You polished up your resume, wrote an impressive cover letter, nailed the informational interview and made a strong impression during the in-person interviews. Your excitement builds as you get the impression that the hiring manager likes you. Then the recruiter calls and the firm makes you an offer! But it’s not what you were hoping for. This is the starting point for a better offer.
1. Use your recruiter as an intermediary
If you’ve gone through a recruiter, use them to negotiate a better offer. It minimizes the risk that you’lll sour the relationship with the hiring manager.
Mike Brothers, managing consultant in the investment banking practice at recruiters Michael Page: “If they’re going to offer one of our candidates a position, we’ve already been vetting their comp expectations and discussed any concerns. For junior people, we tend to be the agent [for negotiations], which helps to alleviate any type of awkwardness or a wrong approach on the candidate’s part.”
That is pretty universal.
“About 80% of the time the negotiation is handled by us in conjunction with the candidate – we’re the go-between,” said Christian Novissimo, managing partner of accounting and finance at recruiters Lucas Group.
Both recruiters concede that at certain levels and with certain companies it makes sense for senior candidates to handle negotiations on their own. If that’s the case, and you hit a wall with HR, sometimes you can ask to get the hiring manager involved, especially if you really connected with that person during the interview process.
“In certain instances for senior execs such as SVPs and MDs, after the initial offer goes out, if there are any fine details to work out, the senior guys do it directly,” Brothers said. “Senior bankers’ job is negotiation and deal-making, so they tend to just do it directly and keep us in the loop.”
2. Plant the seeds of negotiation early
One of the biggest keys to keep in mind when you’re negotiating salary is the timing.
“Long before the offer is about to come, it starts with the first meeting you have, not coming across as overly eager,” Novissimo said. “You want to show excitement about the opportunity and that’s important, but if you make it clear you’ll work there under any circumstances no matter what, that will hurt your leverage.”
3. Set your priorities before making any requests
It’s extremely rare that any offer will check every single box on your wish list. Always prioritize what’s most important to you before making a request or counter-offer. Then, lay out every sticking point on the table at once, even if you eventually negotiate one issue at a time, because you don’t want to settle on salary and have the hiring manager think it’s a done deal when you haven’t hashed out benefits yet.
“Do you care more about money or vacation time? If you win one battle then ask for the other one you actually want more, it’s tougher,” Novissimo said. “Start with what’s most important to you and work from there – if vacation’s not most important don’t start with that.”
4. Know what is and what isn’t negotiable
One big challenge in investment banking is that a lot of firms pay the same salaries for a certain level of experience, especially for analysts, associates and vice presidents. With the more junior people, there is no bonus guarantee but rather a guideline for a target bonus if the candidate performs well.
“Analysts at a mainstream [investment] bank who join straight out of school will earn $85k in year one, $90k in year two and $95k in year three,” Brothers said. “It’s tough if not impossible to negotiate the dollar amount, because most bankers are on lock-step pay scales.”
That said, candidates can try to clarify the trajectory of how they can achieve promotion to the next level, greater exposure to deal-making process and increased deal volume – in fact, most things outside of compensation and, in some cases, benefits may be negotiable.
“Honestly, [for IBD roles] the salary is almost always going to be the same based on your experience, but you can negotiate the timeframe in which you’ll be promoted to the next level,” Brother said.
More experienced candidates may be able to negotiate a higher percentage for the commission they earn on the revenue they generate and sometimes even a guaranteed minimum bonus.
As for the hard salary figure, most companies will give you what they consider a fair increase over what you’re currently earning.
Don’t just focus on base compensation. Bring up other incentives, especially if you have any currently that weren’t mentioned in the prospective employer’s initial offer.
“Think about perks, the opportunity to earn equity, matches on your 401(k), healthcare and other benefits,” Novissimo said. “Anything monetary should be discussed, because it gives you leverage, but you have to be willing to discuss your current comp package in its entirety.”
5. Set the bar higher than what you’re willing to accept
Negotiating is almost always expected. If they make a very aggressive offer and it seems fair, and you still try to negotiation, then it might leave a bad taste. Otherwise, if you do a good job of negotiating respectfully and are reasonable, then it will reflect well on you. Help them to understand why you deserve the figure or benefit that you’re asking for.
“If they offer a 10% raise on what you’re currently making and you say ‘No, I want 50%,’ they might rescind the offer, but asking for more within reason is fine,” Novissimo said. “Always ask for more than you’d be willing to take within reason.”
6. Draw a line in the sand, then stick to it
Once the negotiations progress to the moment of truth, tell the recruiter or hiring manager that you are willing to give them your official acceptance if you get your must-haves or a specific target figure. Say, “I want to get here and if you do get me there, then I’m accepting.”
“You want to be in a position of power, so you have to be willing to walk away if they are unable or unwilling to offer a package you’re comfortable with,” Novissimo said. “If you’re in a position of desperation, then your leverage is gone, so you have to look ahead.”
7. Know when to stop pushing
When trying to negotiate a better offer, strike a balance between pushing for what you want and reading the room, because you do not want offend a potential employer. Being likable is one of the most important factors during the recruitment process. The key is knowing when to stop pushing, because continuing to do so when the HR executive or hiring manager is unable or unwilling to go any further will damage the relationship.
8. Don’t overlook the appropriateness of the fit
If they won’t budge, consider whether making a lateral move or accepting smaller raise would’ve liked is better for your career long-term.
If your best negotiating efforts fail to move the needle in a meaningful way, then it’s time to swallow your pride and take stock of your options with a cool head. In some cases, you’re better off accepting the original offer rather than languishing in a less-than-ideal situation at your current employer.
“If there’s compatibility between the banker and the platform, then people will try to make it work on the comp side if the fit is there,” Brothers said. “People tend to be a little bit ridiculous in their comp expectations initially, but negotiations tend to bring people’s expectations down to what’s realistic and what’s not.”
He worked with an investment banking analyst who joined a different product group in more of a transactional role on a more deal-oriented team. The compensation is the same, but because she switched into a new area where she does not have experience, she has to take a step back, waiting an additional six months for a promotion.
“She would’ve been an associate by the end of the summer next year versus the beginning of 2018,” Brothers said. “It’s tough to just directly lateral across, because it takes time to get up to speed with the new product.”
That also happens at the associate level.
“Maybe you’ve done a bunch of pitch work but you’ve only done one or two deals, and you know that the people who get promoted or successfully make the jump to the buy-side are the ones with the most hardcore transactional M&A experience,” Brothers said.
“If you’re able to step in and close 10 or 12 deals in a year or two, then that’s much more significant experience that will hold water as opposed to a lesser deal volume,” he said. “An increase in deal volume, more live transactional experience or an increase in the brand prestige may be worth moving even without a raise.”
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