Compensation Advice for New Grads

Don't be so focused on salary that you overlook key benefits like health insurance, retirement-plan contributions, and time off

by Sheila Curran

Almost 1.5 million new grads will enter the workforce this summer. If you're among that group, you're in luck: 2006 was a great year to find employment—and 2007 is shaping up to be even better.

If you've got good grades, did some internships, and have some job-search savvy, you very well may have your choice of offers. But don't flunk your first real-world test by incorrectly assessing the pay and perks of any positions you're offered.

While you're still in school, convenience and salary are likely the key determinants when deciding on a job. But after graduation, there are many other factors to consider beyond pay, such as cost of living and benefits. You also need to realize that you may have more flexibility than you think when it comes to negotiating the best possible total compensation package.

What You Need to Know

True, on-campus recruiters usually have set policies on salary and benefits. And unless you have a "hook," like having worked for the military for several years before coming to college, it will be hard for you to make a case why you should be treated differently. However, the majority of employers do just-in-time hiring, meaning someone has to leave before they will recruit someone new. If you're offered one of these positions, you may have more flexibility.

Here's what you need to do know and do to increase your chances of negotiating a better compensation package:

• Know the prevailing salary for someone with your background and experience in the type of work and organization for which you're being considered.

• Identify what benefits are important to you, and check the company's human resources Web site for information on benefits.

• Wait until you've been given a job offer before you try to negotiate either salary or benefits.

• Be professional. Resist pressure to give an immediate answer, but also realize that you can't renegotiate or keep them on hold forever.

Salary

Recent grads are often thrown by questions about salary. The first rule of salary negotiation is that the person who states a number first loses, so there's a very good chance that a recruiter will ask you what you expect to be paid. You can finesse that question by saying that you would expect to be paid the same as someone with similar background and qualifications—which is why it's important do to your homework—or that you're willing to discuss salary when you're further along in the process.

So, let's say you can hold out and get them to name a figure first. How do you know if it's a reasonable offer? If you can, network with someone in the company to find out what people in the kind of position you're interviewing for typically make. If that's not possible, call the organization's human-resources department and ask if there's a salary range for the position. Most salary ranges are divided into quartiles, and usually new-graduate hires will be given a salary in the first quartile of the range.

Base salary isn't the only thing to consider, however. Ask when you will be eligible for performance-based raises. Some companies start with lower salaries but have six-month reviews and potential raises. Knowing that there will be the chance for a bump in salary after six months might make it easier for you to accept a starting salary that's lower than you would like.

Make sure you know ahead of time what a figure really means. If you think a job offer of $30,000 in the Research Triangle Park area of North Carolina is too low, consider that you would have to make almost $49,000 to have a similar standard of living in San Francisco. (Consult a Web site like salary.com to help you figure this out.)

Also, bear in mind that the figure you're quoted may include other financial compensation such as a signing bonus or relocation funds. That's the good news. The bad news: You will receive these extras only once. But since this is an area where there might be more flexibility, be sure to ask.