Things are feeling pretty positive around here so I thought I’d focus today on what to do when you've gotten an offer. Before I start I also wanted to let you know that at some point in the next month I will be taking a break from the blog. My wife and I are going to be welcoming our third child into the world. Tentatively we are scheduled for March 22nd but these things don’t always go as planned. In case you are wondering, we are having a boy and his name will be Kai Strom Thompson. Now back to the article…
When people get offers the best case scenario is that everything is perfect on the first try and you accept immediately. Unfortunately, this is not always the case. Many people try to negotiate and many are successful. However, I’ve seen a lot of job opportunities die on the vine because the two parties can’t get something hammered out. Some other day I’ll focus on how to actually negotiate a deal. However, today I’m going to talk about what you need to know about salary negotiations. These tips will put in the right frame of mind to get it done and start the new job!
1. It is absolutely your right to negotiate… but there can be consequences
Many people ask me if it is OK to negotiate on an offer. I firmly believe that it is. However, you need to think long and hard about what you are looking for and if it is a dealbreaker. The reason is because culturally some companies are very turned off by it. I’ve seen responses ranging from insult to anger resulting from someone negotiating and in some cases I’ve even seen offers rescinded.
Why would companies react this way? To understand this you need to realize that the people making offers are people too. Often times when they put together an offer it is something that they are really proud of and when it is questioned they feel insulted. Some places just refuse to negotiate. Regardless of the reason, there are risks. I’m not telling you this to stop you from negotiating. Instead, I’m making you aware that this is an outcome and that you should think carefully about what you are asking for and why. Make sure that you aren’t negotiating because you feel that it is expected. It’s not.
2. You need to be armed with Supporting Information
With any good argument you need justification. Often times the person you negotiate with has to go back to their boss and ask for more money. You need to give them a reason why you are worth it. Just to be clear there are several reason why you shouldn’t ask for more money. These would include:
- Because I’m worth it – really? Really? I roll my eyes when I hear this
- Because I’m currently underpaid – Companies don’t like to pay for the sins of other companies (this is a valid reason – just not one you should use for your argument)
- Because I haven’t had a raise in XX months/years – see above – also this does not make you special – many, many people have not had raises since the recession in 2008.
- Because I just got my MBA/Bachelors/Associates/GED – I’m all for education. However, getting a degree does not necessitate an immediate salary increase. Believe me you will make much more over the lifetime of your career with this education. You just won’t see an immediate bump.
Valid supporting information would be:
- Significant differences in benefits
- Recent salary changes that weren’t taken into account – (we’ll discuss this more in depth)
- Cost of living adjustments
- Compensation for income lost during the transition
- Because the new job’s duties warrant it
3. Set Expectations – Update Them When Necessary
We live in a weird culture. For some reason someone’s salary and compensation is a really taboo subject. Stemming off of this is the bad advice that is constantly given – “Don’t talk about your salary in an interview.” OK – there is some truth to this. You shouldn’t ever ask a potential employer – “So what does this job pay?” – it’s tacky and makes it seem like you aren’t interested in the job. However, you should be open and honest about your expectations. When asked about it be specific – make sure the company knows the following:
- My total compensation is X
- I would like to see something in a range of X – X
- There are some special considerations in my current situation (I get a huge annual bonus that is out of the ordinary, all of my benefits are paid, I work from home four days a week and get four hour lunches.)
- I would like this type of relocation assistance
The reason people say not to share salary is because there is this fear that your expectations will somehow scare the company off. This line of thinking is total crap. Companies budget for hiring positions and they can make it work or they can’t. I feel that there is a better chance of making things work if they know what they are up against rather than being blindsided at the last minute.
Finally, the interview process can sometimes last weeks and even months. Sometimes when this happens your situation changes. If this affects your expectations you need to tell the company before they make an offer. I see a lot of people get a raise in the middle of the interview process and then get angry at an offer that is now low in light of the raise. Problem is that if the company doesn’t know about it, they can’t adjust for it. So, I would suggest that when you are at the end of the process ask the company if they would like to go over your current compensation again. Just to make sure you are all on the same page.
4. It’s Not all About You!
Here’s the deal. In a perfect vacuum a company would make an offer to you that mirrors how they value you. In reality, companies have other factors that they have to take into consideration. They have budgets, salary guidelines and also they look to have some form of salary equity within the organization. You need to remember this. One of the biggest mistakes I see out there is that people tie their ego to their salary and then become so angry when an offer isn’t right that they can’t effectively negotiate. When you are negotiating do your best to be reasonable about things and don’t take it personal. No company makes an offer with the intent to insult you or p#% you off. If they were trying to do that they wouldn’t be asking you to come work for them.
5. Companies are Generally Uncomfortable Giving People an increase of more than 10% - 20%
Please take this as a general rule of thumb rather than an absolute. I’ve found that companies are generally uncomfortable giving someone a salary increase that is more than 10% - 20% of what you are already making. Knowing this is half the battle. If you want more (and there are valid reasons to want more) you need to be armed with valid reasons why. You also need to be prepared to come up with creative ways to overcome this if the company has guidelines that prohibit anything above a certain percentage.
One of the best solutions I’ve seen is asking for a review after 6 months where there is an increase on the table. Another solution would be to negotiate a bonus structure that is more lucrative. Sometimes companies are more open to situations like this as opposed to a black and white I need X.
Bonus Tip
This is just a small aside but it is worth noting. If you are overpaid in your current position it is not a fair expectation that every company will give you an increase. You need to be aware of the market. Same thing goes for special perks that you have earned. This is why it is so difficult for people to make a move in these situations and probably why the company gave you these to begin with. If you are in this situation you will have to one day make a sacrifice to make the move or sacrifice your quality of life to stay in the bad situation for more money or flexibility.
That’s all I’ve got for this week. Make it a great day and don’t forget to leave comments or email me directly at sthompson@insurance-csg.com.
Check out some of my recent articles on the blog here:
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