Compensation and the Art of Negotiating
Before you make a decision on whether or not to accept a job offer, there is the issue of compensation and benefits. If you’re an entry-level candidate, the salary is probably not negotiable. If you are accepting a high-level position, however, you may have some room to bargain.
You’ll want to think about your salary requirements before the interview — considering what you’ve achieved, what you have to offer, and what you are worth to an employer. Keep in mind that many factors affect how much the organization might offer. If they’ve had a difficult time finding the right person, for example, the perfect candidate could probably negotiate a higher salary than originally offered. However, if they know many other qualified candidates are available and willing to take the offered salary, the employer may not want to budge from a lower offer.
The importance of filling the position and how long it’s been vacant are other elements in the negotiation — as are the organization’s interest in you and your interest in the job. You also have to factor in the potential for personal/professional growth and promotion.
Before beginning any discussion about salary, estimate your minimum monthly financial requirements: rent or mortgage, utilities, car payments, gas, insurance, student loan payments, groceries, clothing, etc. You do not have to discuss this amount with anyone, but it gives you an idea of what you can afford to accept. One important factor is the cost of living in a particular location. Seventy thousand dollars in Colorado buys a lot more than $70,000 in California, so multiply by a cost of living factor if you will be moving geographically for the position.
However, remember that the employer is not at all concerned with your expenses, but only with the value of your skills in the marketplace. ACS Careers conducts annual salary surveys of members and annual starting salary surveys of new graduates in chemistry and chemical engineering. Salary information is available to ACS members through the Salary Comparator on the ACS Web site at www.acs.org/careers. The surveys present data by highest degree, employer type, employer size, work function, and other demographic data, so you can see what others like you are currently earning. Once you identify your requirements and market value, you can come up with a reasonable figure that will make you happy. Don’t be outrageous; keep it within reality.
Do not be misled by the gross salary figure — you’re likely to lose 30%–40% of that total to federal and state taxes. Add to that pre-tax deductions, such as your contributions to health insurance premiums and retirement accounts. Figure out what you will have to spend in after-tax dollars, because that’s what you’ll have to live on.
You should now have three amounts in front of you: The minimum you need to earn to maintain your current lifestyle, an average based on the market, and your ideal figure. Negotiate down if necessary from your ideal, but if the offer is less than your minimum you may have to consider some lifestyle adjustments.
Talking About Money
Salary questions are ordinarily raised once you’re under serious consideration; don’t knock yourself out of the running by revealing too early what amount you have in mind. For the same reason, if possible do not indicate your salary requirements on the application; write “open” or “negotiable.”
If the question is raised early, postpone the topic until you have more facts and are sure the organization considers you a serious contender. Let the interviewer know you still have some questions about responsibilities of the job and that you’d prefer not to talk about pay until you have a full understanding of the job requirements.
An interviewer who asks about your entire salary history is looking for the frequency and percent of your raises — indicators of your performance as well as the relative value of their offer. Your goal is to negotiate a salary based on the job for which you are applying, not one based on your previous salary. You could reply that because the new position is different from your current job, your existing pay wouldn’t be very useful in evaluating your worth for the new position.
Once the interviewer asks, “What are your salary requirements?” you have several ways to respond; here are a few options:
- Itemize what you would be doing daily as well as the scope of your responsibilities, and then ask the interviewer what figure they had in mind for someone with your experience or, better still, what salary range has been authorized for the position. State that you’re certain the organization will make you a fair offer, because you believe your credentials demonstrate you are well qualified, and then ask the interviewer about the range.
- Let the interviewer know you expect a salary appropriate to your experience and ability to do the job well, and then ask what range the interviewer had in mind. Your objective, of course, is for the interviewer to reveal the salary range first. Once you have that information, you can adjust your range so that the minimum overlaps the offered maximum. For example, if the interviewer’s range is $55,000–$60,000 a year, you can respond with $58,000–$62,000. Now you and the interviewer have something to talk about. If you ask for too much, you risk pricing yourself out of the job; if you ask for too little, you don’t know how much you are worth. The last thing you want to do is to give a specific dollar figure because then you have no room to negotiate.
If they insist on you giving a number first, have your homework ready. Tell them that according to ACS Salary Survey data, this type of position in this area of the country should pay in the range of $X to $Y, and you are sure their offer will be in line with market rates.
Getting What You’re Worth
You like the job, you know you will be successful, you’re prepared to give it your best efforts, but the initial offer is lower than you expected — is there some room for negotiation? Most employers operate in one of these modes:
- Take-it-or-leave-it deal: They say there’s no room for negotiation.
- Set salary range: They’ve set a predetermined range for the position, and placement within that range is determined by your experience. The top of the range is rarely offered to a new hire, but is reached by a series of raises over the years. To increase the salary significantly, the job would have to be upgraded to the next classification, with a higher range. (If the employer has underestimated the necessary skills to perform the job well, this might be possible.)
- Flexible salary: They have flexibility to adjust the salary. This is the best position for bargaining; however, if there are other equally qualified candidates, and the employer would be happy with any of them, your negotiating power is reduced.
Another option is to agree to a performance review after six months that would include a salary adjustment. Lump-sum signing bonuses are nice (but rare), and that money isn’t added to your base salary or figured in for your review. Because future raises are a percentage of your current salary, you want to negotiate the highest possible starting salary, which will compound your raises over the years.
Once the salary question is settled, you will need to address the benefit package. Although benefits vary widely across employers, larger organizations usually have more comprehensive packages. Think about what types of benefits you will need. Some organizations have flexible plans (often called cafeteria style plans) that allow you to select the benefits you value most. Benefits are considered part of total compensation, and can add value of up to 30%–40% to your salary.
Typical benefits can include:
- Health (medical, dental, vision, hearing, pharmacy, long-term care)
- Life, disability, and accident coverage
- Profit sharing
- Stock options
- Paid time off (sick leave, vacation, holidays, bereavement, jury duty)
- Transportation benefits (parking, company cars, or subsidies)
- Retirement (company paid, employee paid, or a combination)
- Work-Life Balance enhancers (childcare, flexible hours, telecommuting)
- Continuing education (tuition reimbursement, professional conferences).
Many times benefits and working conditions are more open to negotiation than salary. Ask the company where they are flexible.