Should You Negotiate Your Salary At Your First Job?
Negotiating your first job out of college can seem like a crazy idea. After all, you're just starting in your career and you might not have any more experience than a few internships. However, in our recent Instagram Live with Jordan Sale from 81cents, she shared multiple reasons for negotiating, why you should negotiate, and how to negotiate at your first job out of college. This blog post is a recap of her advice + some tips we dug up that we found helpful!
Before we get into how you might negotiate and handle that conversation, let's talk about why you should negotiate in the first place.
Why You Should Negotiate
Pay Gap There are many reasons for the pay gap - where people who work at the same levels, have differences in what they earn. One of the reasons is the difference in attitude and approach to negotiating. Jordan shared that men tend to initiate negotiations 4x more frequently than women. When they do initiate the conversation, they see different results.
"As women and underrepresented individuals, we must push each other to have these difficult conversations and to be more prepared for them." - Jordan Sale
Companies aren't always transparent. More and more companies are removing negotiating off the table by being open about what they pay people and sharing the formula they use to come up with the numbers. However, until all companies do this, we have to still ask for what we deserve.
If you don't ask, you're not going to get it As students and early professionals, we often operate under the assumption that if we put out heads down and do the work, we'll be recognized for it and then promoted and see all the career glory we deserve. While this is true in many places, the further you get into your career and with employers who may not recognize your work, this assumption is less and less true.
Many times you might see your coworkers or those performing similarly to you get promoted and it can be frustrating. However, it comes down to if you don't ask, you're not going to see any sort of change or progress.
It's frustrating to see this, and we recognize that inequities are present in all kinds of workplaces but what you can control is asking and initiating the negotiation process.
Negotiating in COVID-19 Era
You might be thinking, well I see all the reasons to negotiate, but it's a tough job climate out there! People are being laid off, furloughed, and having their offers rescinded, does it still make sense to negotiate right now?
Short Answer: Yes, still negotiate but acknowledge the pandemic to not come across as tone-deaf.
Caveat the Pandemic
So, if you don't acknowledge the pandemic or mention it during the process, you can come across as tone-deaf and inconsiderate. Jordan recommends to caveat the pandemic in your approach:
"Look, I know it's weird time to be bringing this up, but it's important to have this conversation and I wanted to get a sense of where you're at with things."
If You're Getting a Job Right Now, It's an Essential Job
It's important to remember that if you're being offered a job right now, it's because the company needs that role or they are probably doing fine despite the pandemic. Or, they view the role as critical to their success right now. If they view your role as critical, you can leverage that in your negotiations for your job.
An Extra $5,000 Is Not Going to Bankrupt the Company
Whatever you are asking for is not going to bankrupt the company you are negotiating with. At the end of the day, if paying you that extra $3,000 or $10,000 is going to make it or break it for them, they probably won't be hiring you.
So don't let the pandemic stop you from negotiating your job, but make sure you acknowledge it to not come across as tone-deaf.
Should You Negotiate Your First Job as a New Grad?
Here's the question you have been waiting for. Often people who are further in their career are more comfortable with negotiating as they have more practice and more leverage due to their added experience.
There's No Harm In Negotiating
80% of new grads were successful in their negotiations!! Those are amazing odds.
There's no harm in negotiating for your first job and asking if their's any flexibility in the offer. It can be as simple as asking more questions and using your curiosity to see if their room to ask for more for any part of your offer. The worst thing that could happen is that they say no.
The response you can get can vary so be mentally prepared for that. You might be in a structured program where everyone is paid the same amount so you might face not much room for negotiation.
View Negotiating Broadly
People often think negotiating is just about increasing your salary. However, your base compensation is just one piece of your total compensation. If you think about it from that perspective, you could have a signing bonus, work from home flexibility, 401K matching, relocation bonus, start date that are all open to being negotiated.
Figure out which of these matters the most for you and tackle that. If you have a different offer that is giving you a perk or benefit, you could also ask for that benefit or monetary compensation to match the value of that benefit.
** Another thing you can negotiate is asking for a 6-month pay review. This is especially great if you aren't getting the pay you want and hitting a stall in the negotiating process. With this pay review, you can show all the great work you did in the past 6 months to negotiate up to the pay you want. Here's what you can say:
"I'm comfortable moving forward with this. To be clear, I do think that you know this is not quite where I was hoping to be, and I'm confident that I'm going to do a great job once in a role."
Sooner You Start Negotiating, the Sooner You Will Benefit
Jordan shared that there is a lot of data out there that shows that negotiating your first job out of school, could result in over a million-dollar difference in lifetime earnings!! Which is crazy to think about but if you recall our favorite concept, compound interest, you'll know that the added $2,000 in your first job salary, could compound over time to hundreds of thousands of dollars.
When it comes to annual bonuses, these are often a percentage of what you're earning so if you are making $42,000 instead of $40,000, and are getting a 10% bonus, your bonus would be $200 more!
Your next raise or promotion is also a function of what you're earning today, so not negotiating your first salary could lead to losing thousands of dollars of earnings over your lifetime! So at the minimum, you should try.
You Could Also Be Helping Your Peers
Jordan shared a story of how when she negotiated her first job offer for a $1,500 bump, the company agreed to bump not only her salary but also the salaries of every other new grad starting alongside her. So not only could you be helping yourself, but also those around you!
How to Approach Negotiating
So hopefully, you're convinced about why you should negotiate at this point, but you are probably wondering, "how do I actually negotiate?" This is by no means an in-depth guide to negotiating, but here are some pointers Jordan shared in our conversation.
Step 1: Prepare
Preparation is key. People say that you should spend 4 times the length of the conversation you expect to have prepared. So if you're going to talk for an hour, prepare for 4 hours at the minimum, but doing more than that isn't a bad idea either.
Market Data - Understanding what other people are being paid for your role, at your company ideally or at least similar companies will give you a good understanding of how much you should ask for. This will also help build your confidence as you go into the process.
Where can you find this data?
Asking Alumni at the Company/Asking Your Friends - Show them your offer and see if they can give you any feedback on it.
Ask Your Peers - If you're negotiating a raise at your current company, check with your co-workers about their raises and compensation.
With this data in hand you'll want to come up with three numbers:
Walkaway point: the lowest you will go
Target: where you want to end up
Aspiration: what would make you sign on the spot
Step 2: Brainstorm the Conversation
Think of every single question that could come up during the conversation and how you will respond to them.
If you mention salary data, they might ask "Where did you get your numbers from?". You might go through your entire negotiation conversation, and they could say "Sorry, I wish there was something I could do, but we can't do more than your offer right now."
Step 3: Build A Script
Build all of the market data research you did and the potential questions and answers you brainstormed into a script.
Here are some awesome scripts we found online! Remember to mold these scripts to your speaking style and what you're comfortable saying. You don't want to sound like a robot reading off of a script during the negotiation process either.
Scripts to start the conversation:
"Hi, thank you so much for the offer. I am happy to hear that you want to bring me on to the team, and I'm excited to get started. However, I was hoping we could discuss my compensation. I've done the research on the industry we are in and the current market value. Combined with my qualifications and experience, I would be most comfortable accepting a salary of X for this role." - Indeed
"Thank you for the offer. I just want to reiterate my interest and that I do want to work here. With that being said, based on my research for this role at this company, I see the range falls between X-X (Top 25% range of salaries for your role)." - Samanee Mahbub
Scripts if you have competing offers to use as leverage:
"Thank you so much for the offer! I am really excited about the company and the role. However, as you know, I have been talking to other employers and do have another offer(s). If you’re able to move the pay to $X, I think we can have an agreement." - Samanee Mahbub
"You’re my top choice, but I want to be totally honest with you — I have two other offers, but if we can work this to a fair number, I think we can sign this and get this done." - Samanee Mahbub
Script if they aren't budging on a number when negotiating
"I understand you don’t have any flexibility with the salary right now. However, I’m really interested in working with you. If we agree on one thing, then I think we can have a deal. If I do an amazing job in the next 6 months, will you agree that we can revisit and renegotiate my salary at that point? And could you put that into our contract?" - Samanee Mahbub
Step 4: Practice!!
The more you practice the more confident you will be. Practice with your friends and mentors and have them throw different responses and questions your way so that you are prepared for whatever you are hit with during the conversation.
Haggling at a Night Market and Negotiating for a Job Are NOT the Same
Jordan shared that a common misconception is people think that negotiating or bartering on the street for a trinket is the same skill set required to negotiate a job offer. Just because you are good at the former, doesn't mean you are good at the later.
Negotiating a job offer where you're asking for a 10-15% raise takes a different approach. When you're haggling, you're likely never going to see that person again, but in a professional negotiation, the person you are negotiating with is likely your boss or someone you'll be working with during the job.
Another thing to remember is in a professional setting, they also value you just as much you value the job and don't want to lose you. So you can use that to your benefit.
The timeline is also much slower, in a night market you'll know immediately if they are willing to go lower in the price, but in a professional negotiation, it might take them a while to get back to you.
Finally, Remember that Negotiating is Not Easy and It's Normal To Struggle With It
Putting yourself out there and asking for more money or benefits is not easy for anyone. It can be an uncomfortable and scary thing to do. However, try to remember all the reasons to negotiate and keep in mind that 15 mins of discomfort can lead to a lot of benefits and wealth in the long run.
Breathe. You Got This!
Resources We Quoted From and Love!
81cents - Huge thank you to Jordan Sale from 81cents for partnering with us for our Instagram Live!
You can also reach out to Jordan with any questions: email@example.com
Check out the recording of our event over on our Instagram TV!
Don't miss our upcoming live events, RSVP now!
Disclaimer: The content on Young, Not Broke is for informational and educational purposes only and should not be construed as professional financial advice. Should you need such advice, consult a licensed financial or tax advisor.