Last week, a good friend of mine received an offer from a national non-profit organization. She was interested in negotiating, but they said they wouldn’t. She asked me if I had ever encountered this situation and, if so, how did I handle it?
Before I told her my story, I shared an overview of my approach to job offer negotiation:
1) Know you have power in the negotiation – not just them
It’s easy to think that employers have all the power in a negotiation. After all, they are the ones with the money and the job, and we are the ones trying to get a job, right? Wrong. This might have been true a hundred years ago when workers were easily replaceable in a factory or on an assembly line, but in today’s knowledge economy – great workers are hard to find. It takes a company considerable resources to find and vet qualified candidates, and once they finally find their ideal candidate – you! – they are likely just as emotionally invested in bringing you on board as you are in finding a great job. And, for that matter, they may not have a suitable backup in their candidate pool – meaning you turning down the job may force them to start the search all over. That means more money and time spent trying to find another ideal candidate. All of this gives you power in the negotiation – if it will cost them $10,000 to start the search over again with uncertain results, they should be inclined to pay you an extra $5,000 to close the deal now.
Now, one caveat to this. The more senior or unique the role, the more power you have in the negotiation. With entry-level jobs, you likely have little power. I didn’t attempt to negotiate my offer to be an Investment Banking Analyst at Citigroup almost 15 years ago for example – I knew that was a competitive role and that there were hundreds of people waiting to step in if I said no. But, more often than not that is the exception today, not the rule.
2) What’s your BATNA?
Before negotiating anything, you always must know your BATNA – Best Alternative To a Negotiated Agreement. In other words, if you had to walk away from this job offer, what’s your best alternative, and how happy would you be with that alternative? Do you have two job offers? If so, you have a great alternative that allows you to be more aggressive in the negotiation. If your preferred job is offering less than the other offer, ask them to match the other offer. You don’t have much to lose.
Alternatively, if this is your dream job or if you financially need a job now and don’t have another offer, your alternative to a negotiated agreement is not one you’d be happy with. In these situations, you can still negotiate, but not as aggressively. This is not the time to drop ultimatums such as “I can’t take this job unless it pays at least $80,000.” Determining your BATNA is a valuable exercise to help you decide how to approach the negotiation.
3) List out all the specific items that you want that your offer lacks
Many employers will extend an offer and then state “we don’t negotiate.” This may or may not be the case and is something that you will have to feel them out on. However, when employers say they don’t negotiate, more often than not they are referring only to salary. Always remember – there are many valuable items worth negotiating for besides salary! Asking for non-salary items may provide additional value to you, while still allowing them to hold to their public “we don’t negotiate” position.
Below are some common things that are often on people’s lists. As you write your list, be sure to make each item specific. For example, don’t write down Salary Increase and Additional Vacation Days, write down a $10,000 Salary Increase and 5 Additional Vacation Days. Make sense?
An increase in the salary offered
When you’ll be eligible for a raise or promotion
An increase in the bonus offered
A bonus being offered in the first place
If you start mid-year, receiving a full year’s bonus rather than a pro-rated bonus
Contribution to benefits
Ability to work from home a set amount of days per week or month
The ability to have additional paid work on the side
Cell phone / laptop
Home internet reimbursement (if you work from home)
4) Must-Haves vs. Nice-to-Haves
Next to each item on the list, classify it as a Must-Have or Nice-to-Have. Must-Haves are just like it sounds – you will turn down the offer if you don’t get these items. If you are considering the offer, you may often have no Must-Haves. But, if you do, these are the items that you should be firm with the employer on – make sure they know that you will pass on the role if you don’t receive these items. Lastly, don’t portray a Nice-to-Have as a Must-Have – you’ll lose a lot of credibility if you try to walk that back after they say no.
5) Determine what each item will cost the employer
When a jobseeker asks an employer for something in an offer negotiation, the first two things that go through the employer’s mind are a) how much does this cost? and b) how often will I have to incur this cost? Knowing how your potential employer will perceive your asks is critical before you negotiate.
Go through each of your Nice-to-Haves and rate them on a scale of 1-5 based on their financial cost to the organization (1 = Free, 5 = Very Expensive). Then, rate each item a 1 or 2 on Frequency (1 = One-Time, 2 = Ongoing). You’ll find that some items (the ability to work from home one day a week) cost your employer nothing, while other items ($10,000 increase in salary) can cost a lot. Likewise, $10,000 for a one-time cost (relocation expense) is less costly to a company than an ongoing expense, such as a $10,000 increase in salary.
Once you’ve given each expense both ratings, multiply the two ratings by each other. For example, a very expensive ongoing item would be a 10 (5×2), while a one-time item that costs the company nothing would be a 1 (1×1). Now you have the Employer Value Score: an easy way of visualizing what the item you are asking for will cost your potential employer. Take this list and rank order it in descending order by Employer Value Score. Items at the bottom of the list (1s and 2s) will be relatively easy asks, while items at the top of the list (8-10s) will require significant power in the negotiation to achieve.
6) Determine which items you will ask for
To start, any Must-Have must be on your negotiation list. However, deciding which Nice-to-Haves to ask for requires some consideration. To do this, I give each item a Priority Rating: High Priority, Medium Priority, and Low Priority.
Then, compare the Priority Rating with the Employer Value Score. High Priority items that have a low Employer Value Score are gimmes – your employer will likely grant these quickly. Items that are Low Priority for you but have a high Employer Value Score I would encourage you to simply remove from the negotiation all together. Then you are left with tough decisions to make about items that may be High or Medium Priority for you, and have a high Employer Value Score. Very rarely will you be able to get everything you want. In these situations, I look to how strong my BATNA is to determine how aggressively to push for (and how many items to push for) off my list. Use your judgment — feel out the employer as the negotiation progresses.
Now, back to my story. When a past potential employer of mine told me that they wouldn’t negotiate, I had a hunch that they were simply refusing to negotiate on ongoing costs, especially salary. So, I decided to try my luck at one-time costs, and successfully negotiated reimbursement for relocation expenses (when none had been offered) and to be eligible for a full-year’s bonus in my first fiscal year (even though I was starting halfway through the fiscal year and would ordinarily only have been eligible for a pro-rated bonus). Both were very valuable to me, but one-time costs for the employer.
So, how did it work out for my friend? She received her high-priority items as well, including more vacation days and being eligible for a raise a year earlier than she would have been otherwise.
How will it work out for you? You’ll never know if you don’t give it a try! Don’t be afraid to negotiate. Know your BATNA and approach the negotiation strategically. Use these steps to create your game plan. And remember, you likely have more power than you think. Good luck!