How to negotiate for more money during the interview process

Mod Note (Andy): #TBT Throwback Thursday - this was originally posted on 9/22/12

So, this question keeps coming up, "if I negotiate with a prospective employer, will I piss them off or ruin my chances?"  I wanted to share the perspective of the person hiring and give you a couple of examples of what happened with people I have hired who were being paid below market wage to begin with.  Some of you will probably think I'm a dick for saying some of this, but this is what really happens.  Generally, your job is to try to get paid as much as possible and the employer's job is to pay you as little as possible.  Getting upset about it won't help.  Recognizing how to tilt the odds in your favor will.  I consider the compensation negotiation a part of the interview and hopefully, you will understand why in the examples below.

What I write below applies to experienced hires anywhere and to small companies, but does not apply to standardized programs like analyst and associate programs at big firms (you usually can't negotiate those offers).

Anchoring

Don't be afraid to throw out the first number, just make sure it's a number you would be ecstatic to get.  The company almost always make you throw out the first number and they make sure it's a number you are absolutely NOT ecstatic about.  

How do they do this?

The first thing that the hiring manager will ask you about compensation is how much you are currently making or will get HR to ask you that question or have you fill out a form that asks you how much.  I wouldn't answer this question directly and here's why:  They ask you this so they can anchor their offer what you currently make. If your market value is $200 and you are earning $100, they can offer you $125 and most people think it's great because they received a 25% increase, not realizing they left $75 on the table or not knowing how to combat it. For any technique to be successful in a negotiation, you have to be willing to walk away. The easiest way to ensure you can walk away is to get competing offers or have a reasonable job now.

Let me give you a couple of examples of people that I interviewed and wanted to hire, that were (in my estimation), significantly underpaid when I interviewed them.

Candidate example #1

One very talented young lady (about 26 y/o) I was interviewing 5-6 years ago impressed me with her polish and technical abilities (she was a salesperson).  I think she was making about $150k per year.  Before I could make her an offer, she threw out that she should make $350k as that was the going rate.  She gave me examples with concrete numbers.  Of course, they were cherry picked, but it still made her argument.  I respected her infinitely more for doing that and knew that since she would be negotiating contracts for us, including fee rates, she had a valuable skill set.  Obviously, she would fight for higher fees.  I loved that.  I thought she was worth about $200K before we negotiated and about $300K afterwards.  I saw her true colors during the negotiations and I loved it.  Granted, she wouldn't get $350k from me, but I doubt she ever really expected to.

Notice that I never thought she was a jerk and never did she piss me off.  My respect for her increased during the negotiation, significantly.

Candidate example #2

Ok, on to the next candidate for an unrelated position.  Early in the process, I asked her how much she made currently and it was a little under $300K.  She told me she thought she was underpaid, but never threw out a number and never really pressed the issue too much and certainly never gave any evidence of why she was underpaid.  After getting to know her and her responsibilities, I concluded that market on her should have been about $500-600K.  

But, because she didn't press me on compensation issues, I focused on the growth opportunities of the position, that I could give her a fancy functional title (Head of XX group), and that I could get her on TV and in print.  The reason I told her about these things is because they seemed important to her and I knew I could deliver those things and pay her less than market while having her be excited about the job anyway.  I ended up paying her a smidge over $300K.  All the stuff I "gave" her didn't cost me a penny.  In fact, some of them helped me just as much as they helped her.  

She didn't negotiate hard and I knew, despite her seniority, I would have to babysit the people who worked for her.  I got a deal on her and she had her strengths, but I knew I couldn't trust her to make tough decisions or negotiate for us.  She should have negotiated harder.  I definitely lost some respect for her because she didn't.

Both of the examples above were with people who currently had jobs, but did not have another offer in hand to leverage against me.

Try to refocus the discussion

Once you have some wins under your belt in your career and you go to test the job market, ideally, you can refocus the compensation discussion to something like a revenue share.  If they ask how much you make, you can tell them, "Let's not worry about how much I cost you.  I want to align our incentives and only get paid when I generate sufficient revenue.". Or something that contains that concept.  The point is:  it's much easier for someone to give you 10% of incremental revenue you generate than to have to write a big check and carry you as a cost. However, you must make sure it's all in writing and get a lawyer to review it for holes.  You don't want to be in a spot where you hit an absolute home run and are generating $50 million in revenue and they try to pull the rug out from under you.

Another example is this, let's say you're at a small fund and earn 2% of the carry and get a (relatively) small base.  Let's imagine that this comes to a total of $500K in total compensation.  If I was interviewing at a larger fund, I would not tell them that I got paid $500K, I would tell them that I got 2% of the carry.  They're going to try to negotiate how much carry you get in the new firm, but you have already won.  At this point, the only important thing is that you get a piece of the carry.  You can come to something reasonable once both parties agree that you should get some of the carry.

Anyway, that's enough for now, but I'm happy to answer any questions you may have (I won't have all the answers, but I can try).

 
hawkua:
Thanks a lot for the post. Do you have any suggestions for people who negotiate out of an MBA? What would you use for anchoring - industry/position average, school graduates' average in the industry, or previous salary?
Are you asking how to negotiate right after you graduate from an MBA program?

In general, I would always anchor to something higher than what I'm getting paid now. You have to get creative sometimes. If I was interviewing in Dallas, I would tether to national averages for comp. if I worked in a lower paying industry, I would tether to the average of all industries for MBAs. If I was a first year Associate, I would try to tether to all high performing Associates across all years.

One issue is that if you are graduating from bschool and are applying to a large bank, none of this matters because you just get what they give you in the Associate program. There isn't much negotiating that takes place.

 

Thank you SirTradesaLot, very informing post!

Say one is making industry average but he believes he's underpaid. What are the 'concrete' evidences he can throw out to convince you that you should pay him more? (ok, double-edged sword question)

The Auto Show
 
huanleshalemei:
Thank you SirTradesaLot, very informing post!

Say one is making industry average but he believes he's underpaid. What are the 'concrete' evidences he can throw out to convince you that you should pay him more? (ok, double-edged sword question)

First thing is this: almost everyone believes they are underpaid, most aren't.

So, the first question is: are you an average performer? Because, if that's the case, then there's not much you can do.

Assume you are an outstanding performer. The first thing you need is to convince the person paying you that you are above average. Assuming they agree with that, the average works in your favor. Then you can just say if the average person makes $100, I should probably make $200 since I'm twice as productive.

The alternate is to argue for some sort of revenue share or get another offer. It's really impossible to overstate how important getting another offer is in getting leverage to get more money. Also, if you go out and get other offers and they have comp that is in line with what you are making now, then you know you're getting paid fairly.

 
huanleshalemei:
Thank you SirTradesaLot, very informing post!

Say one is making industry average but he believes he's underpaid. What are the 'concrete' evidences he can throw out to convince you that you should pay him more? (ok, double-edged sword question)

It's all got to do with how much they value you and what the market for your skills is like. You can play hardball by having another offer, or you can just ask. If they want to keep you happy, they will likely be willing to pay you more so long as it is possible (HR often gets in the way).

 

1 Case. She was making 150 and ended up with double that, and you think you didn't overpay ? for a 26-year old ? At that age, her track record was how much she had spend at Bloomingdale's or how many cups of coffee she could drink at Starbucks. Her "competing" offers were probably joining the Army or something like that. -Hey, women are equal to men.

Age, my friend, has everything to do with pay scale. If you like throwing money at a skirt, of course you can do that.

2. I think creating titles that come with no increases in pay is a good idea. Also I agree with performance/rev. based bonuses, many funds make up to 50% of total compensation that way.

Winners bring a bigger bag than you do. I have a degree in meritocracy.
 
Best Response
Financier4Hire:
#1 Case. She was making 150 and ended up with double that, and you think you didn't overpay ? for a 26-year old ? At that age, her track record was how much she had spend at Bloomingdale's or how many cups of coffee she could drink at Starbucks. Her "competing" offers were probably joining the Army or something like that. -Hey, women are equal to men.

Age, my friend, has everything to do with pay scale. If you like throwing money at a skirt, of course you can do that.

2. I think creating titles that come with no increases in pay is a good idea. Also I agree with performance/rev. based bonuses, many funds make up to 50% of total compensation that way.

I mentioned I thought she was worth $300K, I didn't say I paid her $300K. I definitely paid her a lot more than before though and she was totally worth it. She was a salesperson and was effective at her job. An interview where you negotiate is a very fair representation of how someone will do as a salesperson. She did have a good track record in sales as well, which helps a lot in making a decision like that. Sometimes you have to pay for top talent.

I think you may be missing the larger point which is, if you don't ask, you won't get. Person 1 squeezed the value out of me almost to my reserve price and person 2 could have received a lot more from me if she pressed me for more money. That's really the point I'm trying to get across.

 
SirTradesaLot:
Financier4Hire:
#1 Case. She was making 150 and ended up with double that, and you think you didn't overpay ? for a 26-year old ? At that age, her track record was how much she had spend at Bloomingdale's or how many cups of coffee she could drink at Starbucks. Her "competing" offers were probably joining the Army or something like that. -Hey, women are equal to men.

Age, my friend, has everything to do with pay scale. If you like throwing money at a skirt, of course you can do that.

2. I think creating titles that come with no increases in pay is a good idea. Also I agree with performance/rev. based bonuses, many funds make up to 50% of total compensation that way.

I mentioned I thought she was worth $300K, I didn't say I paid her $300K. I definitely paid her a lot more than before though and she was totally worth it. She was a salesperson and was effective at her job. An interview where you negotiate is a very fair representation of how someone will do as a salesperson. She did have a good track record in sales as well, which helps a lot in making a decision like that. Sometimes you have to pay for top talent.

I think you may be missing the larger point which is, if you don't ask, you won't get. Person 1 squeezed the value out of me almost to my reserve price and person 2 could have received a lot more from me if she pressed me for more money. That's really the point I'm trying to get across.

So what does her compensation structure look like? I thought that people in HF sales and marketing positions typically get paid a more modest base along with a small percentage (around 2%) of the capital they help raise. If she makes $250,000 with you in a year then presumably that is because she brought in some decent amount of money to the fund and you gave her a cut out of that.

Too late for second-guessing Too late to go back to sleep.
 
SirTradesaLot:
Financier4Hire:
#1 Case. She was making 150 and ended up with double that, and you think you didn't overpay ? for a 26-year old ? At that age, her track record was how much she had spend at Bloomingdale's or how many cups of coffee she could drink at Starbucks. Her "competing" offers were probably joining the Army or something like that. -Hey, women are equal to men.

Age, my friend, has everything to do with pay scale. If you like throwing money at a skirt, of course you can do that.

2. I think creating titles that come with no increases in pay is a good idea. Also I agree with performance/rev. based bonuses, many funds make up to 50% of total compensation that way.

I mentioned I thought she was worth $300K, I didn't say I paid her $300K. I definitely paid her a lot more than before though and she was totally worth it. She was a salesperson and was effective at her job. An interview where you negotiate is a very fair representation of how someone will do as a salesperson. She did have a good track record in sales as well, which helps a lot in making a decision like that. Sometimes you have to pay for top talent.

I think you may be missing the larger point which is, if you don't ask, you won't get. Person 1 squeezed the value out of me almost to my reserve price and person 2 could have received a lot more from me if she pressed me for more money. That's really the point I'm trying to get across.

When you were creating all these titles for her that add no value, would it be appropriate if she called you out on that?

What would be a good response for her to say to you if she doesn't want these titles and all of the sudden press you for compensation?

 
Financier4Hire:
#1 Case. She was making 150 and ended up with double that, and you think you didn't overpay ? for a 26-year old ? At that age, her track record was how much she had spend at Bloomingdale's or how many cups of coffee she could drink at Starbucks. Her "competing" offers were probably joining the Army or something like that. -Hey, women are equal to men.

Age, my friend, has everything to do with pay scale. If you like throwing money at a skirt, of course you can do that.

2. I think creating titles that come with no increases in pay is a good idea. Also I agree with performance/rev. based bonuses, many funds make up to 50% of total compensation that way.

I disagree that just because she's 26 means she's not worth the dough. 26 years olds in PE//HF are regularly paid that much and good performers are well worth it... sales people I would imagine could be also, though no experience there... 26 year olds (i.e. 4 years exp. as analyst/associate) are the glue that holds together a small but strong PE firm, real estate shop, or HF - they have a solid base of knowledge, highly refined and up to date technical skills, can still work 18 hour days when called upon, have the necessary relationships and experience to guide execution etc... analysts can't work independently with important counter parties and once you get to VP you aren't grinding out docs / models constantly and getting that close to the deals (at least in REPE / PE)... the high talent senior associate is an extremely critical piece of the machine, and paying a few of them 250-400k per year does not hurt the bottom line in any successful PE firm.

I accept your point that paying her double seems steep - but sometimes that's what you need to do to attract top talent. Because this site is about breaking in/ getting a job / getting paid etc / I think sometimes people forget that really good people, even at the relatively junior levels, are not a dime a dozen at all... in fact, very reliable/skilled ones can be hard to find for everyone aside from the very top echelon firms who don't need to recruit

 
International Pymp:
Financier4Hire:
#1 Case. She was making 150 and ended up with double that, and you think you didn't overpay ? for a 26-year old ? At that age, her track record was how much she had spend at Bloomingdale's or how many cups of coffee she could drink at Starbucks. Her "competing" offers were probably joining the Army or something like that. -Hey, women are equal to men.

Age, my friend, has everything to do with pay scale. If you like throwing money at a skirt, of course you can do that.

2. I think creating titles that come with no increases in pay is a good idea. Also I agree with performance/rev. based bonuses, many funds make up to 50% of total compensation that way.

I disagree that just because she's 26 means she's not worth the dough. 26 years olds in PE//HF are regularly paid that much and good performers are well worth it... sales people I would imagine could be also, though no experience there... 26 year olds (i.e. 4 years exp. as analyst/associate) are the glue that holds together a small but strong PE firm, real estate shop, or HF - they have a solid base of knowledge, highly refined and up to date technical skills, can still work 18 hour days when called upon, have the necessary relationships and experience to guide execution etc... analysts can't work independently with important counter parties and once you get to VP you aren't grinding out docs / models constantly and getting that close to the deals (at least in REPE / PE)... the high talent senior associate is an extremely critical piece of the machine, and paying a few of them 250-400k per year does not hurt the bottom line in any successful PE firm.

I accept your point that paying her double seems steep - but sometimes that's what you need to do to attract top talent. Because this site is about breaking in/ getting a job / getting paid etc / I think sometimes people forget that really good people, even at the relatively junior levels, are not a dime a dozen at all... in fact, very reliable/skilled ones can be hard to find for everyone aside from the very top echelon firms who don't need to recruit

What is top talent?

 
BatMasterson:

#1 Case. She was making 150 and ended up with double that, and you think you didn't overpay ? for a 26-year old ? At that age, her track record was how much she had spend at Bloomingdale's or how many cups of coffee she could drink at Starbucks. Her "competing" offers were probably joining the Army or something like that. -Hey, women are equal to men.

Age, my friend, has everything to do with pay scale. If you like throwing money at a skirt, of course you can do that.

#2. I think creating titles that come with no increases in pay is a good idea. Also I agree with performance/rev. based bonuses, many funds make up to 50% of total compensation that way.

You're a moron. Make sure no one lets you be a boss.

 

What if someone told you flat out, give me X or I'm not taking the job, and they're being deadly serious. What would you do? Obviously you're going to be a little pissed and probably not gain a ton of respect for their negotiating finesse, but would you admire their tenacity and confidence or be enraged by their supposed rudeness and perceived sense of entitlement? This is assuming you know they can be helpful to your team and you already decided you want to hire them.

 
<span class=keyword_link><a href=/resources/skills/finance/going-concern>Going Concern</a></span>:
What if someone told you flat out, give me X or I'm not taking the job, and they're being deadly serious. What would you do? Obviously you're going to be a little pissed and probably not gain a ton of respect for their negotiating finesse, but would you admire their tenacity and confidence or be enraged by their supposed rudeness and perceived sense of entitlement? This is assuming you know they can be helpful to your team and you already decided you want to hire them.
I'm going to assume they are polite and professional about it. If so, I would make a decision as to whether they were worth it or not and either walk away or pay it. I've done both before. It's not uncommon.

Normally, they say, "I'd love to come work there and you guys are my top choice, but I can't make these numbers work. If you can give me X, I can start in two weeks. Otherwise, unfortunately I will have to take the other offer."

If they were a dick I would tell them to gtfo. That has never happened to me before.

 
SirTradesaLot:
Let's imagine that this comes to a total of $500K in total compensation.  If I was interviewing at a larger fund, I would not tell them that I got paid $500K, I would tell them that I got 2% of the carry.  They're going to try to negotiate how much carry you get in the new firm, but you have already won.

This is brilliant and sums up your point well.

Here to learn and hopefully pass on some knowledge as well. SB if I helped.
 
Pancakes:
Thank you for sharing this. What about in IBD, where you're pretty much a commodity as an analyst? Is there any leeway in negotiating your salary there?
I haven't seen any negotiating in analyst or associate programs. Ever.
 

bump

@SirTradesAlot - great post, want to follow up with this; about negotiating in an analyst/associate program.

Situation: Let's say you're currently making 60k at regional bank as a 2nd yr Analyst (equivalent) and have an opportunity to go into a top tier bank (think GS/JPM/etc), into a 2nd yr Analyst position (seen on other posts around 85k). You mentioned it's hard to negotiate analyst/associate salary upwards, but what about the reverse? Would they automatically put you at that 2nd year Analyst pay, regardless of low (30k/50k/70k) you're currently making? Or would they ever think "ok he's making 60k, let's give him 75k" and then still be missing 10k from the table?

if anyone else has any experience with this from a lateral transition that would be great. Thanks

Go Heels
 
onepercent:
When moving from an entry level to an associate or similar position at a boutique/mid market, should you ask for something higher than market and assume that they'll counter offer lower? Will going too high hurt your chances of getting the job if they view it as not doing the due dilligence on market pay?
I don't know for sure. In my mind, it depends on whether they treat it like an Associate program or not. If they treat it like a program and they have multiple people joining at the same time to do basically the same thing, odds are there won't be any negotiating.

If it was me, I would ALWAYS ask for higher than market and back it with evidence. Just asking for more will usually increase your odds of getting more. Asking for more and providing evidence as to why you should get more, significantly increases your odds of getting more.

 
SirTradesaLot:
onepercent:
When moving from an entry level to an associate or similar position at a boutique/mid market, should you ask for something higher than market and assume that they'll counter offer lower? Will going too high hurt your chances of getting the job if they view it as not doing the due dilligence on market pay?
I don't know for sure. In my mind, it depends on whether they treat it like an Associate program or not. If they treat it like a program and they have multiple people joining at the same time to do basically the same thing, odds are there won't be any negotiating.

If it was me, I would ALWAYS ask for higher than market and back it with evidence. Just asking for more will usually increase your odds of getting more. Asking for more and providing evidence as to why you should get more, significantly increases your odds of getting more.

The only thing i would recommend here in terms of wiggle room for negotiating is if you are a late contender in a drawn out race... If you find out they have been struggling for awhile to fill the role or the time of year is not fruitful for candidates (like the next few months for associate ibankers getting bonuses in feb) you can make a case for yourself... I would not use their own 'pain' against them but rather go the route of looking for "added value" which is a polite way to ask for more money without overtly saying it and putting yourself in a sling... You might get more cash or some other incentive but if you dont it doesnt make you seem like you are demanding anything and still gives you the room to accept the offer if they dont do anything more for you and you still want the job

Robert Shaw Recruiting Consultant Lakeshore Denver, CO
 

Great post, thanks. Where would you find industry compensation comparables? I tried to negotiate for a 20% increase in base over my offer and they laughed in my face as I had no hard stats to back it up.

 
chrisjr:
Great post, thanks. Where would you find industry compensation comparables? I tried to negotiate for a 20% increase in base over my offer and they laughed in my face as I had no hard stats to back it up.
Maybe others can help on places to find comparables. You should be able to find what analysts, associates, and VPs are making at the large banks and extrapolate towards your position/experience, at a minimum.
 

Great Post, I was going to post a question on this topic.

Say you are on the buyside where negotiating skills aren't critical to making money (as in the sales role you mentioned in the example) and you are not directly responsible for P&L (yet), also you know that you are paid well below the market at your current role and the new role you are interviewing for is to pay substantially more. When asked by HR in first round how much you make do you tell them?

Hesitant for 2 reasons: 1)They look at the lower pay as a sign of that I am not qualified/Worth the higher pay 2) They will pay you well below the market rate they would have initially offered.

Fear is the greatest motivator. Motivation is what it takes to find profit.
 
shark-monkey:
When asked by HR in first round how much you make do you tell them?

Hesitant for 2 reasons: 1)They look at the lower pay as a sign of that I am not qualified/Worth the higher pay 2) They will pay you well below the market rate they would have initially offered.

I agree with your logic. I would avoid telling them what you are currently getting paid, if at all possible. Tell them something like this: let's dance a little before we go to bed OR let's see if there is a match before we start discussing pay OR throw out a number somewhat higher than what you would like to get paid. I prefer the last one. So they say, "how much do you make now?". Then you say, "I am looking to make X this year.". X should be at least 20% higher than you think the most someone would pay you.

If someone quickly agrees to the number you throw out, you didn't ask for enough. You have to make sure that number is sufficiently high that they will definitely say no to it, but low enough that they don't think you're crazy.

If they force your hand, you have to make sure you tell them the reason you are on the market is because you believe your compensation does not align with your responsibilities.

If there is any way to get a revenue share, that would be my strongest preference in most cases.

 
SirTradesaLot:
So they say, "how much do you make now?". Then you say, "I am looking to make X this year.". X should be at least 20% higher than you think the most someone would pay you.

SirTradesaLot, what happend if the firm conducts background checks for perspective employees? Guess I can say the 20% is expected 'bonus'?

The Auto Show
 
SirTradesaLot:
shark-monkey:
When asked by HR in first round how much you make do you tell them?

Hesitant for 2 reasons: 1)They look at the lower pay as a sign of that I am not qualified/Worth the higher pay 2) They will pay you well below the market rate they would have initially offered.

I agree with your logic. I would avoid telling them what you are currently getting paid, if at all possible. Tell them something like this: let's dance a little before we go to bed OR let's see if there is a match before we start discussing pay OR throw out a number somewhat higher than what you would like to get paid. I prefer the last one. So they say, "how much do you make now?". Then you say, "I am looking to make X this year.". X should be at least 20% higher than you think the most someone would pay you.

If someone quickly agrees to the number you throw out, you didn't ask for enough. You have to make sure that number is sufficiently high that they will definitely say no to it, but low enough that they don't think you're crazy.

If they force your hand, you have to make sure you tell them the reason you are on the market is because you believe your compensation does not align with your responsibilities.

If there is any way to get a revenue share, that would be my strongest preference in most cases.

Thanks! Great advice and I agree. Thanks for your time.

Fear is the greatest motivator. Motivation is what it takes to find profit.
 

Have you ever seen a candidate lose the position, because his first number was too high? With the job market as competitive as it is, I've always been afraid to come off as ungrateful by throwing out a huge number and having them hire someone that'll work for cheaper.

 
A2Allegiance:
Have you ever seen a candidate lose the position, because his first number was too high? With the job market as competitive as it is, I've always been afraid to come off as ungrateful by throwing out a huge number and having them hire someone that'll work for cheaper.
I haven't, but to be fair, the overwhelming majority of hiring I've been involved with was pre-2008 crisis. I have seen plenty of people walk away from offers, but not by the first number thrown out by either side.
 
SirTradesaLot:
A2Allegiance:
Have you ever seen a candidate lose the position, because his first number was too high? With the job market as competitive as it is, I've always been afraid to come off as ungrateful by throwing out a huge number and having them hire someone that'll work for cheaper.
I haven't, but to be fair, the overwhelming majority of hiring I've been involved with was pre-2008 crisis. I have seen plenty of people walk away from offers, but not by the first number thrown out by either side.

A2Allegiance - one thing i wanted to put out there in regards to ur comment - through a recruiter like myself sometimes the 'high number' will get you taken out of the running ... While i know there is a different dynamic to it, one thing you should be aware of is that a recruiter might not feel comfortable repping you for something that will not align at the offer stage. When I work with people i never talk about the top number bc it's a given we are going negotiate for the most we can get. What I am most interested in is actually the bottom number it would take so i can shoot down any client lowballing you before the offer even gets out if that makes sense. Not to say the bottom number need be low - but if you are an associate that needs $160k base + $120 guaranteed I need to know that because if I know i can't get it we will save everyones time.

But you know i'll be pushin' for $175 + 125 guaranteed ;)

Robert Shaw Recruiting Consultant Lakeshore Denver, CO
 

What do you feel the strength of a case is when it is being based off of a pro forma for living expenses at the lower end of the spectrum (ie sub 100k range) out of school, and requesting a modest (10% or so) bump from opening offer? Not having any comps makes me assume that this is the only way to create any sort of rationale for deserving a higher salary.

 
av8ter:
What do you feel the strength of a case is when it is being based off of a pro forma for living expenses at the lower end of the spectrum (ie sub 100k range) out of school, and requesting a modest (10% or so) bump from opening offer? Not having any comps makes me assume that this is the only way to create any sort of rationale for deserving a higher salary.
I wouldn't think that was very effective, to be honest. If you wanted to make an argument that the national average pay for this position is, let's say $100, and the cost of living in your town is 80% higher than the national average, maybe that would work.

I still think the more effective technique will always be when you can show how much more effective than average you are. Employers really don't care too much about how hard it is for you to make ends meet. They care about how much money you can make or save them. If you show significantly higher output (however they measure it in your role), then you can argue for higher pay. This puts you in a tough spot if you're coming out of school, because everyone thinks they will be better than average and only 1/2 will be correct (and a much smaller percentage for meaningful differences)..

I would just keep looking for an average that gets you around the number you want to get to, including some of these averages: for your school, for your major, for the city/state you live in, for that position, for that industry, etc.

Not to beat a dead horse, but the best remedy is to get multiple offers, if possible. Also, if you're applying to larger firms, there is really no negotiating of starting pay. I assume you must have gotten an offer from a smaller firm.

 

Tradesalot - awesome article man. I'm going to be following up with an article Thursday on Offers/Counter-Offers from the recruiter angle that should really compliment this well...

One thing i touched on in a prior article that Tradesalot hit here that is really the best weapon to have in your arsenal is MULTIPLE OFFERS/INTERVIEWS... You are never married to a process and something i unfortunately see sometimes is a candidate will get tunnel vision for one opportunity and instead of having multiple horses in the race they elect to get all monogamous about their interview prospects and never have any leverage or a plan B (if you are searching and not a direct recruit).

Also, the rule of thumb in recruiting is that time kills all deals and nothing gives someone a sense of urgency to make their decision about you more than knowing that you might be working for a competitor across the street. It helps supplement the confidence of a hiring manager in their pursuit when they know that others are as well...

Robert Shaw Recruiting Consultant Lakeshore Denver, CO
 

For SirTradesaLot:

Would recommend, even out of college or junior positions, to negotiate slightly above whatever the offer is?

Even if your market price is 60k and they offer you 70k, would you say that asking for 73-75k would be in order? Simply noting your strengths, and seeing if they can do the bump so that as little as possible money is left on the table. Then if they don't bite, just accept the original offer. I can't imagine that this would hurt (lose the offer) but it seems like there is a good chance it will often work if they really want you.

 
Bankn:
For SirTradesaLot:

Would recommend, even out of college or junior positions, to negotiate slightly above whatever the offer is?

Even if your market price is 60k and they offer you 70k, would you say that asking for 73-75k would be in order? Simply noting your strengths, and seeing if they can do the bump so that as little as possible money is left on the table. Then if they don't bite, just accept the original offer. I can't imagine that this would hurt (lose the offer) but it seems like there is a good chance it will often work if they really want you.

If it's a program, like an analyst or associate program, it's not worth it because everybody gets the same offer. If it's not a program, it's usually worth asking for more money.
 
Bankn:
For SirTradesaLot:

Would recommend, even out of college or junior positions, to negotiate slightly above whatever the offer is?

Even if your market price is 60k and they offer you 70k, would you say that asking for 73-75k would be in order? Simply noting your strengths, and seeing if they can do the bump so that as little as possible money is left on the table. Then if they don't bite, just accept the original offer. I can't imagine that this would hurt (lose the offer) but it seems like there is a good chance it will often work if they really want you.

I think you should be very careful. Ultimately you want to get what you can, but is $3k-$5k worth losing an offer over? As was pointed out, negotiating in the standard BB IB process is probably pointless and that is something everyone should know. That would lead me to think that someone dealing with a new analyst or associate that is asking for more money than the 50 other people they just hired might get pissed off.

From a legal standpoint...and I'm not a lawyer, so maybe someone else can weigh in on this...an offer is a potentially binding legal agreement. If you sign it, the firm is legally obligated to honor that contract. However, if you negotiate and ask for more money, it's my understanding that you, legally speaking, have declined the first offer and proposed a counteroffer and that counteroffer technically voids the initial offer which allows the firm to rescind it and walk away without possible legal consequences.

That is to say, you can't be offered $70k, ask for $75k, be told 'no' and then just say never mind, I'll just take the first offer. I mean, you can, but the firm doesn't have to honor it, if they don't want to...so there is definitely some risk there.

Regards

"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so." - Ronald Reagan
 
cphbravo96:
Bankn:
For SirTradesaLot:

Would recommend, even out of college or junior positions, to negotiate slightly above whatever the offer is?

Even if your market price is 60k and they offer you 70k, would you say that asking for 73-75k would be in order? Simply noting your strengths, and seeing if they can do the bump so that as little as possible money is left on the table. Then if they don't bite, just accept the original offer. I can't imagine that this would hurt (lose the offer) but it seems like there is a good chance it will often work if they really want you.

I think you should be very careful. Ultimately you want to get what you can, but is $3k-$5k worth losing an offer over? As was pointed out, negotiating in the standard BB IB process is probably pointless and that is something everyone should know. That would lead me to think that someone dealing with a new analyst or associate that is asking for more money than the 50 other people they just hired might get pissed off.

From a legal standpoint...and I'm not a lawyer, so maybe someone else can weigh in on this...an offer is a potentially binding legal agreement. If you sign it, the firm is legally obligated to honor that contract. However, if you negotiate and ask for more money, it's my understanding that you, legally speaking, have declined the first offer and proposed a counteroffer and that counteroffer technically voids the initial offer which allows the firm to rescind it and walk away without possible legal consequences.

That is to say, you can't be offered $70k, ask for $75k, be told 'no' and then just say never mind, I'll just take the first offer. I mean, you can, but the firm doesn't have to honor it, if they don't want to...so there is definitely some risk there.

Regards

After having asked, I failed to get the additional amount (already paid well) but I certainly didn't lose the offer. Maybe just a little red face, nothing more. Going back to front, I'll address some of what you said.

Not sure whether an offer letter is legally binding or not. I feel as though the offer letter may not be binding UNTIL you reply with acceptance. Before that, I think it can be revoked by the company.

Regarding negotiation, after attempting this and failing, I wouldn't discourage any other candidate from doing it. Especially if you know they really like you or that you're top shit (hopefully you have a realistic estimation of this....).

I bet it would be pretty rare for a company to revoke an offer letter because a candidate negotiated. I mean they liked you enough to give you the offer, Unless you ask for something ridiculous, asking for a few more thousand on a 50-60k salary (especially if you're talking 70-80k) isn't exactly outrageous greed and if the hiring manager gets pissed at this, they're probably an ass to begin with.

So for 2-5k more out of college, based on a 30 second phone call and probably less than 5% chance of loosing the offer. You have to ask yourself: "Are you feeling lucky?"

 

@huanlashenme- yes, in the mainland you'd be more likely to see that pay at an international firm. But overall, in China you see less associates on that level of pay I'd say. Also your question is specifically about REPE and so associates in general get paid a bit less, and only at some of the best paying firms could you make that much money

@blastiose- I dunno, it depends on what you're looking for. But people who can communicate extremely well, never need instructions to do things, have a full range of modeling skills and strong attention to detail (i.e. never make technical errors), are good socially and add a positive personality to then organization, have honed their analytical skills enough to add value to the investment process, etc... basically people who can do everything a vp/director could do (It's likely unrealistic they could source deals, but everything else) AND produce every deliverable you need, work long hours, have a great attitude about doing tons of grunt work when that's what you need from then... etc.

 
International Pymp:
@huanlashenme- yes, in the mainland you'd be more likely to see that pay at an international firm. But overall, in China you see less associates on that level of pay I'd say. Also your question is specifically about REPE and so associates in general get paid a bit less, and only at some of the best paying firms could you make that much money

Yeah, that's what I thought. Pimpin' ain't easy hum~

The Auto Show
 

I've been extended an informal return offer for another summer as an intern at an Investment Management firm with AUM ~7 billion. I was paid hourly at $20/hr, and the topic of compensation has no yet been brought up. Am I in a position to negotiate me wage? Or do I still get no say as I am still a student. I do believe that coming into the internship this time around I am in much better shape (with a previous summer and a year of school under my belt).

Thanks in advance.

 
CanadAnalyst:
I've been extended an informal return offer for another summer as an intern at an Investment Management firm with AUM ~7 billion. I was paid hourly at $20/hr, and the topic of compensation has no yet been brought up. Am I in a position to negotiate me wage? Or do I still get no say as I am still a student. I do believe that coming into the internship this time around I am in much better shape (with a previous summer and a year of school under my belt).

Thanks in advance.

You can always ask, but I wouldn't get my hopes up too much. Most people don't negotiate with students. I would still ask though.
 

So, my own experience here, and I'd love to hear thoughts on this. But I do something that I don't like very much, but which I'm quite good at. I'm paid pretty well (obviously, I think I should be paid more, and I actually have revenue numbers to back it up), and I'm top performer in my group. It's a FI gig in a software division.

I'm at a BB with transfer opportunities (find out on Wednesday if I was able to get into S&T associate program). Last year I interviewed at a MM BDC (kind of a so-so company, start-up). The CIO was impressed with me, but I said I'd like to be paid at my current rate. I had limited transferrable skills, but he thought I was damn smart, and even though he had guys with more skills, he thought I had way more upside (his words).

Then he mentioned a pay cut.I said how much, he said baby cut, and I asked for a number. Didn't get one. Interview over. (He asked if I was married, and I said no, so I think he thought I was a cocky little prick since I didn't have a kid or anything to take care of). I never heard anything back, but I asked one of the guys that interviewed me what I did wrong, and he said I asked for too much money. They ended up hiring a kid with SA IBD over me just because I was too expensive.

Basically, I'm wondering if there is any way I could have handled this better. I'm not really bummed about the job, it's more like when you want to dump a girl but she dumps you first kind of thing. Also, if you accept a pay cut once, does that mean that they probably won't ever pay you? I think yes. I don't feel like my negotiation class in college stuck with me too well.

 

Very interesting. Two points.

  1. What is the best way to sidestep the "how much are you on now" question?. My last role was in a region that was significantly underpaid compared to where I was going and recruiters used this to hose me....ended up in a good role which I really enjoy but it is definitely underpaid! My worry is when I go to move on my low salary now will hurt me again. When people ask what I am on I cannot lie (could come up in a reference check) so what is the best way to avoid?

  2. Once in a job, how soon is too soon to negotiate. I started a job last September and like I said was def a poor package but it was a good opportunity. I have been told there are pay reviews every June. Is this too soon? I have a strong case that I am underpaid and the thought of going another year on wages below my peers when it is supposedly a more important role really gets to me.

 
Zatopek:

Very interesting. Two points.

1. What is the best way to sidestep the "how much are you on now" question?. My last role was in a region that was significantly underpaid compared to where I was going and recruiters used this to hose me....ended up in a good role which I really enjoy but it is definitely underpaid! My worry is when I go to move on my low salary now will hurt me again. When people ask what I am on I cannot lie (could come up in a reference check) so what is the best way to avoid?

One easy way is to say what you expect to earn this year. Instead of saying, "I made $68,000 last year. You can say, "I expect to earn slightly over $100,000 this year.". This tends to help those early in their careers, since it is natural that they make more money year after year. You should definitely exaggerate, but don't say something ridiculous. It's impossible to prove wrong a number you 'expect' to make. A fair number of people (especially HR) won't drill down on the number you provide and it will become Bible to the real people because they work through HR/headhunters and won't realize they had lax due diligence on your numbers, especially at less than VP levels.

Another example: let's say you had a $65,000 base salary in 2013 and got a $20,000 bonus in January/February of 2014 as well as a $20,000 increase in base salary. You actually made $85,000 in pay in 2013, including your bonus. Instead of saying that you made $85,000, you just say that your base pay is $85,000 and a bonus of $20,000 (implies $105,000 total comp without saying it). There's a 23.5% increase in stated pay without saying anything factually incorrect.

In other words, there are lots of ways of doing this. If you're just ridiculously lowly paid....it's tougher, but just start talking about market wages and the like. Most importantly, get multiple offers and play them against one another....do NOT be afraid to use your leverage.

Zatopek:

2. Once in a job, how soon is too soon to negotiate. I started a job last September and like I said was def a poor package but it was a good opportunity. I have been told there are pay reviews every June. Is this too soon? I have a strong case that I am underpaid and the thought of going another year on wages below my peers when it is supposedly a more important role really gets to me.

You can renegotiate when you have another offer or ask for a raise after one year, would be the general guidelines. Unless you have tangibly proven your worth, then ask whenever you feel like doing so.
 

Important Tip:

If you are an incoming analyst or associate (summer or otherwise) at a BB IBD shop, do not negotiate your offer. The offer is the offer and it's the same offer everyone else gets. If you think you should get more money or better terms than the other incoming newbies, you are just going to make yourself look like a douche before you even hit the desk.

 
FormerHornetDriver:

Important Tip:

If you are an incoming analyst or associate (summer or otherwise) at a BB IBD shop, do not negotiate your offer. The offer is the offer and it's the same offer everyone else gets. If you think you should get more money or better terms than the other incoming newbies, you are just going to make yourself look like a douche before you even hit the desk.

100% agree. It's pointless at best and counterproductive in most scenarios.
 
bulge4lyf:
I was able to negotiate my salary to a significant increase (15%+) with a top MM who usually have set salaries. If you're a strong candidate, throwing an extra $10k your way is well worth it.

Care to elaborate a bit? Especially in regards to strategies, resources, etc. I'm in a similar position

http://ayainsight.co/ Curating the best advice and making it actionable.
 

While mehp is right in theory...you can certainly put yourself in a good position to negotiate upwards when you suck it up, be a man, go in there and "fake it until you make it"

Obviously don't come out and lie to them...but it doesn't hurt to maybe subtley hint that they might want to give you a little extra or else they may the run the risk of losing you to a competitor

And please, when you do it, be very respectful, very positive about how you want to work for them, and very careful with how you word things

 

Yeah thinking long-term is how I've been trying to justify it to myself. I think i"m going to stick to the BB.

It is a bit frustrating when you get shown the money; I thought the BB offer was pretty nice, but the MM offer made it look mediocre.

 

MM in Canada paying more than a BB?? That's impressive... considering BB firms in Toronto usually pay pretty high since Analyst classes are smaller. Would love to get an idea of who is paying this type of money in Toronto... is it one of the american elites? Greenhill/Evercore/Jefferies? That is a tough choice in my opinion since BBs dont have a huge presence and alot of them dont even do the execution here...

"If you survive to my age and you rack up a CV like mine, you can look at HR and say, "Fuck you. I don't try out."- Eddie
 

Doubt you can re-negotiate, but you can always renege on the BB and go to the MM. You have the offer - no worries. Don't let this board scare you from doing what is best for you. Bankers move around a lot, and money has a short term memory.

"They are all former investment bankers that were laid off in the economic collapse that Nancy Pelosi caused. They have no marketable skills, but by God they work hard."
 

Really it depends on the offers. Don't think too hard about money now. Finance is like a poker tournament - all the money is at the final table, the trick is getting there.

You can't really negotiate with BBs as an analyst (or even really as a first year associate for that matter, unless you're a lateral hire that someone really wants and your group has some political capital.) You're in like a "program" that's overseen by HR and the banks are giant corporations... it's just too corporate for anyone to bother bending the rules. If it were reversed, maybe you could negotiate with the MM, which probably has more flexibility, but an analyst can't really negotiate with a BB.

Anyways - what are the offers? Not all offers are created equal. Is one more in line with what you want to do? How well known is the MM? Did you click better with the people at one? Elaborate a bit. Don't consider the money, You'll be compensated well enough either way. Your real compensation is going to be the mentorship though. Where do you think you will have a better mentor?

Talk about the offers a bit and maybe this can turn into a valuable discussion.

 

Hey guys,

Well I ended up picking the BB offer. I want brand names on my résumé for now. The MM is a Canadian Big 5 (TD, RBC, BMO).

The offers were in the structured products group for the BB and FX trading at the MM for a summer position.

I know I picked the BB for now but I don't think I'd do that if it were full time recruiting.

 

Why is this even a surprise? Many boutiques have been out-paying BBs for a while now. Also, you are joking yourself if you think you can renegotiate an offer at a bulge bracket firm in their analyst class? Who exactly are you that you are worth more money than the other 150 kids in your class that they hired to do the exact same job? You think to highly of yourself. Either take the MM offer or don't, but renegotiating an offer to become an analyst with a BB that you have already accepted is a total joke.

 

Well I hope the MM wasn't RBC because if it was then you made a weak choice. RBC is becoming a powerhouse and even though its technically not a BB, five years from now it will easily replace some of the current BBs.

Array
 
TeddyTheBear:
Well I hope the MM wasn't RBC because if it was then you made a weak choice. RBC is becoming a powerhouse and even though its technically not a BB, five years from now it will easily replace some of the current BBs.

And that status 5 years from now helps a kid who will very likely be at either another bank, pe shop, or hedge fund, or out of the financial services industry altogether within 2-3 years, because?

Not going to RBC and instead choosing to go to any bulge bracket other than UBS is not a weak choice at all. You can't make decisions based on what might be 5 years from now...

 

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