HOW TO NEGOTIATE THE BEST JOB PACKAGE
So you got the job offer, but the salary is a little low. Do you counter? Surprisingly, many people don’t.
Nearly three in five U.S. employees accepted the salary they were initially offered at their current job and did not negotiate, according to a Glassdoor Salary Negotiation Insights Survey released in May 2016. What’s more, women are less likely to negotiate than men. Some 68% of women respondents vs. 52% of male respondents did not negotiate salary.
Yet, if we don’t advocate for ourselves, who will?
Before accepting a job, check out these tips to negotiate your best compensation package and to position yourself for long-term financial success.
KNOW THE NUMBERS.
Compensation varies widely, so investigate pay levels with those who have similar job titles and functions and are in your geographic location. Payscale.com, Glassdoor.com and Salary.com are a good starting point, as is the Bureau of Labor Statistics’ free wage data. But don’t stop there. “Many industry associations like the American Society of Civil Engineers offer salary surveys that detail how much a certain role commands in the marketplace,” says Dan Ryan, a principal at executive search firm Ryan Search & Consulting and a member of the Special Expertise panel for the Society for Human Resource Management.
THINK BROADLY ABOUT POTENTIAL BENEFITS.
“For entry- to mid-level candi- dates, ask about a hiring bonus, a performance review after six months or even a larger workspace,” says Ryan. And be flexible on how the compensation package is bundled. In exchange for a more robust health care plan or a flexible work schedule, consider accepting a lower base salary. “Every candidate has specific needs, and there is almost always an opportunity for candidates and firms to negotiate in these areas,” Ryan says.
GO FOR THE SALARY INCREASE VS. THE BONUS.
“Salaries rarely go down, while a bonus is not guaranteed,” says David Mullins, CEO of David Mullins Wealth Management. Also, a salary is easier to manage from a tax and cash-flow perspective. “If you receive a 10% salary increase, for example, and invest the extra income in your 401(k), your pay stays the same, while your savings goes up substantially,” says Mullins. Plus, 401(k) contributions are pretax, helping to offset any increase in taxes from the raise. A bonus is a nice chunk of change, but it might bump you up into a higher tax bracket. In addition, a bonus does not count toward pension benefits.
POSE THE RIGHT QUESTIONS.
“During the interview, it’s completely appropriate to say, ‘Explain to me how the bonus program works. How can my performance impact my pay? Can I buy more vacation days as part of the paid, time-off policy?’” says Sandra McLellan, director of the North America Rewards Practice at human resources consulting firm Willis Towers Watson. “Career websites, such as Monster or CareerBuilder, contain extensive information and articles on what to ask during a job interview as well as how to ask managers about compensation,” she says. “If you are working with a recruiter, they will also be a good source for helpful tips,” she says.
JUSTIFY THE ASK.
“It’s not enough for them to like you. They also have to believe you’re worth the offer you want,” says Deepak Malhorta, a Harvard Business School business administration professor who focuses on negotiation, deal-making and conflict resolution. Don’t just state your desire, such as a 15% higher salary or permission to work from home on Fridays. Tell the story about how you selftaught a certain topic, contributed to a winning project or did volunteer work on a cause important to the company.
BUILD UP CASH, THEN PAY DOWN DEBT.
Once the salary increase is imminent, put some financial goals into play. It may make financial sense to pay off high-interest debt first, but emergencies happen, so put some money away in savings, then tackle debt, says San Asato, CFP, a financial adviser at Raymond James. “Ideally, build up a cash reserve of at least four to six months to hedge against life and household events, then allocate a portion of your pay to reduce credit card debt,” he says.
Salary is a natural negotiation point for a job offer, but there are a few others as well, such as benefits or bonuses.