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CAREER ADVANCEMENT
OCA
t
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Skills: Compensation
OFFICE
OF CAREER
ADVANCEMENT
NEGOTIATING COMPENSATION: 5
Getting What You Want
1. COMPENSATION
HOMEWORK
INTRODUCTION
Once an employer has decided that you are the person for the job
and has made you an offer, it is time to make sure that you have
what you need to feel good about saying “yes.” Negotiating a fair and
reasonable compensation package may feel stressful. On one side,
you are excited to be selected for the position, usually after a lengthy
process, and you are eager to get the deal done. You have an idea
about the salary level you would like to earn based on your personal
needs and your assessment of the market for a person with your
qualifications. On the other side, the employer has decided you are
the best person for the job. S/he would rather not lose you as long as your compensation requirements are within reason. Both parties
in the negotiation want to get to “yes.” Each of you is invested in
establishing a professional partnership based on trust and integrity.
t CREDIBILITY
You have the skills and
experience to excel.
t COMPETENCE
You are articulate,
focused and engaged.
COMPETENCE
CREDIBILITY
COMMITMENT
COLLABORATIVE
POTENTIAL
THE SIX Cs TO ADDRESS
IN SALARY NEGOTIATION
—Brian Mandell
t COMMITMENT
You will give maximum
effort to the job.
t COLLABORATIVE
POTENTIAL
You work effectively
with others.
t CONGRUENCE
You communicate
your value on paper
and in person.
t CONFIDENCE
You will persevere,
even in times of stress
and uncertainty.
CONGRUENCE
CONFIDENCE
A. Reviewing your own finances
Objective criteria are the best tools to use
when negotiating. The more you know about
what is fair and reasonable compensation
for your skills in the type of job, sector and
geographic area you are seeking, the better position you will be in to negotiate
effectively. The clearer your understanding of your own financial needs and goals, the
better you can evaluate the viability of an
offer. Ideally, you will start doing your
homework early in the job search process.
Prepare a simple budget based upon
known and estimated financial obligations
you will face, adjusted by cost-of-living
data from the geographic regions you are
considering. This will help you determine a
“bottom line” compensation level below
which you cannot or should not go. Take
into account rent or mortgage payments,
utilities, transportation expenses,
insurance, food, clothing, etc. Do you have
dependents to support? If you have
student loan payments, consider
researching a variety of repayment options
based on your potential salary and your
employer’s tax status. A few public sector
employers, including federal agencies,
offer student loan repayment options.
Certainly you will seek to negotiate
compensation well above your “bottom
line,” but start the process with a clear
idea of your basic needs.
B. Researching the market
There are many tools to assist you in your
research. Make use of these tools as you
establish your best options and the fair
compensation for a particular position.
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CAREER ADVANCEMENT
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oca compiles compensation data
annually. To view information on median
salary by program and sector, see
Employment Overview 2013 at oca on
KNet. For additional information, oca
encourages students to set up a meeting
with a member of the coaching staff for
more specific information by type of
organization, researching cost-of-living
abroad, etc.
Select online resources for compensation
research:
t Glassdoor.com, contains self-reported
salaries across sectors and industries
t OPM.gov, explains federal
compensation structure
t Legistorm.com, provides congressional
staff salary data
t UN.org, explains United Nations (UN)
salaries
t NGOlocalpay.net, contains tailored
compensation survey data for the
international NGO
t GuideStar.org, nonprofit compensation
research tool
t Nonprofitstaffing.com, a free copy of
2013-14 New York City and Washington,
DC area nonprofits can be requested at
the site
2. TIMING OF
COMPENSATION
DISCUSSION
The best time to negotiate compensation
is when the employer has selected you
and there is mutual interest in working
out a satisfactory offer. However, an
employer may try to engage you in a
discussion of compensation earlier in the
process. Such a situation will test your
diplomatic skills under pressure. From the
employer’s perspective, s/he needs to
screen out candidates whose salary
expectations are unrealistic. Your answers
should reassure them of your genuine
interest, while postponing discussion of
specifics for later. If pressed by an
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NEGOTIATING COMPENSATION
Salary survey of hks graduates
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t 617-495-1161
employer to answer the compensation
question before an offer is made, you may
give a preferred salary range. Here are
some typical questions that may come up
in a preliminary telephone conversation
or after a first-round interview, with some
suggested answers.
t What are your salary expectations?
Or, if you were to receive an offer
from us, would you accept it?
Reiterate your strong and genuine interest
in the employer, but say there are many
details about the job and the employer
you need to learn about and evaluate. You
may say that there is a high probability
that you could reach agreement on that
basis. If you have other offers, you may
want to say that you will need time to
analyze and compare a prospective offer.
t You have seen our advertised salary
range. Are you willing to accept a salary
within that range?
Again, reiterate that you applied for this
job because of your strong interest in the
work the organization does. You may say
that you want to be paid fairly relative to
the job market for this kind of work in this
geographic area, and that you are sure
you could reach agreement on that basis.
If asked how much you earned before
coming to hks, consider the context of the
question. For instance, if you came to HKS
from a high income position, for example
in banking, and now aspire to work in the
public sector, you may need to articulate
to an employer that you understand the
public sector’s compensation structure
and confirm that you are committed to
work within the discussed or advertised
salary range. If you came to HKS from a
lower paying or volunteer position, do not
let a compensation question fluster you.
Employers are familiar with pay scales for
junior positions, or specialty programs
such as the Peace Corps, and typically do
not structure their compensation based
on an applicant’s prior history. If asked
verbally or in writing to provide previous
compensation history, you may state that
the new position requiring your new skills
and experience should not be compared
with your former job. As such, your former
salary is not a reliable indicator of how
much you should earn upon graduation.
Sometimes an employer requests salary
history be submitted with your application.
You may want to write in response, “With
regard to salary, I would like to be paid
fairly in relation to the job market for this
type of work in your area.” If a more
specific statement is required, as in some
electronic applications, provide a preferred
range of compensation based on your
needs and market research.
3. HANDLING
AN OFFER
Most employers will extend an offer to
you rather than asking you to propose a
package to them. When an offer is made,
whether in person or in writing, always
thank the employer and ask for time to
consider. What is a reasonable time for
consideration may vary considerably
depending on the organization and the
mode of recruitment. You should ask to
have a verbal offer confirmed in writing,
plus the details of the benefit package the
offer includes. Make clear that you are
grateful for the offer and remain strongly
interested in the position.
If an employer pressures you for an
immediate response, you might answer,
“You know that I have a strong interest in
the job and your organization. I just feel
that such an important decision should
be made after careful consideration. I
promise I won’t hold you up beyond the
agreed time, but I really would like to
have that time to decide.”
If the employer asks you to propose the
compensation package that would be
acceptable to you, make sure you have
the full information on the benefit
package the employer offers. Then
suggest a salary, along with any desirable
benefit adjustments, that falls toward the
high end of your range.
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NEGOTIATING COMPENSATION
4. EVALUATING
AN OFFER
When you do have an initial offer,
evaluate it in its entirety. Make certain
that the job offered is a good fit with your skills, your work and life-style
preferences, and your career goals. You will have gathered much of the
information needed for this analysis
during the job search and interview
process. Now is the time to take whatever
time is available to reflect and to ask
yourself and others some additional
questions.
t Does the job offered meet my job
search goals? Does it fit with my career
plans?
t Do I have a clear picture of the specific
job duties, the probable work hours
and the amount of travel?
t Do I like the people and have a good
feeling about the organizational
culture?
t Does my boss have a management
style I will respond to well?
t Does the organization have a good
reputation? Will I be proud to be a part
of it?
t Do I know enough about the current
issues facing the organization? How
about its financial condition?
tD
o I know enough about the community
that I will be living in? How about the
cost of living, safety, recreational and
cultural amenities, schools, places of
worship, child care, spouse employment
opportunities, etc.?
The importance of “total
compensation”
Yes, the salary figure is very important, but
remember that the benefits portion of a
compensation package, which typically
ranges in value from 25 to 35 percent of
base salary, is significant. Some employers
pay the full cost of benefits and others
share those costs with employees. There is
a major difference in take-home pay
between a $70,000 salary when the
employer pays the full cost of benefits and
a $70,000 salary when insurance
premiums and retirement contributions are
deducted from each paycheck. Examine
the details of the benefits program and
calculate the full value of the salary and
benefits together. This will give you a fair
basis for comparing one job offer to
another and for making sure that your takehome pay will cover your needs.
5. NEGOTIATION
STRATEGY
Based on your compensation homework
and your personal budget, determine a
salary range and benefits package that you
think would be reasonable for the job you
are being offered. The lower end of your
range should be the minimum you would
accept for the position; the higher end
should be what you would prefer to receive
if the employer only knew what a truly great
performer you are. Both ends of your range
should be justifiable with market data.
When an employer views a potential
employee as part of a greater cohort –
someone who is getting hired as a part of
a group, with similar skills and training –
there is less room to negotiate. On the
other hand, if an employee brings unique
mission critical skills and a niche
expertise, there may be more room to
negotiate.
After reviewing the offer, including the
benefits package, counter with a proposal
that asks for a combination of salary and
benefits that falls within your predetermined range. Ask for an amount
toward the upper end of your range and
provide justification based upon your
research. This amount will probably be
higher than the employer wants to pay,
but ideally the employer will respond with
an amount higher than the original offer
and well within your range. Don’t be shy
about asking for at least a 10 percent
bump in starting salary. This amount is
significant because it may take several
years of annual raises to reach the same
level. In addition, a merit bonus, if
offered, may be calculated as a
percentage of base salary.
One of the keys to negotiating the salary
is to emphasize again your strengths.
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Spotlight why they don’t want to lose you
over a gap in base salary. What skills do
you have that make you a perfect fit? Do
you have more experience than others
performing the same type of job in the
industry? Do you have skills that are
particularly well-suited to the position?
Is your education a distinguishing factor?
Bring the negotiations down to a more
human level. Everyone can relate to
human needs. If you can refer to
assessment of your bottom line financial
needs as discussed above, it may be
helpful. Can the employer come up on the
offer enough to meet your need?
6. NEGOTIABLE
ASPECTS OF
COMPENSATION
Review all the aspects of compensation
below before entering into a compensation
negotiation. Not all of these items are
relevant and important in every case, but
consider each item and make a list of
those that are important to your particular
circumstance.
Cash items
t Base salary: amount, timing of reviews,
and potential for increases.
t Signing bonus: if you do not need the
money immediately, negotiate for the
sum to be applied to your base salary as
future raises will be based on your initial
compensation level. Performance-based
bonus: will depend on the financial
performance of the organization and on
your individual performance. Keep in
mind that in the U.S. bonus pay is taxed
at a higher rate than base salary.
t Deferred compensation: employer
contribution outright or match of your
contributions.
t Retirement plans: availability,
employer/employee contribution ratio.
t Severance protection: notice of
severance; amount payable; terms
(usually applicable only to higher
management positions).
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NEGOTIATING COMPENSATION
t One-time expenses: Depending on your
circumstances, employer coverage of
certain one-time expenses can be as
important to you as a particular salary
level. An up-front signing bonus (see
above) can help upgrade your
wardrobe, cover the down payment on
a car, or reduce your student loan
repayment burden.
t Moving expenses: Moving expenses
can add up if you consider house
hunting, moving household goods,
moving your family, and temporary
living expenses. Some employers have set policies on these items;
others are more flexible.
Benefits
t Insurance: medical, dental, vision,
life, disability; dependent coverage;
employer/employee contribution ratios.
t Vacation, sick leave, family leave,
maternity or paternity leave,
bereavement leave; rate of accrual;
waiting period before entitlement;
credits transferred upon starting job.
t Automobile allowance: mileage
reimbursement, other travel expenses.
t Cell phone/BlackBerry provided.
t Professional training/conference
attendance; education (tuition
reimbursement plan).
t Professional membership dues,
subscriptions.
Details that may make the
difference
t Work hours and flexibility: Some
employers offer flex-time policies, for
instance allowing employees to
complete 10 days work in 9 days, or to
work remotely a certain number of hours
a month. Such flexibility may have a
cash and/or quality of life value to you.
t Starting date: Want to go to your
sister’s wedding in Paris? If you need
to start after a certain date, or if you
need time off during your first months
on the job before vacation has accrued,
negotiate those needs up-front. It
is much easier to ask and agree on
special consideration during a
negotiation than after you have
started the job.
tC
onsulting days and publishing rights:
if you plan to provide consulting
services, sit on a board of directors, or
write about your field of expertise, get a
written statement granting agreement
on the parameters.
Closing the deal
When you and your employer have reached
verbal agreement on your overall
compensation package, ask for written
confirmation. Review the written offer of
employment for conformance to the verbal
understanding, then accept in writing. Only
now should you make announcements and
financial commitments related to taking
the new job.
Declining an offer
If, after receiving an offer in writing and giving
it careful consideration, you decide to decline,
respond in person. Follow up with a letter
expressing your appreciation of the offer.
Reneging on a job offer
If you accepted a job offer, you are required
to withdraw from consideration by other
employers. Reneging on a job offer is
ethically and professionally improper. It
damages your professional reputation and
reflects poorly on HKS.
Negotiating across cultures
Your negotiation approach may also depend
on cultural and organizational contexts.
When negotiating across cultures, take
cultural norms, values, local etiquette, and
regional culture into consideration. It is often
helpful to consult a friend or an HKS alumna/
us who works in a similar cultural setting,
either regional or organizational. This will
allow you to learn more about the extent to
which negotiation is considered appropriate
and is expected.
Civil service positions in the U.S. Federal
Government use a General Schedule (GS)
salary scale, a tiered grade system. You can
often negotiate within your grade level, but
often cannot negotiate a higher grade.
Similar practices apply to international
institutions.
OFFICE OF CAREER ADVANCEMENT
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