Salary Negotiations

by Mr. Cheap

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I recently had a buddy lose his job, and go through the whole job hunt process. He found a new position, and we got on the phone when he wasn’t sure if he was going to take it or not (the salary was lower than his last position). I was shocked that he was debating saying yes or no (leaning towards no) and leaving it at that.

With employment, two needs are being met. The employer is helping the employee with his need for money, and the employee is helping the business with their need for labour. By acting like a beggar when you approach a company, you really aren’t doing yourself any favours (and aren’t understanding the reality of the situation).

When I said to my friend to start negotiating, he glumly told me that the guy had said that the salary offer was the maximum the board would approve and he was viewing it as “take it or leave it”. My response was “ok, leave the salary alone and ask for other things”, such as:

1) A signing bonus. Some companies will balk at the idea, but will sometimes be ok with the idea if you deliver it as something else, such as a relocation re-compensation or training re-compensation for some courses you recently took.

2) A budget for training. Pitch it as it’ll be helpful for your personal development AND for the company. Stress that you’ll take courses that’ll be useful to the work you’re doing at the company.

3) An equipment budget. Ask for a discretionary electronics budget for a pda, laptop, external hard drive, books, or other small items that you wouldn’t want to official apply for approval to purchase.

4) A company car or some sort of car allowance (no idea how this works, as I’ve never gotten anything like this, but some people must).

5) More vacation, the same money for less work is as good as more money in Mr. Cheap’s book.

6) A conference budget, i.e. a discretionary fund you can use to attend conferences for career development.

In the end my friend got them to provide a Blackberry (which he loves and was missing from his last job) and a training budget, which when added to his salary, bumps him up to more then he was making before.

Surprisingly, even companies that have “fixed salary levels” can often be flexible with things like this (if you can call it something other than salary, they can often find the money to make it happen).

If you’re about to say no to a job offer, or are ready to quit, why not ask for a few extra perks? The worst the can say is no…

Any suggestions for other non-monetary job perks you can ask for or suggestions to other salary negotition mind tricks?

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{ 10 comments… read them below or add one }

1 The Financial Blogger

I totally agree with you! Sometimes, you might want to consider the bonus structure or other advantages that are offered as a package as well.

Salary is definitely not the only factor!

2 guinness416

Great post. More vacation time is the big one, but you have to ensure they’ll let you take it. Other things which are expensable in my office are parking, cellphone and internet at home (if you work at home from time to time), membership of professional orgs, exam fees. And they’ve paid for flights to Ireland twice for me to do presentations. It all adds up.

3 telly

Interesting post.

Over the past couple weeks I’ve been giving my sister some tips in salary negotiations as she was accepting her first out-of-school engineering position. Like you told your friend, I reminded her that they want & need her just as much as she wants and needs the job. Ok, so maybe she needed the job a little more. ;)

To me, salary is extremely important. I’m not in it for the perks. The reason I say this is because I was one of those kids out of university that took the 1st offer that came to me. Well, it turns out to have been a great job and 8 years later I’m still here.

However, I’ve had to kick and scream (and thankfully I have a very supportive boss), to bring myself to a more ‘acceptable’ salary over the years. Because of this, I reminded my sister that…
your starting salary is what your raises and promotions will be based on from here on in. Get what you can now!

In her case, they used a similar tactic (“we’ve just hired 4 entry level engineers and everyone is being paid the same salary. In this environment, we can’t go any higher in terms of salary”). Well, she asked for 12% more anyway and got 2%. But hey, it’s 2% more than she would have had and with yearly raises, that will be compounded. :)

Sorry for the diatribe. Basically, my advice is, no matter what they tell you, it doesn’t hurt to ask for more. I’ve yet to hear of someone rescind an offer because a candidate tried to negotiate salary.

4 FourPillars

Neat post – I never thought of asking for anything other than $$.

Telly – good point about getting a good salary – at most companies it’s really hard to get a good raise except by leaving the company.

Mike

5 Mr. Cheap

Great comments, thanks all. I’d happily take a trip to Ireland if the company was paying! Telly, I agree with you that salary is important, and I wouldn’t work for low wages even if there was some nice perks. Its more a way to get a little more out of them if the offer is right at the bottom of your acceptable range.

I also agree that often “the salary isn’t negotiable” isn’t entirely true (and I love the line that they have to pay everyone the same… riiiigggghhht).

6 guinness416

Where I work we’re almost all ex-pats of one sort or another, with the associated family travel obligations. A few people have asked for additional time off in lieu of the annual raise – including myself – and been refused :(

7 telly

guinness,
When my husband took his current position he tried to negotiate for an extra week of vacation as well as salary but they were firm about not negotiating vacation. Years of service determines vacation time. Period.

A great number of employees at his company are ex-pats so they put a policy in place to allow employees to take unpaid vacation. I’m not sure what the limitations are but it’s been very useful to many people that go “home” for a month or so.

8 Gates VP

Hey Cheap, this is a great post!

I like this quote:
The employer is helping the employee with his need for money, and the employee is helping the business with their need for labour.

Though the way I look at it is that the company is paying you a risk-adjusted % of the income that you generate.

What I really like about these suggestions is that they attack non-salary budgetary items. Medium and Large businesses typically assign budgets to “other things”, like training and equipment.

In this case the dollars they spend are not “fungible”. Training and equipment dollars are taxed differently than salary dollars. These dollars also “look” different to investors b/c training dollars are just par for the course in many industries and most companies aren’t actually meeting their training needs anyways.

So basically all of these suggestions work quite well b/c they’re asking for money from a “different bin”, typically one that’s monitored less closely. Good idea!

As to Telly‘s comment:
Iíve yet to hear of someone rescind an offer because a candidate tried to negotiate salary.

I’ve done this before, in fact did it just a couple of months ago, even though we needed the body. Paying him the salary he wanted was going to be a money-losing venture, so we just turned him down.

On a bigger scale, “salary caps” (e.g.: we can’t do better, board won’t approve more, etc.) are actually warning signs to me. As a rookie these may be acceptable limitations, but once you have some experience and success, you should have a little “pull”.

Here’s my take: unless I’m grossly overpaid, I’m going to want a pay increase next year, at the very least I want to keep up with inflation. Being grossly overpaid isn’t really sustainable long-term, but staying at the same salary for 5 years is no less sustainable. So when I talk salary increases, I don’t actually talk about my numbers, I talk about their numbers: How much money do we need to make to hit the next pay scale? What type of billable hours, what rate of billable hours will help me achieve the next pay scale?

Yes I’m talking about my own money, but I’m also talking about theirs. If I’m billing $5/hour more, then what % of that is mine? If I generate leads on new projects or do the extra legwork to get follow-up projects or collect outstanding payments or find new resources or save the company development costs, then what’s my cut?

There are two classes of employees, the 20% and the 80% and if you’re part of the 20% (or want to be), then you also have to leave room for growth and developmen. If the company can’t offer you more money and won’t tell you what you can do to earn more money, then they’re likely just going to treat you as a grunt and stifle your abilities to drive your own future with that company.

My company offers a profit-sharing program for senior staff and preset, automatic pay increases over the first 2 years for Junior staff. I wouldn’t do it any other way.

Of course, YMMV.

9 mariam

I think this comes from experience and knowing how the “system” works which your readers obviously do.

All I can add is get everything in writing :) The person hiring might not have passed it through HR even if it doesn’t go under the salary column :)

10 telly

Gates,

“As to Tellyís comment:
Iíve yet to hear of someone rescind an offer because a candidate tried to negotiate salary.

Iíve done this before, in fact did it just a couple of months ago, even though we needed the body. Paying him the salary he wanted was going to be a money-losing venture, so we just turned him down.”

So, you made someone an official offer, they countered with something a bit higher and YOU withdrew the offer?

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