than XX% more”.
Be comfortable with how much value you put at risk. There are 2 sets of risks here. The first one is losing the offer. Unlikely, but it happens.
The second is getting off on a really bad foot with your new boss/employer. When I ran the recruiting for 3M’s SBD group, I was a decision maker in hiring and the person you negotiated with. But I was also the staffing manager for our project pipeline and a major part of your annual review process in the group. So pissing me off could have an impact on your opportunities and evaluation going forward. I happen to be remarkably patient and have great forbearance, but not everyone does!
Have a picture of what you will be satisfied with (and be flexible)
What are you trying to get? Seriously. It’s not that hard to think through. Too many people come in without a clear goal of what they are trying to get. If you have multiple goals, have them prioritized in your own mind so you know what to really fight for.
Also, be open minded in how you get your needs met. Rather than a bump in salary, would you take a first year bump in the form of a signing bonus? You get the idea.
Assess your leverage and whether you want to use it
Do you have credible alternatives to use as leverage? Are you willing to walk away?
Credible Alternatives: Obviously, the student with 5 good offers is in a different position than their peer with only 1. Even better if one of the offers is from a dire competitor. Then the competitive juices get flowing. Boston Consulting doesn’t like to lose someone to McKinsey.
Depending on your situation, there are all kinds of potential alternatives. Things like more school, alternate out of school opportunities like teaching or the Peace Corps are all credible. Don’t create them just to have them. But if they are authentic interests of yours, then they are relevant competition to an employer you are negotiating with. Note: you need to be working on them well in advance.
Walking Away: I was willing to walk away when I negotiated which puts pressure on the recruiter. You have to determine whether you mean it and how much pressure that creates. DO NOT even allude to this if you don’t mean it. Also, you can make your point about this without being a tool or disrespectful.
Remember that just because you have leverage doesn’t mean you have to use it. Make sure it’s worth it.
Note: Don’t be too clever if you are working several offers. We all hate to be played, so don’t be a “clever dick” as a British colleague would say. (It sounds really good when he said it with his accent).
Leave them impressed with your maturity and professionalism
HOW you handle the negotiation is usually more important the WHETHER you negotiate. A well managed discussion can increase your standing. A poor one can hurt you. So be smart.
Note: It does not impress to come back a second time with further issues/demands.
Remember that this is a repeated game and keep perspective
This is a long term relationship. There are multiple opportunities in the future to have compensation discussions. You will likely have regular annual reviews. You’ll also have an opportunity to develop a track record for excellent performance, develop a network and a market for your skills externally.
The pay bumps down the road will have little to do with where you start. So don’t over think this step of the process. Where you land, how excited you are and how well you do will be waayyy more important in the long run than an incremental $5K now.
What did I miss?