Why You Should Negotiate a Job Offer

This guest post is by Francesca Gino, a behavioral scientist and professor at Harvard Business School and the author of “Sidetracked: Why Our Decisions Get Derailed, and How We Can Stick to the Plan.”

Imagine you have accepted a new job in another state. You want to drive to your new home, but your old car won’t make it there, so you decide to buy a new car (assume that you are not trading in your old car). You decide on your favorite model that lists for $21,000, but a friend informs you that you could probably get the car for around $20,000. There are a number of ways you could purchase your preferred car, but let’s focus on two of them. In both cases, the time involved, final price, service implications, etc., are the same – the only difference is the procedure. Here are the options:

Option 1: You spend the afternoon at the dealership and negotiate a price of $20,200 for your preferred model.

Option 2: You spend the afternoon going to a fixed price dealership in a neighboring town and they sell you your preferred model at a fixed, non-negotiable price of $20,200.

Which one would you prefer, assuming that the car is identical in all respects? If you are like most people, you would pick option two. This is because, for most people, negotiating is no fun: it is uncomfortable, especially in situations where is it unclear whether it is even appropriate.

For instance, most graduate students entering the workforce do not negotiate their job offers. One study found that only 57 percent of men and 7 percent of women negotiated their salaries when starting a new job. Even leaving the gender issue aside, these percentages are strikingly low especially when considering that negotiations at this stage of the employment relationship greatly impact salaries down the road.

What can you do to overcome such fears of negotiating and make sure you get off to a good start when entering a new job? Here is some advice to help you negotiate a job offer.

Ask – Because Employers Expect You To

If you are sitting on an offer, you’re probably thinking you are lucky you have one. Having a job offer in this economy is already something to be thankful for. But you should remember that, across industries, employers expect new potential hires to negotiate. They do not expect you to accept what they offer so ask. It is possible you won’t find flexibility on salary but it is likely your new employer will be open to negotiating other terms of the offer, such as bonuses, vacation days, location or other issues you care about.

Prepare – Use Benchmarking Resources

There is a lot of information you can gather prior to discussions. Survey tools like Salary.com, Glassdoor.com and PayScale can give you a good sense of what other people in similar jobs and geographic areas are making. And do not forget to tap into your networks: your friends, peers and colleagues can be invaluable sources of information.

Stay On Track – Come Up With a Strategy Before You Negotiate

At the time of preparation, you should develop a plan that identifies your bottom line, and your priorities. Your plan should also include the questions you’ll ask and possible strategies to learn more about what the other side has to offer. But what’s critical at this stage, in addition to all of this, is to anticipate what may get you off track during the negotiations. For instance, negotiating with your future boss may make you uncomfortable or anxious. Make sure you have strategies to counteract the forces that may derail your negotiations.

We often attach bad feelings to the very thought of negotiations. And we often do all we can to avoid them. Yet, there is a lot of value in negotiating job offers. By asking, preparing and staying on track you can make sure you’ll get off to a good start by entering a job that you shaped thanks to your effective bargaining.

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  • http://catinpv@hotmail.com Cathy Goodwin

    When is the best time to negotiate or talk about salaries. Is it when you have been offered a job or during your firs interview?

    • Jeff

      Generally, the first interview is never a time to discuss what benefits or pay you will get from the company. I feel that once you have an offer in hand, that’s the time use what what leverage you have to improve the offer. If you don’t have much leverage, for example a current position or other real offers, it’s difficult to ask for something and hold your ground. I also feel that the farther you proceed into the company’s selection process, the more they have invested in you. If you are asked to a 2nd, 3rd or even 4th interview, you are definitely on their short list, and they likely don’t want to lose you over a reasonable improvement in their offer. Keep in mind that an offer can’t be far beyond what others in a similar position already at the company are getting. Maybe this might be 10-15% above the max that is already in place… but, there certainly are many factors in play, especially experience.

    • Greg Hildebrand

      Cathy,
      The advise I’ve gotten consistently is that before the offer is made, a question about salary is a screening question. If there is a big discrepancy between their expectation and yours, in either direction, it may not be a good match of applicant to job. After the offer is made, any discussion of salary is a negotiation (and that is when negotiation is appropriate). After the offer is made is also when you have the most power to negotiate. They have decided they want you, and they have to sell their offer, and their company to you. You are officially the best candidate they have, so they realize they will have to pay to get you. They also probably expect you to negotiate, so they won’t offer you the maximum price they are willing to pay. If you negotiate, they will stay within their budget; if you don’t, they are getting a bargain!

      Best of luck to you!

      Greg

    • Shelly

      I had an interview today. I actually met with two people, separately. I believe it went very well with both. I think I made a mistake though…When asked if I had any questions, I did, I asked several. But, one of them was if they knew what the salary was. They weren’t able to answer that question. I left there feeling really confident that I will get a job offer. Now after thinking about it and reading articles, I realize I shouldn’t have asked that question. I hope it doesn’t ruin my chances for getting an offer. I also have a hard time with negotiating pay. I feel like if I ask for too much, I might lose the opportunity.

  • seege

    Whether or not you negotiate also depends on what field you are in. I’m in the food service field; there is usually no room for negotiation until you’re at a management level.

  • Matthew

    How would you negotiate if the pay and commission for the position was laid out in a group informational session prior to the individual interview?

  • http://www.yahoo.com Alice Garner

    I have had a lot of employers look at me and think I’m too young to do the job and even told me I don’t know what I’m doing. I have to show employers what I know like one time I actually typed up a document in Word before I could get the job and did other office stuff to show that I could do the job finally he had hired me. I live in Knoxville, TN and now that I have finish my Associates Degree its even harder to find a job that you are qualified for. All I get is Customer Service jobs that expect you to sell and I’m not a seller at all. I can do Administrative Assistant/Receptionist work but not persuade anybody to buy anything that I know I can’t do. What should I do if all I know how to do is office work and not sell anything. I can provide customer service skills but not sell what jobs are out there that fit my skills.

    • Yuriy Ksenidi

      Alice,

      One thing to try is visit staffing firms and tell them all you can about yourself. Say that your focus is office work but you are willing to be trained on even selling stuff; which seems to be a weakness/challnege for you. I do not know what you have an Associate’s degree in but whatever it is, find a way to make it one of the highlights. Many jobs don’t even bother saying they want a Bachelor’s anymore-so your education should fit that aspect. You said that you demonstrated your skill to a person who hired you. Many times that is the only way to convince someone-which is similar to the selling stuff you do not like to do. If the person hired you, than you did a good job selling your skills-so you do know how to sell! Granted, working is sales is just not your desired job.
      Not knowing anything about your background, I suggest you do a brief self-analysis of strenghts, weaknesses, opportunities (your career aspirations) and limitations (threats)-a SWOT analysis many firms do annually. The limitation could be that because you are afraid to sell stuff, you only can work in an office environment and do not want to learn how “to sell stuff.” Your strength is working in an office so try to extend your interest to as many aspects of office setting as possible. It is also perfectly fine to learn a new skill. So, reach out to your college and ask if it offers classes on skills that require to “sell.” This can be something like a negotiating class because there you convince another person to listen to you and give up something. Then, you can boast that you have the ability to “sell” without feeling uncomfortable about it. Likewise, your city may offer some kind of mediation service for neighbors, business owners, etc. Ask to observe and see how the mediator gets the two sides to come to agreement. There is some selling skill involved there too.
      Point is, having a job where you use skills you already have is fine; however, gaomomg news skills is essential to self-improvement. You can volunteer for an organization to do a presentation of Microsoft Word features-like macros, comments, etc. These are not used too oftern on regular basis. You will practice presentation skills, teaching, and some selling too because you will encourage employees to go on and use this stuff in their daily work. So, again, selling is more than what you may think-it can be seen in a myriad of applications and does not need to be intimidating.
      Hope this helps!

    • Bevav

      These days job titles are not what they appear to be. Many people looking for customer service positions are finding that they are expected to “sell”. Two reason this is the trend.
      1) Employers who are looking for telemarketers want to make the position appealing so they may advertise Cust.Serv. but when all is said and done, there are quotas “upselling” expected.
      2) A person who applies for “Bank Teller or “Cashier” position is expected to upsell either products or services in addition to the position listed. It is a trend I found surprising but true. I have been a Director of HR for over 12 years so I see the changes.
      I advise you to keep trying but be sure to ask when you are offered an interview if sales are involved. This will save time and energy on both ends. Research the company, if it is Insurance, etc. Chances are good they will want to bring in a sales member first.
      Also be sure to read the job description. If it sounds to good to be true, it usually is. Earnings as high as $2000 a day, etc.
      Our company is advertising for Customer Service Reps, and I am surprised by how many applicants are shocked that I require no selling at all, just basic assistance. Also “Help Desk” may be a key word for the position you are looking for.

      I hope this helps a little

      Bets of Luck in your future endeavors.

  • Mary

    I was offered a job on my first interview offered being let go of my job of 33 years. It was much less pay than I was making but I really wanted the job so I asked for more money and gave a low that I felt comfortable with. The Sales Manager came back the next day and said the President of the Company refused to pay anyone more than what other salespeople were being paid. I asked if they could possibly sweeten the deal with more vacation or other benefits. He called back the next day and said they were going with another person who was happy with what they were offering. Here I sit 15 months now unemployed.

    • Bevav

      Mary,
      I’m sorry to hear this. It is a tough job market. Especially if you are coming from a higher level position and now have to be the entry level or “New” employee. Due to the economic fall over the past years, many of our organizations clients had to lay off, terminate or just reduce staff. In the past year or so I am seeing more opportunities for experienced people like yourself. Since you do not mention the pay scale you were after it is hard to be sure this is accurate advice, but I would look for a position you are qualified in or have an interest in learning, that offers base pay and commission. This way you control your earnings destiny to a point. If you have the experience of 33 years in sales, you should be able to hit your goal in no time. Example in Florida….New hire comes in at $9/hr say. They learn all they can about who we are and what our product or service is by doing the entry level work.
      Many organizations hire from within for sales and management roles because the new people really do not know enough about the company and what they do and how they do it. In my company, to give someone an opportunity to sell our services, they have to have hands on experience. If there is an interest and they meet the experience or criteria, we give them a chance. It is a Win WIn. They have a higher earning potential and we have one more person trying to get new business in.
      I am not in sales, but have been in the past and believe there is no limit on what you can make if you believe in what your selling and put the work in!!
      You may have to start at a lower rate, but if you work at it, you can multiply your take home threefold in a few months.
      I am also sorry you have been unemployed so long. In my position I interview and do all hiring and you may be surprised at how many people I have turned down a job because they were making money on unemployment. It makes me sad because these out the future CEO’s CFO’s of the world.
      It is nice to see that some people still have work ethics and pride.
      Look for companies that offer base pay + commission on sales. You may have to start at a lower rate to begin with but I am sure you will prove yourself in no time and move ahead quickly.

      Best of luck to you.

  • Ann

    I am in the K-12 education field. I am moving from a private school to a public school and have accepted a job offer in a school district. I have not yet received my contract but have found out that there is an even more compatible position available in another school within the same district. Should I submit a request there or keep my word with the first school.

    • Bevav

      Hi Ann,

      That is a tough one. We all have to look out for #1 but at the same time we need to make sure what we do is within our personal code of ethics. The fact that you posted this question makes me think you are of high ethics and put consider others.
      Many people have numerous applications and offers. It would be great of we could get the first job we asked for but usually a person will have their resume out to 10-20 different employers. Is it unreasonable to submit your request in this field? I am not familiar with Schools etc but my personal opinion is….
      Think about the pros and cons of each …..
      1) Are you guaranteed a position/work?
      2) Are the benefits equal in both positions or does one offer more than the other?
      3) Location, Location, Location..which requires easier transportation for you.
      4) Which one is more satisfying personally, not financially? (Happiness is key, money can not buy it:)
      5)Are you excited about a change from private to public? Some people are afraid of change but change is good for most.
      6) which do you feel you will excel at and be the best teacher ever.

      Now, if you are still not sure you can submit your request for more information. There is no reason why you should not be able to have all your facts. Knowledge is power. You have a commitment to the first opportunity but you also have one to yourself.
      Once you receive the information, go back to the questions above. Then if you feel you are torn, call the first School and tell them there is another opportunity that you are torn with and you wanted to be honest and let them know. (either they will appreciate your honesty, think you are trying to highball them, or they will understand, they may even match the salary)

      It does not always come down to money to make us happy. Take the route you feel will personally satisfy you. You can make more money and hate your job and who wants that.
      The old saying I learned in School, Be true to yourself AND treat others as you would have them treat you

      Best of Luck!!!

  • David

    Sometimes employers want to know your salary requirements even before you get the job offer. Give them a small to moderate range of what you really want with your stated desire to increase it accordingly once they see how good you are at the position. Base that salary range on research you must do before going into the interview.

    If not, do not fear, but rather be polite and confident. Wait until you get an offer and have been advised of your salary then tell them you can do the job well, but would appreciate a bit more in pay. See how high they go. If they really like you they may even go higher than what you, yourself, wanted. When that happens to me I quip “that’s so close to what I had in mind that I’ll take it.” You obviously don not want to tell them that that is more than you expected, but rather seal the deal with something like “you won’t be disappointed”

    If they ask you what is the least amount you would take either tell them you’d first like to know the most they could offer or give them for an amount certain. Base you strategy on how you feel the interview has gone and, of course, how desperate you are to get the job.

    Of all things do not come across as a push-over. If they won’t go up a penny ask them to give you a couple of days to think about. “Can I have ’til Friday to get back to you?” If they want an answer then and there, I’m not sure you’ll enjoy working for them. If they allow it, solidify the arrangement with an e-mail confirming the offer and telling them as many positive things that you can about the company, yourself, the interview and that you will definitely let them on or before the date to which you agreed.

    You need to really probe as to whether or not you will be a good fit for that position with that company. Negotiating the salary is a starting point.