Chapter 10 Step 6: Negotiate and Close Your Offer

10.1 Effective Negotiation Requires Work Before, During, and After

10.2 How to Be More Comfortable When Negotiating for a Position

Many individuals are highly uncomfortable when the subject of salary or compensation arises. Why? Because money evokes emotion in a lot of people and whenever emotion is involved, rational thought tends to wane.

Money, to a large extent, dictates your style of living. If you are reading this book as a college student, the starting salary you receive may determine whether you will have to move back home with your parent(s), if that is even an option, or if you will have an apartment with one or more roommates. People get emotional about lifestyle issues.

To decrease the stress related to your living expenses (whether you move back home or have a place of your own), know your expenses, including rent, utilities, food, transportation, clothes, gifts, credit card debt, student loans, and so forth. If you’ve done your research, will the position for which you are aiming cover these expenses? Is there a match? Is there a huge disconnect? It’s best to review your expenses and think about them sooner rather than later.

We need to make rational decisions, so we need to remove the emotional component from the negotiation process, and it’s very possible to do so. If you have followed each of the steps in the job search process, you should have more confidence in the process. You should have a plethoraA wide variety and a large amount. of job search activity, no matter what the state of the economy, that should result in multiple offers. Knowing that you will have multiple offers should calm you, even if you are the most nervous or emotional individual.

Practice is a theme that has been present in every chapter of this book, and negotiation is no different. Meet with career services to practice negotiating until you feel very comfortable. After role-playing three or four or five times, your emotion should be kept in check and shouldn’t interfere with the conversation. You may also practice with a friend, but try to get as much advice from a professional as you can.

Remember to conduct in-depth research to ensure you have a clear idea of what the salary levels should be. There should be no surprises at this stage if you’ve conducted the proper research, which includes speaking to career services, speaking to your network of peers, and conducting various salary surveys. A good source of starting salaries can be researched on the National Association of Colleges and Employers (NACE) website. NACE also has a Salary Calculator tool that enables you to enter the state in which you reside, the region, and the appropriate occupational categories (ranging from business to life, physical, and social sciences, to the arts, health care, sales, forestry, construction, installation and repair occupations, to transportation and material-moving occupations).

Another tool you may decide to use is GetRaised (http://www.getraised.com), which helps determine if you are being paid the right amount relative to the job you are doing. For college students seeking entry-level jobs, you can still use this tool by entering “one year” in the number of years you’ve been working in this particular job, and then enter all the other information asked (where you work, the title of the job for which you are applying, and so forth). This tool will give you the competitive salary for this position. Of course, you will have zero experience, versus one year, but at least it gives you an idea of the salary range you should be seeking. It’s a very useful tool for experienced job seekers, especially because it will give you the script you can use to negotiate for higher compensation. GetRaised is just one tool of many, so research various tools available to you.

10.3 Items Open to Negotiation: Cash and Noncash Components

It’s important to review the various components of an offer before accepting. When identifying what to negotiate, several individuals may think only to negotiate base salary, or total compensationRefers to all facets of compensation: base salary + bonus + commission (if applicable)..

Cash and noncash components can be negotiated, and each has a host of considerations:

Cash Components

• Base salary. You get paid your base salaryWhat you get paid on a regular basis, which will be weekly, twice a month, or monthly. on a regular basis, which will be weekly, twice a month, or monthly. Consider what the future salary potential could be and understand the timing. For example, most companies review performance and salary increases once per year, while others may review this twice per year.

• Bonus. Several bonusPertains to an amount of money, in addition to your salary, based on performance. options could be available, depending on the company and opportunity. If you are not eligible for a bonus, ask if it would be possible to receive one in the future, if your performance goes above and beyond what is expected. Ensure you know the timing of each bonus that could be available to you.

  • Sign-on bonus. Larger companies may pay sign-on bonuses, which were originally given out to reimburse students for moving expenses when they lived a certain distance away from their new work address. Corporations decided to streamline the process, and relabeled this a sign-on bonus, giving it to all candidates.
  • Quarterly or year-end bonus. Some companies allot for a quarterly bonus and a year-end bonus, both of which are paid based on individual performance and, of course, company performance (which could result in huge percentage swings either way). It’s important to understand how these bonuses are calculated and exactly what you are eligible for in advance.
• Commission. Salespeople have a great opportunity to make commissionA percentage of total sales paid in the form of a commission bonus., which is a percentage of the sales they make. This is a great opportunity, but you should also exercise caution. Understand the commission structure clearly. What happens if you do not sell anything for the first two or three months? Do you receive a base salary, or is it full commission? Is commission paid on gross sales or net profit? Do you get a draw that you will then have to pay back? Explore all of these details so you are clear on the entire structure.

10.4 Why You Should Always Consider Negotiating

Many individuals shudder to think of negotiating, in any type of economy, never mind a down economy. That should not be the case, especially when you consider all the work the company has to do before they identify you, the perfect person to receive the job offer.

All the steps a larger company may take to fill an opening are included in the following list. Smaller companies may require fewer steps, but the detail listed here demonstrates the great amount of time and effort needed to find the right person to extend an offer. Once that person is identified, employers do not want to start the process over again, so there is some room for negotiation.

Steps include:

1. The available position needs to be identified as either a “replacement” (someone has left and they need to be replaced) or an “add to staff” (an incremental position is needed). Therefore, the position will either be backfilledRefers to filling a position now vacant because the employee left the position or left the company. or a new position will be created.
2. The hiring manager must secure budget for this position. Just because someone left this position (i.e., they got promoted, they left the company, or they were fired) does not make it a given that the position will be filled. Many times, managers have to make the case for hiring a replacement. The tighter the budget, the less likely it will be filled.
3. The job description needs to be written (either by the hiring manager or human resources [HR]).
4. HR must be given the open requisition to fill (along with the forty or fifty other job requisitions they are currently filling).
5. HR will decide where the position will be listed. It’s typically always listed on the company website, but it will need to be listed on specialty job board sites in addition to the larger sites for the specific industry.
6. Candidates will submit résumés that need to be reviewed.
7. Top résumés will be compiled.
8. Top résumés will be shared with the hiring manager, and a top slate will be selected.
9. Candidates will be contacted for an interview (either by phone or in person).
10. Interview schedules will be created.
11. Candidates will be interviewed by HR and the hiring manager.
12. Top candidates will be selected for the second round.
13. Second and final rounds will take place.
14. The hiring manager and HR select the person to receive the offer.
15. An offer will be made.
16. The candidate will receive the offer verbally.
17. If accepted, the offer letter will be put in written form and mailed to the candidate.
18. The offer letter has to be signed by the candidate and returned to the hiring manager.

The preceding exercise demonstrates that once a company extends an offer to you, they want you to accept. If you would like a bit more in your salary, most companies will consider complying to ensure you accept, but some will not. If you would like a bit more in terms of year-end bonus percentage targets, they may easily decide to comply, but then again, they may not. If you are interested in a later start date, they may be open to that, and of course, some may not be.

It’s important to also remember that nothing is a given. In strong hiring markets, your chances are stronger to negotiate. But even in down markets, you still have leverage.

Also note that your base salary is a very important starting point at a company. Accepting an offer with a compensation level that is far below market value can be a tricky move as well, even if you are very anxious to get any experience you can. Your next employer may be very curious as to why your compensation level is so low, and it could add a red flag to your candidacy. Whenever in doubt, speak to a professional—perhaps someone in career services or a colleague in the field. For most opportunities, salary increases come just once a year and are sometimes skipped in down economies, so you could be “stuck” at a very low compensation range for a longer time than you would like. Getting a higher base when you begin can make a significant difference for many years to come. With that said, research is always a key point in the negotiation phase. Ensure you know the best starting point, and your negotiation will be more successful. Also note that if you are hired into a large company, with a formalized entry-level program, all hires receive the same exact compensation package, and there is no room for negotiation. You can still ask, but the answer may be no.

10.5 How to Get to a Decision and How to Juggle and Time Multiple Searches

Step 1 of the job search emphasized that an individual should shoot for at least ten targets during a job search. Your goal is to receive as many offers as possible. Offers equal negotiation power. If you plan your job search strategy properly, many of your targets will move toward step 6.

As you move toward an offer with one company, it’s important to communicate with the others as to when you expect to receive an offer. To be fair, give each company the needed lead time to prepare an offer.

Case in Point

Peter interviews with Company A, which is his number one company. If he receives an offer, he will readily accept. Company A has interviewed Peter twice, and he is a finalist. They are not ready to extend offers until next month, but they ask that Peter let them know if he receives an offer from another company.

Peter has interviewed with Company B and he is put on hold.

Peter then interviews with Company C just hoping to get an offer, so he can leverage that with Company A. Things go very well and he is more interested than he thought. If given an offer, he would seriously consider accepting. Company C lets Peter know he will receive a call regarding his candidacy on Friday and that they feel very positive about what he has to offer. They do not, however, tell him that he will definitely receive an offer.

Peter has interviews with Company D, E, and F in the next ten days.

Peter calls Company A and sends the following e-mail:

This e-mail communicates six very important things:

1. It addresses the urgency of the situation. The subject line highlights and notifies the company representative that the information is time sensitive, and in the last paragraph Peter states that he hopes to hear from them by Friday, or at the latest, by early next week.
2. Peter reiterates his interest in the position—in the first paragraph, in the third paragraph, and again in the final paragraph. It’s helpful to let this company know that they are his number one choice.
3. Peter lets the company representative know his interview activity is continuing, which also is helpful because the best candidates have a lot of interview activity. Recruiters know this, as do hiring managers.
4. Peter follows the recruiter’s instruction and lets Company A know he may have another offer.
5. Peter is, at all times, professional and respectful.
6. Peter also has posture at this point. He is likely to receive an offer from Company C, and is giving Company A enough time to get their offer ready.

10.6 How to Negotiate without Alienating Your Prospective Employer

In the previous section, good communications skills were highlighted as a way to effectively negotiate an offer with two prospective employers. In addition to good communication skills, you can employ other strategies.

When negotiating for increased salary, it’s imperative to make the business case for why your skill set deserves the pay you request. Share market data that shows how much people with this skill earn (your research from step 3 will give you this information). Show how the skill will add to the company’s bottom line (your assessment of your strengths from step 2 and your interview skills from step 4 will enable you to do this). If you lack years of experience, focus on what you can do from here on and keep the discussion centered on the skill as opposed to experience to maximize your negotiations.

This phone exchange communicates five very important things:

1. Kevin is professional when communicating with Mr. Duffy. He is polite and thanks him once again for the offer, reiterating that this job is exactly what he was looking for.
2. Kevin then makes his case for a higher salary. He doesn’t just state he wants a higher salary for the sake of wanting it. He gives three legitimate points for why it should be $60,000.
3. Once Mr. Duffy states that he cannot give a higher base salary offer, note that Kevin does not interrupt.
4. Mr. Duffy then states that while he can’t raise the salary, he is able to give an increase six months into the job. He also adds that Kevin has the opportunity to get his PhD. Kevin may not have ever known about the potential to increase his salary six months into the job. This is a vital information point that can be very lucrative for Kevin.
5. Both parties are pleased with the outcome.

Market your skills, especially if you have unique abilities. For example, if you speak more than one language, that can be seen as a benefit to an employer, especially when dealing with customers. Think about how that differentiates you and market that skill in terms of how it benefits your future employer.

Highlight how your background strengthens your candidacy. If you’ve had internships and part-time jobs that added to your skill set and will ensure that you contribute readily to an employer from day one, make sure you discuss that information with them. The key to impressing a potential employer is to make the case why your skills outmatch your competition by showing them why and how—even if you have to volunteer your time.

Demonstrate how your skills can benefit your employer now. If you’ve completed work via an internship or a previous job that has direct usefulness to your future employer, share it with them (as long as you don’t share confidential data). Demonstrate that you can do the job right now, and that you have familiarity with the process. That could nudge you ahead of your competition.

Always negotiate professionally, and always be prepared to hear no. This way, you are encouraged by what you can achieve through the negotiation process. Never engage in aggressive negotiating behavior because it can backfire and cause you to lose the offer completely.

Use your references. You were advised to gather recommendations in advance of your interviewing activity. Sharing testimonials of a job well done can only support your candidacy in a very positive way.

Remember the famous phrase, “It’s business, it’s not personal.” It can be difficult to separate business and emotions; however, highlight your accomplishments by their business impact, including costs saved, revenue generated, and profits increased. Be very clear about how your contribution leads to bottom-line impact.

Good negotiating is a valuable skill you will always use in your career, so strengthen this skill sooner rather than later!

10.7 The Six Things Needed to Close an Offer

Whenever you apply for a position, you should have the six attributes described in this section at your disposal, at every stage: when you apply, when you are contacted to interview, and most of all, as you continue in the interview process. You should use these attributes most of all when you are a candidate on the final interview slate because you need to continue to distinguish yourself among other candidates.

The process can be grueling, demanding, and downright difficult. If you are a student going through the on-campus or off-campus interview process, you have to balance your job search activities with exams and perhaps even finals. If you have a part-time job or even a full-time job while going to school, you have even more things to juggle. If you are searching for a job after you have graduated, or if you’ve been out of school for several years, there are always things in your life that command your attention. You need to master keeping these attributes “at the ready” because your life’s chaos should never been seen or even sensed by your future employer.

Let’s review why each of these six attributes is important and vital in the job search:

1. High energy. This attribute is needed to succeed in any job. Being energetic means that you have the vigor, the force, and the get-up-and-go outlook needed to accomplish small and not-so-small tasks that any job will entail. Recruiters and hiring managers will sometimes call you back for several rounds of interviews. By demonstrating high energy, you prove you can handle any job given to you, and high energy will set you apart from others.
2. Positive attitude. Any job or any career is packed and perhaps jam-packed with problems, issues, and challenges. If you have a positive attitude, you are much more likely to see the answer to the problem, the issue, and the challenge. Being pessimistic can have the opposite effect. Recruiters and hiring managers are very keen on identifying a positive attitude versus a negative one, so ensure you demonstrate this readily.
3. Strong follow-up. This is particularly important because recruiters and hiring managers are often pulled in a number of directions during the job search. Having a strong follow-up ensures that you know what every next step is at every turn in your job search. There is also a fine line between strong follow-up and pestering; ensure you do not cross that line. The best way to avoid crossing that line is to not require that a recruiter or a hiring manager answer each of your e-mails. Whatever the stage in your job search, either simply state that you are still interested, that you hope for a positive response, or that you appreciated their time.

4. Determination to succeed. You will absolutely need a determination to succeed because you might face pitfalls, curves, and roadblocks at every stage of the search. Viewing this process as long term can be very helpful in ultimately getting a job offer:

   • A long period of time can elapse between when you are first interviewed and when you are asked to interview a second time. This could be two weeks or two months. You will have no way of knowing. Having determination to succeed will get you through this drought.
   • The interviewer could think you are a strong candidate, but not for this particular job, and may refer you to another division either on campus or off campus. Either way, you will have to drive this process through to fruition.
   • The interviewer could turn you down because he or she went with another candidate, but later on, that candidate could renege on the job acceptance. It doesn’t happen often, but it could happen. The employer may then go to his or her original interview slate and decide to offer the job to the candidate who was second in line.
5. Savvy interactions. During the job search process, you will have ample opportunities to interact with all types of employees at the company, and often, they will be at varying stages of seniority. You will no doubt have interactions with administrative assistants, managers, VPs, and senior VPs. No matter what the interaction, show yourself to be a person who can get along with everyone, and be respectful of everyone’s position, from the security officer who screens your bags to the individuals you meet in the elevators. Be savvy and show you have the good sense and ability to leave positive impressions no matter where you go. Remember that you do not know where the strong relationships lie in a company. The security guard could be very good friends with the recruiter. Administrative assistants often hold quite a bit of power. Always use good business etiquette in every interaction. Show that you are capable of being part of a team and getting along with all types of employees. It will serve you well.
6. Posture. You can do two things to ensure you have good posture. One is to stand up or sit up straight, with your shoulders back and your head held high. The other way to ensure good posture is to execute every stage of the job search as outlined in this textbook, to ensure you have enough targets that will result in at least one or two offers coming your way. This type of posture means that you will always “care” about the result, but you will not be devastated if you do not get one particular offer because you will have the confidence to know that another will absolutely come your way. It is not be a matter of “if.” It is a matter of “when.” When you have that confidence, and that posture, you are in full control of your job search. You’ve heard the phrase “it’s the journey and not the destination,” and so it is with your job search. Having posture means you have the ultimate confidence that the outcome will be a positive one.

10.8 Q&A Focused on Negotiation and Closing the Offer

Often, listening to questions and answers about a topic brings it to life. The following Q&A came from real job search candidates trying to solve issues they faced in their job search. The questions are written in the present tense and will include phrases such as, “I did this” or “I’m not sure what to do here.” Read on and learn about how to manage these situations should they arise in your job search five days from now or five years from now!

Question 1. I am planning to accept a job that pays below market because everything else about it is ideal. The job responsibilities are exactly what I want to do. The structure of the organization is ideal and my boss and team seem great. I also expect to move in two to three years anyway. How much impact will the lower salary have on my future negotiations?

Answer. You should be commended for considering factors other than just salary in your job decision. At the same time, salary history carries a lot of weight in future salary negotiations, so the decision to take a lower salary now will require extra work in the future:

• Better negotiation skills. Your past salary is a very strong anchor in the minds of prospective employers. I once conducted a search for a leading Fortune 500 company who finally found their ideal candidate after almost two years into the search. Their prospective hire had been grossly underpaid, so to bring him to market, the company would effectively have doubled his salary. In their minds, that suddenly seemed like a lot, so instead, they offered him slightly below market but still an enormous increase over his former salary. The candidate eventually negotiated for market value, and everything worked out, but the negotiation took much longer than it should have (and the candidate had to be a much better negotiator than he should have) because of his original salary discrepancy.
• Better positioning. Your past salary signals to employers your level, title, and responsibilities. Once you accept a lower salary to start, you then have to convince successive employers that you belong at the level, title, or responsibility that in their minds command a higher salary. You will need to position yourself so that future employers don’t have to think, “If she’s so good, why isn’t she paid accordingly?”
• Better personal financial management. Employers aside, your decision to take a lower salary affects your personal bottom line. You will have less money to save, invest, and cushion you during economic downturns.

Question 2. Is there ever a scenario where taking the lower salary makes sense?

Answer. Of course, there is. Career planning is a highly individualized process, so exceptions abound. However, rather than encourage you to accept a lower salary, I challenge you (women especially!) to explore as many other creative solutions as possible to get what you want without having to “pay for it” in a lower salary.

Question 3. What’s the best way to approach a recruiter about salary negotiation? How does someone new to the workforce approach negotiation? How does that approach change after you have a few years of experience?

Answer. Recruiters will demand to know salary before they present you to the client. They need to know that you are in the ballpark of what their client is expecting. It also is good market knowledge for them to have. So you need to know that whatever you say goes to their client.

When you are new, you might think you have no negotiating leverage. It is true that the big management training programs or analyst and associate programs at banks and consulting firms have set salaries with little negotiating. For everywhere else, and that means most other jobs, there is no standard salary. You are paid what the employer has in their budget and what they think you are worth. Look at the market value of your skills (computer, languages, analytical, coursework), your internships and part-time jobs, and your degrees. Know what benefit you will bring to your employer’s bottom line and what comparable people in these same roles are making. When you are new, employers will try to pay you based on your years of full-time experience because you have relatively little. You want them to focus on skills and results.

When you are experienced, it’s trickier because there are more variables, but the essential lessons remain the same. Know your market and how you contribute. That is your value and that should be your price.

Question 4. Due to the down economy, I committed to a job offer that paid very little (peanuts), but was offered a good job profile. As time progressed, I realized that the company did not deliver on its promises and I plan to quit soon. As I apply for jobs, I am expected to quote a salary based on my current salary. The current salary is very little and I believe that with my experience and education I should be able to quote a higher salary. How can one deal with this situation?

Answer. Your current salary is a very strong anchor to what employers think they need to pay you. Therefore, you need to do whatever you can to establish your value before divulging how little you make. Focus on what you are bringing to the job and what comparable people in these roles are making. See the points in the preceding answer. Now that you have established that this is the correct anchor, you can explain your salary as an anomaly and one of the reasons you are leaving. Employers are happy to get good hires at a fair price, even if that means paying a lot more than what you happened to make at a previous job.

Question 5. How do I respond when a job posting (application) asks for salary history and minimum salary requirement?

Answer. This is why I don’t recommend that people spend a lot of time responding to job postings. There is very little room to maneuver because some employers toss out applications with missing information, such as salary and salary requirements. I won’t even move ahead with presenting candidates to my clients and hiring managers without salary information. You have to respond with the truth, and, unfortunately, the salary you name anchors how the employer perceives you.

If you don’t want to respond, you need to find another way to apply that circumvents the application. Network into the decision makers and bypass the recruiter. Make a pitch that focuses on your value so that salary becomes a secondary consideration.

Question 6. I received an offer from a large consulting firm. The start date for the job is July fifth. My family always spends the July fourth holiday and the remaining week at my grandparent’s cottage in Lake George. This consulting firm has a training program that begins on July fifth. I’d like to begin on July eleventh. Can I negotiate for this?

Answer. Large firms put extensive time and effort into constructing training programs that can introduce you to the company, along with senior managers, and provide training that can be vital to your success.

Speak to your human resources contact and ask what is on the schedule for the first week of training. The training can be eight weeks long, with the first week scheduled with senior manager welcomes. If they feel this is something that can be missed, then you have an option to consider.

I would recommend you skip the family vacation this year, and get a good start to your career. Important networking contacts can be made in that first week when everyone is new to the company, and those contacts last decades. The information you can gather at this training event can be vital to your success.

Question 7. I have two years of administrative experience with a medium-sized manufacturing firm and I’m making $45,000. I finally got an interview for a job I’ve wanted as a compensation analyst. The recruiter said I would be offered the job for $45,000 because I don’t have any experience, but they really like me. I wanted $55,000. Should I hold out for that?

Answer. You need to do your research. What are entry-level compensation analysts getting in your market—Los Angeles? Let’s say your research gives you two data points that indicate the going rate is $50,000. You can then negotiate for the $50,000, citing the research, and citing that you have two years of business experience under your belt. In my twenty-five years of corporate experience, I’ve never seen an offer pulled because a candidate asked for an additional $5,000. Think ahead: is there anything else worth negotiating for? Either way, it may be worth taking for three reasons: (1) it’s a step up from administrative assistant, (2) you will be learning a new skill that is of great interest to you, and (3) you can grow within that discipline.

10.9 Chapter Review and Exercises

Individuals can naturally get intimidated when they have to negotiate, but the truth is that we negotiate things every day, without even realizing it. We negotiate which restaurant to go to, which movie to see, how to best present a project, yet no one feels intimidated or nervous about negotiating.

It’s a given that negotiating for a job has more serious implications that negotiating for what movie to see, but if you’ve done your prep work, it should go very smoothly.

Negotiation is a skill and, like any other skill, practice is critical to succeeding. Role-play with your friends and your contacts at career services. Practice asking for a slightly higher salary with a partner who doesn’t give in easily. Practice asking for a higher salary with a partner who doesn’t give in at all. Respond professionally and appropriately at all times.

When receiving an offer, it’s best to think of the totality of the offer. What makes you happy about the offer? What displeases you and how would you like to see it changed? In some cases, you will not be pleased in the compensation arena because you’ll have less vacation time than you would like or no opportunity for a bonus (at the starting point). Either way, remain professional at all times, and balance and weigh each component, thinking about the long-term potential of the position, the company, and the industry.

Sometimes when you negotiate, hiring managers will go higher with compensation and sometimes they will not. If the compensation is extremely low, much lower than the average, perhaps you should refuse this offer. Consult someone who knows what they are doing: career services, a professional you can trust, or perhaps a career coach. It’s well worth your effort to ensure you move ahead wisely and appropriately.

Some people view compensation as the most important component of an offer, and others, perhaps most, place it in the top three or four components. Other components may include the following:

• Your manager: Can you adjust to their style?
• Your company: Does it have a strong brand?
• Your challenge: Is the job challenging enough, and can you rise to the challenge?

Interview and get multiple job offers and negotiation will be much less stressful.

One final note: don’t forget to follow your gut instincts. We often immediately know whether something is a good or bad idea, and we are usually right. Negotiating can be risky, but you can mitigate that risk by using all of the previous job search steps, and also tuning into and trusting your instincts.