Entering the Real World and Knowing Your Real Worth
With their college days behind them, new graduates are looking to enter the workforce and start putting their hard-earned degree to work. Excited by the prospect of landing their first job, graduates don’t realize that they could be already losing out on valuable income by making one big mistake: not negotiating their first job offer.
According to a recent survey by NerdWallet, a personal finance website, and Looksharp, a job site targeting new graduates, almost 90 percent of employers surveyed said that they had never retracted an offer because an entry-level candidate tried to negotiate. But according to the same survey, only 38 percent of new graduates negotiate with their employers upon receiving a job offer. This discrepancy means that new graduates could be leaving money on the table.
Getting Started with Salary Negotiations
With the right preparation and research, salary negotiation shouldn’t be an intimidating process. After all, new employees are making an investment in the companies they are joining, just as those companies are investing in the employees they’re hiring. Being prepared with the right data and think about how you’ll answer potential questions will help you feel more confident going into the conversation.
Knowing where the offer you received falls within the market rate for your position is a crucial factor in helping you negotiate. Online resources like Salary.com allow you to identify the market rates for positions in your area, as long as you know the key responsibilities for the position you’ve been offered. Remember that matching based on the job description – not just the job title – can mean the difference between an accurate match and one that is misleading. Saving the job descriptions for jobs you apply to can help you have this information on hand once it’s time to negotiate.
If you determine via your research that your new employer is offering a salary that is below what others pay for the same position in your pay market, this is a great starting place for negotiations. You should come to the table with the job descriptions of the market comparison positions you evaluated, along with the results of your research that demonstrate that the offer you received was below market value. Acknowledging how excited you are to start your new role and addressing the market value of the role head on, with data to back up your position, is the best way to begin negotiations.
The Power of Negotiations
Assuming an average salary increase of just 3 percent annually, NerdWallet reports that employees who negotiate for a 5 percent increases in pay on $40,000 job offers at age 22 can make up to $170,000 more by the time they turn 65 than if they had not negotiated for the extra 5 percent up front. That is a lot of potential money that new graduates could be leaving on the table if they don’t try to negotiate their salaries at the start of their careers! With three-quarters of employers reporting that the graduates they hired typically had room to increase their first salary by 5 percent to 10 percent, new graduates should feel comfortable initiating negotiations – especially if their research shows that the offer on the table is below market value.
Coming to a Final Offer
If you and your employer can’t come to an agreement on salary, you can try negotiating for non-cash incentives instead. They could me more flexible in terms of the other benefits they can offer, like additional vacation time or a more flexible schedule. You can also try to negotiate for early performance reviews or midyear compensation re-evaluations. If you feel like they aren’t offering you what you deserve, you also have the choice of turning them down.
Whether you’re a recent graduate at your first job or you’re on your 20th year with the same employer, there is no harm in bringing salary negotiation to the table, especially when you believe you’re worth more than what you are being paid and have the data to back up your beliefs.