Negotiating a Job Offer
Getting the Right Deal For You
Imran is ecstatic – he's just accepted a verbal offer of his dream job. But, when the paperwork drops into his inbox, he realizes that he may have been a little hasty. The salary is at the low end of the range discussed at the interview. And some of the benefits, such as vacation allowance, are below the industry standard.
On the one hand, it's a solid opportunity with a reputable company, and has good long-term prospects. But, on the other, he'd be no better off financially and would have less holiday time to spend with his young family.
Many of us will face a similar problem at some point in our careers. But you don't have to accept an offer on face value. Many employers expect prospective team members to negotiate, so it's important to know how to approach the situation confidently.
In this article, we'll look at what negotiation is, and why it matters. We'll then take you through seven steps to help you to secure the outcome you want when you are offered a job.
What is Negotiation?
Negotiation is when two or more parties try to reach a mutually beneficial agreement on an issue, while avoiding unnecessary conflict.
The process draws on our abilities to build relationships, communicate effectively, listen, solve problems, make decisions, assert ourselves, and influence others. So being able to negotiate successfully is a useful skill to have, whether you're discussing the terms of a new job or debating with your family what to do at the weekend.
But negotiation isn't easy. A survey carried out by CareerBuilder found that nearly half of U.S. workers accept the first job offer they receive. Research also shows that women and younger candidates are the least likely to try negotiating. Reasons for not negotiating include being scared of rejection, lack of confidence, and a fear that employers will retract their offers.
However, many companies do expect to negotiate, so they won't be surprised if you push back after receiving a job offer. And, if you make a good case, and the organization has room to maneuver, you could find yourself in a much better position.
So treat these discussions as a necessary part of the application process, and as a good opportunity to secure the offer that you deserve.
Compensation is a prime consideration when you are deciding whether to negotiate the terms of a job offer. In the short term, you could end up feeling resentful if you settle for a job that you don't think fairly rewards your skills and experience.
You'll likely be frustrated and, in the long term, you could earn much less over your career, receive lower bonuses, and have a smaller pension pot when you retire. Research shows that people who negotiated their starting salaries increased their pay by an average of $5,000 a year.
However, money may not be the most important factor. Labor market conditions – if there is high unemployment in your line of work, for example – may have to guide your thinking. But there is no doubt that it can pay to negotiate.
7 Steps to Negotiating Your Next Job Offer
Preparation, strategy and confidence are fundamental to successful negotiation. So, here are seven steps to follow, to help you secure the best job offer that you can.
1. Consider the Whole Offer
While your base salary is an important factor, consider the total reward package before deciding on your next move. That includes bonuses, pension and health insurance, and work-life balance considerations such as vacation time, the commute, and the flexibility of work hours.
You may decide that working for a company with a good reputation, job security or long-term career prospects is worth taking an initial hit in salary or benefits. Perhaps it will put you in a better position later in your career, or once you've proven your worth. There are many factors to consider when assessing an opportunity. Read our article, 8 Criteria for Evaluating a Job Offer, to find out more.
If there are aspects of the offer that you're unhappy about after you've weighed up the pros and cons, rank them in order of importance. This list will give you a starting point for your negotiating strategy.
2. Focus on Your Market Value
If you think you deserve a better opening offer, research your market value. Consider the industry average, what local competitors pay, the company's location, and the competition in the labor market. If you're well informed, you'll have more confidence that your request is reasonable.
Emphasize the unique experience, skills and achievements that you can bring to the organization. But remember to stick to the facts and remain objective. Avoid bringing personal need into it, as this may weaken your case and make you look desperate.
3. Establish Your Reasons For Negotiating
If your job offer falls short in an important way, you should speak up. But don't just do so for the sake of it (unless negotiation is expected in your profession or culture, or at your level of seniority). This is especially true if the offer's already good for your industry, your location and your experience.
Pushing back at this stage could damage your credibility if you can't justify your demands. Equally, if the salary was made clear from the outset, or it's the company's ''best and final'' offer, it will likely reflect badly on you if you try to debate it further.
4. Assess Your Bargaining Position
How much you're willing to negotiate should depend on your bargaining position or BATNA (Best Alternative To a Negotiated Agreement). This is what you will settle for if you can't get exactly what you want, and it is something you should be clear about in your own mind before going into negotiations.
Your bargaining position will be stronger if you're in employment rather than if your job is insecure or if you've been out of work for a while. You'll also have more leverage if you're considering other offers, especially if those terms are more favorable. Just be careful not to play organizations off against one another, as you could lose out.
Be clear in your mind about why you want the job, and which items on your wishlist you're willing to compromise on if the employer can meet you halfway. You may ultimately find there's more flexibility on ''cheaper'' benefits, such as vacation allowance, even if the company isn't able to increase the salary.
Beware negotiating a much better deal and then not living up to the higher expectations that you've set by doing so. You'll be under greater scrutiny once you join the organization, especially if you're paid more than the rest of your team.
5. Practice Your Delivery Style and Strategy
The fact that you have been offered a job means that you have impressed your prospective employer, so it is important that you maintain good relations.
If you're nervous about negotiating, rehearse your arguments until you feel comfortable delivering them, and have a list of prompts ready in case you forget any of your key points.
You can practice your delivery style with a friend. Ask whether he or she thinks that you are asking for a reasonable increase, and whether you're communicating politely and fairly.
Prepare to tackle the key items on your list at the same time, rather than waiting for one request to be dealt with before moving on to the next. That sort of back-and-forth strategy is guaranteed to test the other party's goodwill.
6. Conduct Yourself Professionally and Politely
Open the negotiations by saying how pleased you are to receive the job offer, even if it falls short of your expectations. Be clear about what you want, but avoid issuing threats – you'll undermine your position and your relationship with your prospective employer if you do so.
Remember, you could be working with these people soon, so maintain a ''win-win mentality,'' where honesty and openness are the keys to success.
You might be tempted to negotiate over email but it's better to speak in person or over the phone. This allows you to build rapport, limit miscommunication, and avoid too much back and forth.
7. Know When to Walk Away
You may find that negotiations grind to a halt if the gap between your expectations and the offer is too wide. A small company might not be able to provide the kind of salary or benefits that a larger organization can. Or, perhaps a bigger business is constrained by restrictive pay bands in a way that a start-up is not.
Whatever the reason, know when to walk away, and whether you are going to accept what's on the table or move on to the next opportunity.
You can always use what you've learned from your negotiations in your next job search. Just remember to leave discussions with the other party on a positive note, as you never know when your paths might cross again.
Negotiation is an important life skill, not least when it comes to getting what you want and deserve from your career.
When deciding whether to negotiate, consider the whole offer and retain a professional style throughout.
Next time you're offered a job, choose the right time to open discussions, and settle on the minimum that you'd accept based on your market value and bargaining position. Don't haggle for the sake of it, and know when to walk away if the deal isn't right for you.
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