Talk about an uneven playing field: Every year, freshly minted college grads are unleashed on the job market - with little work experience and no expertise in negotiating pay packages. These newbies go up against corporate recruiters and hiring managers who have been playing the game for decades. But you can level the playing field with a few simple but powerful strategies.
First, do your homework. Learning about salary ranges in your field will help you avoid the common pitfalls that trap rookie negotiators. Second, prepare yourself to negotiate. Scary as that might sound, there's no need for frantic haggling. A few polite questions can go a long way toward beefing up your pay package. Read on to find tips on how to score a sweet deal in your first salary negotiation.
The Negotiation Process
This document is your first chance to make a strong impression on an employer. The resume offers a quick summary of your academic achievements and professional skills. Keep in mind that hiring managers are likely to devote only a minute or two to your resume, so one page is the limit. Make sure every word is spelled correctly. It's OK to boast about your accomplishments but never lie. Emphasize your skills in leadership, communication, teamwork and problem-solving. For more advice and examples, see Pitzer College's detailed guide to student resumes.
This might be an informal interview over the phone or by Skype to vet whether it's worth doing a formal in-person interview. You'll talk about your work history and educational background, but it's unlikely that salary will be discussed. It's possible that an employer will ask how much you expect to make. Career coaches say that you don't want to be the first to name a number, especially not this early. Deflect by saying something like, "I'd need to know more about what the job entails before I answer that question."
This is the time to let your passion, potential and professionalism shine. Don't be the first to talk about money. Instead, let the employer broach the subject. When an interviewer talks about money and asks how much you expect to make, avoid giving a precise figure. However, do your homework so that if an interviewer presses you, you can give a realistic figure or range. Salaries vary widely by major, field, and size of company. Still, it's not time to negotiate yet. Be cautious about making ambitious demands that might cost you an offer.
Congratulations. You've got an offer. Now you must engage in the stomach-churning task of asking for more. First things first: Thank the employer for the offer. Next: Graciously say you'd like to ask a few questions to help you understand the full value of the offer. Consider bonuses, health benefits, retirement plans, vacation time and other perks. Make sure the employer lays out the worth of these benefits.
Don't be shy about bargaining, negotiation experts say, but do it the right way. Be polite, professional and low-key in your negotiations. Confidence is good. Arrogance is bad. Showing too much ego can cause an employer to yank a job offer. If the salary seems low, offer examples from your work history and education that highlight why you're worth more. If salary surveys support your position, cite them as evidence. If there's no room to negotiate on base pay, ask if the employer can be more flexible with vacation time, flexible work arrangements and other benefits.
If the pay is less than you'd like but the employer offers a generous package of perks, perhaps you should accept. However, set the stage for a raise by asking for an early performance review, or by indicating that you'd like to revisit your salary in six months or a year. If the offer just isn't enough, by all means, turn it down. But do so in an emotionless way that doesn't burn bridges.
If the offer is x and you're trying to get to y, you need to identify why you're worth it.
We've had students double their salary by taking an offer in Silicon Valley - but I like to say they just quadrupled their living expenses.
You'll never know unless you ask. Use a level head, non-ego-driven voice and ask, 'Is the salary negotiable?
Too many people just look at salary. Does the employer pay for parking? Do they pay for lunch?
Know What You Want to Negotiate
Savvy negotiators know preparation is crucial. So do your homework before the negotiation. Start by determining how much money you realistically can command. Find the salary range for entry-level positions in your field. Michigan State University compiles starting salary stats that can help you set a benchmark. The National Association of Colleges and Employers also publishes a starting salary survey. Other sources of salary information include:
To get a sense of demand for workers in your field, talk to your school's career counselors. Fields such as engineering, computer science, and accounting tend to offer high starting salaries. Also, consider the cost of living in the area where the job is located. San Francisco and New York are far pricier places to live than Detroit and Indianapolis, so factor that into your calculation. MoneyGeek's cost-of-living calculator can help you compare up to four cities at a time. In general, the more expensive the area, the more employers are willing to pay to attract talent. Finally, consider what's important to you. If salary is your main concern, focus on the companies and job descriptions that promise generous paychecks. If work-life balance is a priority, consider sacrificing some pay for perks such as extra vacation time, the flexibility to work from home one or two days a week or something else.
- How much do you expect to make?
- Are you considering any other offers?
- How long do you expect to stay in this job?
- Is there any reason you wouldn't be able to accept this offer?
- What other compensation besides base salary is important to you?
Overcome Challenges With the Right Answers
Employer: "How much do you hope to make in your first job?"
You: That's a fair question. Can you tell me what the salary range is for the position?
Employer: "You don't have enough experience to justify that salary."
You: During my internships and classwork, I gained valuable experience that was directly related to this position. In addition, I possess technical skills that I know are in demand in today's job market.
Employer: "Don't get too focused on the salary alone. We also offer generous health benefits, retirement contributions, and paid time off."
You: I appreciate that. Please allow me some time to study the offer.
Employer: "That's as much as I can pay you. My company's salary schedule simply doesn't allow me to go any higher."
You: I appreciate your candor about your company's guidelines. Is it possible that I could be eligible for a performance review in six months rather than a year? Are there other areas we could talk about, such as time off, work hours, tuition reimbursement, professional dues, or other non-salary items?
Employer: "You're asking for more than I'm paying experienced people in the same position."
You: I'm surprised to hear that because I have done some research that shows the range for professionals with my experience is x to y, so I believe I'm asking for a reasonable amount for someone with my education and skills.
Q&A With the Experts
We tapped three experts to answer some common questions about negotiating your first salary. Here are some of the tips they had to offer.
Phil Gardner, director of the Collegiate Employment Research Institute at Michigan State University.
Debora McLaughlin, chief executive of The Renegade Leader Coaching and Consulting Group.
Paul McDonald, senior executive director at staffing firm Robert Half International.
How much bargaining power do I really have in negotiating my first salary?
There's really not much room right now. Employers have become averse to getting into bidding wars. Employers aren't negotiating much. Students need to know what the range is, not the average. They also need to consider cost of living. Just because Johnny got $5,000 to $8,000 more doesn't mean you're going to get $5,000 more if he's in a different area. There is one exception to this: Silicon Valley. They're paying a lot to get workers. It hasn't trickled into the Midwest yet. But if we keep getting these good employment numbers, you're going to see some room for salary negotiations. It's very isolated to specific types of majors, such as engineering and supply chain. A lot of companies are coming in with big performance bonuses at the end of the first year.
This really is a great time if you go in knowing your advantages and you can demonstrate your value. You have a lot of room to negotiate, especially if you look at things beyond salary. You can negotiate a six-month review rather than an annual review. You can also negotiate title and a number of things regarding your own professional development. Maybe it's shadowing someone in another department, or partaking in a mentorship program, or getting reimbursed for membership in the Chamber of Commerce or other professional organizations.
The market is better than it's been in the past five years. The unemployment rate for college-degreed individuals ages 25 and older is 2.9 percent. The national unemployment rate is 3.6 percent. For new grads in areas such as finance, accounting, marketing, technology, and human resources, you have a multitude of opportunities. The job openings that are being advertised in writing or online are near an all-time high. Having said that, you have to do a lot of work to get the offers. If you get out there and network and put in the effort, you'll be rewarded with multiple offers.
What's a common mistake new workers make when negotiating?
They go in with unrealistic expectations. They get an offer and they go back with a counteroffer that's just unrealistic, and the employer rolls their eyes. If you're going to make a counteroffer, you've got to have good information that's reliable. But students don't investigate salaries. We're baffled often at how students set their salary expectations. Sometimes they're way high. And there are other students, particularly from the liberal arts, who don't have a lot of business experience and tend to under-value themselves. Glassdoor and a lot of other sites have data, but it might not be accurate, or it might not be appropriate for your situation. And sometimes students don't look at the overall picture.
Answering the question, "What are you expecting to make?” Whoever gives the answer first is the weaker party in the negotiation. Also, make sure you look beyond the salary to the total value of the compensation package. Maybe one offer is $5,000 less, but you won't have to work every weekend.
Taking the first offer without negotiating. I see this time and again. The new grad has debt to pay, and they're so anxious to get out there in the real world that they just take the first offer they get. I would highly advise against that. Do your research. Then you have a ballpark for the functional role you're interviewing for and the geographic area. It's OK to say thank you and then evaluate. You don't have to answer right away.
How do you prepare for a negotiation?
Negotiating salaries is always hard. It's a little easier for men than women; that's well documented in the research. You just have to do your research and lay out the reasons you think you're worth the money. Most students don't know how to negotiate very well but most adults don't know how to negotiate very well, either.
Think about what you bring to the table that the company needs. One of the key things is to talk about innovation. Every business leader knows there could be a new startup in a garage somewhere that could come in and destroy their business, so big companies are trying to bring innovation back into their organizations.
You need to know what the range is for that geographic area and that type of work. Do your homework and look at the publicly available information on salary. If somebody is really trying to get you on the cheap, then you know. Absent that, you're grasping at straws, and you might come in and just take anything.
What's a common objection a student will face in a negotiation? How do you overcome it?
The biggest objection is, "We just don't entertain counteroffers. We've presented you with the package." The only comeback is, "This is a job I really want, but the salary is just under what I've found through my research is the going rate for this position." That's gutsy, but if it's really a low-ball offer, you just have to trust yourself and be prepared to continue your job search.
A lot of employers complain that millennials expect to make more than their top performers. It's fine to ask for a lot, but you have to demonstrate why you are a top talent. Really know the classes you took; you can use the course descriptions to amp up your resume. Maybe you speak Spanish, or you're an expert at social media or video branding. Do you really want this job? If you really want it and the money is not there, then go for these other levels of negotiation, but clearly indicate that you're unhappy about the compensation.
How do you avoid being the first to name a number?
Most of the time, students won't be asked, "How much do you think you're worth?" Companies will give a salary estimate, or they'll give a range. Usually, for a student with no work experience, the employer almost has to be the first to name a number.
Ask what the range is, and then identify where you fit in that range and why. Once you've asked the question about the range, then ask the employer to describe the experience of someone who's in the middle of the range. Then it helps you equate to why you might be at 40 percent or 60 percent.
People don't like to talk about money. They don't feel confident. But you have to be prepared for that question. It's a standard question that's being asked. If you're asked a direct question about what you expect to make, come back with a range. Say, "I'm not sure what your position pays, but I would consider something between $60,000 and $70,000." That way you've left yourself open for negotiation later.
Did you negotiate your first job?
No. It was the U.S. Army, and I was drafted. I didn't get to negotiate a salary until probably my third job, because I was being hired away at a much higher salary.
No. I started as a temp and then I was hired full-time.
I had multiple offers, but I did not negotiate my first offer, because it was a good one, and I knew what the market was.
Invest Early: The Importance of Internships
Since the Great Recession, employers have run especially lean. Most aren't keen to teach you everything you need to know to do the job - they much prefer to hire a worker who has a bit of experience and can get to work with minimal direction. Given that reality, internships can be a valuable foot in the door - and a precious negotiating tool. By pointing to on-the-job experience you gained in an internship, you can build your case for a heftier pay package. Look for internships that will give you real-world experience. And while you're interning, take the opportunity to gather salary intelligence from full-time workers. Find a polite way to ask them about compensation, perks, and negotiating tactics.
Salary is the most obvious part of any compensation package, but it's not the only thing that can affect your financial life. Most employers offer a variety of benefits and perks that can fatten your total compensation. When weighing two offers, be sure to look beyond just the salary and include the value of extras. Among the other things you can negotiate:
Ask your employer to explain the bonus. How much can you expect to receive? How often is it paid? How is it calculated? How likely are you to receive a bonus?
If you take a sales job, commissions likely will make up a big chunk of your salary. Try to negotiate a more generous commission, and ask your employer if you can collect a larger salary in your first months on the job, when commissions are likely to be lean.
Company policy might call for you to receive only one week off your first year, but employers often are willing to sweeten the pot.
Want to work from home on occasion, or prefer to arrive early and leave early? Ask for flexible working arrangements.
Asking for more vacation might make you seem like a slacker, but requesting employer-paid tuition or money to attend professional conferences is a sure way to seem ambitious.
Some employers reimburse for parking, commuting costs, gym memberships, and other expenses.
When is Negotiation Inappropriate?
Sometimes, there's no need to negotiate. If, for instance, the initial offer is so generous that asking for more would seem greedy, just accept. Knowledge of the job market and of yourself are crucial to making the right play. By definition, job seekers who lack leverage don't have much room to negotiate. If you don't have experience through internships, or if your grades are marginal, or if you're joining a cash-strapped nonprofit organization, or if you're trying to break into an industry where applicants far outnumber job openings, you might be wise to just take the job rather than risk alienating an employer. And in some types of jobs, such as government positions and jobs covered by union contracts, pay grades are so stringent that attempts to negotiate are unlikely to yield much improvement in the offer.