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Pay Up

Soft-sell strategies for negotiating a higher starting salary

By Ron Johnson and Joe Schall

Over 3,000 years ago, a parable says, Daedalus crafted wings out of feathers, wax and twine for his son Icarus. Daedalus warned his son to keep a middle course, flying equally between the sea and the sun, but Icarus, as we know, flew too close to the sun, melting his wax wings and falling to his death.

When considering whether or not to negotiate for a higher starting salary, you might worry that, like Icarus, you'll set your sights too high and end up getting burned. Especially in our currently shaky economy, if you've been given any sort of offer involving dollar signs you can consider yourself lucky, so why risk negotiation?

Perhaps a better question is "Why not?" Although it may be a surprise to you, companies are used to negotiation once they've made an initial offer. In fact, the Society for Human Resource Management reports that 82% of human resource professionals expect to receive counter-offers from job candidates regarding pay and benefits. In addition, some 92% believe that salaries are negotiable.

Therefore, when you receive a job offer, you can artfully negotiate for a higher starting salary. But there are important tips to keep in mind when negotiating. You must know what words to use and you must be able to assess the value of the job offer and the value of your skills.

How to Assess a Job Offer

A job offer is much more than a piece of paper with some numbers written on it. A job offer represents a major life change. So, let's start by walking through three key offer assessment questions:

Is this the kind of work that will get you out of bed in the morning?
Remember that you'll spend 40-60 hours each week at work. Therefore it obviously helps if you like what you do. Consider first the value of the job. Do you respect the company's reputation and products? Does the level of responsibility match your personal needs? Are you comfortable with the company's size? Answering these questions, which can usually be done even before the interview, will give you an initial sense of how to value the job.

For example, we coached a student with job offers from both Black & Decker (B&D) and General Motors (GM). The job with B&D paid more and came with more responsibility than the GM job. However, the student wasn't interested in power tools, although he was interested in cars. Remember all those hours spent at work each week? He took the GM job.

Is the job in a place in the world you want to be?
A job's true value cannot be considered without looking at its geographic context. Real estate agents often cite the three most important factors in a house's value as being "location, location, location." Consider first whether you want to live in the job's geographic local. Second, remember that location has a great deal to do with dollar value. Put simply, the location of your job enhances or detracts from its value.

We have taught many outplacement seminars, and in 60-75% of the cases, with thousands of individuals reporting, geographic location was cited as the number one issue affecting job selection. In interviews with hundreds of engineering students, the majority reported location as a key consideration.

You must strongly consider whether the job is in an area of the world where you want to live, and whether the host company has offices in other locations where you might later work. Consider also the distance from friends and family, which can translate into the money required to communicate or visit.

In addition to an on-site visit that can give you a sense of how well a location suits you, turn to resources like the Places Rated Almanac, which ranks major U.S. cities based on factors like climate, crime, cost-of-living, health care, job outlook and transportation. Here you will find, for example, that the average cost of a home in Cedar Falls, Iowa, is just $75,700, while Riverside, Calif., is predicted to have a major increase of new jobs by 2005. On-line you can check out Web sites like www.bestplaces.net, where you can assess places to live based on the same criteria as listed above, and you can even compare two cities or compute city-specific cost-of-living.

Is the offer enough for you to pay the rent?
Before you roll up your sleeves and begin salary negotiation, you can begin to calculate what kind of salary is reasonable to expect. Some employers do not even directly advertise a starting salary, while some will ask you for an expected salary range or for your salary history. This issue can be covered either on the job application or in an interview, but either way it's important that you're prepared to discuss pay. Remember not to confuse how much pay you're offered with your personal worth. An offer is simply the price a company is willing to pay you for particular work based on market forces.

To calculate a reasonable salary, be willing to do some homework. Visit your school's career services office and peruse the most up-to-date material, compare job listings and advertisements to see what other companies are offering for the same job, check out periodicals or professional organizations in your field to see if they publish salary surveys, or call employment agencies or job placement firms in your target area.

One of the best resources on-line for computing a salary range is www.salary.com, where you can use the salary wizard to punch in a location and job title, yielding an estimated salary range for that particular area and job. For example, this Web site reports that a median income for an entry-level civil engineer in central Pennsylvania is around $43,000 per year, while the median income for the same position in Miami, Fla., is around $45,000. Once again, location influences value.

Most important, when considering starting salary, is having a range in mind. For starting positions, we recommend a range of $5,000-$7,000. Once you've done your homework to determine that, say, $50,000 is a typical median pay for the work you'd be doing in a specific location, you might go to the negotiation table with a desired salary range of $48,000 to $54,000. Employers are used to this way of thinking about salary, and as long as you've done your homework, you should not fear being specific about a salary range when prompted.

Finally, especially if you end up on the lower end of your desired salary range, consider the value of the perks and benefits attached to the job. Some companies offer a signing bonus, and a respectable benefits package should include coverage for health and life insurance as well as a 401(k) or pension plan. In some cases, additional perks might include a company car or mileage allowance if your job requires a good deal of travel. With just a bit of calculation, you can attach a dollar value to each of these perks and add them to your base salary to get a sense of your total compensation package.

How to Negotiate a Job Offer

Of course, careful assessment of a job offer's value won't help you much if you can't find the right words during the negotiation. Yes, there is a right and a wrong way to go about it. Remember, when the employer makes an initial offer, it is rarely at the top of the salary band for the position. Human resources representatives are in charge of maintaining competitive salary ranges for different levels of work. Most jobs have a specific classification that includes a salary range, and by offering you an initial salary at the low end of the range a company leaves room to increase your salary before having to promote you.

Now let's look at a model that savvy candidates use to negotiate their way to the upper end of the salary band.

Timing the Negotiation

An actual salary amount might first be mentioned in an interview, over the phone or on paper. Regardless, do not feel obliged to respond to the offer on the spot. An ideal approach is to anticipate and time the negotiation yourself. We recommend a follow-up phone call placed by you or a face-to-face meeting.

However, you must first choose the right person to negotiate with. Generally, you want to try to negotiate directly with the person who gave you the offer-probably a direct hiring manager or human resources representative. From a time standpoint, earlier in the day and earlier in the week is best-get people when they're fresh. If you try to negotiate later in the day or week you run the risk of dealing with a person who is burned out or irritable.

Value Them

Begin a salary discussion by expressing your appreciation for the offer you've been given. Cite specifics about how you've enjoyed your relationship with the company thus far, and note the professionalism with which you've been treated. Such an introduction should be warm but brief-just a few short statements.

Value You

After an introduction, summarize briefly how you recognize that your skills and background are a good fit for the company. For example, you might say something like "When I look at the job you've offered and match it to my engineering degree, years of co-op experience and leadership training, I see a good fit." In short, quickly remind the company representative how you add value to their company.

Discuss the Offer

After you've taken a bit of time-just one minute or so-to show that you value both the company and yourself, negotiate the offer directly. We suggest a statement such as this: "From a work standpoint the offer you've made is attractive to me, but I'm wrestling with the offer just a bit." You should not suggest that you're disappointed with the offer, but that you simply haven't made a final decision yet.

At this point, either you or the representative will likely bring up the issue of salary directly, and here you can consider citing three things: reference points, ranges and comparables. Reference points are salary figures based on either formal or informal research ("Other recent graduates from my program tell me they started at average salaries of $50,000."). Salary ranges, discussed earlier, can be presented in the context of the specific offer itself ("In our program, the range for starting salaries is low 40s to upper 60s."). Comparables are other offers that you might have on the table, and based on how concrete these offers are you might cite them as well ("I have other offers, and some are equal to or higher than this offer."). Of course, we recommend here that you always tell the truth and keep the tenor of the discussion warm and efficient.

The idea is for you to get the company to offer to sweeten the deal, even if only slightly.

In the best of cases, the hiring manager will suggest a higher number right on the spot, and if it suits you then you can close the deal right then. However, in many cases the person you're negotiating with will say, "So, what are you looking for?" At this point, assuming you've stated your reference points, ranges and comparables, be prepared to make them an offer in a reasonable, calculated range. For example, say you've been offered $40,000 in salary and $3,000 in a signing bonus. For a salary negotiation discussion, you would be prepared with a logical counter-proposal. You might say, "If you can get me into the upper $40s in salary or offer a higher signing bonus, my decision is made."

At this point, just let the hiring manager talk, and you'll either be offered an increase, be told that no increase is available or be told to wait a day or so for a decision. And don't let a short wait for a decision scare you off or make you lose your nerve-a company has a right to rethink the salary issue just as you do, and a company representative may have to check with others before increasing an offer.

End Well

Obviously, the person you're negotiating with has been through this process before, and you probably have not. Therefore, you want to consider the words you choose carefully, weigh your comfort level against any risk you think you're taking by negotiating, and be sure to end the negotiation discussion on a positive note.

Based on our experience of coaching many students through this process, we believe that the likely outcome of such a discussion will be a higher salary offer or signing bonus, perhaps not given on the spot but typically within the next day or two. Regardless, you can end the conversation positively with a focus on an improved offer and further discussion ("I look forward to hearing back from you about this ") or ask about a detail such as the company's policy on moving expenses or performance bonuses, thus bringing the call to a natural and pleasant close.

Finally, keep in mind that this is both a soft-sell negotiation and a standard practice. You don't want to push too hard, but neither do you want to fear that a company would automatically retract an offer simply because you tried to negotiate (if so, then perhaps it's not a company you'd be happy working for anyway). With most professionals these days changing jobs five or more times over the course of their careers, you'll likely be at the negotiating table at least several times in your professional life. Each time, remember that managers rarely sit around and talk about what a great job you're doing and look for ways to offer you a higher salary or a promotion. You are responsible for your own career. Each time you negotiate, remember that, based on what you have to offer, your research and your good judgment, your goal is to get them to pay up.


Ron Johnson teaches leadership and communication in Penn State's College of Engineering and Smeal College of Business Administration. Joe Schall teaches professional writing in Penn State's College of Earth and Mineral Sciences.

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