Negotiating a job offer can be scary, especially if it’s your first job after college. According to salary.com, failing to negotiate can cost a women $500,000 over the course of her career! If you want that money in your bank account, not left on the table, then you need to know how to successfully prepare for your first job offer negotiation.
Step One: Do Your Research
In negotiation, if you fail to prepare, you prepare to fail. If you want to get the best offer possible, you have to do your homework. Planning your negotiation can also help ease your nerves and build your confidence.
What Do You Need to Know?
The first thing you need to know is the average salary for a person with your experience in your field. You should also familiarize yourself with the cost of living in the area. You can use the following websites to get an idea of what your base pay should be.
After determining the average salary for the position, you should look at the other factors in salary and benefits negotiations. You can research similar sized companies’ benefits to get an idea of your industry’s standards. Some common benefits include paid time off, flextime, bonuses, office space, health club memberships, and on-site daycare or childcare vouchers. Depending on your lifestyle, some benefits may be more important to you than others. You should create a ranking system to help you decide which benefits are most important to you.
Step Two: Create a Ranking System
In order to determine the minimum offer you would accept, you must create a ranking system for your job offer. Doing so will keep the negotiation based in rationality instead of emotionality.
How to Create a Ranking System
First, list all of the benefits that you’d like to negotiate, in order of importance.
For example, your benefits, in order of importance, may look like this:
- Paid Time Off
- Office space
- Parking pass/Transportation pass
Try to limit your list to the five most important benefits you’d like to negotiate.
The next step is assigning point totals to the benefits you’ve listed. Your ranked benefits may look like this:
||$45,000, $50,000 opening offer
||10 points for $45-50K, -5 points for anything under $45K
|Paid Time Off
||15 days, opening offer 18 days
||10 points for 10-15 days, -5 points for anything under 10 days
||Private office/cube, opening offer of private office/cube
||5 points for private office/cube, 0 points for shared work space
|Parking Pass/Transportation Pass
||Parking pass/unlimited public transit pass, opening offer of 100% company paid for parking/public transportation
||5 points for 100% company paid for, 3 points for 50% company paid for, 0 points for self-paid
||Free childcare, childcare voucher, opening offer of free childcare (if on-site is available), 100% cost of childcare voucher
||3 points for 100% company covered, 0 points for self-paid
For each benefit, you should have a specific goal in mind. That goal is your target point. You want to start with an opening offer of 5-10% higher than your target point. Your resistance point is the lowest offer you would accept. Your point value system can be anything that makes sense to you. In this example, if you received your opening offer for each benefit, you’d end the negotiation with a total of 33 points and accept the offer.
Never reveal your resistance point!
Your resistance point is your source of power in the negotiation. You do not want to let the other party know the lowest offer you will accept because, if you do, that will be what they offer you. In the example above, you may decide that you need a total of 15 points to accept the job. These points could be obtained through any combination of benefits. If you do not reach your resistance point of 15 points, then you would decline the job offer. In order to confidently decline the job offer, you must know your best alternative to a negotiated agreement.
Step Three: Know Your BATNA (Best Alternative to a Negotiated Agreement)
A BATNA is your best possible outcome if an agreement is not reached. For a job offer, your BATNAs may include working somewhere else, staying at your current job, taking time off work, or collecting unemployment. The stronger your BATNA, the more leverage you have in a negotiation. With a great BATNA, you can walk away at any point in the negotiation. BATNAs allow you to negotiate with confidence.
Remember, the worst thing they can say is “no.”
If you never ask, you’ll never know.
So, do your research, prepare your ranking system, determine your strongest BATNA, and go get that extra $500,000. Good luck!
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