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Monday, August 25, 2014

Advice: Negotiate Your Starting Salary - Part 1

Monday, August 25, 2014 Posted by Chris Tung , No comments
Everyone wants more money. It's a pretty simple idea really. You work hard, and you should be compensated fairly for it; however, it's the hiring manager's job to pay you the least amount possible to keep operation costs as low as possible. So, how do you negotiate a starting salary that will make you happy while ensuring that the hiring manager advocates for you and gets you the salary that you deserve?

Assuming you've already taken care of the basic basics of getting a job, here's the first step in a three part series that will show you techniques I've used and shared with my friends that have helped us increase our offer packages by roughly 30%:

Calculate Your Current Total Compensation

This best way to explain this very important first step is to tell a story so...let's meet Jack.

Jack currently has a job, but he's in a rut so he decides to take some interviews. After a few weeks, he gets an offer for $55k from a company he's interested in. He knows he needs to find out if $55k is a lot more than what he's currently making so he calculates his base pay plus any stocks, options, or bonuses he might get this year and determines that his compensation at his current company is $47.5k, which makes the $55k look really good because it's almost a 16% raise. Should he accept the offer?

If you think he should, you may have jumped the gun because Jack didn't calculate his total compensation from his current company and could be short changing himself a lot of money!

From free lunches, free snacks, and company-sponsored happy hours to free daycare, Uber rides home, and employee matched 401k, it's important that Jack writes out everything that his current company offers him so that we can get a fuller understanding of whether or not Jack's new package is better, worse, or about the same as his current package.

Here's an example of what his spreadsheet might look like once he calculates his total compensation:

As you can see, once Jack calculates his total compensation from his current company, $55k from his new company isn't so great anymore. In fact, he would be leaving his current job for a little less than a 4% pay bump, which isn't a whole lot and something he can probably get during an annual review. In the end, it's important that Jack (and you) calculate total compensation in addition to your base compensation so that you can find out whether an offer is worth taking.

But, let's say you're like Jack and now you know that a 4% raise isn't good enough for you to immediately accept the offer. How do you go about explaining that you'll need more before you jump ship? Check part 2 to find out!

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