Friday, May 25, 2012

Ten things to consider when negotiating for that new job

You've done it! All your hard work getting your resume into shape, all the network interviewing and company research, posting that resume to all the right places, going through the phone screen and the real interview. You receive a phone call and the person tells you they are ready to make you an offer. Here it is...

Now what?

1. Now is your last chance to negotiate.
There are some very important things you need to consider at this point. First of all, this is your last chance to negotiate. Every penny extra you get now not only gets multiplied by every year you work at this company but it is the basis on which all future raises are based. So if you can negotiate an extra $10,000 now and work there for 5 years, that's $50,000 extra you earn, plus those 3 - 5% raises you get are added to the $10,000 meaning an additional $2,500. Chances are, your salary at your following job will be based on your ending salary at this job so the stakes keep getting higher. Negotiations you perform at this point could literally be a million dollar decision. So get it right.

2. They want you.
The people who interviewed you and several other candidates came to a tough decision. You are the person who will best suit their needs. People rarely change their minds at this point. It's not as though they are deciding between two people and will take whomever they can get the cheapest. New employees are not airfares. We are stuck with these people for the long haul and, once we decide who we want, we don't back down just because they are asking for a little more money.

3. No-one ever gives you their best offer first.
Let's say the budget for hiring a new person for this position ranges from $60,000 - $120,000. That's not unusual. Ranges can be quite large because people often have much greater than the minimum requirements for the job. The hiring manager decides they want you. She talks with Human Resources and they agree to offer you $100k. But, the economy is bad so they think they can save a little so they offer $90k. If you say yes to that, what will they think? Most likely, "What's wrong with him that I got him that cheap?" or "Damn! I should have offered $80,k."
If you negotiate and bring them up to $110k, they believe they got a better product. So it's a win-win.

4. Don't say yes right away.
The first offer you receive might be over the phone. "Bruce, we've talked it over and decided to offer you the position. Can you start in two weeks? The salary is $90,000 and you will get all the benefits we discussed during the interview."
How do you respond?
First of all, sound excited. "Cheryl. Thank you for the offer. I'm so excited to start working working with you soon. I have many ideas on how to tackle the problems you told me about."
That's good, you sound excited and didn't say no. Now for the other shoe to drop.
"Can you send me the offer in writing and I'll talk it over with my wife and get back to you tomorrow?"
Nobody expects you to agree to a life-changing offer in an instant so this is quite acceptable. Most offers in writing will give you a week to respond. You haven't said no but you haven't said yes either. You are deferring to an unseen authority, a classic negotiating strategy. Do you recognize this from the last time you purchased a car and the salesman asked you to write down your offer and he'd try to talk his sales manager into accepting it?

5. Say 'No' in a way that makes them offer more money.
You want them to offer more money before you negotiate. When you return to them the next day, start by saying something along these lines. "You wanted a go-getter in this position. I'm clearly the best man for the job. When we talked during the interview you said you were offering a competitive salary. I don't think $90,000 is competitive. Can you do better?"
Notice you are not counter-offering, just asking them to up their bid. Remember when they thought they could get you for $90k even though they thought you were worth $100k? Now is when they come up to that point. When they do, thank them and acknowledge their new position. "So you are now offering $100k in addition to the same benefits and start date?"

6. Bargain for every last cent.
Remember that $10k extra is a million dollar decision. That means that $1k is a $100k decision. So fight for every cent. If you think you can get $110k, your counter-offer should be $120k. If they offer to split the difference by offering $110k, your response should be along these lines: "Your new offer is $110k, my position is $120k, can we split the difference here?"

7. Be tough. You aren't negotiating with your boss.
Unless it's a small company and you are. In which case, be gentler since you want a good, long-term relationship with this person. But most people are negotiating with Human Resources and will be working in a different department. When negotiations are concluded, HR will tell the hiring manager, "It was tough and he negotiated hard but I finally got him for you at the best price I could." This is a compliment to you and makes the HR person look good also.

8. Now negotiate for other things.
Salary isn't the only thing on the table. Negotiate start date, review time, level of benefits, signing bonus, vacation time. Sometimes you can trade one off against the other. If the HR person is up against the top end of the range on salary, ask for a signing bonus. (Remember that the bonus won't multiply yearly like extra salary will so don't trade a $10,000 raise for a $20,000 bonus. It's worth a lot less in the long run.) But a performance bonus could multiply each year. You could trade salary for vacation either way that you prefer. Some companies have two or more levels of benefits and you may be able to switch from one to the other. And try to get reviewed in 6 months instead of a year so that your raise comes earlier.

9. Congratulate them when the negotiations are over
Everyone is nervous at the end of contracted negotiations and wonder if they got the best deal. You are aren't you? So put their minds at ease by telling them what great negotiators they are. Say something like, "I hadn't planned on working for you at this rate but you are such a skillful negotiator and made such a compelling argument, how could I say no? You are an asset to the company. I'm proud we're on the same team now."
That kind of a statement makes them say what you wanted them to say in section 7. "It was tough and he negotiated hard but I finally got him for you at the best price I could."

10. Don't go overboard
It's one thing to negotiate with a used car dealer you'll never need to deal with again. In that case, go for the throat and walk away if you need to. When negotiating for a job that you'll likely be in for five years, you want to remain in their good graces. So leave a little money on the table and show a little bit of a soft side. That will pay dividends when you need that promotion later or when lay-off time comes around again. You need to work with these people so treat them well.

Here's a good book to read before you go through your next negotiating round, whether it be at a garage sale, a used car lot or your next job. Just be careful about which tools to use with people you want a long term relationship with:

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