Article Collection

Negotiating A Fair Pay Package

By Donald Asher

This article originally appeared on CollegeJournal.com (collegejournal.com)

Mira Rosenthal graduated from Reed College in Portland, Ore., with a bachelor's degree in French literature. She spent a year traveling and temping, then landed a full-time position as a technical writer for a company in California's Silicon Valley. The job paid $35,000 a year and she felt she negotiated a good deal. She received full benefits and higher pay than many friends who went straight to work from school.

Lance Geng taught himself HTML programming and left school before graduating to work part-time as an intern for a start-up company in Silicon Valley. After showing the firm he could do the work, he negotiated an offer for a full-time position as an HTML programmer. Like Ms. Rosenthal, he started at $35,000, but he also asked for and received 1,000 shares of company stock worth approximately $50,000.

That isn't the only difference. Mr. Geng is 18 years old, and the school he left behind is high school. Like an outstanding athlete, he made a financial decision to turn pro.

Welcome to the job market, where your value isn't determined by your degree, but by your skills and economics: the law of supply and demand. Mr. Geng was worth more than Ms. Rosenthal for two reasons. First, Ms. Rosenthal graduated several years ago, when the market was softer. Second, Mr. Geng has a skill that's far hotter than technical writing.

He also negotiated harder. "I asked for $40,000 a year," he says, "but they'd only go to $35,000. I did get them to max out on shares, though." Mr. Geng says he isn't complaining about his pay. After all, he says, "I'm only 18."

If current employment trends hold steady, this year's high-tech college graduates will be in demand. That means they'll be in a position to negotiate with employers for added pay and benefits, plus soft issues such as flextime. Then there's the issue of stock options and signing bonuses -- now standard for new college graduates in some fields and industries.

But haggling over pay can be awkward. What's the right way to do it and how will you know if an offer is adequate? The following tips can help you talk about compensation with employers and receive the pay you deserve.

1. Start Early

As in almost every skill, practice makes perfect. The more you talk with employers, the better you become at it. "Start interviewing early, so you can get a lot of practice, and be open to companies you might not have considered," says Autumn Looijen, a 1998 graduate from the California Institute of Technology in Pasadena. Her degree in engineering with an emphasis in computer science made her a hot property to last year's employers.

2. Do Some Advance Research

Know what employers pay for new hires with your skills and background. Currently, graduates from top schools with technical and computer skills are earning pay premiums. A good starting point to your pay research is reviewing last year's salary offers for new graduates, says Amy Malak, associate director of the career center at Caltech. Use this and other information to gain an idea of your value to employers and what you can ask for, she says.

Be sure you investigate a company's web site before each interview, since it usually contains specifics on products, services, plant location and other details. Most company web sites also include recruiting information that describes the company's culture, hiring policies and benefits for new hires. Citing facts from a web site "really impresses them," adds Ms. Looijen.

3. Be Flexible

A good pay package isn't just about money. There may be other benefits you consider more important, such as mentoring or tuition reimbursement while you earn a masters's degree. Moreover, companies don't always have the ability to increase base salaries for new hires, since pay for corporate positions usually fits into carefully determined salary ranges.

"The salary structure may be set in stone," says Jan Ford, associate director of career development at Rose-Hulman Institute of Technology in Terre Haute, Ind., "but [an employer] may be able to offer you bonuses, grad-school classes, special vacation packages, a laptop as part of the job, moving allowances and other perks that don't necessarily add dollars to the base salary."

At many companies, new hires' starting salaries are bumping against or exceeding those of employees hired earlier. This salary compression problem can cause internal discontent and put hiring managers in a bind.

"We're trying to stay current, but the market is changing so quickly" because of pay inflation, says Valerie B. Ricetti, technical recruiter for Inhale Therapeutic Systems, a biotechnology company in San Carlos, Calif.

While Ms. Ricetti and other hiring managers hope this trend won't continue, they're using bonuses and stock options or grants to sweeten starting pay offers. These pay elements aren't added to base pay, helping to eliminate compression problems.

"Be sure you understand how stock and options work," says Ms. Ricetti. For instance, she says, the value of a share of stock is relative to the total amount of stock a company issues and to the company's value.

"The point isn't the number of shares, but the percentage of the company's value," she says. "A lot of people don't realize that 10 shares of stock at one company may be worth more than 100 shares at another. And [most employee] stock options are valuable only if the stock price goes up."

Your research can help you determine the type of pay and benefits available at your target employer. Use creativity when structuring your package. Most companies are willing to bend to hire desirable candidates, and you may be able to close a deal that might otherwise have slipped away.

4. Be Pleasant

Don't be confrontational or demanding, advises Alan D. Ferrell, director of placement at Purdue University's Krannert School of Management in West Lafayette, Ind. Instead, be reasonable and reassure the employer that you want to secure a win-win agreement.

"Say 'I want to understand your offer and your compensation policies. I know you've done salary surveys, and that you may have restrictions on what you can offer me, and I appreciate that. At the same time, I want to make sure I've fairly assessed my market value,' " says Mr. Ferrell. "If you're still far apart, present your rationale for what you'd like to get, then ask this simple question, 'Can you help me with this?' Whatever you do, avoid being arrogant."

Negotiate from a position of strength by being informed about pay in your field. "Give the company a reason to find more money for you. I've seen students present ultimatums to companies, and they often say, 'Sorry. We're not interested,' " says Ms. Ford.

She warns against overreaching. "You can't just say, 'I want more money.' That isn't the way to negotiate. [Present] information about other offers or emphasize your experience, especially internships or co-op experience related to the job."

Len Morrison, associate career center director for Babson College's F.W. Olin School of Business in Babson Park, Mass., also cautions graduates not to be aggressive when negotiating. "I've seen too many instances of students who lacked experience negotiating," he says.

Recruiters would prefer to have a dialogue about the merits of their offers, he says. "That's more likely to result in a successful increase in the offer," says Mr. Morrison.

Ms. Looijen accepted a job as a developer at Netscape Communications Corp. in Mountainview, Calif., at a salary considerably higher than the company's initial offer simply by keeping a dialogue open.

"I kept talking to them, letting them know how much I liked their company and how much fun I had interviewing with them and how interested I was in working there," she says. "I let them know I wasn't going to waste their time. If they were going to spend time developing a better offer for me, it was going to pay off. And I used the other offers and last year's salary data to give them a rationale for upping the offer."

5. Aim High

Don't discount your value. Ask for a package that's at the high end of the spectrum for your target position, and be willing to compromise.

"Always aim higher than you expect to get, not by an outrageous amount, but by a little more," says Mr. Geng. "You might get more than you expect."

He also advises asking for an offer in writing. "If it isn't in writing, all those promises don't mean a thing," he says.

Ms. Looijen advises new graduates to ask for signing bonuses in addition to their starting pay package. Not every company will offer one otherwise, she says.

6. Know How To Handle Multiple Offers

Timing can be an issue, and you may receive your first offer before you return for second interviews at other companies, says Ms. Malak. In this case, you must know how to stall with employers.

"Learn to ask for the time [you] need to make a thoughtful decision," she says.

Ms. Looijen received five offers at the same time. "It was nice to know that I was going to have a choice about where I was going to go," she says. "In the end, I didn't accept the highest offer, but it gave me a place to negotiate from."

Adam Riggs, a sociology graduate of Reed College, found himself at the center of a bidding war with several New York City firms, something he never expected. He had paid his own way to New York to interview during spring break and made several appointments.

His first offer was from an economic consulting firm in White Plains, N.Y., which he received just as he started interviewing for a consulting job in Seattle with Deloitte & Touche, a national accounting and consulting firm.

The New York firm was so eager to hire him that it kept upping its offer during his interviews at Deloitte. He never actually received an offer from Deloitte & Touche, but meeting with it raised his bargaining power with the first company. "I ended up with $2,500 higher starting salary and $1,000 to help with moving, which I accepted," he says.

He recommends not giving away your hand but also not being overly demanding. "You have to ask for something reasonable, or they'll decide they're not interested in you anymore at any price," he says.

7. Career Satisfaction Isn't Just About Pay

Don't accept an offer based on salary alone. "Figuring out what kind of work you want to do is more important than cash," says Ms. Ricetti. "If you're interested in several things, find out what road you want to go down and the job that makes sense for you. Don't always be seeking the dollar. If you don't like what you do, it doesn't matter how much you're paid. You're going to be miserable."