Evaluating and Negotiating Job Offers Part 1 – The Base Salary

(This is part 1 of the series on Evaluating and Negotiating Job Offers. You may also find these other parts interesting: Part2: Signing Bonus and Relocation Benefits, Part3: Stock Option or Restricted Stock Units(RSUs), Part4: 401K, Part5: ESPP, Part6: Other Perks).

Evaluating the first big job offer can be daunting; negotiating for better terms, may sound downright intimidating. The more you read on this topic, the better prepared you will be to handle any situation as it unfolds. This series is an attempt to put all that I have learnt about this process in one place. It walks through the different components of a job offer and how to negotiate for a better package. Remember, there is more to an offer than just the financial aspect. However, since the focus of this blog is finances, I will limit the core discussion here to financial aspects, and will allude to the any other aspects only if it is relevant to the discussion on hand.

Today we discuss about the central component – the base salary.

Importance of good starting salary

Contrary to what a lot of other articles on this topic say, I believe that you should pay a lot of attention to your base salary. Two of the arguments I have heard regarding the base salary (a) It’s not all about the money and (b) Do not focus on just the base salary, evaluate the whole package. Let’s look at each of these arguments.

Argument (a) is very valid. Except that unless you feel that you are being paid what you deserve, any job, no matter how much you like it at the beginning, can start to grate on your nerves after a while. If you feel you are being short changed, you will lose the interest. And that can’t be good. So, if you have multiple offers, give equal importance to both financial and non-financial aspects while evaluating the offers. If one of them is superior in all non-financial aspects, but pays a little less than the other, go ahead, take that offer. On the other hand, if the difference in financial aspects is huge, you should consider negotiating for a better offer. We will come back to the negotiation in a bit.

Let’s look at argument (b). Clearly, this is also a very valid point. You should always look at the whole package offered. That does not mean, however, that you should neglect the importance of your base salary (take a look at the simple example here if you need some convincing)! I have seen a lot of people settle for a much smaller base pay than they expected, because the rest of the package is great. To each, his own. But before you decide to go this route think long and hard and make it a conscious decision. For instance, annual pay raises are awarded as a percentage of the salary you have at that point. If you start low, it will be hard to raise your salary later, no matter how hard you work! Also, eventually when you want to switch jobs, it will be harder for you to negotiate a high salary, if your existing salary is low. Of course, it can be done, but it will involve a lot more than just saying “My current employer pays me $XY, I will consider making the move if I am offered $XY + $Z”. See my point?

How do you determine what is the best base salary that you deserve?

A few years ago, answering that question would probably have been fairly difficult. But with every bit of information you look for easily available on the Internet (for free), there is just no excuse for not knowing before hand, what the ball park of your expectations should be. Here are a few sites that offer free salary reports (and in some cases, more detailed paid reports). For our purpose of determining the general range, the free report should be sufficient.

  • salary.com
  • vault.com
  • glassdoor.com
  • jobstar.org
  • U.S. Department of Labor

In addition, use the time honored “grape-vine” system. Check with your advisor what range of salary his previous students got. Check with your peers for information about recently graduated students. Look on bulletin boards and discussion forums.

Finally, don’t forget the career center. Most colleges offer career centers. Sadly, some are better than others. No matter how good or bad your career center is, you can bet that there will be a few resources available there. Look for salary surveys like the ones provided by NACE. These provide very realistic up-to-date information of the salary information for different majors.

Now that you have the general range of salary for your education, experience and geographical location, determine where in this range you belong. Be realistic, but leave some room for error. In other words, based on the general range, what do you expect your personal range should be ?

Negotiating for your desired starting salary

Please read the other parts of this series before you decide your strategy for negotiation for the whole package. Here are a few tips for now.

  • Never initiate the discussion about salary/benefits. This topic should always be raised by the employer.
  • Do not ever give out a fixed number.
  • During the discussion, if you have to specify your expectation, always offer a range, with the bottom of the range aligned with your desired salary.
  • You will have a lot of leverage in the negotiation if you have multiple offers on hand. In other words, do NOT settle for the first offer you receive. Interview with several employers simultaneously so can have multiple offers around the same time frame. Even if you do not have another offer in hand, you can always allude to it as “I have interviewed with other companies and expect to hear from them soon”. This has the psychological impact of putting you ‘in demand’.
  • Good communication skills will come in very handy while negotiating salary. However, if your communication skills are not great, or if you do not feel comfortable talking about money matters, negotiate via e-mails instead of phone calls or during the face-to-face interview. When asked on phone or during the interview, say politely, “I have not given a lot of thought to salary issues yet, would you mind if I think about it and get back to you via e-mail?”
  • Always be courteous. Never demand, always request.

That’s it for this installment. I have several more posts planned in this series to cover signing-bonus & relocation benefits, stock options, 401K, ESPP, annual bonus, insurance benefits, paid vacation and other perks. If you found this article useful, please stay tuned for the next posts.

(All the parts of this series are now published. Check them out at – Part2: Signing Bonus and Relocation BenefitsPart3: Stock Option or Restricted Stock Units(RSUs)Part4: 401KPart5: ESPPPart6: Other Perks).

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