The Importance of Negotiating Salary

Posted by: Francesca Di Meglio on May 12, 2009

With the economy in turmoil, many MBA graduates are finding the job search tough going. To give readers some insight into the strategies they’re pursuing and the difficulties they face, BusinessWeek has recruited four out-of-work MBAs to write about their experiences for a new feature called “The Hunt” that will appear periodically on the Getting In blog. Comments, as always, are welcome.

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By Bryan Glover
When it comes to being successful in a job search, few things are as important as interview prep. Each of us has our own method of preparing for interviews, but I think there are some things successful people do before each and every interview they have. Some of these may sound silly and obvious, but I have seen people make these mistakes during my time as a hiring manager. It is critical to know what the company does and if the company is large enough, what the group/division you have applied to does. You should have at least some idea of what the job should pay in case it comes up. You also need to dress appropriately for the position you are seeking.

From my experience, the number one question that I know is definitely coming up during interviews these days involves salary expectations. As a matter of fact, I have had “What pay range are you looking for?” be the first question out of a phone screener’s mouth. Talk about throwing me back on my heels. To me, that is the equivalent of someone asking how much money I make during the first five minutes of our first date. I understand why I am being asked, but being asked that question first says a lot about the company on the other end of the line. All that being said, I honestly believe most people sell themselves far too short when answering this question out of fear of offending the other party, so my advice is to research a reasonable range and add at least 25% to that number when answering the “salary question”.

I consider myself to be pretty good in interviews and my track record would support that assertion. However, I have made my fair share of mistakes over the years. Almost every mistake I have ever made revolved around not being prepared to answer questions about the company or salary. The best thing you can do is admit your un-preparedness if asked. I have made the mistake of trying to BS my way through "So do you know what we do around here?" and I am quite sure I came across poorly by trying to fake it. I believe people across the desk from me respect me honestly saying "I'm sorry I don't. I should have asked the recruiter when they contacted me, but I didn't and that was my mistake." They may not hire me, but taking ownership at least lets them know I have integrity and the ability to own my mistakes, which are both admirable qualities in any employee. It also gives the interviewer a chance to talk about themselves and their company, which can be a very good thing.

One of the biggest benefits I received from my MBA program with regard to the interviewing process came in the form of a negotiations class students are required to take. We conducted mock salary negotiations, which were very helpful because they broke down the process. However, the best part of the class and the lesson that will stick with me was one on anchoring. The negotiation revolved around selling a factory to another company. Both sides were given information sheets about who the key players were, constrictions on financial matters, etc. As a way of demonstrating the lesson, I was one of two students who were given one additional instruction as follows: make sure you speak first and say that you will take no less than $40 million (make sure you come up with a justification). Before being handed this, I had figured I'd be lucky to get $25 million for the factory. Lo and behold, I ended up selling the factory for $38.5 million and unloading some other items we wanted to rid of. The average for the rest of the class: $19.5 million. The moral of the story: most companies have a salary range and it’s all right if the discussions begin above that range. It's more difficult to get someone who has offered you $60,000 to go to $80,000 than it is for you to ask for $100,000 and settle on $80,000.

Lastly, I'll briefly cover dressing for the interview. If you are going to interview in certain industries, you will know how to dress right away. Financial services or banking, wear business attire (yes, that means a tie and jacket). Going to work on a farm or ranch, wear jeans and a work shirt. However, there are many companies where you might not know how to dress. When I have been uncertain, I simply ask. I have had numerous people respond "anything but a suit" and I was very glad I asked because my default is to wear a suit. If you are truly unsure and afraid to ask, then wear a suit. I know it seems common sense, but the saying "common sense isn't all that common" exists for a reason. If you do ask and they say "we wear jeans and t-shirts" my advice would be khakis and a button down or polo. This sends the message that you understand the casual nature of the company, but the professional nature of an interview.

Reader Comments

Petro

May 29, 2009 11:17 AM

Right Bryan...this is normally one tricky one. But the problem is that you may not be the only one qualified for the job, so among the shortlisted candidates the pay might be the only factor which will determine whether you are taken or not.
If you quote too high you price yourself out of a job. too low a quote, you undersetimate yourself & potential.

I think you should first let them know what you earn -they can't offer you below this. Then add a reasonable figure depending on the post and added responsibilities, etc. Otherwise the best option is to find out what their budget is for the post and what the previous occupant was being paid (yes, inside info!). Knowing the salary scales at that level in the organization also helps.

Then hit them with a 'hee' - a 10-20% above their budget, not too high a figure as planned. At this point i bet you will have gotten yourself a 50% raise!

jeannae

July 27, 2009 5:16 AM

article for group project!

jeannae

July 27, 2009 5:56 AM

presentation article

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