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Negotiating Job Offers

The Science of Asking for What You Want

Congrats! You snagged that coveted job offer. Now comes the hard part: Do you take the offer as it stands, or negotiate?

While it may seem like a small decision in the face of other career choices—like where to move or what jobs to explore in the first place—negotiation can have long-term effects on your career and finances. One study found that negotiating just a $5,000 increase in pay at your first job could make more than a $600,000 difference over the course of your career.

Of course, few things are more intimidating than negotiating with a potential employer, whether it’s for a bigger salary, a bonus structure, or various benefits. If you’ve never tested the waters before, understanding the psychology of negotiation can help you both build up the courage to ask and successfully reach a compromise.

“The person who makes the first offer has an advantage because you’re beginning the discussion. You set the ‘anchor,’ and the other party will work off that initial value."

—Dr. Todd Thorsteinson, professor of psychology and communication, University of Idaho

Negotiation Isn’t a Zero-Sum Game

The old proverb “a bird in the hand is worth two in the bush” isn’t just an expression you’ve heard from your grandmother—research shows we tend to hold on to what we have rather than risk losing it for something else, a behavioral tendency called “loss aversion.”

In reality, while negotiation isn’t an option for every employer, you’re pretty unlikely to lose an offer altogether just for trying: According to a recent survey from NerdWallet, the vast majority of hiring managers (90%) have never retracted an offer because a candidate attempted to negotiate. What’s more, 80% of new graduates who negotiated were at least partially successful.

According to a CareerBuilder Survey, 45% of employers are willing and prepared to negotiate. Yet nearly half of all job seekers (49%) simply accept the first offer given to them.

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“People tend to see negotiation as an adversarial game—me versus you. But it’s much more effective to see negotiation as a shared problem,” Dr. Daniel Shapiro, an associate professor of psychology at Harvard and founder of the Harvard International Negotiation Program, says.

So, while it’s contrary to your nature, remember that negotiation isn’t a zero-sum game. If you’re successful, the company benefits by landing a talented new employee, and you benefit by getting a job package you’re happy with.

Bianca Jackson

Project Manager, Gannett-USA Today Network

“When I accepted previous job offers, I was terrified of the possibility of a company rescinding the offer if I negotiated. I decided to negotiate my salary because I was tired of wondering “What if?” What if I could have gotten more money? More time off? Additional perks?

Once I conquered my fear and realized they’ve already made the decision to hire me, I had nothing to lose. I negotiated twice: once for a $20,000 pay increase and another time for telecommuting privileges and more personal time off. Employees must remember there's more to negotiation than just salary. Work-life balance is a top priority of mine.”

Set the ‘Anchor’

While loss aversion is an obstacle to negotiation, some psychological frameworks actually help you when it comes to asking for what you want and getting it. “Anchoring,” for example, can play to your advantage if you’re asked to present an expected salary before they make the offer, or if you have to go back to the employer with a number in mind for negotiations after the offer.

“The person who makes the first offer has an advantage because you’re beginning the discussion. You set the ‘anchor,’ and the other party will work off that initial value,” Dr. Todd Thorsteinson, professor of psychology and communication at the University of Idaho, says.

Before negotiating, do your research and understand what the market typically offers (sites like PayScale and Glassdoor are good resources). Then, when the time comes, present a number on the high end of the spectrum—even if you’re comfortable with less, this offer will raise the “anchor” for the hiring manager.

NerdWallet’s survey found that employers tend to have 5 to 10% of authorized wiggle room for a candidate’s salary, so keep that in mind before throwing out big numbers.

 

It’s Not Just About Numbers

What if an employer simply refuses to go higher? Work cooperatively with the hiring manager, Shapiro says. “Think outside of the box about additional perks that are low-cost for the employer and high-benefit for you, such as more vacation days, better healthcare benefits, and the like.”

Many hiring managers are open to this conversation—if they can’t negotiate pay, they’re willing to discuss other benefits and perks. According to CareerBuilder, 33% of employers are willing to negotiate a flexible schedule, and 19% are willing to offer more vacation time. Time is money, so it’s worth it to look at aspects of the offer that are non-monetary, but that could increase your quality of life.

In fact, our recent career survey of 1,000 people found that successfully negotiating factors like vacation and remote work is closely correlated to job satisfaction—41% of people would give up 10% of their salary for a more flexible schedule.

Negotiation can have a powerful impact on your lifetime earnings and career trajectory, so it’s worth taking the time to learn how to do it well so that you can reap the benefits throughout the course of your career. Remember: You can’t get what you don’t ask for.

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