In the January 31, 2017 Ask The Headhunter Newsletter, a reader can’t negotiate a higher job salary — but learns how to get more money.
I rejected three job offers from three companies because none of them would budge on the salary. With unemployment dropping, the labor force is tighter, and employers say they can’t get good hires. It’s obvious why. They won’t pay enough! There must be a way to negotiate more money in a market like this. You must know some tricks. What can I do next time?
You’ve answered your own question. When you can’t negotiate a higher salary in the job offer, ask for more money!
HR departments act like salaries are still set in stone while, as you point out, HR also says unemployment is at record lows. We can debate how big the unemployment number really is — loads of talented people are still on the street and many have dropped out of the market altogether, making it seem like everyone who wants to work is already working. (Jobs plentiful! Pay is up! But, how are you doing?) But forget all that. What matters here is HR. And HR says the talent market is very tight.
Nonetheless, HR in many companies won’t shake money loose to boost salaries so it can hire who it needs. That’s how you can leverage more money.
When the salary offer is on the table
When a company makes you a job offer and won’t budge if you try to negotiate higher, you need to understand what makes HR tick. Someone somewhere in the company created a salary scale for every job. Forget what the job is actually worth in the market — probably a lot more, and in time, we might see these salary scales adjust to reality. For now, many companies are stuck. They’re just not going to offer you more salary than the scale permits.
So don’t ask for more salary. Ask for more money. You should do this only under three conditions:
- The employer has already made a specific salary offer and will not budge when you try to negotiate.
- You really like and want this job.
- You’re really going to walk away from the job offer if the employer won’t give you more money.
That last item is key. Really being ready to walk away actually makes you a very powerful negotiator. It frees you to be creative. (So does positioning yourself properly to begin with. See Fearless Job Hunting, Book 6: Be The Profitable Hire.)
Give the employer what it wants
How to Say It
“I understand that you won’t raise the salary for this job, and I accept that. But I know I’m worth more, and I can get it elsewhere. But I want to work here, with you, at this job. We’re at an impasse, but I think we can get over it while respecting both our positions.”
Now do something that will give you a huge edge in this negotiation. Give the employer what it wants. That’s right: Accept the job.
How to Say It
“The main thing I want to say is, I want to come work for you — and I accept the job.”
Then pause and say nothing.
What job seekers don’t realize is that every employer that wants to hire you is worried you’re going to reject the job. It’s worried you don’t really want the job, you’re not sure you want to work at the company, you’re not sure about the manager, maybe you don’t like the work space, the building, the people… The employer has no idea how to convince you. Every employer that wants to hire you is worried you’re going to say no.
So say it out loud. Make the commitment and put the company’s worries to rest. Tell them you accept the job.
Negotiate the terms
Whatever their response, say this next:
How to Say It
“I’m ready to start work. As long as we can come to agreement on the terms.”
Now, don’t try this if you are at all hesitant about anything other than the money. You must be ready to show up at this place to work for this manager, with these people, doing this job. You must be ready to start work now.
If the terms can be worked out.
Ask for more money: A signing bonus
Now deliver the key to everyone’s happiness.
How to Say It
“I know you have a salary scale that you can’t break. I’m not asking you to break it. I’m not going to ask for more salary. But I am worth more money. So I’d like to propose terms that will not affect the salary you’ve offered. I accept the salary. But I’d also like to propose terms that will still pay me what I’m worth. I’d like to propose a one-time signing bonus of $X. It will not affect my salary, or anything based on it, like future raises, 401(k) contributions, insurance, or anything that is tied to salary. I accept the salary of $N that you offered if you will include a one-time signing bonus of $X.”
Why it works
Will this work? Who knows. It’s a gambit to try only if you’re willing to walk away otherwise. It’s a way to save a deal. I hate to say no to a deal I’ve already worked hard for — so I ask myself what I’ll settle for that won’t hurt the other guy, and I try to say, Yes to what you want, if you’ll do X for me. If you won’t, I’ll walk away, no harm done.
Here’s why a signing bonus can work. The lovely thing about it is, it doesn’t break the salary range. The company is not paying you more than it planned. But it has to pay you what you’re worth. You just have to set $X reasonably, and that requires some compromise on your part if you really want the job.
(If the employer whips out a salary survey, taps it, and says you’re not worth any more, I hope you read this first: Beat The Salary Surveys: Get a higher offer.)
Keep in mind that, if the employer agrees, your future raises will be based on your salary. If the raise is 3%, it’ll be 3% of your salary, not your salary plus the bonus. The same goes for all other benefits based on salary. You’ll see that bonus just one time. So plan accordingly.
(Worried the employer might withdraw its non-negotiable offer because you dared ask for something more? Read The Bad-Business Job Offer: Negotiating not allowed! Like we already discussed, you must be ready to walk away.)
Do you want this much more money?
What’s the point of a one-time payment, you ask, if what you really want and deserve is a higher salary? The point is that — as we noted at the beginning — you’re going to walk away from this job offer anyway. This is better than the offer you rejected — assuming you really want the job. This is more money. If there’s no size of signing bonus that would make you happy, then don’t even ask for it.
But if you can’t negotiate a higher salary, and what you want is more money, then negotiate for more money. A signing bonus is a good way to do it.
A few gotchas to beware of
You didn’t think there were no gotchas, did you?
- Signing bonuses always come with a catch. You may have to agree to stay for a certain period of time, or refund the bonus or some pro-rated part of it. Negotiate an acceptable period.
- Signing bonuses are sometimes paid in parts, to avoid having you skip out with the money. It might be monthly for a year, or quarterly or twice over a year. Negotiate it. My preference is to get it all upon start date, especially if there’s a refund clause.
- Signing bonuses usually come with a written agreement. Consider having an attorney review it — along with your written job offer and other terms.
- Signing bonuses are usually taxed just like any other pay. Consult your accountant if necessary.
- The company may like your idea — but not the amount of the bonus. Decide well in advance what you’ll accept, and stick to it.
What kind of money is there other than salary? Would a signing bonus make a difference to you? How big? Have you ever gotten a signing bonus? How would you advise this reader?
My first salary negotiation was at college graduation. Intuitively, I negotiated salary utilizing my proven value that was exemplified during my internship. With proven performance and demonstrated example, a higher salary was granted.
After negotiating the salary and accepting the position, I went back to the hiring manager and asked; ‘why did you offer a lower salary than was expected?’ He responded: ‘If you would have excepted the lower salary, I would have saved $3,000 a year.’
As Nick professes: if you demonstrate solutions to profitability, your worth increases. Capitalize on your worth and have the courage to negotiate what you think your worth supports.
Keep in mind, your worth may not be as valued as you think. That is okay, just weigh the pros and cons of the position, your needs and make a decision.
Either way, keep in mind, the world is your oyster.
Paul: Thanks for your story. What’s astonishing is how casually (apparently) the hiring manager responded that he’d save money if you had accepted the lower salary.
On its face, that might seem like simple market economics. But there’s a profound fallacy underpinning the manager’s behavior. Salary is not an expense to a company, though that’s how accountants portray it — and everyone swallows it. What a company pays you is an investment. And that’s not semantics. A company buys a piece of equipment as an investment against an expected return — and capitalizes it. An employee is capital, too — the employer expects an ROI.
Of course, in both cases we want to pay less to maximize our ROI. But it doesn’t work that way with people.
All my life as a headhunter, I’ve encouraged my clients to offer a job candidate they really want — Why make offers to any other kind, right? — MORE than the candidate asks for or expects. The reason is simple.
Unlike machines, people perform better when motivated. So, when a candidate expects $75,000, offering the candidate a totally unexpected $78,000 triggers an incredibly valuable response. For an extra 4% investment, the employer will likely get far more than a 4% higher return.
However, when they offer less, I think employers suffer with a far lower ROI than the salary savings might suggest.
Managers may think they’re being rational by offering less to save money. They’re missing an opportunity to get a much higher return. Salary isn’t an expense. It’s an investment. Done right, investing more returns more. Remember: We’re saying the employer really wants to get that candidate on board. So why not maximize the potential return with a demonstration to prove it?
Nobody ever worked harder or more enthusiastically because a company low-balled them.
Putting all that aside, I realize your main point is that you succeeded in getting a higher offer not by just asking for it, but by demonstrating your higher value. Kudos to you! You’ve delivered a very valuable lesson to others!
But I was tickled by your new boss’s statement and had to riff on it! Thanks!
I’m not sure if you’re worth the extra money considering you don’t know how to spell the word “accepted” (not excepted) and I certainly wonder what your resume must look like if you cannot spell.
Here’s some free information for you:
Accept means to agree or to receive something offered. Except means excluding or with the exception of.
I work in an industry where signing bonuses would be impossible to budget, so when I run into a salary ceiling problem, I have successfully extracted other benefits instead, such as more/faster vacation accumulation (e.g., 4 weeks instead of 2), a higher education budget (e.g., $5K instead of $1K) for maintaining my credentials, immediate vesting in the 401K program and employer matching, etc. Make sure all these are detailed in the offer letter that you both sign, so if later, HR accidentally forgets to make it happen, you have proof that they owe you and must fix it. And if the company doesn’t send you an offer letter, send them that says “As we discussed, I will be thrilled to start with your company as [position] on [date], for a salary of [X], your standard benefits package, plus [the extra benefits you negotiated]. Please sign and return a copy of this letter to me so we can get started.”
Peachy: I love your method of getting that offer letter! A reminder to eager job candidates — DO NOT move ahead with a job until you’ve got it in writing. As Peachy points out, what happens if somebody gets hit by a truck? I’ve seen it again and again: “Someone promised you an extra week of vacation? Sorry, it’s not documented… that person’s gone… No dice.”
And your alternatives to more money are peachy, too! It pays to make a list of such concessions BEFORE your interview or compensation negotiation. Have them ready. Get what you can.
As for the budget issue you said prevents a company from paying signing bonsuses, that’s not always true, though it’s not easy to overcome. Most companies have recruiting budgets — for job postings and for external recruiters. That pot can be tapped for a one-time signing bonus if the company really wants to do it. After all, the fee it’s saving on a headhunter is likely far more than a reasonable signing bonus to get you on board. It’s just another tack to take — the money might be there. Help them find it.
The other item to be watch out for is, should you receive a bonus of X dollars you may very well be just advancing your salary increase that you would receive at your annual review. It’s similar to when a company extends a counteroffer to retain an employee who wishes to leave the company for a new opportunity. So, a year from now, when your increase is lower than your expectation that might be something to look back upon….
Bill: Yep. Good point. Every dollar comes from a budget. With a counter-offer, it usually comes from your next raise. So perhaps negotiations for a signing bonus should include discussion of how it would affect a future raise.
People are very nervous about a discussion like this about money. They fear they might offended the employer. That’s absolutely the wrong attitude. If this offends the employer, better to find out now, because it’ll still be a problem later. A good employer will candidly discuss finances, as long as you are respectful — but nothing about money should be off the table. The negotiation might include a guaranteed raise if you meet certain objectives, for example. The key here is to get that in writing, and the objectives must be, well, objectively measurable and agreed upon, and the reward must be clearly defined.
My lawyer likes to say that good, detailed contracts that spell out what matters make for happy, long relationships. It’s worth working all this out in advance. Though you may surprise an employer that’s accustomed to a defective hiring routine.
In salary review meetings I’ve been at, signing bonuses have never come up – and they have been standard in Silicon Valley. What does come up is that starting salaries are competitive, and the candidate can often pick one job or another with little friction, but if you don’t like your raise you have to start looking for a new job and take the risk that it will be worse. So starting salaries go up faster than raises.
But higher starting salaries have the advantage of a higher base for raises. Which is one reason so many companies went to lower raises and more bonuses about 25 years back.
But if you can’t get a higher salary asking for a signing bonus (or maybe other perk) is a great strategy.
Salary reviews and “Cost of Living Adjustments” are the biggest, saddest joke in the industry. Starting salaries are beginning to become competitive. “There is a talent shortage!!” or not. Job boards and Applicant Tracking Systems drive away more good candidates than they attract.
Anyone in HR or finance who thinks that a COLA of 2% over 5 years or, in the case of Social Security, 0.016% over five years covers the increase in the cost of necessities (rent, utilities, food, toilet paper, etc.) has not gone shopping in recent memory.
Even the government full-time, non-contract positions have starting salaries that look interesting, and make their convoluted ATS palatable.
Maybe not for entry level employees, but in larger companies you could negotiate non-cash benefits that might be only for the higher-ups – company cars, gas cards, gym memberships, business class tickets for business travel (instead of middle-seat hell)etc. More vacation, training and seminar time and travel, company cell phones.
On the other side of the table, when a salary/raise freeze was on, I noted many of the admin staff were grousing. So I offered them upgrades on their work tools – Cadillac-level ergonomic workstations, duplex copiers and scanners, really nice desk chairs, top-flight software – all of which came out of the capital improvement budget, not the salary budget. The result – I had lower turnover and the happiest staff in the company, loyal to a fault.
Go, Hank! Far more important than the upgrades you provided is that you acknowledged employees’ dissatisfaction by doing what you could. They’re no dummies — they recognize a boss who doesn’t ignore them.
Thank you for showing that it doesn’t take that much to keep people happy.
Giving people a habitable environment and effective tools to win at their jobs is half the battle of retention.
I agree with the advice – and I have read that negotiations like this are sometimes coined “The Far Point Gambit.” [Aside: this is a reference to an answer Captain Picard gave Q in the first episode of Star Trek: The Next Generation].
The success of the response hangs on the ability to say “Yes, but…” to an ultimatum – try to defuse the situation by embracing it, as in accept the offer provisionally as long as some conditions are met.
What about renegotiating a low ball salary from a consulting firm? I have been working for this firm for nearly a year for a large corporation as a Help Desk Rep, and recently found out that several more junior people are actually making more than I am through another firm.
@Laura: You could try these methods, but I find it’s tougher once you’re already on a contract job. They feel they’ve got a stream of candidates who can replace you for less (even tho they pay some new ones more!).
The only way you’ll find out is if you try. The best way to do that is to develop an alternative in case it doesn’t work out — and be ready to leave for the other gig. Odds are good you’ll get the raise you want if you move.