Recent college grads looking for work are in a “sellers’ market.” The market is tight, and the list of hungry candidates is long. You’re in competition not only with other grads, but also with experienced professionals looking to re-enter the workforce after a break. The point is, you’re not in a position to make big demands.
But being in that situation doesn’t mean that you shouldn’t negotiate on salary. It might be tempting to accept whatever initial offer HR presents, but the person making the offer expects it not to be accepted. Armed with the right information and approach, you can achieve the best starting salary possible for the position and company you’ll begin your career with.
The Long-Term Repercussions of Your Starting Salary
You usually hear this reality discussed in terms of pay gaps, but it’s important for recent grads to keep in mind no matter what their demographic profile looks like. The overwhelming majority of companies give pay raises — whether those are performance-based, promotion-based, or simple cost-of-living increases — based on a percentage of the employee’s current salary. Let’s look at what that can mean over the course of a 40-year career.
Assuming a typical 3% annual cost-of-living increase, an employee starting at $50,000 makes $51,500 the following year. An employee who negotiated a 10% higher starting salary would make $55,000 her first year and $56,650 the following.
Here’s what their salaries would look like along the arc of their careers, assuming just annual cost-of-living increases with no merit raises or promotions (these are rounded approximations):
- After 5 years, their salaries would be approximately $58,000 and $64,000, a difference of $6,000 per year.
- After 10 years, their salaries would be $67,000 and $74,000, a difference of $7,000 per year.
- After 20 years, they would earn $90,000 and $100,000, a difference of $10,000 per year.
- After 40 years (if they make it that far), they would earn $154,000 and $169,000, a difference of $15,000 per year.
In that final year, the difference in salaries is just a little over $1,000 per month. That doesn’t seem like very much, but over the course of her entire career the employee who didn’t negotiate her starting salary earned a total of $3,640,000. The employee who negotiated earned a total of $4,000,000. That’s a difference of $360,000: the price of a reasonably-sized home.
And keep in mind — this is just with cost of living increases. It doesn’t take into account merit pay, bonuses, promotions, or moving to another company. It’s the lowest possible difference made by negotiating vs. failing to negotiate.
Realistically, negotiating salary for your first job offer can make a seven-figure difference in your lifetime earnings. Now, let’s take a look at how to make that happen.
Some Salary Negotiation Tips for Recent Graduates
1. Be the Second to Speak
There’s an adage for negotiations of any kind: “He who speaks first loses.” If you volunteer a pay range you’d be happy with, you’ve given up the power position. If it’s far lower than your employer had in mind, they’ll likely give you what you asked for . . . costing you hundreds of thousands of potential income over the course of your career. If it’s far higher than what they were thinking, they might go with a secondary candidate who costs less.
If asked what you want for salary, respond with, “I know what I’d like to make, but I’m excited about working with you. What’s your budget?” Then they’ll respond with an opening number, giving you an idea of what range is reasonable.
See also: Read and study sales techniques so you’re skilled at negotiating for price and know the right words to use to negotiate successfully.
2. Do Your Research
If you go in knowing nothing about what you can expect to earn from your job, it’s like target shooting in the dark. You might hit something worthwhile, but you’re not setting yourself up for success. Prior to your interview, research the starting salaries for the position and the company you’re interested in. Sites like Salary.com and Glassdoor are excellent resources for this kind of preparation.
When the potential employer tells you the initial offer, compare it against what you know is fair and standard in the industry. Then use that comparison to formulate your counter.
See also: Learn about regional salary differences so you know you’re comparing apples to apples.
3. Exude Confidence
As Amy Cuddy put it in her brilliant 2012 TED Talk about body language, “Your body language shapes who you are.” This means that the way you hold and present yourself is just as — if not more — important as the things you have to say.
The more confident you are during the interview, the more value your potential employer will perceive. Even if it doesn’t impact the starting offer (these are frequently standardized according to company policy), it can make them more open to negotiate a higher income for you, and more receptive to renegotiating your salary and bonuses, and even your job title and responsibilities going forward.
Granted, it can be hard to “exude confidence” when seeking your very first job after college. Here are some pro tips — aside from my strong encouragement to check out Amy Cuddy’s talk — about how you can appear confident even if you’re not feeling particularly confident in a given meeting:
- Make appropriate and consistent eye contact.
- Ask follow-up questions for each question you are asked.
- Use confident body language: upright sitting position, not fidgeting, open posture, etc.
- Breathe deeply and smile.
- Speak slower than you normally would, and avoid oversharing or babbling.
Finally: Asking for a higher starting salary is a very, very confident move. On a similar note, interviewing the interviewer about why you want to work for them can help you look and feel more confident.
See also: Learn how to show your confidence without sliding over into arrogance.
4. Accentuate Your Talents
Your interviewer has seen what you know, do, and have accomplished on paper . . . but to them your value is just words in print. While you answer questions, do what you can to reference the things you can and have done. This puts your worth in the “front of mind” when it comes time to talk about what you’ll be paid.
As a new hire fresh out of college, it might be hard to come up with too many examples of direct career experiences. That’s alright. Focus on what you did accomplish in high school and college, and use those as examples of what you’re capable of. All of your extracurricular activities, travels, small jobs, or even random interests you might have explored over the years can add to your appeal, especially if they help highlight your ingenuity, adaptability, or they demonstrate the depth of your interest in the job you’re interviewing for.
See also: Research the news for the industry you’re applying for jobs in. Work your knowledge of current events into the interview.
5. Be Patient
You may be eager to discuss salary and benefits, but exercise some patience. Let the interview progress at a natural pace. Speak slowly. Ask probing questions. Be complete with your answers. Wait for the interviewer to bring up compensation, which might not even happen until a second or even third meeting.
If you feel it’s time to discuss compensation, start by asking about work-life benefits and company culture. The interviewer will likely mention some of their wellness benefits and other perks for employees. From there, it’s an easy segue into core benefits like health insurance and retirement plans. After that, you can get down to the actual salary.
As a bonus, knowing about the benefits package first helps you understand the entirety of the compensation offered. You won’t be considering just salary in a vacuum.
See also: Research the most common benefits in your industry so you can compare them meaningfully.
6. Aim High
At some point, you will have to give a number. If you’re successful in speaking second, it will be a counteroffer to the initial salary the interviewer suggested. If you weren’t, you’ll be opening negotiations with the number you give.
When this time comes, figure out what you’d like to make and increase it by about 20%. If the interviewer offers $40,000 and you know the average is $35,000, ask for $42,000. If you’re speaking first and you know the average if $50,000, suggest $60,000.
If you get lucky, you’ll start your first job making 20% more than you hoped for. If you have to “meet in the middle” it still increases your chances of starting with a salary you’ll be happy with. Don’t worry about going too high in the initial asking amount — that 20% number shouldn’t alienate anybody, and if 20% above the average and reasonable price does induce panic, that’s a red flag saying you shouldn’t work for that company.
See also: Run the numbers on your personal budget before thinking about salary. If what you accept is less than you can live on, you’ve made a huge mistake.
7. Do Even More Research
When it comes time to discuss your compensation, you won’t actually be discussing your value to the company. You will be discussing the value your actions in the interview have already established. Every answer you gave that demonstrated how you are worth investing in will make the interviewer more willing to not just consider a higher starting salary, but to advocate for it if necessary.
Putting yourself in a position where the interviewer is deeply convinced of your higher value means proving how you will solve the company’s problems. Dig as deep as you can with your research prior to the interview, finding answers to questions like these:
- What are the hiring manager’s top challenges?
- What are the goals for the department or team you would join?
- What are the major pain points for leadership around your position?
- What are the top challenges and troubles for the company as a whole?
- What parts of your resume were the most attractive to the hiring team?
- What projects are the interviewer most invested in, worried about, or proud of?
- How can you demonstrate you are an excellent fit for the company culture?
- What is a short-term project you can come in and pitch in the interview?
Inserting evidence that you know the answers to these questions will firmly establish your value. Once your value is established, negotiations for salary are really simply letting that value shine through. Everybody in the room will agree on your worth.
See also: Research growth opportunities within the company. If they won’t bend on starting salary, begin the conversation about your career path. Find out when you can get situated in a position with the salary you desire.
8. Practice Your Salary Pitch
You know why you’re worth the salary you want to earn. Take the time to express that in a “salary pitch.” This concept is similar to an “elevator pitch” for a show or concept: an impactful speech you can deliver in the time it takes to share an elevator ride with a decision-maker.
Start by making a bullet list of why you are worth the salary you desire. Encapsulate the key points in your resume, what you know about the position and the company, and the ways your life has demonstrated your value so far.
Next, write the most important, attractive, and relevant points from that list into a paragraph. Work on and edit down the paragraph until it’s sharp and compelling. Then write that paragraph as a single, powerful sentence — and no cheating by making it a run-on sentence! Just make it the most impressive expression of your worth and value you are capable of creating in a single phrase.
Finally, practice that sentence with everybody who will listen. Your roommates, friends, parents, college career counselors, current employers . . . all of your closest mentors, helpers, and family members. Once you can recite it with passion and power, it’s ready to be put into play during negotiations.
See also: Read the company mission statement and see how you can align your experience and skills with the values it represents.
9. Consider the Offer
This one feels a little like the “don’t-call-until-after-three-days” rule when you get the phone number of an attractive person. It’s just about as cheesy, but it does undeniably work. After a firm offer is on the table, ask if you can consider it overnight. Suggest you want to talk it over with your spouse, or compare it to some other opportunities, or just say you want to think it over.
This accomplishes two goals. First, it demonstrates that you are willing to take the time to carefully think about important decisions. Employers approve of that. Second, it does add a little uncertainty into their minds as you mull it over.
If you call back the next day saying you’re interested, but would really like a 10% increase, the combination of those two factors will make that increase exponentially more likely.
See also: Research the average cost of recruitment in your industry. Knowing how much it costs to get you in the interview can help you have confidence in how much you’re worth employing.
Most recent graduates who get nervous about negotiating for salary feel that it’s inappropriate and potentially alienating. They worry that not accepting the first offer makes them look like malcontents, or arrogant, or not “team players.”
That worry makes sense on the surface, but doesn’t match well with reality. First, remember that hiring managers, HR executives, and other people who make hiring decisions are used to and expect negotiation for starting salaries. Often, they have to negotiate on annual pay increases. This is a normal part of their job, and will not set you up as somebody with abnormally high demands.
Second, high-performing employees are more likely to negotiate for salaries than low-performing employees. This is a thing anybody experienced enough to be in a hiring position understands. Demonstrating that you can, under pressure, advocate for your best interests will show them that you’re willing to do that for them. It makes you more likely to get the job. Not less.
Cameron Morrison is a headhunter and recruiter for start-ups with funding and medium-size businesses.