Negotiating Offers

MITFall 2011

Today

• Katie Somers– Career Assistant, MIT Global Education &

Career Development• Tom Hendrix

– Senior Consultant, Stroud

• 1 hour. Interactive. Thought provoking.– Questions and discussion encouraged

How many of you….

• …are planning on working after MIT?

• …are currently in a job search?

• …are currently considering offer(s)?

Would you accept this job offer?

NOW HIRING

• Working with the best people in the world

• 13 hours/week (or more if you want)

• Live wherever you want– And there are no taxes there

– Travel as much or as little as you like

• 14 weeks vacation/year

• $350,000 /year and 50% bonus

• Expected raises of 25% each year

• Full benefits

• Free parking and there’s never any traffic on the commute

• Call _________

Me Too

!

Key point for today: get the career combination that will

be happiest for you

Key thoughts on negotiating: 1. Know what you want 2. Get the facts3. Seal the Deal

1. Know What You Want

What is going to make you feel successful in your job and in life?

What are the most important elements that I want from my career?

Consider the whole package

The Career

Package

The WorkThe

People

Other•Title, prestige

•Commute

Growth

Base Salary•Starting•FutureBonus

Salary

Vacation•Allotted•Actual

Benefits•Medical, etc.

Cost of Living

Hours•Week

•Weekend

Key Points:

• Know what matters to you – build your own wheel

• Look beyond just the salary number

• Avoid the “comparison trap”

The Comparison Trap

• I want…..Hours

Personal Growth

Salary Vacation

Fame

Discovery Factor

Public Service

Teacher X XInvestment Banker

X

Researcher

X XConsultant

X XTom Brady

X XJudge XDentist NO

!

Questions to Consider

• What is going to make me feel successful?• What are the most important elements that I want

from my career?• What exactly will my day to day responsibilities be?• Is the day to day work going to challenge and

excite me?• How will my value to the company and the market

change over time? • What opportunities will I have to develop?• Who will I be interacting with?• Will I enjoy working with my colleagues?• What is “the package” and how does it stack up to

what I want?

Factors Affecting Job Offer Acceptance

0 20 40 60 80 100

Didn't Get Into Grad School

Ist Job Offered

Ability to Meet Ed Dept Payments

Job Security

Other

Benefits

Best Opp at this Time

Salary

Work Life Balance

Training Oppts

Supervision and Colleagues

Employer Rep

Fit With Experience

Location

Fit With Culture and Environment

One of My Top Choices

Oppt to Make Impact

Oppt for Advancement

Employer Sponsors Non-US Cit*

Creative & Challenging Work

Job Content

Off

er

Ac

ce

pta

nc

e F

ac

tor

Importance of Factor *Only Non US Citizens

Essential % Very Important %

GECD Graduating Survey

Look at

what’s #14

You don’t have to

agree with this order

Consider the whole picture, though

2. Get the Facts

Just focusing on salary for a minute:

Which is better: $50K to start with 15% annual raises, or

$60K to start with 3% raises?

0

50

100

150

200

250

300

1 2 3 4 5 6 7 8 9 10 11 12 13

Annu

al S

alar

y (

$K)

Year

Sample Salary Growth

$60K Start, 3% raise

$50K start, 15% raise

Even just focusing on salary for a minute…

What affects starting salary and growth rate

of salaries?

2. Get the Facts BEYOND just money• …and find out why something has to be true

– An example: Developing the company’s people

• The best way: Ask questions of your prospective employer

• …even if you’re afraid they might make you look bad

• Ex: Weekend working required/expected?– “No – weekends are yours.” Great!– “Yes.” Better to find out now than a few months into the

job.

The Career Package

The Work

The People

Other•Title, prestige

•Commute

Growth

Base Salary•Starting•FutureBonus

Salary

Vacation•Allotted•Actual

Benefits•Medical, etc.

Cost of Living

Hours•Week

•Weekend

How much (in dollars) would you trade for an extra week of vacation?

• Suppose you make $52,000 per year.

• Now suppose you make $104,000

• How much would you spend on flights, hotels, entertainment etc. on that vacation?

Case Study●Base salary - $70,000●Parking

● $70 per month● $840 per year

●Medical & Dental benefits● $100 per month● $1,200 per year

●No vision insurance● $200 per year on eye care

●No bonus opportunity●No 401k match

●Base salary - $68,000●Parking – free●Medical, Dental & Vision

● $80 per month● $960 per year

●Bonus opportunity● Average of $6,800 per year

●401k match● 2% of salary ● $1,360 per year

Case Study

$70,000 – base - 840 – parking - 1,200 – medical & dental

- 200 – vision

Equals

•$67,760 net annual base

$68,000 – base - 960 – med, dent & vision

+ 6,800 – bonus

+ 1,360 – 401k match

Equals

•$75,200 net annual base

Other factors

$0

$500

$1,000

$1,500

$2,000

$2,500 Average Rental Rates - 1 bedroom apartments

And consider the size and quality of what you get

for that rent…

Source: Rentbits.com October 2011

Other Sources For Facts

• People you know in the company or industry– Teammates, classmates, family & friends…

• Other current employees (besides the one interviewing you)– Just ask for contact info of someone in the

position you’re interviewing for or similar level– You can tell a lot just by talking to them

• Career services offices• The web can be useful, and can be

misleading– Proceed with caution

3. Seal the Deal

How many of you…

…think that you should always negotiate a job offer?

…think that you should never negotiate a job offer?

•Most employers expect negotiationsBut. . . •Only about 25% of job applicants actually negotiateCopied with permission from “The Art and Science of Negotiation” Rebecca Bryant, PhD, Graduate College, University of Illinois

3. Seal the Deal: Advice on Negotiating

• Decide whether or not to negotiate– Is something else out there really better?– What’s the gain for you? For the Employer?

• Treat it as a conversation to find out more, rather than a me vs. you competition– Seek to understand the reasoning. Companies don’t

make offers arbitrarily.

• Also:– Consider your definition of success. Would it be met

with a “Yes” or “No” from this conversation?– Bring your facts, and remember that the other person

has facts too

What Stroud considers when making offers:

• Competitiveness in the market for talent– What others are offering

• The career package that suits our culture• Fiscal responsibility, long term health of

our company• We have a lot to gain and a lot to risk in

any hiring decision– You might be our best consultant ever and we

want to grow our business– Bad hires are personally and professionally

difficult

Negotiating: Engaging openings

• I would engage in this conversation:– “I’m considering several offers and I want to make

the best choice for me.”– “These are the factors I’m considering.”– “I like what you’re offering me on ___, ___, and ____.– “I want to know if we could change ___.”

• I wouldn’t be as happy to engage in these conversations:– “Can’t you do better than that?”– “So-and-so is offering me $4k more. Can you

match?”

Points to Remember

• Choose the offer that best meets your career goals and lifestyle values

• Assess your skill value in the marketplace

• Focus on the compensation aspect most important to you

• Look at the “big picture” and the future value of an offer

Questions / Comments / Feedback

More information and background reading on negotiating:

GECD:*****Katie’s contact info *****

Contact Stroud– www.stroudconsulting.com– Tom: t.hendrix@stroudconsulting.com

• Happy to talk after the session• See my profile on LinkedIn• Business cards at the back