Compensation evaluation is an important final step in your interview process. It is much more complicated than merely comparing paycheck income especially considering the increasing variation in cost of living, healthcare, and the implications associated with state income taxes.
Negotiating salary may feel uncomfortable for some people, but it can be appropriate to negotiate if you believe your skills are worth more than the salary and benefits being offered. Keep in mind that economic conditions can be a major factor in an employer’s ability or even willingness to negotiate, especially if they have a line of qualified candidates at their door. These negotiations require upfront planning, preparation, and goal-setting by the candidate.
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I. What Does a Total Compensation Package Include?
A good salary package is more than just a paycheck. There are many benefits that a company will offer to expand the size of the total compensation package. Do your homework to determine what benefits and perks can be negotiated. Also, take some time to consider what is most important to you on the job.
There may be non-monetary benefits that you want to evaluate when making a decision. What type of rewards, besides salary, are you looking for in a job? For example, does the position provide long-term security? Does the work give you the creative outlet you need? Do you see yourself getting promoted within the company? All of these factors should play a role in your decision-making process.
Examples of benefits include:
- Sick leave or personal days
- Car allowance or automobile expenses
- Pension plans or 401K
- Relocation compensation
- Health clubs or wellness centers
- Expense accounts
- Profit sharing and Stock options
- Educational reimbursement
- Company-sponsored training
- Financial planning services
- Flextime or telecommuting
- Relaxed work environment
- Casual dress code
- Free parking
II. Salary Goals
Typically, the candidate and employer have opposite goals during the salary negotiation. Your goal should be to bring home the best salary you can for the work you’ll be doing. Your employer’s goal will be to offer you the most equitable offer he/she can while also saving money for the company. Keep in mind that your employer wants you to be happy and satisfied in your job. A salary that is lower than you deserve may ultimately cause you dissatisfaction and result in a desire to leave. This is where your goals and the employer’s goals meet in the middle. Although this may sound like an adversarial situation, both parties are working together to create a win-win situation.
III. The Keys to Salary Negotiation
- Never discuss salary until the end of the interview process. You should not mention salary until a job offer has been extended. Also, make sure you have a very defined job description before you determine a fair salary expectation.
- Never be the first to mention a salary figure. Although you may have expectations in mind, let the employer be the one to establish the first benchmark. This will usually work to your advantage in obtaining the best package that you can.
- Employers don’t usually tell you the most they are willing to pay. Let the employer be the initiator so you can identify the general pay range for the position and negotiate up from there.
- Conduct market salary research before you go into the negotiation. Having a detailed job description is critical for determining equal pay in the marketplace. Do not just rely on position titles for research. Sometimes, the same titles can mean very different things to different companies.
- Complete your budget before the negotiation to determine how much you will need. Ask someone to help you calculate your expenses, insurance, savings allotment, and anything else that may come out of your paycheck. Don’t forget to take out taxes in your estimate.
- Research the cost of living. A job paying $30,000 per year in Dallas is far different than a job paying $30,000 per year in San Francisco. The Career Center’s web page includes a salary calculator that will assist you in a cost-of-living analysis.
IV. What If Your Recruiter Asks You to Discuss Salary Before You Are Ready?
- You may field a salary question by asking or saying something like:
- “What is the range for this position?”
- “I’m really excited about the opportunity to work for your company, and I am willing to consider a competitive offer.”
- “Compensation isn’t my only consideration, but I’d like to make sure we’re thinking along the same lines. What range do you have in mind for this position?”
V. What if You Could Not Reach Your Ultimate Goal in the Salary Negotiation?
Although you may not always reach your maximum goal in the salary negotiation, you may still see long-term benefits in joining the company. One option is to ask for a single, lump-sum signing bonus. Some companies will offer these as a way to attract candidates if the salary package is not as competitive. You also may want to negotiate for the future.
Negotiating for the future means looking from one quarter to a year or two out and establishing benefits or incentives for benefits in that time frame. Some of these may include:
- A performance review in 60, 90, or 120 days. This will give you time to prove yourself and have a fair measure for a potential increase.
- A title promotion with a raise. Ask your employer to evaluate your performance for a potential promotion after a year of work with the organization.
- Bonuses. Monthly, Quarterly, or Annual Bonuses are an excellent way to increase the total financial package and are typically directly related to your performance or the performance of the organization.