It’s the time of year for a few of my favorite things: warmer weather, March Madness (how are your brackets?), and … job offers! We’ve seen a marked uptick in promotions and new job offers lately, so it seems a good time to review the topic “how to negotiate.” Here are some common questions and scenarios we field when coaching alumni.
How do I know my real worth in the market?
First, understand that any job opening has market value based on the hiring company’s health, growth, and history, as well as the relative scarcity of skills and requirements needed to succeed in the job. Most companies have a base salary range for a role. If salary isn’t revealed up front you might ask, “Can you give me an idea of the salary range for this position?” On the Compensation page of our Alumni Career Services Job Search Toolkit, we recommend a variety of research tools, noting that Glassdoor has become an essential resource for most. Be sure to look at a wide range of reported salaries, different companies within an industry, and variations of job title and location. Tapping into your Darden network can be helpful as well, asking industry insiders broadly, “What level of salary is expected in this role?”
Do I have to reveal my current salary when asked?
Job candidates are often asked early in the screening process, “What are your salary requirements?” or “What do you currently make?” Most candidates balk at revealing their salaries, thinking that will give away leverage they might need if they ultimately get an offer. However, recruiters use current salary not to anchor a negotiation, but to ensure that they can afford you. Candidates should never lie about salaries because some companies ask candidates for past paystubs as part of the background check.
You may be able to deflect this question by demonstrating that you’ve done your homework with a statement like: “My read of the market leads me to believe that this job should have a base pay between $X and $Y, and I’m comfortable in that range. I’m confident that if you decide to offer, we can come to an agreement.” However, we advise mentally separating this question from a negotiation later in the process. It is possible to achieve large compensation jumps.
Who should I negotiate with?
Once you’ve landed an offer, the next important element to consider is who you’ll negotiate with. Offers are often presented by a recruiter or HR representative, but rarely does that person have the power to negotiate. That person may act as an intermediary, but only you can best represent your interests. If the offer is presented by someone other than the hiring manager, ask for time to consider, then reach out to the hiring manager with a gracious thank you and request to discuss your questions and concerns directly.
How do I negotiate higher compensation?
Start by prioritizing which aspects of the offer you value the most. Total compensation has a number of financial components — base salary, annual bonus, signing and/or relocation bonus, and equity. Any up-front bonus will not be a part of the equation in a future salary increase discussion, so it’s usually to your advantage to gain more on the base than the other components. Also, ensure that you understand when and how future salary increases will take place, as well as the specific hurdles that must be met in order to earn a bonus. Our Job Search Toolkit’s section on Negotiating includes a set of guidelines as well as a checklist of compensation and benefits.
When making your counter-offer to the key decision-maker, state your expectation, make a brief case that you believe your experience deserves this higher number, and ask simply, “What can you do for me?” Building your case should always focus on your skills and potential, never on your personal financial wants and needs.
The job I’m being considered for is structured very differently than my current role and the pay isn’t comparable; how can I convey this to the hiring company?
You may be leaving a higher paying industry or city for a job that promises a more favorable lifestyle. Conversely, maybe you are moving from an early stage startup to a more traditional corporate position. In either case, it’s equally important to do compensation research around your target role. Acknowledge to a recruiter early in the screening that you’re aware of the gap and describe why you’re still a great fit for the job.
I’m in late stage interviews with two different potential employers and expect offers from both; how do I deal with the timing of the offers? Can I share the offer terms from one employer to leverage the other?”
It’s exciting to get two or more offers, but also daunting because you can’t control the timing of each offer, and you may be pressured to give a quick answer before you have the information you need to make an informed decision. In this scenario, think carefully about the possibilities. Compensation aside, which company is the best overall fit in terms of role, industry, growth, culture and personal factors?
When you get the first offer, express your enthusiasm and ask for time to consider. Immediately let the other organization know that you have an offer in-hand, but you are still very interested. Ask for their decision timeline. If they tell you, for example, “two weeks,” then you know how much time to request from the first employer. If the first employer insists on an answer before the second employer will decide, you have three choices:
- If the first employer is your first choice, negotiate the offer independently and move forward.
- If the first employer is your second choice, think about why. What would the offer need to be to make it more desirable? Higher comp? Better title? Flexible work arrangement? What would make you comfortable accepting before you know the outcome of the second employer? See if they will meet your needs.
- Politely explain that you are not prepared to accept at this time, but you remain interested. Ask to keep communication open in case the position is still available when you are ready to decide.
I’m considering joining an early stage startup; how do I value a possible equity stake?
Unfortunately, there is no straightforward way to value an equity stake in an early stage startup. Many important but obscure factors influence equity valuations: number of current equity holders, current shares outstanding and granted, methodology for internal values of each share or stake, vesting time-frames, number of outside investors (now and potentially needed in the future), and how the founders envision growth and ownership going forward. Often, senior candidates considering joining a startup will be asked to make a trade-off in cash compensation for some portion of equity, knowing that the liquidity of the equity is usually pure conjecture. It’s best to have a detailed dialog about all these factors when possible and, ultimately, know that your personal sense of risk tolerance is the most important factor to consider.
The hiring company has specified a start date that conflicts with my current plans; can I ask for something different?
Many companies have a provision for the term needed to work before becoming eligible for benefits, so it’s important to understand the effect of your start date on that eligibility. Most companies will be flexible on this date given your need to give notice and transition. Most companies’ health care coverage extends through the end of your month of resignation and begins on the first of the month after you start. Therefore, it can be ideal to end and start a job within the same calendar month so you don’t have a gap in coverage.
And after you’ve sealed the deal, be sure to review our tips for Starting a New Job!
Of course, each person’s situation is very unique; if you find yourself facing a tough salary negotiation, call on Darden’s Alumni Career Services for support.
Marty Speight ‘96, Career Consultant for The Armstrong Center for Alumni Career Services at the University of Virginia Darden School of Business