Help a Reader: Negotiating Salary for a New Job

Here's a question I recently received from a reader:

I'm currently in a sales capacity at my company and have been since graduating college a little over a year ago.  Yesterday I was contacted by a higher level manager here at the company.  He invited me to his office and informed me of a newly formed position (not sales) in which I'm a leading candidate.  It would definitely be a step in the right direction for my career.  The new position combined with my impending return to school (enrolling in an MBA program this fall) leads me to think I will become a major player in the company's future. 

The question I have is in regards to salary.  Previous to the company informing me that I am a candidate for the position, I heard through the grapevine they had offered it to a programmer who declined to accept a position with another company.  They re-evaluated the position's direction and decided to have someone with more of a business background who can learn some ground-level programming but at the same time market and develop new software programs and initiatives.  Through a loose tongue of one employee, I became aware of the offer they made originally to the programmer.  It was markedly more than I currently make. 

In the event I do receive an offer and it is lower than the other offer they had previously made, how should I handle it? Obviously I don't want them to know I was privy to the old offer, but what steps could be taken to get them to raise the offer? Should I list a "ballpark" idea of where I'd like to be (which would be in the range of the previous offer) or just accept the offer made to me outright?

My two cents is that the other offer has virtually zero impact on this decision. Instead, focus on the market value of you in the position. Take the following into account when doing so: 1) Your experience (maybe less than what the other person had) and success in the field, 2) the position (a bit different than the original one they had in mind), and 3) similar positions at other companies. Try to get a firm number on this before you actually get the offer.

I'm guessing that they'll try and pay an in-house candidate less, and if they do offer something below fair market value, I'd offer some of my research into why I thought the position deserved more (in a kind way, of course.) If they balked or tried false promises (like "we'll review your position for an adjustment in the next six months") or otherwise persuade you ("this is your ticket to the higher ranks"), you could possibly negotiate something else -- more vacation time, them paying for your schooling, flex-time, working at home, etc. that had some meaning to you. If they refuse to budge, you're going to have to decide whether or not the position is a good move for you or not.

In addition, remember that you're only out of school for a year, so while you've been doing well, there are probably a ga-zillion people who have the same or close to the same amount of experience that you have. Yeah, it would cost them something to find the right person, but it wouldn't be much. And if they perceive you as making too many waves or causing too much of a fuss over the issue, they may simply tell you "we've decided to go in another direction."

That's my take. I'm sure others have some thoughts too. Have at it in the comments.

Comments

[Becky@FamilyandFinances]

I agree completely with FMF's take on this.

[Kyle]

It seems like they retooled the postion to be less technical and more business-oriented, so the offer made to the previous programmer is more or less irrelevant since it was for a different position. Technical skills are hard to come by, so it makes sense a business-oriented candidate without those same programming skills would be worth less to the company, at least initially Be prepared for them to offer you less.

[Tom]

I agree with both FMF and Kyle. In the meantime look up the position (if it exists) on Salary.com and if your alma mater has salary stats for various jobs, use those too. These can be helpful tools in getting a ballpark figure. I wouldn't be too "fussy" though, try for one round of salary negotiations, but no more.

Also, start trying to brush up on the technical aspect of the new position, the programming languages, etc. If you don't get the salary you were looking for, prove to them you are worth the extra money.

[LC]

I would aim for something about halfway between where you are now and the number you heard. One round of negotiations should be the max, and definitely don't turn it down even if it isn't too much of a raise, since it sounds like it would benefit you a lot. I would spin it more like "since this is a position with more responsibility and visibility in the company, I was expecting something more in the range of $xxx."

[El Cheapo]

I agree with FMF's comments on the matter. Let me also add that I think its in your best interests to forget about what your loose-lipped fellow employee told you about the previous offer to the programmer. The programmer may have been negotiating in his own right and simply left for a better monetary offer. Worrying about a potential offer for an ex-employee isn't worth the time or trouble.

The fact that you were approached by a high-level manager puts you squarely in the drivers seat. I think its in your best interests to gauge the determinants of the job and opportunities for growth in this position. It is completely appropriate to ask for the salary range too. Again, I wouldn't obsess over the actually salary figure but try to take in the big picture. Does your company offer tuition reimbursement? Is there opportunity for growth in this new division? Who will your new boss be and what is his/her demeanor?

Having been a programmer and having now moved over to a more business-side slash technical hybrid position, I would encourage you to definitely explore the option. You're in a great position and obviously in good standing at your company. Good luck.

[rdub98]

Don't forget to consider the "hidden paycheck" in all of this too. What type of added benefits does this position come with? Consider where this position will take you on your career path. Is it something that you want? Salary is one thing, but other little perks are worth more than money like the ability to network with some of the big whigs. If this job isn't the perfect fit for your career path, look at it as a stepping stone to where you really want to be. It could be a big step in the right direction.

[Jake]

Don't expect a big raise after just one year of work, unless you took a below-market salary to begin with.

[Trent D.]

The first thing to remember is that you want to "anchor" at the high extreme. You don't want to go too high, but make sure the first number you say is a number you'd be satisfied with, because they might say "okay". The negotiation will probably wind up somewhere between their "anchor" and your "anchor", which is the whole point of "anchoring" on the high end.

[Robert]

One thing you could say (if its true) is that you are concerned about the loss of income growth due to your increased productivity in your sales position. From what I know of sales (little), you usually become more proficient/productive as time goes on. So, if they are going to 'anchor' you at a salary number, you might want to bargain for a salary that is commensurate with what you could be making as a more productive salesperson.

[indio]

I think you should also negotiate a "kicker" outside the regular corporate performance review cycle so that when you finish your MBA you get a major increase. Don't let them bundle it together and offer only 6-8%. Your fair market value will be significantly higher after school. Also, they are saving a lot by hiring internally as opposed to hiring a search firm to conduct a search which usually costs 1 yr salary. Factor that into the negotiation.

In response to Jake's comment...
I wouldn't be too quick to dismiss a big raise so early in your career. Even if you were at market value before, you are at the low end of the pay bracket, so you have more room to go, so your raises will be bigger early in your career. Also, some companies wait a year or so to judge new employees on whether they have "high potential" so they don't waste a high salary on someone they haven't had a chance to observe.

I would aim for a hefty raise, but I wouldn't expect much more than 10-15%.

[Christopher Smith]

I suggest PayScale (www.payscale.com) as a highly useful service for figuring out what your target range should be. It's a free service; you put in your compensation package for a current job or an offer, and in return it shows you what other people in your geographical area and kind of job are making.

[JK]

I would also make sure you are guaranteed a 5-6% cost of living increase every year, get it in writing in the contract. This is so much easier than asking for a raise. You might also negotiate bonuses based on company/personal performance.