Salary negotiation is a process that typically requires a lot of back-and-forth communication between two parties and this might be a topic you would want to raise together with your response when you receive a job offer you are keen on but with a salary package you are not completely comfortable with.
Preparing Your First Response
If you receive an offer with a salary package that isn't what you expected, then you might want to consider how you are going to respond the very first time, especially if it is your first time negotiating.
Below are some things that you might want to consider when determining your response:
- It's best to be clear about why the offer is not in line with your expectations and what the employer's explanation is. In this case, you will need to weigh the benefits of accepting the offer and the benefits of negotiating for more compensation. While firms can be adamant about having their offers met, they will jump back on board if there are any benefits of accepting it (e.g., a known date for your start date).
- Your response is critical when considering salary negotiation since the employer will be looking at how you respond to the situation and whether you are likely to be flexible on your demands.
- Employees that do not ask for more money are less likely to get more money, and this is true usually for first-time salaries (and therefore first-time salary negotiations).
No Harm Asking?
Seize the opportunity to ask just because you find there is no harm trying will hurt your chances of negotiating more per the employer's response.
- Do not accept the first salary offer you are given because most HR departments are already prepared with a salary range that the employer previously negotiated with other staff members. Rejecting this offer will allow you to be in a better negotiating position, as you will be able to counteroffer with your own valuation of the job.
- Based on the salary range that you yourself are asking for, get in touch with the employer to make sure that you are still in line with its expectations.
- Practice sensitivity in dealing with the employer's comments and reactions to your salary negotiations. It can be easy to accidentally overstep when first starting out on the negotiation process. This is especially true if you are in a position of not being able to get more or if the employer is pushing you down from a higher salary.
- Once an offer is made, ask for clarification on some of the most restrictive elements of your package. It is important to clarify these elements because there could be a miscommunication about what was initially offered to you.
Some questions are strictly off limits. Employers can't discriminate you because you are yellow (Asian) or have a scar on your cheek. There is real harm if they ask those questions and knowing where the boundaries are drawn can help you navigate the question minefield better.
How to Estimate The Maximum Offer
As mentioned earlier, HR has a salary range in mind when making you an offer. To estimate the extreme end of the offer, you should look at two factors: the "hope" range and the "doubt" range.
- The hope range represents what you would be able to secure if you reached for the ceiling. Often, this ceiling is the ceiling that HR is working towards.
- The doubt range represents the ceiling that you will not be able to achieve if the employer does not trust you. Employers will take caution when offering their hopes for your salary because they are aware that you might be better positioned to negotiate.
How to React to Lowball Offers
As a first-timer to salary negotiation, it is likely that you will end up dealing with a lowball salary offer. However, it is necessary to understand why employers give these offers, and how to react when you encounter this scenario.
- When you are first starting out, it can be a significant challenge to determine your own value. This is why the employer might give you a lowball offer for the purpose of getting to gauge your market value.
- When negotiating for a new employer, employers are wary of bad HR reputations. You might be offered a lowball offer as a way for the employers to test how you will react.
- Conservative employers will offer you something they think you can live with. This is a way of calibrating your worth.
- Some employers offer lowball offers without the intention to get you to accept them. In doing so, employers are not just calculating your worth, but they are also assessing your commitment to the job. Do not let yourself be moved by the feeling of being personally insulted, as this will only affect your dignity.
- In lowball salary negotiations, the employer is anticipating your ability to counter at a higher rate. Therefore, the first offer is considered to be a reference point where you start your negotiation, so make sure to take these offers with a grain of salt.
Bonuses can definitely add value to your compensation package (especially if the industry norm is 4-6x your basic monthly!), but their inclusion can also cause trouble.
For first-timers who are new to salary negotiation, stress on including an annual performance and company-wide bonus to be included in your overall compensation. To negotiate this, you will need to understand how the bonus is calculated and what it adds to the overall package.
- Bonuses are based on the performance of your company. This can include your contribution to the company's bottom line. As you are new to the company, your abilities are untested. By asking for the performance bonus as a reward only if you overachieved your promised targets, gives employers assurance you will strive and be motivated to perform at your best.
- Bonuses also serve as an incentive for employers to retain you. This helps you avoid the uncertainty of job hunting each year after the bonus.
- The inclusion of bonuses in your compensation package is generally an indication that the employer is confident about your performance. This alone will make you stronger when negotiating with other employers.
- Company-wide bonuses are not always guaranteed. However, to argue for its inclusion in salary negotiations, you can reason that an overall bonus could be a good barometer of how you and the company performed together as a team. Especially for new hires, it is a good indicator of how you will perform for the next few years.
Impact of Employer's Alternative Options
Does your interviewer have alternative candidates? This represents the strength of your competition. Having a bigger pool of applicants for your potential employer to choose from can be both an advantage and a disadvantage for you when you are negotiating salaries.
- Being able to gauge the sentiment of the employer will allow you to determine your damage control strategies and continue to bargain. Restless and rigorous competitors can be a result of your success if your profile is in the top percentile since you outrank even the strongest candidates.
- A salary ceiling limits the maximum salary your employer is willing to extend to you. This salary ceiling forms when other candidates are willing to accept a lower salary offer in order to secure the job. Competition in this case puts you at a disadvantage. As a result, this will be the point where you will need to draw the line and refuse to accept anything less.
- Outperforming a large pool of applicants elevates your worth to the employer. If the competition is high, the finest SSS-grade "specimen" has the weight to pull in a salary negotiation. Even when employers compare your responses to other applicants when negotiating with you, your strong and unique candidature profile will be able to influence the discussion in your favor.
Don't Be Afraid of a Short Employment Record
The length and number of years of job experience are relative to the industry you're in.
- If you are fresh out of school, a short employment record is acceptable and there is no reason to feel frustrated. You will not be treated poorly (or be at a losing end) if you have not had much job experience.
- Your employment record is noise to the employer. It does not reflect how skilled you are or how competent you are for the current job - the title can seem to be similar, but in reality, the nuances of the job are different. The impact of your past employment on salary negotiations will be minimal due to the irrelevancy and mismatch.
- Employers may take note of your relevant job experience, but they do not necessarily make it a parameter for your job application. If you are moving from one company to another, your employment record also counts the time you spent at other companies. The total number of years may still be counted and give you the advantage when you ask for higher pay.
"Take My Offer, or Deal's Off" as the Last Resort
Last resort take-it-or-leave-it strategies are for when you have no other option.
- You can use this strategy at the end when you are in a comfortable position to walk out with dignity.
- This strategy gives you a decisive outcome. You are saying that you are not willing to negotiate and the employer will either accept the lowball offer or say goodbye. This shortens the salary negotiation, and you are effectively ending all room for give and take. There will be no leeway.
- In business, last offers are not conceived as threats because they are ride on the concept of "willing seller, willing buyer". If one party is not willing, then the transaction falls through. A failed negotiation is perfectly fine and normal - in this world, not all deals are sealed.
Compare Your Compensation with Your Peers
Similar to other job search processes, the salary negotiation process will be greatly affected by how much you know about the position and the market for it. In this case, the more that you know about your colleagues and their salaries, then the greater power you have when negotiating for more pay.
You need to understand all factors that are included in your compensation package. These include base salary, bonus system, stock options, or any other perks or benefits. Feedback from your friends who are applying with other companies will be very useful in asking for a competitive rate. When comparing your compensation package to others, the last thing that you want is to be overpaid or underpaid.
You might also want to consider the competition for positions in the same area as your intended job. While it might not be the best way to compare your salary, it will serve as a good reference point if you are uncertain about where you stand. This will help with setting realistic expectations on what you are going to ask for and what you are willing to accept.
Deficiency in knowledge about your compensation package will result in you asking for more, thus causing other opportunities to be lost. When you are better informed, you are better able to participate interactively and effectively in the negotiation process.
Impulsive and unrealistic offers will ultimately affect your negotiating position negatively since the employer might find it difficult to sign on you. Doing your homework and research into the compensation package figures will also help you manage your emotions and expectations.
Going Home to Reconsider the Offer
It is a good idea for you to take all the time that is needed to think over your options and prepare for what you are going through. Don't rush into a premature decision without proper thought and consultation. Asking for time to consult with others is a good negotiation tactic that shows you are serious about the job and asking for time to weigh your options is good practice.