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Negotiating job offers

Negotiating Job Offers


This module is intended for people negotiating job offers outside the co-op process.  While some co-op students have successfully negotiated their co-op work term salaries, this has generally been met with resistance from co-op employers.

Negotiating is a discussion that leads to a mutually agreeable arrangement.  It is not rude or pushy.  Instead, it is a way to ensure that you are getting the proper compensation for the time, skills, knowledge and results you will provide for your employer.  The employer’s role is to make a good business deal by hiring talented people without unreasonable cost to the organization; your job is to help the employer recognize why you are worth what you are asking for.

Negotiation can apply to salary, benefits, or other perks.  Depending on the type of organization you are negotiating with and the labour market you are negotiating in, there may be little room for negotiation (e.g., unionized organizations/organizations with defined salary ranges, job shortage) or a lot (e.g., non-unionized environments, talent shortage). 

Why negotiate?

Most people are uncomfortable negotiating offers, because they do not think it works, do not have a plan, or have not done their research to understand their true value.  Because most employees do not negotiate when they first join an organization, workers are under-compensated by an estimated 10-25%.  Salary increases are based on your initial salary, so it is well worth ensuring your first salary represents your true value to the organization. If you start off too low, it is very difficult to catch up later!

Steps to negotiating

While not every negotiation will proceed the same way, there are basic steps you are likely to go through during a successful negotiation. 

Step 1: Determine your fair salary range

Salaries vary depending on what (if any) other benefits are part of the overall compensation package, the local cost of living, the availability of talented workers, the size and financial success of the organization, and, of course, the job itself and the level of experience you bring to it.  Arrive at a fair salary range before you receive an offer by using:

  • Printed and online material: salary surveys, trade journals, professional association websites, etc.  Trade journals may devote an entire issue to salaries.  Salary surveys can be based on broad research but sometimes draw on salary information from only a few people. Make sure you use surveys in which you can see that a reasonable number of people were surveyed, and that the information applies to the geographic area in which you are seeking employment.
  • Professional associations: you may find free information about salary ranges on professional association websites, or you may need to be a paid association member.
  • Information interviews: people already working within your field may be willing to tell you the fair salary range for someone with your level of experience, which can be more useful than relying on averages.
  • Networking: tactfully ask anyone you know – friends, family, professors, alumni, present and past coworkers – about fair salary ranges (not about what they themselves earn).
  • Direct requests: people in similar jobs or the same job at a similar organization may be willing to share information about salary ranges.  Again, ask about the fair range rather than about their own earnings.
  • Union representatives, faculty associations, staff associations.
  • Recruiters and employment agencies: if you are registered with a company, they may be more willing to help out with your request.  They will often have very accurate information about salaries.
  • Human resources: keep in mind that their job is typically to recruit workers at a favourable cost to the organization, so unless they are working in an organization with set salary ranges, it may not be in their best interests to share salary ranges with you.

Once you know the fair range, ask yourself:

  •  What is the least compensation that you will accept?  Think both about salary, and about salary plus benefits.  Consider the cost of living where the organization is located, and whether you would incur expenses to take the job (e.g., by needing to move).
  • What is the most you think you are worth, and why?  This will help you prepare to negotiate, as you will need to articulate what contributes to your worth: your skills, knowledge, and accomplishments that will help you excel in your new job.

Based on what you know about yourself and about the salary range, you can enter negotiation knowing the range that is fair to both you and the employer.  This will help prevent you from looking flustered during the discussion, and will help you make a decision once you know the employer’s final offer.

Step 2: Wait until you have an offer to discuss salary

There are several points at which you may be asked about salary expectations – before the interview, after the interview(s) have started but before an offer is made, or as the offer is made.  When employers ask about salary expectations before making an offer, they are trying to determine whether:

  • you are too expensive, and should be ruled out
  • you are too junior, and should be ruled out
  • you have done insufficient research, and should either be ruled out due to poor judgment or should be hired but at a lower salary than you could earn
  • you have done your research and the recruitment process should continue

Note that aiming too high or too low can cause you to be ruled out of the process.  So, focus on getting the job before negotiating compensation.  This way, instead of employers drawing conclusions about you based on your salary expectations, they will get to know about your abilities and fit first.  Once they are convinced that you will be an asset, they will be much more willing to negotiate compensation based on your full worth.

Deferring talk of compensation may be easier than you expect.  If an application form requires you to include a salary, you can note that the salary is “open” or “negotiable.”  If a job posting – or a Human Resources professional – requests that you provide information about your salary expectations or history, you can respond with phrases like:

  •  “Regarding my salary expectations, I would hope to be paid the market value of X job with Y years of experience.  I would be happy to discuss this with you in an interview.”
  • “I would be happy to discuss salary information in an interview.  Please be assured that this level of responsibility looks appropriate to me, and I do not think there will be any problem with salary.”
  • “Once we are both convinced that I am the right candidate for the job, I would be more than happy to discuss compensation.”
  • “I’m sure we can come to an agreement that’s fair to both of us, based on the market value of this position, and the skills, knowledge and experience that I will bring to the role. What salary range are you currently thinking of?”

There are times, however, when you may benefit from discussing salary early.  If you are applying for a job for which you are overqualified, for example, employers may fear that you are “too expensive.”  Address their concerns by explaining that you are familiar with the fair salary range for the job, and that you are excited about the work itself and have no concerns about the compensation.  If the job is a significant step down, it may be to your advantage to state the salary range right in your cover letter, so that the employer knows you are fully aware of the likely drop in salary.  Otherwise, the employer may assume that you would be unpleasantly surprised by the salary they can pay, and that it is not worth putting in time and effort to interview you.

Some employers may be very adamant about discussing salary early in the process.  If you feel that you may be ruled out for not discussing the salary, by all means share the salary range you have researched, but also note that the salary would depend on the exact level of responsibility and on the total compensation package offered by the employer.  If the employer asks you to agree to a salary range early on, leave the door open to future negotiation by saying something like, “If X is fair, of course it’s acceptable.  But could we wait to discuss compensation, until we’re both clear on what the job entails and what I can produce for you?”

Step 3: Let the employer name a number first

Once the employer offers you a job, you can discuss salary.  Begin by stating your enthusiasm for the job, and reiterating why you will be an excellent fit for the role.  Then note that you are interested in discussing compensation, but see if the employer will name a figure first.  Try saying something like, “I’m sure you have something budgeted for this position.  What range did you have in mind?”

Step 4: When you hear the figure, repeat it, then be quiet

Once the employer states their first offer, repeat the figure (or the highest number, if the employer states a range), and then be quiet.  This will give the employer a chance to correct you if you misheard, and will give you time to compare the figure to your researched fair salary range, and to decide what to do next.  If the employer is concerned about losing you, they may use the pause to rethink their offer and to open up the negotiation.  Pausing will feel awkward, so, before the interview, practise sitting in silence for 10, 20 or even 30 seconds. 

Step 5: Counter the employer’s offer with your research and your value

If the offer seems too low, do not give up.  Remind the employer that you are excited about the job, believe you can bring value to the employer, and want to know what the employer can offer within the fair salary range that you researched.  For example, you might say, “$45 000… I appreciate your offer, and am excited about the work.  Given my track record of success in sales, I’m sure I can bring a lot of value to your organization.  According to my research, a fair salary range for someone with my skills would be $50 000 to $55 000.  What can you offer in that range?”

If the employer cannot offer a higher salary, you can say that the salary is below your expectations, and that you would be happy to discuss an offer that is fair to both of you in terms of bonuses, increased commission (if applicable), vacation or professional development time, or other benefits.

Even if you are tempted to say no immediately, do not say no in the room.  Say that you need time to think about the offer, and agree on a date by which you will get back to the employer.  This will give you and the employer time to think.  In order to avoid burning bridges, do get back to the employer when you say you will.  If you must turn down the offer, state that you regret it, and that you hope to encounter the employer in the future.

If the offer seems too high, do not immediately accept it.  Ask questions to find out whether you fully understand the scope of responsibility in the role.  You do not want to be trapped in a job if you cannot live up to employer expectations.  If the scope of responsibility is what you expected, see if you can find out why the salary is so high.  It may be that your research was incomplete, or that there is something about the organization that justifies a higher salary, such as a difficulty retaining staff.

If the offer is just right, still take 20 seconds or so to think about it.  Then note that the offer is acceptable, but still do not accept the position – get information about the entire compensation package first.  You could say something like, “That sounds fair.  Could we discuss benefits, as well?”  If you already have all the details, note that you are excited about starting the job, want to review what you and the employer have discussed, and would like to know when they would like your final confirmation. 

Step 6: Negotiate compensation beyond salary

In addition to salary, consider what benefits are most important to you.  Not all organizations will offer all benefits, but you might ask about:

  • Commission
  • Commuting discounts or a company vehicle, depending on the travel required for work
  • Daycare
  • Employee assistance program
  • Equipment such as laptop, tablet or cellphone
  • Expense reimbursement
  • Flexible work schedule
  • Health club/fitness centre membership
  • Insurance (medical, dental, life): insurance is costly, so insurance coverage can add significantly to your overall compensation package.  Find out the details of coverage and of the employer’s and employee’s contributions to insurance plans
  • Overtime pay
  • Parking
  • Pension plans
  • Performance bonus, profit sharing
  • Performance reviews: while all employers should conduct performance reviews, if the salary offer is lower than you had hoped, ask to set a date for an early performance review, with the option of a raise upon good performance
  • Professional development
  • Professional memberships
  • Relocation expenses
  • Sabbaticals
  • Signing bonus
  • Stock options or matched savings
  • Telecommuting
  • Tuition reimbursement
  • Vacation or personal days

Ask for a benefits package to review while you are considering the job offer.  If you are just starting in your career, you might not feel that a pension or insurance coverage is important, but when you require them, you will certainly be happy to have them.

Under pressure?

Some negotiation scenarios are more challenging than others.

Pressure to accept an offer immediately

Sometimes an employer will make an offer and ask you to sign a contract or verbally agree to an offer immediately.  Express your gratitude for the offer, your excitement about the job, and your desire to make important decisions carefully.  Then ask for the time to consider the offer objectively.  Stick to whatever timeline you have agreed to.

More than one offer

If you have more than one offer, it is important to respect all employers, even while you try to decide on your best option.  You may find yourself with an offer from your second choice while still waiting on an offer from your first choice.  When you receive the offer, ask for a few days to consider the offer, and be sure to let them know that you are enthusiastic about the role, but want to ensure you are making the right decision.  Then let your preferred employer know that you have received an offer from a competitor, that you hope to work for your preferred employer, but need to respect the timeline you have agreed to with the competing organization.  Ask whether your preferred employer can accelerate their decision-making process. 

Your preferred employer may not be able to speed up their recruiting process; like you, they will want to ensure they are making a carefully considered decision.  In this case, if you decide to accept the offer from your second most preferred employer, keep in mind that you have made a favourable impression on both organizations: you have expressed your interest to a potential future employer and have shown them that you are a desirable candidate, and you have behaved professionally with your new employer by honouring the timelines you agreed to.  If you decide to turn down the offer from your second most preferred employer, do so within the timeframe to which you agreed, and acknowledge that the decision was not easy and that you regret the inconvenience to the employer. 

Just as job seekers want to be dealt with respectfully and honestly, so do employers.  In order to put pressure on a company to negotiate, some candidates have claimed to have lucrative offers from a competing organization, when there was either no competing offer or a more modest offer.  Unsurprisingly, unethical tactics have the potential to cause an organization to withdraw a job offer and hurt a candidate’s reputation and employability in the long term.

New to the field

If you are a relatively new worker, you may feel you have little leverage in negotiations.  It is true that more experienced workers bring unique value to their employers, but the employer is already interested in you, so remind the employer of whatever makes you valuable to them.  Also, consider negotiating for benefits or perks that can help you advance your career quickly, such as training and mentorship opportunities.

Dos and Dont's

Do

  • Be prepared to discuss salary
  • Assume you can reach a win-win result
  • Research your fair salary range, based on the job, organization, location and what you can bring to the job
  • Practise what you will say if the employer wants you to name a figure first, or seems unreceptive to negotiating
  • Practise explaining why you are worth what you are asking for
  • Consider non-salary compensation, such as days off, professional development opportunities, and other benefits and perks
  • Match your behavior, speech and clothing to the salary range you are seeking

Don’t

  • View the discussion as a confrontation
  • Enter a discussion without knowing a fair salary range
  • Explain personal reasons for negotiation (e.g., student debt, family to support) that do not show the employer why you will be valuable to them
  • Enter the discussion with either a desperate or an arrogant attitude
  • Jump at any offer
  • Name a salary range too early
  • Name a specific dollar figure
  • Supply information about your past salary history