Paul Levy and Farzana Mohamed have written a book to help new arrivals to the job marketplace, college students and others who have been offered a position but are not quite sure how to negotiate the terms of their job with their new prospective employer. They start their book, How to Negotiate Your First Job, with this story:
Karim, soon to be a college graduate, was stunned into inaction, paralyzed by an unforeseen opportunity. In the midst of a recession, with an unemployment rate topping 9 percent, he had been offered a job.
The e-commerce company at which he had just spent the summer as a software design intern wanted to hire him. The rub? He thought he should be paid 10% more than the offer. With a semester of college left, he had several months to decide whether to accept the position, but he didn’t know what to do next. Would they be insulted if he asked for more money? Would it sour his relationship with the person who made the offer? Was he allowed to talk with another company in which he was interested? Should he tell this company that he had another offer?
Karim is not alone in being inexperienced in the ways of the world when it comes to negotiating the terms of his first job. Many graduating college students have no idea what to do or say as they approach an employer. In fact, neither do many people who are already in the workforce.
This book is for the Karims of the world. You have spent most of your childhood and young adult life going to school—primary school, secondary school, and college—preparing to enter the work force. You have gotten pretty good at science, mathematics, computer programming, accounting, or whatever. You have applied for jobs or, like Karim, you have been offered a job out of the blue. Now, it is time to sit down face to face with your potential employer, and you don’t know what to say and you don’t know what to ask.
We are going to give you the tools to get through this stage of your life. Sure, we are going to help you get what you want and deserve. But, here’s the little secret. We’re going to help you get what you want and deserve in a way that will make your new employer even more pleased to hire you. “What?” you say, “I will end up with more money and better working conditions and my new employer will be happy?” That’s right. The principles on which this book is based are tried and true methods of expert negotiators. Even though you are not an expert negotiator, you can use them.
From there, Levy and Mohamed dive into the basics of negotiation. They remind us, first, that you need to decide to negotiate!
It might seem kind of silly to suggest to you—in a book about how to negotiate your first job—that the first step is to decide to negotiate. But many people don’t. Especially people like you who are just finishing college and are really happy to get a job. You may be worried that the employer will get angry or upset if you quibble over the terms of the job they’ve just offered you. Maybe you are worried that they will withdraw the offer, and you will be back to square one. You imagine the worst: You might even have to move back in with your parents after graduation! It may help to take a look at this from the other side.
Once an employer has offered you a job, they clearly want you. They’ve likely spent thousands of dollars and hundreds of hours choosing you. The second-place candidate may not have made the grade. If you don’t take the job, the employer might have to start over again. Moreover, they really want you to work for them and not their competitors. They thought you were the best in class. The last thing they want is for you to work for the competition.
This means you have leverage, something many first-time job seekers don’t realize. You can use this leverage to negotiate a better deal than their initial offer. Many prospective employers actually anticipate that you will to try to make a deal.
Mary Markel Murphy, who does recruitment for MIT, said, “You need to know that it is okay and even expected that you negotiate. As an HR professional, I leave a little buffer room when I make an offer with the expectation that a candidate may negotiate and I may need to increase the salary offer as a result.”
What happens if you don’t try to negotiate a better deal? The good news is that you will have a job. The bad news is that you may find out later that your colleagues did better than you. This could make you feel angry or resentful—maybe even a bit stupid—and you don’t want to feel that way when you have an otherwise exciting and interesting job.
You also will come to realize that you have shortchanged yourself in other aspects of your life. You shouldn’t have to start out your career with this sort of regret, especially once you understand that you are in a position to do better for yourself.
We’ve noticed, however, that even people who are convinced of their worth may have a deep prejudice against negotiation. We want you to believe that you can have a respectful, thoughtful, and collegial discussion with your potential employer that will get you a better result.
Here’s the magic part: You can conduct a negotiation in a manner that not only enhances your situation but also brings additional value to the company, making your employer even happier that they have chosen you to join their firm. But you have to decide to negotiate.
From there, Levy and Mohamed go into the strategy and tactics associated with successful negotiations. We’ll include just a few of them here. They go into great detail in the book, with lots of real-life practical examples and stories. One of the most important concepts they present is called BATNA, the best alternative to a negotiated agreement.
It might seem odd that an important step as you plan for the negotiation is to think about your alternative to accepting the job. In negotiation parlance, we call this “the no-deal alternative.” The shorthand term we use for it is BATNA, your Best Alternative To a Negotiated Agreement.
Remember, negotiation is a means to an end. In this case, the “end” is your happiness. If you are conducting a negotiation and conclude that you will feel better by not making the deal, you should walk away. We’ll want to remember, too, that while happiness may relate to money, it also is likely to comprise other factors.
Before beginning a negotiation, you want to understand your BATNA—the scenario or course of action that you would pursue if there is no deal with the other person. Your job is to “price” your BATNA to see if it makes more sense than the offer on the table. Why? If we view negotiation as a means to a goal, such as having financial stability, we must also consider other means available to you to reach that end. This could be a competing job offer, or it may be the expectation of another offer, or even the option of doing something else with your time such as starting a venture or continuing school.
You want to constantly evaluate the process and likely result of the negotiation against your other options. Knowing your BATNA will tell you the point at which you are just indifferent between saying “yes” and walking away. As you negotiate your first job, your task is to think about how to evaluate your BATNA and how to estimate theirs.
How do you evaluate your BATNA? You want to make a salary that is in line with your level of education and experience, and you think it should be at least as good as other jobs in the marketplace. But how do you know what that dollar range is?If this is your only job offer and you don’t have a specific proposal from some other company against which to compare it, you will have to do a bit of research.
While you are evaluating your BATNA, understand that your prospective employer has probably done the same thing. After all, they are trying to recruit great prospects like you, and they know they have to offer salaries in the range of the market. But they might also face important constraints on how much they can offer. Both big and small firms often have salary schedules that they use when recruiting new folks.
Another key concept presented by Levy and Mohamed is that of interest-based negotiations.
Positional bargaining occurs when we get stuck with the description of something we say we need. In interest-based negotiation, we focus on what we really care about. Very often, it is something quite different from what we say we need.
Why does this matter to you in your job negotiation? If we think strategically about your objectives, there are probably a lot of things that matter to you just as much as salary. How you choose to put those forth and use them in the negotiation is very important to your ultimate satisfaction with the job. Both you and your employer want you to be satisfied, and so you want to share your interests with the employer as you discuss whether or not you will take the job.
It is helpful to think about your interests before you get to the bargaining table. It’s not that you cannot and should not refine your understanding during the negotiation, but the bargaining table is not always the best place to do so. Sitting face to face across a table is stressful, and you are likely to be thinking about other things. So let’s do the bulk of the work away from the table. Just as you plan and prepare ahead for the interviewing phase of your job search, rehearsing possible responses, you’ll find that by preparing for and practicing how to talk with an employer, your job offer will pay dividends.
Start by thinking about the things that matter to you that have nothing to do with your soon-to-be current salary. What personal concerns have to be solved that would make you satisfied about a job if money were not an issue?
Not all interests are highly quantifiable. Some are tangible and some are intangible. Some are subjective and some are objective. For example, money is tangible and amounts of money are objective, but the process by which you achieve wealth might be more intangible and subjective. Nonetheless, you want to assess and prioritize the full set of your interests, and at the same time you also want to try to understand the same on the part of your employer. Then, you want to meld the two sets of interests into a workable package.
Remember that you and your employer are each making an investment in a future together, and this conversation is just one continuing part of establishing a longer-term relationship. If you frame it this way, you can think about the conversation as a way to explore how each party will invest in the other —and you will set the stage for the kinds of conversations and explorations that will be useful to you in your day to day work. They will want you even more to join their company.
Then Levy and Mohamed present the “secret sauce” that makes this all work -- trading on differences.
Mark Twain said, “It is not best that we should all think alike; it is difference of opinion that makes horse races.” What did he mean? He was suggesting that two people looking at the same group of horses and jockeys would predict differently which one would win. If we consider that people often bet on horse races, he was saying that people assign a different monetary value to the same thing.
This simple observation has great power in a negotiation if you are alert enough to apply it wisely. The power is that the application of this principle can transform a negotiation from one in which the two parties “split the pie”—if I get more, you get less—to one in which there are joint gains. The pie is actually made larger, and we both do better than if we had not come to an agreement. Most people think of differences as separating us. In negotiation, differences have the power to make a deal possible.
When you trade on differences, you want to find things that are of high value to you, but low cost to your new employer, or vice versa. It makes it easy for them to say “yes,” and the different valuation thereby makes a deal possible.
It will be helpful to think ahead of time about what differences you can trade on. This comes from being clear about your interests and that of the company. You can turn back to the lists you made as you defined interests in the last step and do some more research. But let’s think about this strategically. As we discussed, you want to have learned a lot about the interests of your employer. How is the company doing? Look at their employment statistics and see how fast they are growing. Where are they facing challenges and constraints? What are their hopes, in terms of market growth and new lines of business? All of this information is there for you to find from publicly available sources. A fast growing company might place a high value on an employee’s willingness to move. Such flexibility could be of low cost to you if you don’t care about where you live. A smaller company might value employees who are willing to work long hours and take on broad responsibilities. That extra work may be of low cost to you if you have the time to spare and want to gain a broad range of experience.
After you have a good understanding of their interests and yours, make a “Differences Inventory.” What aspects of the job might present a different valuation for you and the company? As we have mentioned, you are looking for things that have a high value to one party and a low cost to the other. Jointly explore with the employer how you might trade on those differences. Remember to say “What if?” rather than asking a “yes-no” question. When you find that joint gains are possible, codify the method for achieving those gains in writing as part of your deal.
Preparation is the key, say the authors, and one way to prepare is to think in advance about how you will handle the questions you don’t want to answer.
Some of the most unsettling moments in a negotiation occur when the other party asks you a question you really don’t want to answer. Certain questions can put you in a tough spot; for example, “What’s your real bottom line?” You don’t want to lie, but if you answer truthfully, you can be squeezed. Sometimes, too, the person asking the question truly has no right to the answer he or she seeks. An uncomfortable choice awaits you. Should you answer honestly, or should you hedge, or should you decline to answer?
Thinking in advance about the hardest questions you might be asked and how you will answer them is good practice in and of itself. There is an additional benefit, though. Thinking through your possible answers will actually help you better understand your BATNA and your interests. We suggest that you actually practice out loud answering the hardest questions. Ask a friend to ask you the questions and answer them. You’ll find that certain words and phrases are awkward, and so it might take several tries to get your answer down pat. Then, if and when the questions come up in your job negotiation, answering them will feel natural.
Levy and Mohamed ask, “Are women worse negotiators than men?” They note that a number of studies indicate that there are differences in both approach and response.
Women are attending college at higher rates than men, graduating in greater numbers and earning higher grades. Yet one year after graduation, women were making only 82 percent of what their male colleagues were paid, according to a 2012 report, “Graduating to a Pay Gap,” from the American Association of University Women.
Even when men and women had the same majors, there were often gaps in pay. The researchers found that female business majors earned an average of slightly more than $38,000, while men earned just over $45,000. In engineering, technology, computer science and social sciences fields, researchers found that women made between 77 percent and 88 percent of what their male colleagues were paid.
There are indications that the wage gap is not just about the careers that women are choosing. It’s about how they are negotiating and that they may be penalized if they do.
In a study by Professor Linda Babcock at Carnegie Mellon, men and women asked for raises using identical scripts. People liked the men’s style, but the women were branded as aggressive—unless they gave a smile while they asked, or appeared warm and friendly. In other words, unless they conformed to feminine stereotypes.
But what do we do about the facts noted above by Professor Babcock? Victoria Budson, executive director of the Women and Public Policy Program at Harvard’s Kennedy School of Government and chair of the Massachusetts Commission on the Status of Women, expands by noting that if women appear more relational in the discussion, they do better in terms of the results achieved. “They have to signal more relationally than their male counterparts to be heard the same.”
Sheila English, an accomplished businesswoman and public administrator, urges women—for the sake of their own comfort in the negotiation—to rely on the same kind of interpersonal skills with which they are most comfortable in the rest of their lives. Rather than trying to enter the negotiation in a “male style”—all business, assertive, and direct from the get-go—spend time working on building a relationship with the hiring representative. In other words, play to your natural inclinations.
The authors end with a reminder: A negotiation might hit a limit at some stage. They suggest the following.
Be mindful of both direct indications and indirect non-verbal signals from your counterpart. A firm may simply not be able to do any more for you. You need to have the grace and presence at that stage to decide whether to accept the final offer on the table, or walk away. Knowing your BATNA and practicing the negotiation skills we have laid out for you will help you understand when and how to do that. But we’d like to leave you with a final thought.
Don’t feel pressure when an employer tries to back you into a “take-it-or-leave-it” situation. An employer may try to convince you that you are so lucky to have a job or a chance to work on cool things that you should jump at the offer. Keep in mind that your decision will determine how you spend much of your time in the coming months or years. You shouldn’t have to make up your mind quickly.
Your response? “I’m glad and honored to hear that you would like to offer me a position. I am excited about working here and I think I can bring great value to the team. This is a big decision for me, however, and I need to think about it.”
If offer is low, you might also add: “Frankly, the offer is less than what I understand to be comparable rates in the market, and I need to consider it more carefully. When would be a good time to talk next week?”
Finally, life will not end if you decide to say “no.” Indeed, the very same employer might get back in touch.
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