from Guide to the Job Hunt on Jul 23, 2023
Why and how to prepare for offer negotiations
Negotiation sounds like a cherry on top. Get the offer first, and possibly futz the numbers a bit at the end. But here's the truth: Technical preparation determines whether or not you receive the offer; negotiation determines how much you're compensated.
Negotiation in a job hunt begins much sooner than you might think: It can begin the moment you get in touch with a recruiter over email, LinkedIn, or a phone call. Knowing this, I wrote this post to help you get in the right mindset before even your first phone screen starts.
In a nutshell, there are three universal pieces of advice for negotiation: First, negotiate; second, get multiple offers; third, never offer the first number. With that said, every recruiter's guide to negotiations is already aware of these three tips for candidates. Whereas these are solid tips to follow, they barely scratch the surface.
There are many nuances to the negotiation, and in this post, I'll show you just how tricky negotiations can be.
Before discussing how to prepare for negotiations, we should first discuss reasons to negotiate. Let me paint a dire picture to get you going:
- Recruiters have more experience negotiating. According to a 2021 study1, recruiters negotiate on a weekly basis with a number of different candidates, averaging 50+ offers per year. By contrast, you may negotiate no more than 10 offers in your lifetime.
- Recruiters have more information. For starters, recruiters have access to detailed statistics for the company they work for, as well as for other companies of similar scale. This includes compensation bands, acceptance rates, actual offer data, and more. By contrast, you're limited to the information that Blind, levels.fyi and aipaygrad.es provides.
This is the reality — that you're vastly out-matched as a candidate receiving an offer. As a friend once said to me "You're playing a game of chess against a grandmaster, without knowing the rules". You're already walking into the offer process nearly blind, and this disadvantage has a significant impact on your future compensation.
You're playing a game of chess against a grandmaster, without knowing the rules.
There are a number of reasons that recruiters may draw on to hinder negotiations; there are even several common reasons you may use to stop yourself from negotiating. Here are several misconceptions that you may encounter:
Tactic #1. The company needs to maintain "internal equity," to be "fair" to other employees.
- Companies use one interpretation of this: Since fairness is needed, your pay should be lower. But that's just the version that favors the company; there's a second interpretation: If fairness is needed, everyone else's pay should just be raised.
- Furthermore, many companies will appeal to "internal equity" without providing data for what you're being equated to. For example, Nuro's recruiter would evade questions about the compensation band, promising to share them "next time". For what it's worth, next time never came.
- There are other variants of this argument too; all of them revolve around comparing your pay with your coworkers pay, for fairness. Any argument of this sort is a red herring: What matters to you is the difference between your offers across companies — not between you and your neighbors' offers within the company.
Tactic #2. The recruiter says negotiations are out of their control or otherwise does not budge when it comes to compensation.
- This is understandable at a company-level in very specific scenarios: in a "large-batch" program such as internships at large companies or rotation programs for newly-graduated undergraduates. In both of these cases, base salaries are largely non-negotiable. In this scenario, consider negotiating other parts of the offer, such as paid time off, perks such as relocation bonuses, or signing bonuses, which may still be malleable.
- Broadly speaking, recruiters are also speaking the partial truth, when they say they're unable to negotiate. In reality, your hiring manager has the power the adjust compensation by large amounts; the recruiter's role is to convince the candidate to meet the company at the current offer, with possibly a 5-10% wiggle room built-in for them to award at will.
- Tesla was very transparent3 about this process, for example; the recruiter shared frankly that he had about ~10% wiggle room and that larger changes would be up to the hiring manager's discretion. In this scenario, if you're looking to negotiate larger changes in compensation, speak directly with the hiring manager.
For all of the above tactics, shift the focus in your arguments.
- Shift from an adversarial view to a collaborative view, where you have the team's interest at heart. Make the case that increasing your offer benefits the hiring manager and the team.
- Shift from a company-centric view to a candidate-centric view, where you're weighing between different offers available to you. Make the case that increasing your offer makes you more likely to accept their offer without regrets.
With a taste now of your disadvantages in the negotiation process, let's dive into general techniques for overcoming those disadvantages.
Your cheat code to gaining "experience" quickly is to simply review real-world, job hunt dialogue. This is the best way to understand just how tricky the negotiation process can be — as well as understand how to respond to those same tricky situations. In light of this, I will attempt to include as much example dialogue in these posts as I can.
Here's the first real-world example. Even the opening questionnaire from a recruiter can take advantage of your lack of experience. See the below questionnaire from a recruiter at Meta:
These questions seem innocuous enough. At a first glance, which questions stand out? There are two.
Question #1. Are you actively interviewing and do you have any deadlines (pending offers, etc.)? If so, what are the dates and with which companies?
There is a must-answer part of this question, which is: Do you have any pending deadlines? Definitely let the recruiter know that you've got a timeline to meet2.
The second part about which company is important to the recruiter for two reasons:
- Does this company have an offer that is comparable? For example, is equity similarly as liquid? See Is my offer good? to judge liquidity of equity. If you're interviewing with Meta and a startup, Meta can pretty confidently dismiss your other offer as un-comparable.
- Roughly what range will the offer fall in? Knowing that the other company is Microsoft is perfect for the recruiter: Given you're a new graduate, your recruiter now knows exactly what level and almost exactly what compensation you will receive. This is not information you would like to give up.
In short, if you have a pending offer, report the deadline and just enough information so that the recruiter knows your existing offer is comparable. For example, I communicated a date and simply that the company was also FAANG. You can see my full job hunt timeline in How to plan your job hunt.
Question #2. What are the things you are looking for (what is important to you) in the company/industry environment you ultimately would hope to join?
The recruiter is effectively asking you to provide selling points for them — with that said, this isn't all bad. In my particular case, as I was interviewing with Apple, this helped my recruiter understand which teams within the company were actually better fits for my interests. Just be aware that this is information that recruiters may then use later on, to convince you of the offer's value. I answered truthfully here that I was looking for production-focused teams.
The takeaway is not to feel "bad" for learning how to negotiate. Whether or not you like it, recruiters are already leveraging your inexperience and lack of information against you, even in this initial questionnaire. This guide simply helps you to play catchup.
Here is a collection of different resources that contain real-world negotiation dialogue:
- Ten rules for negotiating a job offer. - Haseeb Qureshi
- How not to bomb your offer negotiation. - Haseeb Qureshi
- Software engineer salary negotiation: A comprehensive guide - Rora
- How to negotiate industry offers in AI - Rora
Use these resources above to overcome lack of experience negotiating.
- Right now, open up one of the links above on your phone, so that you can read it the next time you're in line for coffee or lunch. For bonus points, open several links. Each time you finish an article, queue up another article to read the next time you're idling on your phone.
- Right now, find a friend to discuss negotiation strategies with. Find difficult-to-answer questions or points in the articles above, and ask each other to come up with answers live. Note that when it comes down to actual negotiations, you can also defer communication to emails, where you won't need well-articulated responses on-the-fly. After an honest attempt to respond, try to come up with effective responses together.
With practice and review scheduled, let's now turn to the information deficit.
"Information" here refers to the compensation ranges and related details for each company you're considering. You should gather as much information as you can, but there are a few points here to consider:
- You don't need market data to negotiate. Granted, more information is helpful, but you don't need comprehensive amounts of information before negotiating. In short, you need just enough data to understand how much of a low-ball your initial offer is. Once you've negotiated offers to an appropriate range, differences between your offers matter more than the status quo.
- Protect your own information in negotiations. The most important information in your negotiations is unavailable to the recruiter: your own compensation and rival offers. Don't give this up to the recruiter so quickly, and use these to your advantage, selectively. As a result, one key to handling the information asymmetry is to keep your cards close to your chest. In fact, it is illegal for employers to ask for your previous salary per California's 2016 Equal Pay Act.
- Ask recruiters directly for information. Several states, including California, New York, and Washington, legally require employers to disclose salary ranges to candidates. For example, Washington's 2019 Equal Pay and Opportunities Act requires employers to disclose salary ranges after an offer is made, whether for transfers, promotions, or a new hire.
Take into consideration the above factors when gathering information and assessing your offers. Here is a collection of different websites that offer information on compensation ranges:
- levels.fyi for privately-reported total compensation ranges
- aipaygrad.es for privately-reported ranges for AI-related jobs
- comprehensive.io for published salary ranges
- layoffs.fyi for layoff information
Use these resources when assessing offers, as we discuss in Is my offer good?
- Right now, check the above resources for your company. Use that information to assess the offer you originally signed — give yourself some leeway for recent inflation. Are you within the compensation band for your role, according to these third-party resources? Keep this in mind when establishing expectations for your job hunt.
- Right now, find internal resources on compensation. There are often Slack channels or other "groups" within the company that discuss compensation. For example, Meta had a compensation group that shared anonymized offers. Using this information, you can get a more accurate idea of the compensation band as it is today. Compare these to the resources above.
At this point, you should be on your way to overcoming the information deficit.
In short, read and practice to overcome your deficit in negotiation experience; search and collate compensation reports to overcome your deficit in compensation information. Both of these strategies together can help you prepare more effectively for negotiations during the job hunt.
We haven't discussed specific strategies or dialogues yet for negotiations in full swing, but these todos are good first steps to take, immediately. Remember that negotiations are just as critical as technical preparation; the latter determines if you get an offer, and the former actually determines how much you're offered.
A study conducted by the National Association of Colleges and Employers (NACE) reported in a "Recruiting Benchmarks Survey" that each recruiter handles an average of 187.9 candidates and makes 53.4 offers per year. ↩
With that said, know that you ultimately do have some leeway for offer deadlines, if you communicate with your recruiters in advance of a deadline, as we discuss in How to handle an early offer deadline. ↩
Across all of my job hunts, this particular Tesla autopilot recruiter was the most transparent and straightforward. No dancing around the question, and as a result, I almost did accept Tesla's offer. You can read more about my decision process for the Tesla offer at Why (and why not) work at Tesla. ↩
Want more tips? Drop your email, and I'll keep you in the loop.