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Negotiating a Job Offer

How to manage salary and benefit conversations in the workplace.

By Jonie Watanabe Tsuji

Negotiating a  Job Offer

To negotiate or not to negotiate, that is the question. As much as you were excited to hear the words, "Congratulations, you got the job!" you wonder, is it safe to negotiate or should you just accept the offer? This can be a difficult question to answer. After all, the economy is pretty tough right now and you might not have the luxury of multiple offers from which to choose. However, you have nothing to lose by having the discussion. Although the job market might be tight, there are still job offers being made. So here are some of the basics to consider when negotiating an offer.

What's the Figure?

Once you've heard the magic words, "You're hired," you should have been given a salary figure. If the offer is given to you by phone, don't negotiate yet, just ask to get the quote in writing. Human Resources should send you a letter within a few days outlining the salary and benefits of the position (make sure the exact job title is listed on the letter as well), along with a start date.

Step One: Know Your Worth

With the job title and figure in hand, start doing your homework. Go to websites like Salary.com (www.salary.com) and Payscale (www.payscale.com), research the job title, and see how your offer compares to the average person in the field. In fact, the U.S. Department of Labor's Bureau of Labor Statistics also has general salary information by industry and location (nationwide, state, and regional). Finally, do not forget your university's career center and alumni association. Many of them keep salary data of graduates from your institution, so you can see what offers were made to others in your major and how your offer compares.

In addition to gathering information, you need to strategize the upcoming negotiation process. Aside from being armed with salary statistics, you will need to justify why you deserve a higher salary. What do you have to offer an employer? What skills have you acquired from past experience from internships, co-ops, and school activities? Is your area of study (research) of particular interest to this company? Knowing your strengths and what you have to offer will be your major line of defense.

Next, research your field/industry and your future employer. What is the future growth within the industry? Who are your company's biggest competitors? How is this company doing financially? Having this information will give you an idea of how far you can take the process. For example, if you received an offer from a company in a growing industry—with a lot of competitors—and the research you did for your senior thesis can lead to major advancements in the field, you probably have the upper hand and can go further with negotiations. On the other hand, if the company you are negotiating with has very few competitors and is the industry leader, you may not be able to take it too far.

Finally, use your personal network. Do you know any friends (or relatives of friends) that went into your field, or better yet, work at that company or a competitor? Ask around, you will be surprised by the information you can get from your network.

Step Two: Start the Negotiation Process

Once you have this information in hand, you are ready to start the process of negotiating. Never negotiate with a recruiter or Human Resources; it should always be done with your future boss. The number one rule in salary negotiation is you should not be giving the figure. Have your "magic figure" in your head based on your research, but don't give that number out. Consider starting with the statement, "Could you tell me what the salary figure is based upon?" If the response sounds similar to, "Well, all of our Engineer 1s start at this figure," then this is your opportunity to showcase why you deserve more money. Remember the homework you did in step one? Use this information to demonstrate, one point at a time, why you deserve more than all of the other Engineer 1s that will be hired. It is important to take it step-by-step and not to give all of your reasons at one time. With each step, you will be able to get a sense of where the negotiations are going (is your potential boss receptive or is he/she becoming perturbed?) and how far you can take it.

Step Three: Consider Topics Other Than Salary

Salary is not the only bargaining point. If you can't budge your future employer on increasing your salary, perhaps there are other topics to consider. Gone are the days of huge signing bonuses but maybe this can be an option. However, keep in mind that with bonuses, 50% is usually taken by the U.S. government. Does the company require a lot of overtime with no monetary compensation? See if they will consider giving you an extra day off over and above what is offered for vacation. What is their relocation policy? If they give you a flat sum, possibly you can find the cheapest way to move and pocket the residual money. Finally, if none of the above work, consider asking your potential boss to move up your salary/performance review. Rather than waiting a year to get to that first review, perhaps he/she would be willing to do this process after six to nine months, thus increasing your salary sooner.

Final Step: Close the Negotiation

When it comes to negotiation, my best advice is to go only as far as you feel comfortable. If you have reached your salary goal, or if you get a sense that you have gone as far as possible (your future boss starts to sound annoyed), stop. Always leave the conversation on a positive note. Let your future employer know you are happy to have received the offer, and tell him/her what date you will call them back with your final decision. Never leave an employer hanging.

Despite everything said above, there is nothing wrong with accepting the offer without negotiating for a higher salary. In these times, people are afraid to lose the offer. As long as you have carefully evaluated the offer and it meets the standard requirements, namely, the stated position title/description as previously agreed upon and typical benefits (health, retirement, sick, vacation, etc.), you should be good to go. But it doesn't hurt to have options.

Graduating from college is a big accomplishment—going through the job search and accepting a job offer is just a culmination of your hard work. So why not take the time to do your research and negotiate the best offer you can? I always tell students, "You probably don't want to start a job with the thought hanging over your head, 'I wonder if I got the best deal?'" If done with class and respect, your prospective boss will appreciate the fact that you have done your homework, you know what you are worth, and that you have knowledge about the world of work. In the end, he/she will admire you for it, and most of all, you know you had a hand in the outcome.

Jonie Watanabe Tsuji is a career counselor and career fair coordinator at the California Institute of Technology in Pasadena.

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