The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: cranilation on March 05, 2015, 04:13:26 PM
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I've been offered an entry-level position at an international corporation in human resources. I am wondering if this 401k is standard.
Salary is $55,000 with possibility for 10% bonus based on company performance.
401(k) is:
6% pre-tax contribution, with annual automatic increase of 2% each year
50% match for first 6%
What would a reasonable request be? Would a request for 100% match be reasonable?
Thanks!
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As far as I know, you can't negotiate on 401(k) match, everyone in the company gets the same deal there.
But a 50% match up to 6% of contributions (essentially a 3% match) is completely standard.
401(k) is:
6% pre-tax contribution, with annual automatic increase of 2% each year
Do you mean that they automatically enroll you at 6% and increase it by 2% every year? That's awesome, but I'm sure you'll hear a lot of your coworkers complain about the company tricking them into taking money out of their paychecks ;)
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As far as I know, you can't negotiate on 401(k) match, everyone in the company gets the same deal there.
This is my experience as well--virtually everything is negotiable except company match.
That being said, if you're really entry level you have virtually no negotiation leverage unless you have competing offers that equal it, or you bluff.
When I was an entry level guy I had competing offers from Fortune 500 companies, and they still wouldn't budge on their offers. Frankly, I just wasn't that valuable to them. YMMV.
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Most (all?) 401(k) plans have a plan document that must be followed. Typically, the plan will depict the match % and is not changed unless the plan document is amended to change it. I have never seen a plan where the basic match is based on experience (except for the initial eligibility period). You should be able to obtain the plan document prior to being hired if you ask.
However, you could have a vesting schedule that is based on years worked at the company.
A common vesting schedule is the 5 year vesting schedule:
Year 1: 20% vested (example, the employer contributes $1,000. You are vested in $200. If you leave the company you forfeit the remaining $800)
Year 2: 40% vested
Year 3: 60% vested
Year 4: 80% vested
>Year 5: 100% vested
A reminder, the vesting schedule would be only for the employer match. You are always 100% vested in any employee contributions.
There is also a Safe Harbor 401(k) where eligible employees are immediately vested in the contributions (there are some rules to go along with it).
Overall, I agree with the above posts that you can't negotiate it.
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As others have pointed out, I don't believe 401k match is negotiable. Unless you can negotiate the entire company to a raise ;)
Depending where you live, that's a pretty solid offer for an entry level human resources job. If you're in a medium to low cost of living area that's a home run actually.
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Salary is $55,000 with possibility for 10% bonus based on company performance.
401(k) is:
6% pre-tax contribution, with annual automatic increase of 2% each year
What would a reasonable request be? Would a request for 100% match be reasonable?
6% of $55K is only $3300. You could ask if you are allowed to contribute the IRS maximum of $18K.
That won't change the match, and as others have said that's a company-wide policy so you won't get any individual treatment there, but you can certainly check to ensure there aren't any rules preventing you from saving the full $18K.
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The 401K plan is standard, you cannot negotiate the company match. The 6% pre tax contribution to start is probably their automatic enrollment set up but you should be able to adjust the percentages of your contribution.
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401(k) is:
6% pre-tax contribution, with annual automatic increase of 2% each year
50% match for first 6%
The way this is worded is a little ambiguous. Companies can do automatic contributions, on their behalf, or they can automatically enroll you. It sounds like they're enrolling you based on the increase of 2%/year. You do want to be able to adjust this on your own, so you should get them to clarify that. More is better, $18k is the max for 2015 :)
50% on the first 6% is standard, but it's low where I live. I live in a low COL, so lower salaries, so maybe a higher match is how they "fix" that.
You can't negotiate it, but you certainly should consider it when comparing different companies. And use it as a negotiating tool. "Since your 401k match is so low, I will need to compensate by putting a higher percentage of my paycheck into my 401k, so this really comes out as a lower take home compared to company XYZ."
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IMO, having a basic 401K plan with no matching is standard.
To get any matching at all puts it above average.
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Yea the 401k plan is usually prescribed in a bunch of paperwork and disclosures, they aren't going to change it for one person.
At the entry level, I would not negotiate. $55k a year for HR is roughly market rate for corporate jobs. Your income should jump a ton 2 years and then 4+ years experience, those are the times to look at different jobs if your company is offering single digit raises each year.
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Thanks for the feedback everyone!
Here's what I plan to say to the HR rep:
Hi (HR REP). I'm very excited for the offer and can't wait to join the team! I do have a few requests that I'd like you to consider, if that's possible.
The most important thing for me right now is maximizing my 401(k) contribution. I understand that company match is typically determined for the entire company. I wonder if it would be possible to increase my pre-tax contribution from 6% to 10% or greater.
In keeping with this greater pre-tax contribution, I would also like to request an increase in my base from $55 to $60 - this additional income would go straight into my retirement savings.
My final request, and I don't know if this would be possible, would be to receive the $1000 relocation expense benefit even though I am not relocating to Grand Rapids. This money would go towards optimizing my car's MPG and bringing my wardrobe up-to-date to reflect (COMPANY)'s business casual dress code.
Thank you very much,
(ME)
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No one cares where your additional salary is going. Do NOT tell people what you're spending the money on.
If you don't have a counter, you have zero leverage. They're a terrible HR department if they give you anything.
You ignored pretty much everyone's advice. I'd literally yank your offer if I got that email.
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Don't send that the HR rep.
"I'm very excited for the offer and can't wait to join the team!"- well, there goes your leverage.
If you plan a counter, be prepared that they may just rescind the offer. They may also just say no, and you can take the original offer, but it might be removed entirely.
Second- they don't care what you are going to do with the money- rather give them a reason to GIVE you that money (the other job offer I have has much lower insurance premiums, so I'd like a higher base salary here to make up the difference.)
Third- get rid of this "and I don't know if this would be possible". If it isn't possible, they'll tell you. Don't give them an out right away. If I heard that, whether it is possible or not, I'd say no- because you are clearly willing to hear it. (And specifying clothes is TERRIBLE. Relocation expenses, okay- since you don't have those, I have no idea how you justify this request. Optimizing your cars MPG? WTF???? If I saw that, it would get passed around the office to be laughed at.)
Last- "I wonder if it would be possible to increase my pre-tax contribution from 6% to 10% or greater." I think this is fine. It's a standard "how do benefits work" question.
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This would give me the WTF?!?!?s:
My final request, and I don't know if this would be possible, would be to receive the $1000 relocation expense benefit even though I am not relocating to Grand Rapids. This money would go towards optimizing my car's MPG and bringing my wardrobe up-to-date to reflect (COMPANY)'s business casual dress code.
I guess I don't see a problem with trying to get 60k if you can (probably not likely if you don't have a current job or competing offer), but it's none of their business where the money is going towards.
AFTER you get hired and are enrolled in the 401k, just call up HR and tell them you want to set your contribution to X. (I can even do this online through Fidelity's website at my job). No explanation necessary.
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Do not send that email.
If you are going to ask for more money, you better have a backup plan.
Remember, if you counter their offer, it is no longer available for you to accept if they walk away from their offer (ie your counter rejects their offer).
Your hiring manager does not care that you will spend your 5k increase in salary. All they know is it's 5K out of their pocket.
Lastly, your email is written from a point of weakness (can you please give me more money vs. I need 60k to consider this position to be competitive with my other offers)
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My thinking was, studies have shown that people are more likely to ascent to a request if it includes a rationale, even if it doesn't mean anything to them at all. Do you have a particular reason why a short, abrupt request for additional compensation would be better?
I disagree that a counter offer is required. I don't think that this company views me as completely interchangeable with the next random person who wanders in the door, because they are creating a specific position for me, because they want to bring my unique talents onboard.
Also, I'm not currently unemployed - in fact, it's a rather stressful topic trying to navigate how I can break off my current job, which might mean my current boss - an old friend - would be left with a half-completed project which would not be completed before it would be too late. Of course, I'll have to do it - I need the health insurance and the current job is part time, ending in august. But, she's a previous boss/mentor, so I don't want to burn that bridge.
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And do not ask for a sign on bonus to pay for you wardrobe. its okay to ask for one but don't tell them why you need it.
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I'd just say - It's going to take $60k to get me to leave my current job. And mean it. If you're WILLING to take less, they're going to give you less.
I'm semi-job-hunting/browsing currently. I have a number in my head that it will take to get me to go to a new company. If they offer less, I'm just going to say thank you but it's going to take $X to get me. If they can't offer that, it's thank you and have a nice day. That's not to say I'd be ENTIRELY unwilling to listen if they could offer close to that plus throw in some really great perks/benefits. But it'd have to be a pretty awesome offer.
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Do not send that email.
If you are going to ask for more money, you better have a backup plan.
Remember, if you counter their offer, it is no longer available for you to accept if they walk away from their offer (ie your counter rejects their offer).
Your hiring manager does not care that you will spend your 5k increase in salary. All they know is it's 5K out of their pocket.
Lastly, your email is written from a point of weakness (can you please give me more money vs. I need 60k to consider this position to be competitive with my other offers)
All good points. Especially the 1st sentence. Cranilation, please read the below blog post on salary negotiation. I used it to a tee with my current employer with success a couple months ago. Your need for money could not be less relevant to them. Their sunk cost in the hiring process does matter though. They like you and are likely willing to pay $5k more than they offered just to avoid having to go through the process again with someone else.
http://www.kalzumeus.com/2012/01/23/salary-negotiation/
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I don't think that this company views me as completely interchangeable with the next random person who wanders in the door, because they are creating a specific position for me, because they want to bring my unique talents onboard.
That's good. So you do have leverage. It is easier to ask for something if you have a negotiation point (can just stay at current job). So say "I'm really excited about this position, but the offer is lower than I expected. If you can make it $62K, I will be ready to start!". Then the HR person will say, "ooh, how about 60?" and you'll get what you wanted.
"lower than I expected" is the kind of reason they expect. Not "work clothes are going to cost me a lot of money, and I want to have more in my retirement account."
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My thinking was, studies have shown that people are more likely to ascent to a request if it includes a rationale, even if it doesn't mean anything to them at all. Do you have a particular reason why a short, abrupt request for additional compensation would be better?
I disagree that a counter offer is required. I don't think that this company views me as completely interchangeable with the next random person who wanders in the door, because they are creating a specific position for me, because they want to bring my unique talents onboard.
Also, I'm not currently unemployed - in fact, it's a rather stressful topic trying to navigate how I can break off my current job, which might mean my current boss - an old friend - would be left with a half-completed project which would not be completed before it would be too late. Of course, I'll have to do it - I need the health insurance and the current job is part time, ending in august. But, she's a previous boss/mentor, so I don't want to burn that bridge.
Your perception of the business world needs a massive overhaul.
Reality check incoming- At 55k, you are nothing to this company. You are 100% completely interchangeable. A part time job with a friend is very weak leverage.
This is pure business. Your current job is paying you for your time. If they are underpaying you, leave. "Feeling bad" about your boss having zero contingency plans is not a rational decision. If they aren't paying you, they don't value you. It's a two way street. You can take this offer and make them match/beat it as well.
I assumed you were graduating from college since you were asking for money for a wardrobe. Again, no one cares about you. They are paying you for your time.
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Agree completely with iowajes recommendation as long as you're aware of the possibility they bail on your 55k offer (low probability)
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Thanks for the feedback everyone!
Here's what I plan to say to the HR rep:
Hi (HR REP). I'm very excited for the offer and can't wait to join the team! I do have a few requests that I'd like you to consider, if that's possible.
The most important thing for me right now is maximizing my 401(k) contribution. I understand that company match is typically determined for the entire company. I wonder if it would be possible to increase my pre-tax contribution from 6% to 10% or greater.
In keeping with this greater pre-tax contribution, I would also like to request an increase in my base from $55 to $60 - this additional income would go straight into my retirement savings.
My final request, and I don't know if this would be possible, would be to receive the $1000 relocation expense benefit even though I am not relocating to Grand Rapids. This money would go towards optimizing my car's MPG and bringing my wardrobe up-to-date to reflect (COMPANY)'s business casual dress code.
Thank you very much,
(ME)
This is not an e-mail I would recommend sending. Others have commented:
1) Don't say you're going to join until you're happy with their offer. If you're still negotiating, eliminate that language. You can say, "I'm happy to be considered for the position, and appreciate the offer." Then get on with your negotiating.
2) The HR rep has nothing to do with your 401(k) contributions level. That is 100% up to you.
3) Don't say that the most important thing to you is maxing your 401(k). That's weird as all hell. As far as they're concerned, they'd like it if your most important thing to you was coming to the new job and kicking ass. Even if it's not true, THAT'S how you want to come across.
4) Eliminate "I don't know if this would be possible"
5) IF YOU DO NOTHING ELSE I SUGGEST, PLEASE PLEASE PLEASE DO NOT USE THIS PART:
"In keeping with this greater pre-tax contribution, I would also like to request an increase in my base from $55 to $60 - this additional income would go straight into my retirement savings.
My final request, and I don't know if this would be possible, would be to receive the $1000 relocation expense benefit even though I am not relocating to Grand Rapids. This money would go towards optimizing my car's MPG and bringing my wardrobe up-to-date to reflect (COMPANY)'s business casual dress code."
This is facepunch worthy. And I know you're probably excited to show how responsible you are to the HR guy/girl and in some way justify it, but this is so bad it's painful.
So - why am I being such an asshole, with regards to point #5? Because what you'll do with the money is SO IRRELEVANT to negotiating pay. It's weird as hell, and it shows that you're a complete novice at asking for more money. If I got a request like that (me, personally - the "mustachian" me, the guy saving 50%+ of his pay), I'd be really disappointed in a candidate who said this. This shows a fantastic lack of understanding around asking for more money, and poor judgment.
Here's a key rule of negotiating pay: If you have to mention what you'll do with the extra money, or why you need it, you have already shown you don't have a good reason for asking. If you want more money, you mention what you have done or will do for the company, above and beyond the salary level they have offered / experience level that they're expecting.
Your car's MPG? Your wardrobe? Are you fucking kidding me?
If you can show how you deserve more money, ask for it! But that means showing how you're slightly more qualified than the "average" candidate who they've talked to. It does NOT mean showing why you need the money ("My roof has started leaking so I'm likely to repair it soon") or talking about what you'll do with it ("I plan to put it straight to my retirement accounts, LOOK AT HOW RESPONSIBLE I AM"). Why you need the money or what you'll do with it are COMPLETELY irrelevant. Only explain why you deserve it.
Good luck with your negotiations - I think you can get some of what you're asking for. But re-vamp that e-mail!
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Asking if you can set your own pretax 401k contribution is entirely reasonable but is probably already answered somewhere in the documentation. Personally I think you're better off taking the offered salary, and if you're crushing it in 6 months, ask for a raise. Everything else in your draft email is awful.
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Thanks for the feedback everyone!
Here's what I plan to say to the HR rep:
Hi (HR REP). I'm very excited for the offer and can't wait to join the team! I do have a few requests that I'd like you to consider, if that's possible.
The most important thing for me right now is maximizing my 401(k) contribution. I understand that company match is typically determined for the entire company. I wonder if it would be possible to increase my pre-tax contribution from 6% to 10% or greater.
In keeping with this greater pre-tax contribution, I would also like to request an increase in my base from $55 to $60 - this additional income would go straight into my retirement savings.
My final request, and I don't know if this would be possible, would be to receive the $1000 relocation expense benefit even though I am not relocating to Grand Rapids. This money would go towards optimizing my car's MPG and bringing my wardrobe up-to-date to reflect (COMPANY)'s business casual dress code.
Thank you very much,
(ME)
This looks like a joke. I can imagine HR forwarding your message around the company for a good laugh. Ask for a higher salary and signing bonus like a normal person.
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Personally I think you're better off taking the offered salary, and if you're crushing it in 6 months, ask for a raise.
I'd be careful to find out the culture of the company before thinking a raise is likely.
The places I've worked, raises are pretty much non-existent. It is well known the only way to get a substantial raise is to leave for 2-3 years to go to a competitor and then come back. (And this is true for all 4 major competitors in my market- I've worked at 3 of them.)
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Personally I think you're better off taking the offered salary, and if you're crushing it in 6 months, ask for a raise.
I'd be careful to find out the culture of the company before thinking a raise is likely.
The places I've worked, raises are pretty much non-existent. It is well known the only way to get a substantial raise is to leave for 2-3 years to go to a competitor and then come back. (And this is true for all 4 major competitors in my market- I've worked at 3 of them.)
Jes, this strongly depends on your market and industry. My experience is the opposite of yours - I think the one time that I didn't get a pretty decent raise was in the depths of the recession, when my employer bumped my salary like 3-4%. In the first ten years out of school in some industries and markets, you can probably expect your salary to climb 5-10% per year. Other markets - you'll be happy to find an employer who increases salaries at the inflation rate.
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ioseftavi,
Employers beating inflation is the rare exception, not the rule. I think more are starting to come around as they realize they're hiring the same people back in 3 years at 50% pay bumps anyway, but who knows.
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ioseftavi,
Employers beating inflation is the rare exception, not the rule. I think more are starting to come around as they realize they're hiring the same people back in 3 years at 50% pay bumps anyway, but who knows.
Damn. If that's the experience of most of y'all, then I stand corrected. I know for most of the people I know (selection bias, obviously...), its seemed like 5-10% raises the first 10 years out of school were around what you could hope for, provided you were in a solid geographic market and an industry that wasn't obviously under heavy pressure.
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Jes, this strongly depends on your market and industry.
Which is why I mentioned that you should check the culture of the company before making assumptions.
But damn, I'd kill for a 5-10% raise. Best raise I ever got was 3%. Most common raise was 1-2%. Lowest raise was 0.3% (with an exceeds expectations review). But I think each job switch I've gotten about 20-30% more than where I left.
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My own experience was:
2006: Hired
2008: 20% raise (this was a few months after I was promoted to a new position)
2011: 17% raise (I asked for this - wouldn't have got it if I hadn't asked. As quickly as the boss agreed, I have been kicking myself all these years cos I bet I could have got a lot more.)
2014: 13% raise
However in my company if you left to work for a competitor, you would NOT be welcomed back in a few years. I know of one person who left and got re-hired, and she left to work in a TOTALLY different industry, and came back in a completely different position than the one she left.
BUT - it's a small business. ~70ish employees. And entry level is 25k.
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Benefits like retirement plans and pensions have to be largely equal among employees. Something in the pension/ERISA/whatever rules say that they have to be "equally rewarding" or something to that effect for everyone. The idea is to prevent them from giving massive benefits to only executives.
The easiest thing to negotiate is salary or a bonus. If you had a choice, I'd negotiate a salary because bonuses are one time, and raises are harder to get than a higher bonus. I'm assuming this is an entry level job? If so, I doubt there would be much negotiating room. If you are asking for 1k... let's face it, you're not going to decline an offer or choose a different job based on such a small amount. Everyone knows that. If you'll take it at 55, you'd be alright with 54.
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Thanks for the feedback everyone!
Here's what I plan to say to the HR rep:
Hi (HR REP). I'm very excited for the offer and can't wait to join the team! I do have a few requests that I'd like you to consider, if that's possible.
The most important thing for me right now is maximizing my 401(k) contribution. I understand that company match is typically determined for the entire company. I wonder if it would be possible to increase my pre-tax contribution from 6% to 10% or greater.
In keeping with this greater pre-tax contribution, I would also like to request an increase in my base from $55 to $60 - this additional income would go straight into my retirement savings.
My final request, and I don't know if this would be possible, would be to receive the $1000 relocation expense benefit even though I am not relocating to Grand Rapids. This money would go towards optimizing my car's MPG and bringing my wardrobe up-to-date to reflect (COMPANY)'s business casual dress code.
Thank you very much,
(ME)
You have every right to negotiate. As long as you're not asking for something unreasonable, the worst they will say is sorry, but we can't do that, and they'll leave the original on the table. It's pretty rare for someone to get to this spot and HR just to withdraw the offer.
I would ask for 60k and the 1k signing bonus, but I agree with the others that you're not really asking the correct way. Starting salary is your basis for your raises. If you're a good employee, and the company did well that year, they might give you a 10% raise, whether you're at 55k or 60k. I just negotiated an offer and here's how mine went:
Thanks for sending me this offer, I hope we can find something that works for both of us.
As I mentioned to (interviewer's name), I will bring my experience with X, Y, and Z needed by his team.
If I get A, B, and C I will bring my experience to your company.
Thank you,
MrMoogle
I kept it short and sweet, I'm sure longer emails work too, but I'm pretty direct. I didn't get everything I asked for, but I got more than I started with. I only talked about the companies needs, not mine. And I didn't reject the previous offer. If it's really unacceptable and you're asking for a big jump (60k isn't a big jump) you might want to, but negotiating is give and take, so I try to keep everything on the table.
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My own experience was:
2006: Hired
2008: 20% raise (this was a few months after I was promoted to a new position)
2011: 17% raise (I asked for this - wouldn't have got it if I hadn't asked. As quickly as the boss agreed, I have been kicking myself all these years cos I bet I could have got a lot more.)
2014: 13% raise
However in my company if you left to work for a competitor, you would NOT be welcomed back in a few years. I know of one person who left and got re-hired, and she left to work in a TOTALLY different industry, and came back in a completely different position than the one she left.
BUT - it's a small business. ~70ish employees. And entry level is 25k.
My experience:
2008: Hired
2009: No raise
2010: No raise
2011: 50% raise (changed career from government to industry)
2012: 3%
2013: 5%
2014: 6%
Bonuses have increased with each year as well, since switching to industry (no bonuses in government work)
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2011: Hired from undergrad
2012: 10%
2013: 11%
2014: 5%
2015: Offered ~2%, pointed out I was underpaid and said they couldnt deal so I started interviewing and then all of a sudden they could afford 20-30%, left for 50% raise
First 2-3 year growth extremely high and typical due to coming right out of school, the tapering typical if you don't move IMO.
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OK, you've all convinced me :) Especially MooseOutFront's link, which laid out a negotiation strategy that I very much did not follow.
I have a spotty memory. When the HR rep and my future supervisor called me on the phone a few days ago, they suggested 55K as my starting salary. I believe I responded with something like "That's very generous, thank you," but I also asked if the compensation was negotiable, to which they responded "Well, everything is negotiable..." I didn't get the sense that they WANTED me to negotiate that, but that's what they said.
They mailed me a letter with 55K, and other benefits, described. To accept the job, I need to sign the letter and mail it back to them. They said several times that I should do this as fast as possible, and the letter says I have 5 days to decide, or refuse.
As many of you have said, on the one hand, I don't have much to negotiate from. Yes, they want to hire me... but they also have me over a barrel because I (stupidly) acquiesced to their request to list all the salaries I made for the past five jobs. That really pissed me off at the time, but it really felt like I could choose to either tell them, or retract my application. Live and learn, right? Also, the "minimum" salary range I gave them was 40k. 55k is much higher than that, and they know it.
I don't want to be greedy, but on the other hand, like many have also said, your incoming salary negotiation is one of the best ways to maximize over-all earnings. If I can secure a 5-10% bump over 55k, then every additional raise, be it 1% or 10%, will compound with the initial bump. So I don't want to do myself the disservice of cowardly saying "I'm screwed, thank you kind employer for allowing me to take this job at all!"
On the third hand, I think that regardless of me, regardless of the company, it's just flat out policy for the company to low ball and then the potential employee to negotiate up. If they offered me 50, I would ask for 55. if they offered me 60, I would ask for 65. For the same job for the same person. I think that's just standard - am I wrong to think a company would never offer the max amount they will pay, first go?
So, hm. Now I don't know what to do. Maybe something like this:
"Hi (HR). Thanks for sending me the offer, and for answering my questions yesterday.
I know my unique combination of instructional design, process analysis, and organizational change management experience will help the learning team transform (COMAPANY) into a learning-centered organization.
I would like to request the compensation be increased to $60,000, and to be given the $1,000 "relocation benefit" as a signing bonus expenses related to starting the new job.
Thank you,
(ME)
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Good. Except that last sentence "I am ready to accept an off of $60,000 starting salary and $1k relocation bonus." Something just so they know it's a done deal if they agree to that number.
And then I would probably accept whatever they came back with next. But that's just me.
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Even though I'm not relocating?
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Yeah there may be a better word there. Just call it a signing bonus?
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Light years better. I wouldn't include specifics, just get to the point. Say you're ready to accept at a salary of 60k.
If they're terrible at their jobs which is very possible, they'll say okay and resend you paperwork.
Agreed on the irritation from them asking for previous salaries; it's intrusive but its becoming standard. Half the jobs I've interviewed for have wanted W2's so no way to hide unless you doctor them now
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Good. Except that last sentence "I am ready to accept an off of $60,000 starting salary and $1k relocation bonus." Something just so they know it's a done deal if they agree to that number.
And then I would probably accept whatever they came back with next. But that's just me.
I would just change it to $1K sign on bonus.
OP mentioned he isn't relocating.
Your letter is much better and hopefully you learned a bit about the process through putting out your original sample letter.
Make sure to be confident in any interaction. Although you gave away most of your leverage, you're at the point where they have already decided they want to hire you and may just want to seal the deal.
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Putting "relocation benefit" in quotes (and since you are not relocating) looks slime-y like an exaggerated wink. Call it a signing bonus.
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OK, I have sent out the following:
"Hi (name),
Thanks for sending me the offer, and for answering my questions earlier today.
I know my unique combination of instructional design, process analysis, and organizational change management experience will help the team transform (company) into a learning organization.
I am ready to accept an offer of $60,000 starting salary, with a $1,000 signing bonus for expenses related to starting the new job.
Thank you,
(me)"
So, done and done. Now to sit back and see what happens.
A big thank you to EVERYONE who commented - even the people who intentionally insulted me - I am much more confident with where this ended up than where it began.
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:) Some facepunches from internet strangers acting in your best interest sure beats facepunches from the hiring manager where you want to end up working!
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And good luck! I hope it works out.
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Good luck!
When you say mail, did they really snail mail it to you? If so, that sounds crazy to me, but maybe your state has laws like that.
You sent them an email right? Since they want a response within 5 days, if you don't hear back within 24 hours, don't be afraid to call them.
I got a, "I'll see what I can do" back pretty quickly, then a counter the next day. Also, they didn't put it in an official offer until we agreed on the terms, since they didn't want to go through all the work of creating it if it wasn't going to be the final one.
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Wow. I'm glad you guys were able to convince him to change his counter offer letter. The first one was cringeworthy.
Also, just as a general rule, if you're offered $55 and you want $60, then you need to counter at $65. They might meet you there, they might meet you in the middle.
As for providing previous salaries, I don't get why that's such a big deal. What difference does it make what you made before? If you think you deserve $60, then draw a hard line at $60.
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As for providing previous salaries, I don't get why that's such a big deal. What difference does it make what you made before? If you think you deserve $60, then draw a hard line at $60.
Well, disclosing your past salary doesn't mean you have to accept lowball offers, but it does mean the offers you get are more likely to be lowballed. In other words, disclosing past compensation doesn't force you to accept a bad offer, but it makes it much harder to get a good offer.
Personally, I've more than doubled my compensation with each job, and that's a trend I intend to continue. I have a long-term acquaintance who goes for multiples of 3 when changing job. You can't achieve that if you disclose past compensation (nor can you usually achieve it with raises).
Why? I've disclosed my past salaries and told prospective employers, this is what it will take.
Just because someone overpaid me before, doesn't mean someone has to overpay me again. Same is true with being paid under market.
Some people come in unemployed. But if they are worth $100K, they are worth $100K and not minimum wage.
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I don't think it affects leverage at all.
Larry Ellison (CEO of Oracle) makes $1/yr. What's the most you'd pay him to run your business? Minimum wage?
What if he wanted $100K/yr? Way too much since he only makes $1/yr?
I have had prospective employers say, well you want X but you're making Y right now. And to that I say, what I'm making now is irrelevant since we're talking about what I need to make the move.
It's like a house. What difference does it make if soneone paid $250K? If it's worth $400K, it's worth $400K.
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On the third hand, I think that regardless of me, regardless of the company, it's just flat out policy for the company to low ball and then the potential employee to negotiate up. If they offered me 50, I would ask for 55. if they offered me 60, I would ask for 65. For the same job for the same person. I think that's just standard - am I wrong to think a company would never offer the max amount they will pay, first go?
I think this depends on the situation. A very smart co-worker of mine once asked me "if you find someone worthy of hiring and you really want to work with that person, why wouldn't you make the very best offer that you can?" That was in a competitive job market and I'm sure things are different now, but the main thing I experienced in the years since then is that making someone a great offer breeds loyalty and immediately makes the employer and employee on the same side rather than opposing sides. Why should we want to start a working relationship like this?
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I don't think your post replies to the point I was making. I obviously agree that your salary history is irrelevant to what you are worth in some abstract sense. However, the question of whether you should disclose that information is a very different question, and it is that question I have been addressing in my posts.
If you believe that disclosing your salary history is shrewd negotiation strategy, that is fine. I have no vested interest in dissuading you of that notion. In fact, if anything, it helps me for you to be getting less money than you otherwise could, because it means higher profits for the corporations employing you, and to the extent I am a part-owner of those corporations, I am earning more money as well.
Successful negotiators do not get what they ask for very often. If you are getting what you ask for, you are probably not asking for enough.
Let me ask you this though: Do you think disclosing your salary history can help you, or do you merely think it's neutral? If you merely think it's neutral, why take an unnecessary risk by using that strategy? If you actually think it helps you, I'd be interested to know your explanation of how it does so.
I never said it was shrewd negotiating strategy. And when I said I had disclosed them in the past, it was because I was required to do so as part of my online application submission.
I wouldn't volunteer that information at all because it is irrelevant. As irrelevant as the class I dropped in college. But if asked, I'd have no problem revealing my salary history (or the class I dropped). It will have no bearing on what it would cost a company to retain me.
If I was selling a car for FMv of say $10K, and a buyer found out I got it for $100 from my uncle, does that mean I should sell it to him for $2K? That information has no bearing what I want to get in return for the car.
Now let me ask you. If you had an opening for a minimum wage position and a candidate you liked disclosed that he/she was currently making $60K, how much would you pay him/her? Minimum wage right?
I get what you're saying. It's no coincedence that many of the offers where I disclosed salary started just a bit higher than my recent pay. But i'm saying it didn't matter. The end point was always the same and that's what really matters.
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A comment for your next job application - the best time to have negotiated the salary was on the phone when HR and your prospective manager called you. They were probably typing up the offer letter at that time and called you to find out if $55K was going to work. You mentioned it was a generous offer so they mailed you the offer for you to sign.
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It may happen that a prospective employer is considering you and another person for the position to be filled. They like both of you equally well. You disclose that you made $63,500 at your last/current job. The other person tells them that they made $47,900 at their last job.
If the employer thinks EITHER of you can do the job equally well, and they liked both of you, it's in their best interest to offer the other person $53,000. THAT'S why they want your numbers.
Or maybe they haven't even gotten to the point of interviewing you. They first interview the guy who made $47,900 and liked him, so why even bother going through the time of interviewing someone who's likely to cost them more money?
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At work we are required by HR to interview at least three candidates for any position that is available. So, there is always at least two other people vying for the position.
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It may happen that a prospective employer is considering you and another person for the position to be filled. They like both of you equally well. You disclose that you made $63,500 at your last/current job. The other person tells them that they made $47,900 at their last job.
If the employer thinks EITHER of you can do the job equally well, and they liked both of you, it's in their best interest to offer the other person $53,000. THAT'S why they want your numbers.
Or maybe they haven't even gotten to the point of interviewing you. They first interview the guy who made $47,900 and liked him, so why even bother going through the time of interviewing someone who's likely to cost them more money?
I don't think that's why. Plus, the hiring manager is the one who makes the decision so he will want to present an offer to the best candidate. HR just sets the limit on how much he/she is allowed to retain a candidate for.
Frankly, I think it's a myth that companies want to lowball people. I've worked for some of the biggest brands in the world, and they have all want to pay the least amount of money that keeps turnover low, not the least amount of money they can get away with.
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Frankly, I think it's a myth that companies want to lowball people. I've worked for some of the biggest brands in the world, and they have all want to pay the least amount of money that keeps turnover low, not the least amount of money they can get away with.
I agree. Any company that lowballs learns quickly that the new employee figures it out eventually and moves on. This increases their hiring costs, disrupts projects, etc. Overall, it's a money loser for the company. Where I work, they benchmark about a dozen other companies to make sure they are paying market rates (not too little, and not too much either).
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Frankly, I think it's a myth that companies want to lowball people. I've worked for some of the biggest brands in the world, and they have all want to pay the least amount of money that keeps turnover low, not the least amount of money they can get away with.
I agree. Any company that lowballs learns quickly that the new employee figures it out eventually and moves on. This increases their hiring costs, disrupts projects, etc. Overall, it's a money loser for the company. Where I work, they benchmark about a dozen other companies to make sure they are paying market rates (not too little, and not too much either).
This is exactly what I would consider lowballing.
"What's the absolute lowest amount of money we can pay to prevent people from leaving us?"
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You can't negotiate a 401(k) match - that's beyond the scope of power that any one HR manager has, and is standardized across the firm. (In other words, deviations from the plan must occur as amendments to the entire plan, and for everyone enrolled.)
My firm provides a 25% match of all of my contributions, (so effectively a $4,500 employer match when I max this year). Because I have a pretty low base salary, this represents roughly a 10% match, subject to a 4-year vesting period.
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It's just the psychology of it. If somebody tells you they currently earn $100,000 per year, as an employer you will be much less likely to consider paying them $1,000,000 per year, because the $100,000 figure has implanted itself into your mind as a rough ballpark of what they are worth. If the candidate insists on $1,000,000, you're more likely to just walk away rather than consider offering it.
Now, in the context of lower paying jobs, there is typically a budgeted range for the position and no matter how expertly you negotiate, you can only get something within that range, so you might not be that prejudiced by the past salary disclosure. However, in the context of higher paying jobs, the budget is basically unlimited so disclosing prejudicial information can make it harder to get what you want.
Another way of looking at this is that disclosing your salary history quantifies your leverage. If your tell the prospective employer, "I won't accept unless you offer $1,000,000", they are simply not going to believe you if you are currently paid only $100,000. But if they believe you are currently being paid $900,000, they will think you have more leverage and might take you more at face value.
How are you negotiating that high of raises for each job switch? This doesn't seem realistic...100% raise from starting salary is what a fully experienced person at my company could expect to make after many years.
Perhaps you can do this if your starting salary is low, but eventually you'll plateau unless you own your own business and have the ability to grow it.
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Frankly, I think it's a myth that companies want to lowball people. I've worked for some of the biggest brands in the world, and they have all want to pay the least amount of money that keeps turnover low, not the least amount of money they can get away with.
I agree. Any company that lowballs learns quickly that the new employee figures it out eventually and moves on. This increases their hiring costs, disrupts projects, etc. Overall, it's a money loser for the company. Where I work, they benchmark about a dozen other companies to make sure they are paying market rates (not too little, and not too much either).
This is exactly what I would consider lowballing.
"What's the absolute lowest amount of money we can pay to prevent people from leaving us?"
I think maybe it is just a matter of semantics. The market rates I mentioned are efficient labor market rates. The prevailing market rate will settle at the fair value. I don't know if I would define it as you have. I am happy with my pay and benefits; I think I am being fairly compensated.
With the huge number of salary surveys that you can find online now it isn't really possible for companies to lowball employees; at least employees who are staying on top of their market value.
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I never said that the most highly compensated people are only paid 100% of starting salary positions. Only that for any given position, there are certain salary bands that are developed by HR. These bands can be quite large, but they don't span anywhere near 100% of a given starting salary. For those in typical careers, such as a nurse, accountant, doctor, engineer, lawyer, etc. The odds of just switching jobs for 100% raises seems completely unrealistic. Those salary bands stagger with each level, and generally are maybe 10-20% higher from the previous promotion/position level.
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A very smart co-worker of mine once asked me "if you find someone worthy of hiring and you really want to work with that person, why wouldn't you make the very best offer that you can?"
I've interviewed at two companies that I later found out paid their recruiters bonuses based on how LOW they could get qualified candidates to accept salaries. (i.e., the bonus was only paid out after the new hire completed their 6 month probation period.)
I'm glad I didn't take jobs at these companies, as I think this is a horrible way to treat your employees.
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I've interviewed at two companies that I later found out paid their recruiters bonuses based on how LOW they could get qualified candidates to accept salaries. (i.e., the bonus was only paid out after the new hire completed their 6 month probation period.)
I'm glad I didn't take jobs at these companies, as I think this is a horrible way to treat your employees.
Why wouldn't that be so? Assuming a candidate is qualified and deemed to be a good fit, why wouldn't you try to minimize their salary? I would be much more worried working for a company that is throwing around money, threatening profitability.
I think in general, most companies assume they are going to have to pay market rate for a new hire. Frankly, I would be concerned as to why a qualified candidate would accept anything less.
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For "front office" jobs (anything client facing or product producing) you obviously want the best people. Minimizing expenses not always the motive.
For "cost center" or "back office" jobs (HR like in the example, audit) there is a much higher incentive to minimize expenses.
Obviously plenty of exceptions, this is just the general rule. For jobs you need a warm body in, you want to pay the least possible that won't get you sued. For ones that are producing revenue, you want to maximize the reward even if it means the expenses go up.
Agreed that giving the future employer your previous numbers only helps them, but are you going to pass up an opportunity due to it? It irritates me as well, but its becoming common practice.
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A comment for your next job application - the best time to have negotiated the salary was on the phone when HR and your prospective manager called you. They were probably typing up the offer letter at that time and called you to find out if $55K was going to work. You mentioned it was a generous offer so they mailed you the offer for you to sign.
I very much hope that that is not the case. During the call, they said that everything was open for negotiation and that I should talk to my spouse about it and think it over. So, fingers crossed.
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A comment for your next job application - the best time to have negotiated the salary was on the phone when HR and your prospective manager called you. They were probably typing up the offer letter at that time and called you to find out if $55K was going to work. You mentioned it was a generous offer so they mailed you the offer for you to sign.
I very much hope that that is not the case. During the call, they said that everything was open for negotiation and that I should talk to my spouse about it and think it over. So, fingers crossed.
Yes that's a good time to start negotiating, but $55k isn't your whole compensation. You need all the details that come with the offer letter to valuate the offer. You need to look at the whole package before determining whether 55k is acceptable or not.
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well, it worked! Thanks again everyone! Job starts in a few weeks... and then you all get to field all sorts of questions like "what about 401(j)?" etc :p
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well, it worked! Thanks again everyone! Job starts in a few weeks... and then you all get to field all sorts of questions like "what about 401(j)?" etc :p
HINT THIS IS WHERE YOU TELL US WHAT FIGURE YOU SETTLED ON AND HOW IT WENT. By "it worked" I assume you got the job, but what figure - did they go for 60k plus the 1k signing bonus?
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Congrats!!!
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haha ioseftavi, yes i got 60k. the 1k bonus is to be determined - they said "the relocation expense should cover that" but I'm not going to push it for just 1k. Next job, though, I'll do things right, from the start.
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haha ioseftavi, yes i got 60k. the 1k bonus is to be determined - they said "the relocation expense should cover that" but I'm not going to push it for just 1k. Next job, though, I'll do things right, from the start.
Congratulations dude! Well done on revamping your offer, and good on you for getting the extra $5k! Now go and kick some ass!
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Great job here cran! You were about to send an epic email to HR. Haha it would have been remembered for sure.
I admire your ability to learn on the fly and implement some good advice immediately to your benefit.
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Congratulations!