Negotiating that Job Offer
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You’re finishing up your illustrious career as a McCombs undergraduate, and that first job after college is on the horizon. Most students get through the interview process successfully, but some find themselves at a challenging fork in the road: what job offer should I take? Few are prepared to negotiate their offer with the hiring manager. Below are some tips on how to prepare for that conversation so that both parties are thrilled when its time for you to sign on the dotted line.
What important variables should I consider?What key factors are hiring managers considering?
How do companies determine the compensation component?
What is included in an offer?
Why should I care about anything besides the compensation? All companies’ benefits are the same, right?
Is my offer negotiable?
What do I want in an offer?
How do I justify what I want?
What if I just want more money?
What’s an MIS major worth these days?
What's acceptable and what's rude or arrogant when negotiating a first offer?
What do I want to negotiate?
What important variables should I consider?
Finance columnist Jim Citrin recommends that you consider the following: (1) the job itself, (2) the money, (3) the lifestyle, and (4) tradeoffs. While this article focuses on negotiating the offer (e.g., money), these other variables are important to consider:
- The job: What will your role be? How much will you learn and develop? How fundamentally interested are you in the business? How prestigious is the organization and the title? How great an impact can you have?
- The money: What is the current compensation? Is there a long-term incentive? Under what conditions can bonuses be earned? Is there an opportunity for wealth creation? Does the organization offer stock options or restricted stock? What's that likely to be worth in three to five years? What about a pension? Benefits?
- The lifestyle: How will the job fit your life? Where is it based? What is the commute like? How much travel is involved? How much control will you have over your schedule? Will you need to work weekends? What are the deadlines and crunch times?
- Tradeoffs: Is the money worth the sacrifices you and your family would make? Or is securing the right lifestyle so important that it's worth taking a step backward regarding compensation? Is the job so interesting and important that you're willing to postpone the attempt to build financial security?
What key factors are hiring managers considering?
- Relevant skills and track record: How do you line up with the key selection criteria for this position? How exceptional is your expertise in the area most important for the job (e.g., marketing, finance, investing, general management, technology, etc.)? How sound is your performance track record? What role did you really play in project and work results?
- Cost: How much will it cost to attract you? How will the base salary and bonus requirements align with peers in the organization? Is a buyout provision necessary? What's the cost and risk of relocating you? Are you that much better than others given the cost?
- Timing: Are you ready to make a job choice now? How much transition time is required? Can the organization afford to wait on hiring you?
- Culture: How strong is the cultural fit between you and the company? How will the organization respond to you? Will it embrace or reject you? What are the risks?
How do companies determine the compensation component?
According to Salary.com, determining compensation requires a balance between pay levels for employees inside the company and the pay levels those employees could command in the company’s recruiting markets.
Primary external factors are the:
- Competition’s compensation practices.
- Availability of talented employees in relevant recruiting markets.
Primary internal factors are the:
- Diversity of jobs in the organization.
- Company job performance expectations
- Employer’s human capital investment strategy.
- Organizational culture.
- Compensation
- Relocation
- Award and performance review system
- Signing bonus
- Level
There are a lot of general perks that may not be explicitly mentioned in your offer because they are available to all employees. Ask your recruiter to outline these as well, such as gym memberships or employee communication plans (e.g., broadband, cell phones, etc.)
Additionally, your recruiter may be able to tell you how they decided the offer package. Did they base it on your internship performance? Was it based on some unique skill you have?
It is very important to be respectful and humble with your questions. The idea of playing hardball to get what you want will NOT work. After all, this is your recruiter’s job. S/he has probably heard it ALL before. Being considerate and nice is something no one gets tired of in the recruiting/hiring process. Besides, you are coming out of college with limited (even if high quality) experience.
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Why should I care about anything besides the compensation? All companies’ benefits are the same, right?
Compensation is great. It is a clear and definite number that you can tell your parents you earned for your four or five years at UT. It is also the hardest thing to negotiate.
It is vital to consider at what job level (rank or grade) you will enter the company. It may be worth taking a lower compensation package to enter at a higher level. Level can be determined a variety of ways depending on the company. Many companies factor in seniority while others are based purely on employee performance. Sometimes you can negotiate for an early review date. Coming in at a higher level could mean a fast track for promotion.
What about friends and family? Can you negotiate for more vacation time or additional funds to visit home?
top of pageYES. But the salary may not be. Directly asking if the offer is negotiable puts the person you are haggling with on the defensive immediately. Instead, after the offer is given, think about it. Negotiation is a slow process. Don’t get nervous – very rarely will a company rescind an offer.
Before your offer comes to you, make a list of things that would make this the perfect job for you. This will help you know what you want when the offer comes.
top of pageThe first thing most students say is a fat paycheck. It is hard to guess what is going to be important to you besides money. After all, many of us are poor college students with substantial car and education loans. However, this is one of the first steps to growing up. You have to look deep to see how important some things are to you. How do you like to work, what is your style?
top of pageAsk not what your company can do for you, but what you can do for your company.
Pretend you are the hiring manager. Find out what is most important to them personally. Find out what is most important for the company in employees. Try to align your goals. Negotiate for the win-win scenario.
One of the easiest things to negotiate for is something that will enhance your wellbeing, and the company’s wellbeing. For instance, if you are fairly tech savvy, ask for superior hardware. Good hardware will make you more productive and happier, and it will improve your work output—and that will aid future promotion.
If a job involves a lot of travel, think about what would make your travel better. For example, ask if the company will pay for you to be a member of an airline club. Yes, you’ll get free drinks, but more to the point, you will be able to plug in and connect at the airport.
Search for things that will help the company and you accomplish your goals.
top of pageWhat if I just want more money?
Do you think you deserve it? Prove it. Just like negotiating for a higher test grade, you have to build a case for why you are entitled for what you want.
Common reasons for adjusting the compensation:
- Cost of living adjustment: Chances are that they have heard this one before, so do your research.
- Additional talents and experience: If you can shorten your learning curve to being more productive sooner, then the money the company saves in training you can go into your pocket.
- Matching industry salary averages: What is the average starting salary for this type job? Are you in the ballpark? Check out sites like salary.com.
What’s an MIS major worth these days?
CNNMoney.com staff writer Rob Kelley recently wrote an article on the most lucrative degrees for college grads in 2006. According to the Fall 2006 edition of Salary Survey, a quarterly report by the National Association of Colleges and Employers (NACE), graduates who majored in MIS were taking home the biggest gains in starting salary from last year at 7.5%. According to the survey, majors that have seen some of the biggest increases in average starting salaries are:
- Information sciences and systems: Up 7.5 percent to $47,182
- Economics/finance: Up 6.2 percent to $44,588
- Accounting: Up 4.6 percent to $44,928
- Business administration/management: Up 4.2 percent to $41,155
What's acceptable and what's rude or arrogant when negotiating a first offer?
Brush up on those soft skills, because it is time to read your audience. But check your attitude. Do you feel it is your inalienable right to make $80K per year?
That approach will get you nowhere fast.
Recruiters are people too. People respond best to people who are not rude or arrogant. If you have a well-supported reason for asking for something, it is less likely that you come across as difficult to get along with. Besides, the WORST thing they will do is say “no” (and tell the other recruiters about how ridiculous your request was).
top of pageNot all of these will matter to everyone, and not all of these will be negotiable, but here’s a list to help you think about what matters most to you in your first major work situation.
- location, location, location
- apartment/house hunting trip(s)
- team or project you work on/with
- personal work hardware (e.g., bigger monitor, smaller laptop)
- mobile communication reimbursement (e.g., cell phone, mobile access for laptop)
- home broadband reimbursement
- flexible scheduling (e.g., four 10-hour workdays instead of five 8-hour days)
- option to work from home on occasion
- performance metrics (i.e., how you will be assessed)
- percent of time on traveling for out-of-town work assignments
- team incentives (e.g., team vacation weekend at the end of a project)
- personal incentives
- stock options or restricted shares
- when to become fully financially vested with stock options or other retirement funds
- vacation time/how vacation time is accrued (e.g., starting with vacation hours vs. waiting several months)
- travel for recruiting
- management training
- advancement track
- start date
- how expenses are reimbursed (e.g., charging on your personal card to get miles vs. having to use the corporate card and not receive miles)
- travel conditions (e.g., business class vs. economy; luxury vs. economical hotel)
- signing bonus
- start at a higher position grade than entry-level
- early review for advancement
- housing or commuting supplement for international assignments
- Relocation package
- full-service movers
- hiring housing specialist
- long- or short-term corporate housing
- flexible move date
- financial help selling your house or terminating lease
- vehicle moving
- moving pets
- moving expenses for significant other
- job hunting assistance for significant other
- lump sum to cover relocation costs organized by you
- how relocation expenses will be reimbursed (e.g., exact receipt vs. allowance)
