Why You Should Negotiate a Job Offer

This guest post is by Francesca Gino, a behavioral scientist and professor at Harvard Business School and the author of "Sidetracked: Why Our Decisions Get Derailed, and How We Can Stick to the Plan." Imagine you have accepted a new job in another state. You want to drive to your new home, but your old car won’t make it there, so you decide to buy a new car (assume that you are not trading in your old car). You decide on your favorite model that lists for $21,000, but a friend informs you that you could probably get the car for around $20,000. There are a number of ways you could purchase your preferred car, but let’s focus on two of them. In both cases, the time involved, final price, service implications, etc., are the same – the only difference is the procedure. Here are the options: Option 1: You spend the afternoon at the dealership and negotiate a price of $20,200 for your preferred model. Option 2: You spend the afternoon going to a fixed price dealership in a neighboring town and they sell you your preferred model at a fixed, non-negotiable price of $20,200. Which one would you prefer, assuming that the car is identical in all respects? If you are like most people, you would pick option two. This is because, for most people, negotiating is no fun: it is uncomfortable, especially in situations where is it unclear whether it is even appropriate. For instance, most graduate students entering the workforce do not negotiate their job offers. One study found that only 57 percent of men and 7 percent of women negotiated their salaries when starting a new job. Even leaving the gender issue aside, these percentages are strikingly low especially when considering that negotiations at this stage of the employment relationship greatly impact salaries down the road. What can you do to overcome such fears of negotiating and make sure you get off to a good start when entering a new job? Here is some advice to help you negotiate a job offer.

Ask – Because Employers Expect You To

If you are sitting on an offer, you’re probably thinking you are lucky you have one. Having a job offer in this economy is already something to be thankful for. But you should remember that, across industries, employers expect new potential hires to negotiate. They do not expect you to accept what they offer so ask. It is possible you won’t find flexibility on salary but it is likely your new employer will be open to negotiating other terms of the offer, such as bonuses, vacation days, location or other issues you care about.

Prepare – Use Benchmarking Resources

There is a lot of information you can gather prior to discussions. Survey tools like Salary.com, Glassdoor.com and PayScale can give you a good sense of what other people in similar jobs and geographic areas are making. And do not forget to tap into your networks: your friends, peers and colleagues can be invaluable sources of information.

Stay On Track – Come Up With a Strategy Before You Negotiate

At the time of preparation, you should develop a plan that identifies your bottom line, and your priorities. Your plan should also include the questions you’ll ask and possible strategies to learn more about what the other side has to offer. But what’s critical at this stage, in addition to all of this, is to anticipate what may get you off track during the negotiations. For instance, negotiating with your future boss may make you uncomfortable or anxious. Make sure you have strategies to counteract the forces that may derail your negotiations. We often attach bad feelings to the very thought of negotiations. And we often do all we can to avoid them. Yet, there is a lot of value in negotiating job offers. By asking, preparing and staying on track you can make sure you’ll get off to a good start by entering a job that you shaped thanks to your effective bargaining.
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