What You've Gotten Wrong about Negotiating a Job Offer
Recently, I tried to help an engineer negotiate a job offer from a FAANG company. Even though the offer included the max base salary for his compensation band, it was abundantly clear that he was leaving hundreds of thousands of dollars in equity on the table. He didn’t believe me and accepted the offer without negotiating.
A year later, his colleagues confirmed my assessment - he was being significantly underpaid. Even worse, he found out that his manager couldn’t grant him more than a 3% standard raise without giving him a promotion – which he wasn’t entitled to having worked at the company for under a year.
It would be easy to criticize someone for not negotiating more at the outset, but these stories are far more common than you’d think. Professionals of all levels let fear and anxiety dictate how they approach negotiating.
This fear is perpetuated by a few key myths about the process of negotiating and what’s required to be successful. Below I’ll walk you through the 5 most common misunderstandings we see our clients have about negotiating – in the hopes that they’re helping you in your next negotiation.
The 5 Lies:
- You need market data to win
- You’re negotiating with the recruiter
- Negotiating is greedy
- Asking questions could cost you the job
- Offer deadlines are real
Lie #1 - You need market data
Candidates tend to overstate the importance of data in negotiating. This is especially true among technical candidates, whose professions often require them to mine for data.
Data can certainly help you understand how your offer compares to the rest of the hiring market, but there’s a more important variable in your control: your emotional attachment to the offer.
The table below illustrates how much of an impact a candidate’s emotional attachment has on their ability to negotiate effectively.
I once worked with a Harvard Law graduate, who served on the board of a tech accelerator in Silicon Valley and had over 20 years of experience in the industry.
In spite of this, he accepted an offer that he knew was significantly below his market value because he was lured by the opportunity to join a “rocketship” startup. His high emotional attachment to the offer and the company rendered him ineffective at negotiating his offer.
Conversely, we’ve seen companies like Google increase an offer beyond market data or without a counteroffer just to close a deal with a top candidate who was hesitant to relocate to the Bay Area. Our emotions have a much larger impact on negotiation outcomes than data. The reality is that all employment offers are deals in the labor market, and they should be negotiated like any other deal would be
The value of the deal is subjectively defined based on your future performance and value to the organization, and not on what today’s data suggests you should be paid.
Lie #2 - You’re negotiating with the recruiter
All too often, candidates allow recruiters to end salary negotiations when recruiters utter the words, “It’s out of my control.”
Most recruiters aren’t lying when they say that, but they’re also not being fully transparent. While they don’t have much power or influence over how much a hiring manager might budge, they’re also not incentivized to be your advocate in these discussions. Their goals are simple: find great candidates and get them to sign as quickly as possible.
That’s why you should be negotiating directly with the hiring manager. There are a few key points you can and should negotiate with a potential manager, including:
- The level of your offer, which directly impacts your compensation
- Your career scope and future development
- Possibilities of out-of-band compensation
- Offer deadlines
Let me make one thing abundantly clear: recruiters don’t understand the value you’ll bring to the business. And, their job is to influence candidates to accept offers that are best for the company – rather than the offer that's in the candidate’s best interest.
The easiest way to avoid this is to communicate directly with the person you’ll be working for.
Lie #3 - Negotiating is greedy
Some candidates and businesses tend to approach negotiations in a way where one party wins and the other loses. The reality is that this win-lose paradigm is really more of a lose-lose situation. Work relationships that begin after a contentious negotiation – where one party gets more at the expense of another – usually lead to short tenures.
Approaching the other party as an adversary makes it difficult for companies to retain talent—and it makes it even more difficult for employees to develop loyalty for their employer.
Rather than thinking of your manager as the adversary blocking you from getting a higher salary, think about how you can create a mutually beneficial deal. When you can make the case that increasing your offer benefits the manager in terms of the impact you’ll have on their team, the conversation around compensation becomes much easier.
In addition to advocating for a higher salary based on your previous experience, take the time to convey your ability to achieve expectations and tackle tough challenges on a daily basis. By illustrating how you’ll make your manager’s job easier, you’re much more likely to then get what you ask for.
At Rora, every one of our clients creates a document called an “Impact Roadmap” that outlines the expectations and outcomes for the role, which they collaborate on with their manager once they receive an offer and before they start negotiating compensation. We have found this is a critical communication step to getting your manager as an ally in the negotiation.
Lie #4 - Asking hard questions could hurt you
The reality is that you should be interviewing the company as much as the company is interviewing you. The best time to do this in order to improve your negotiating leverage is once the company gives you an offer.
Contrary to popular belief, asking hard questions is another way you can showcase your experience and talent. You should interview your future team, manager, cross-functional teammates, skip-level manager, and executive-level leadership if you have the opportunity to do so. The goal of the interviews should be to figure out how you can have an impact and help the business. If you have this intention and a potential employer is denying you the opportunity to meet with your future colleagues, that’s a huge red flag that you should take seriously.
Here are a few practical questions you should feel empowered to ask, all of which will give you more clarity about your ability to thrive in this role. More importantly, the answers will give you additional context to understand whether or not the offer is fair:
- Why did this role open up?
- Who previously held this position? Can I speak to that person?
- What is the company's financial performance (revenue, growth, retention, runway, etc.)
- What are the three biggest challenges the project/team is facing right now?
- Why does leadership care about the project and/or team?
By asking hard questions to help your manager, you’re managing upwards, a critical skill for any successful negotiation at the offer stage of any interview process. Asking hard questions also shows that you’re a critical thinker, and that you take ownership and agency over everything you do—both of which are sound reasons for any company to increase your offer.
Lie #5 - The offer deadline is real
The most common tactic companies use to out-negotiate candidates is deadlines. At many large tech companies (Google, Meta, Amazon, etc.) many candidates are not even aware that their interview feedback lasts for one year, so if they reject the offer they could still join the company within a year without interviewing again.
Deadlines can be real. You don’t have an infinite amount of time to accept. Ultimately it depends on the hiring manager’s perception, how many people are being hired, and if the company has any candidates at the offer stage. In most cases, candidates have more time than they realize to take time to make a thoughtful decision.
A manager who is not willing to give you the time to thoughtfully decide if the offer is a fit for you and your career is a red flag. The more a manager wants a hire, the more patient and open they will be. If the manager is giving you a 24-hour deadline, they are basically saying I need a butt in a seat and I don’t care who.
Bonus Lie #6 - You’re on an equal playing field with the company
Companies leverage several internal and external teams to hire talent and negotiate job offers as a unified front. There are sourcers, recruiters, compensation analysts, HR business partners, managers, and lawyers. They also partner with headhunters and spend billions of dollars on recruiting tools to optimize employment packages that work best for the company.
This is a lot for any candidate to go up against on their own. Why should you have to do it on your own? Want to learn more about getting support for your next offer negotiation (or promotion conversation) - check out teamrora.com.
Rora helps top STEM professionals negotiate better employment deals -- often as they transition from academia into industry. In the past 5 years, the Rora team has helped over 1000 engineers and data scientists negotiate more than $10M in additional earnings from companies like DeepMind, OpenAI, Google Brain, and Anthropic -- and advocate for better roles, more alignment with their managers, and more flexible work.
Rora recently released their 2023 AI Researcher Compensation Guide which overviews the highest offers they’ve seen this year – so you can understand what a top-of-band offer looks like.