There are a lot of resources out there that talk about salary negotiation but many tend to skew a bit theoretical. In my experience, one of the hardest things about negotiating your salary is knowing what to say in tough, ambiguous situations with a power balance that’s not in your favor. What’s OK? What’s rude? What are the social norms? And so on.
Before I started interviewing.io, I’ve worked as a software engineer, an in-house recruiter, and an agency recruiter, so I’ve literally been on all sides of the negotiating table. For the last few years, I’ve been guest-lecturing MIT’s 6.UAT, a class about technical communication for computer science majors. Every semester, negotiation is one of the most-requested topics from students. In this post, I’m sharing the content of that lecture, which is targeted toward students, but has served seasoned industry folks just as well. You’re never too young or too old to advocate for yourself.
Btw, if you don’t like reading and prefer long, rambly diatribes in front of an unsightly glass wall, I covered most of this material (and other stuff) in a webinar I did with the fine people at Udacity (where I used to run hiring) a few months ago. So, pick your poison.
Why negotiate at all, especially if I’m junior?
If you’re early in your career, you might say that negotiation isn’t worth the hassle — after all, junior roles have pretty narrow salary bands. There are a few reasons this view is short-sighted and wrong. First, though it’s pretty unlikely in the grand scheme of things, if you’re applying to a startup, there might come a magical day when your equity is worth something. This is especially true if you’re an early employee — with a good exit, a delta of a few tenths of a percent might end up being worth a down payment on a home in San Francisco.
But, let’s get real, your equity is likely worthless (except interviewing.io’s equity… that’s totes gonna be worth something), so let me give you a better, more immediate reason to learn to haggle early in your career, precisely because that’s when the stakes are low. Humans are frighteningly adaptable creatures. Scared of public speaking? Give 3 talks. The first one will be gut-wrenchingly horrific, the stuff of nightmares. Your voice will crack, you’ll mumble, and the whole time, you’ll want to vomit. The next one will be nerve-wracking. The last one will mostly be OK. And after that, you’ll be just fine. Same thing applies to approach anxiety, mathematical proofs, sex, and, you guessed it, salary negotiation!
So, make all the awkward, teeth-cringing mistakes now, while it doesn’t matter, and where failure will cost you $5K or $10K a year. Because the further along you get in your career, the bigger the upside will be… and the bigger the downside will be for not negotiating. Not only will the salary bands be wider for senior roles, but as you get more senior, more of your comp comes from equity, and equity has an even wider range for negotiating. Negotiating your stock well can make 6-figure differences and beyond (especially if you apply some of these same skills to negotiating with investors over term sheets, should you ever start your own company)… so learn these skills (and fail) while you’re young, because the older you get, the harder it’s going to be to start and the more high-stakes it’s going to be.
So, below, as promised, I’ll give you a few archetypal, stress-inducing situations and what to say, word-for-word in each one. But first, let me address the elephant in the room…
Will my offer be rescinded if I try to negotiate?
As I mentioned earlier, this blog post is coming out of a lecture I give at MIT. Every semester, I start the negotiation portion of the lecture with the unshakeable refrain that no one will ever rescind your offer for negotiating. Last semester was different, though. I was just starting to feel my oats and get into my talk (the negotiation piece comes about halfway through) and smugly recited the bit about offers never being rescinded, followed by my usual caveat… “unless you act like a douche while negotiating.” Then, a hand shot up in the back of the room. Ah ha, I thought to myself, one of the non-believers. Ready to placate him, I called on the gentleman in the back.
“My offer got rescinded for negotiation.”
The class broke out into uproarious laughter. I laughed too. It was kind of funny… but it was also unnerving, and I wanted to get to the bottom of it.
“Were you a giant jerk when you negotiated?”
“Nope.” Shit, OK, what else can I come up with…
“Were you applying at a really small company with maybe one open role?” I asked, praying against hope that he’d say yes.
So, there’s the one exception I’ve found so far to my blanket statement. After working with hundreds and hundreds of candidates back when I was still a recruiter, I had never heard or seen an offer get rescinded (and none of my candidates acted like douches while negotiating, thank god), until then. So, if you’re talking to a super small company with one role that closes as soon as they find someone, yes, then they might rescind the offer.
But, to be honest, and I’m not just saying this because I was wrong in front of hundreds of bloodthirsty undergrads, an early startup punishing a prospective employee for being entrepreneurial is a huge red flag to me.
OK, so, now onto the bit where I tell you exactly what to say.1
What to say when asked to name the first number
There will come a time in every job search where a recruiter will ask you about your compensation expectations. This will likely happen very early in said search, maybe even during the first call you’ll ever have with the company.
I think this is a heinous, illaudable practice fraught with value asymmetry. Companies know their salary ranges and roughly what you’re worth to them before they ever talk to you (barring phenomenal performance in interviews which kicks you into a different band). And they know what cost of living is in your area. So they already have all the info they need about you, while you have none about them or the role or even your market value. Sure, there are some extenuating circumstances where you are too expensive, e.g. you’re like an L6 at Google and are talking to an early stage startup that can only afford to pay you 100K a year in base, but honestly even in that situation, if the job is cool enough and if you have the savings, you might take it anyway.
So, basically, telling them something will only hurt you and never help you. So don’t do it. Now, here’s exactly what to say when asked to name the first number.
What to say when you’re handed an exploding offer
Exploding offers, in my book, are the last bastion of the incompetent. The idea goes something like this… if we give a candidate an aggressive deadline, they’ll have less of a chance to talk to other companies. Game theory for the insipid.
Having been on the other side of the table, I know just how arbitrary offer deadlines often are. Deadlines make sense when there is a limited number of positions and applicants all come in at the same time (e.g. internships). They do not make any sense in this market, where companies are perpetually hiring all the time — therefore it’s an entirely artificial construct. Joel Spolsky, the creator of Trello and Stack Overflow, had something particularly biting to say on the matter of exploding offers many years ago (the full post, Exploding Offer Season, is really good):
“Here’s what you’re thinking. You’re thinking, well, that’s a good company, not my first choice, but still a good offer, and I’d hate to lose this opportunity. And you don’t know for sure if your number one choice would even hire you. So you accept the offer at your second-choice company and never go to any other interviews. And now, you lost out. You’re going to spend several years of your life in some cold dark cubicle with a crazy boss who couldn’t program a twenty out of an ATM, while some recruiter somewhere gets a $1000 bonus because she was better at negotiating than you were.”
Even in the case of internships, offer deadlines need not be as aggressive as they often are, and I’m happy to report that many college career centers have taken stands against exploding offers. Nevertheless, if you’re not a student or if your school hasn’t outlawed this vile practice, here’s exactly what to say if it ever happens to you.
The reverse used car salesman… or what to say to always get more
At the end of the day, the best way to get more money is to have other offers. I know, I know, interviewing sucks and is a giant gauntlet-slog, but in many cases, having just one other offer (so, I don’t know, spending a few extra days of your time spread over a few weeks) can get you at least $10K extra. It’s a pretty rational, clear-cut argument for biting the slog-bullet and doing a few more interviews.
One anecdote I’ll share on the subject goes like this. A few years ago, a close friend of mine who’s notoriously bad at negotiation and hates it with a passion was interviewing at one of the big 4 companies. I was trying to talk to him into getting out there just a little bit, for the love of god, and talk to at least one more company. I ended up introducing him to a mid-sized startup where he quickly got an onsite interview. Just mentioning that he had an onsite at this company to his recruiter from the bigco got him an extra $5K in his signing bonus.
Offers are, of course, better than onsites, but in a pinch, even onsites will do… because every onsite increases your odds of not accepting the offer from the company you’re negotiating with. So, let’s say you do have some offers. Do you reveal the details?
The answer is that it depends. If the cash parts of the offers you have are worth more than the one you have in hand, then you can reveal the details. If they’re worth more in total but less in cash, it’s a bit dicier because equity at smaller companies is kind of worthless… you can still use it as leverage if you tell the story that that equity is worth more to YOU, but that’s going to take a bit more finesse, so if you’ve never negotiated before, you might want to hold off.
If the cash part of your equity is not worth more, it’s sufficient to say you have offers and when pressed, you can simply say that you’re not sharing the details (it’s ok not to share the details).
But whether you reveal details or not, here’s the basic formula for getting more. See why I call it the reverse used car salesman?
So, “if” what? I propose listing 3 things you want, which will typically be:
- Signing/relocation bonus
The reason I list 3 things above isn’t because I expect you’ll be able to get all 3, but this way, you’re giving the person you’re negotiating with some options. In my experience, you’ll likely get 2 out of the 3.
So, what amounts should you ask for when executing on the reverse used car salesman? It’s usually easier to get equity and bonuses than salary (taxed differently from the company’s perspective, signing bonus is a one-off rather than something that repeats every year). Therefore, it’s not crazy to ask for 1.5X-2X the equity and an extra 10-15% in salary. For the bonus portion, a lot depends on the size of the company, but if you’re talking to a company that’s beyond seed stage, you can safely ask for at least 20% of your base salary as a signing bonus.2
What if the company says no to all or most of these and are a big enough brand to where you don’t have much of a leg to stand on? You can still get creative. One of our users told me about a sweet deal he came up with — he said he’d sign today if he got to choose the team he could join and had a specific team in mind.
As I mentioned at the beginning of this post, there are plenty of blog posts and resources on the internets about negotiation, so I’ll just mention two of my favorites. The first is a riveting, first-hand account of negotiation adventures from one of my favorite writers in this space, Haseeb Qureshi. In his post, Haseeb talks about how he negotiated for a 250K (total package) offer with Airbnb and what he learned along the way. It’s one of the most honest and thoughtful accounts of the negotiation process I’ve ever read.
The second post I’ll recommend is a seminal work in salary negotiation by Patrick McKenzie (patio11 on Hacker News, in case that’s more recognizable). I read it back when I was still an engineer, and it was one of those things that indelibly changed how I looked at the world. I still madly link anyone and everyone who asks me about negotiation to this piece of writing, and it’s still bookmarked in my browser.
If you’re an interviewing.io user and have a job offer or five that you’re weighing and want to know exactly what to say when negotiating in your own nuanced, unique situation, please email me, and I’ll whisper sweet, fiscal nothings in your ear like a modern-day Cyrano de Bergerac wooing the sweet mistress that is capitalism.3
2Some of the larger tech companies offer huge signing bonuses to new grads (~100K-ish). Obviously this advice is not for that situation.↩
4In the early days of interviewing.io, we tried to charge a flat per-hire fee in lieu of a percentage of salary, precisely for this reason — we wanted to set ourselves up as an entirely impartial platform where lining up with our candidates’ best interests was codified into our incentive structure. Companies were pretty weirded out by the flat fee, so we went back to doing percentages, but these days we’re moving over as many of our customers to subscription as possible — it’s cheaper for them, better for candidates, and I won’t lie that I like to see that recurring revenue.↩