Salary negotiations - how not to burn

All photos in this article are taken from Christopher Nolan's The Dark Knight trilogy. This is still Batman!

Let's play!

In preparation, you have worked well with the phone. Interviews at the office this morning were fun. After a general lunch, a staff member sat down at the table across from you. He asked: "What salary would you like?"
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What do you do? What do you do ?!

Whatever you do, do not give him a specific number. As soon as he has a figure, he will be able to set the tone while continuing negotiations. This figure will be the ceiling - the highest offer you can get at this place. But, most likely, you will get less.

Or, perhaps, he will try a different approach to push you to call the number: “What is your salary now?”.

This question sounds quite reasonable. Is it not necessary to answer this question?

You don’t need to answer this question either! And you do not have to answer it. Employers know that, in principle, everything above your current salary will be an improvement for you and they will accordingly adjust downward the proposal they planned to give you.

How best to deal with these issues? Just say: “I am not comfortable reporting this information at the moment,” then bring the discussion back to the work you are interviewed. If the question is repeated, then also repeat your answer until the interlocutors leave you alone with this question.

At some point in the process, you come to what I describe as "Yes, if ..." or "No, but ...". “Yes, we are ready to work with you, if we can reach a mutually satisfactory agreement on wages,” compare: “No, actually, we are not ready to work with you, but, perhaps, we could, if it turned out that you agree to a low salary. " After you have heard the principle agreement: “We are ready to work with you here. What is required for this? ”- then and only then start talking about money. - Patrick Mackenzie

Remember - you have this information. They dont have. Your knowledge of your own current and expected salary is, in principle, your only informational advantage in payment negotiations.

And believe me, you will need any and every advantage you can get.

In the process of negotiating work, you have a fundamentally weaker position

Personnel has an incredible amount of information about you. At the very least, they have your resume, LinkedIn posts, a description of your work, and your GitHub profile that you submitted to them earlier when submitting your resume. They may also have viewed your social media profiles and phoned former employers (and not only those that you gave them) with questions about you.

Not only do the employees of the personnel department have the advantage of a huge information asymmetry, but they are engaged in recruiting staff professionally, earning it a living. They are professional negotiators. Probably, they have already led to lower expectations of salaries from other candidates earlier that day before starting a conversation with you. And tomorrow they will wake up, come to work and will again and again bring down the expectations of the salaries of the candidates.

What do you know about them, other than the name and position they report when introducing themselves? You do not know how your interviewers assessed your efficiency in advance, let alone the unit budget allocated for your hiring.

Your goal should be, at a minimum, as much as possible to level the odds on this playing field. One important way to do this is to transfer personal salary negotiations from real-time to e-mail correspondence.

E-mail has two advantages: it gives you written documentation of proposals, which makes it harder for an employer to reject them (“Oh, John did not have the authority to make an offer of such a high pay”). But more importantly, it gives you the freedom to think over sentences and even use them as a means to get other places with higher pay.

Regardless of the proposal insist in negotiations for a higher payment

What if you switch from a low-paid profession, such as a teacher’s job, to a more profitable job, such as software development? The initial offer you receive may be significantly higher than the amount you or your colleagues have ever earned.

Your first wish may be to jump on a chair with a shout "Yes!".

But save an impenetrable face. Almost always there is the freedom of maneuver to insist in negotiations for higher pay.

Of course, there is a danger that an employer will refuse a job offer if you consider his offer too long or if you struggle too hard for higher pay. Employers know that people, in choosing in their depths, prefer to reduce the risk of loss, rather than the potential for salary increases . And employers are ready to use your desire to avoid risk against you.

Let's suppress now that fear of the possibility of losing the job offered, and instead think about the circumstances that the employer has to take into account when it comes to hiring.

First of all, considerable funds have already been spent on the preparation of all these interviews and - often - on airline tickets for transporting you to the city of the main office location, on placing you in a hotel.

Take for example Google. Google makes an offer to only 1 of 7 candidates who reach an interview on the spot. Think of the dozens of working hours of highly qualified specialists spent on interviews — and tens of thousands of dollars on airline tickets and hotel bills — just to make one offer.

If you reject their proposal, they must again spend all the same time and money trying to find another candidate that meets their standards.

Therefore, if you receive an offer, then you have a certain opportunity to manage the situation.

Know the market

Of course, you could find someone on LinkedIn who works in a similar position with an employer who offers you a job, and ask him: “How much do you get paid at Microsoft?”. This can give you one data point.

But who knows, maybe this employee didn’t insist on negotiating a pay rise. Perhaps he is underpaid, but he does not even know about it.

Instead of trying to determine a reasonable salary by asking delicate salary questions to different people, go straight to the basic data . There are three main parameters that are important here: location, company and position .

In Mumbai, a salary of 100 thousand dollars a year will provide you a luxurious life. And in San Francisco? So-so. If you move to another city for a new job, be sure to consider the cost of living in this city. There is a cost of living calculation for most of the largest cities in the world.

Some companies pay better. For example, it is known that Netflix pays its developers a lot more than the market average . Therefore, try to compare your offer with the salary of other specialists in the same position in a similar company. To do this, one could use a tool like GlassDoor, but there is a much more objective approach: get data directly from the US Department of Labor.

But wait, does the US government provide data on how much companies pay their employees? “Yes” is valid for employees arriving in the USA on an H1-B work visa. Such employees are required to report their earnings.

And some genius put all this data into one large searchable database containing over 1.6 million salary records. You can search by company, city and position. Access to the database is free; there are even filtering and charting options.

Given that non-US citizens require a visa - and, thus, they have a lower negotiating capacity than US citizens - these salaries probably represent a lower level for people who can already legally work in the US. Therefore, make sure that everything that you are offered to ultimately accept at least corresponds to these average data, taking into account the location, company and position.

Stock options may be empty. Focus on cash

If a company offers you shares as part of your remuneration, but the company is not yet public (with a liquid trading platform where you can sell these shares), then these shares probably are worth nothing.

Many large companies issue their stock options for employees, which over time become the property of employees, helping them to remain at work. If you can profitably realize these options and then sell the shares themselves on the open market, then everything is fine. They then in many cases represent almost the same thing as cash.

But the vast majority of new companies fail, and the value of their shares goes to zero. The graffiti artist, whose Facebook share, worth a couple of thousand dollars for the murals he created in 2005 on the walls of the company's office in Palo Alto, California, now stands at $ 200 million , many thousands of employees of other startups have their stock options are literally worthless.

Even if you are in a successful startup, tax difficulties may prevent you from exercising your options. Uber uses this technique to firmly attach employees to itself. Through this remuneration structure, they essentially say: “Stay with us until we reach a public offering, and then you can eventually become rich. Leave, but then you better have a multi-million dollar credit line so you can pay the base of all tax bills. ”

It should be borne in mind that if an employer willingly offers you company stocks instead of just paying you more cash, it says a lot about his own view of the company’s prospects and how much he will expect in the end.

If you are still interested in rotating the wheel of fortune in the form of a stock option, then there is a database that can help find out how much share capital you should expect on top of your low salary.

Yes, a high initial salary really deserves all this exertion

My friend had been bargaining with Apple for several weeks at his initial salary. After six counter-offers, he finally received the desired salary, and he and his wife were able to afford to buy a house in Silicon Valley. His salary almost doubled the original Apple offer.

And another friend of mine was able to get offers from several different companies for several weeks and then had employers play against each other. Even though he already knew from the first day in which company he would like to work in the end, he continued to be interviewed. And he used these additional offers as a means of maximizing his initial salary at the job of his dreams.

If you have time for a long, exciting reading, then Heshib Qureshi, a professional poker player who became a developer, wrote a detailed report on how he negotiated like a madman and pushed employers together, eventually receiving a compensation package for $ 250,000 in his first developer post.

“But these are exceptions,” you might think. “All this requires tremendous troubles, interviews and interviews in many places, and a lot of preparatory investigations. And I have bills to pay right now. ”

The reality is that your future raises and, to some extent, your salary in further jobs, are highly dependent on your initial salary for this next job.

Starting with a low salary - as it happened, say, for most Americans who graduated from college during the Great Recession - will greatly affect your life salary potential. This is due in part to the fact that salary growth is usually defined as a percentage of your current salary.

What is the difference with a salary of 100 and 120 thousand dollars a year accumulated over five years? Assume that wage growth is 10% each year (which is a slightly understated value for the software industry in the United States):

• With a salary of 100 thousand dollars: 100k + 110k + 121k + 133.1k + 146.4k = 610.5 thousand dollars of total income
• With a salary of 120 thousand dollars: 120k + 132k + 145.2k + 159.7k + 175.6k = 732.5 thousand dollars of total income

That's right - adding only $ 20 thousand to the initial salary can lead to additional income over five years by more than $ 120 thousand. To realistically assess this amount - it is more than most Americans spend on all their higher education.

Are you ready to survey the database and exchange e-mails for a few weeks if this can result in all the money spent on college by you or your children being returned?

Yes. Salary negotiations deserve it.