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How to negotiate a job offer: A guide for job seekers and employers

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So you applied for the job, went through the interview process and now have been offered the position. Is there anything more you need to do before simply signing your contract and picking out your First Day of Work outfit?

Actually, there is.

While many people may believe that a job offer works like buying oranges at the store — they set the price and you agree to pay it — in reality, it’s much more like buying apples at a farmers’ market where they set the price and you have room to negotiate.

We thought it would be useful to look at exactly what’s involved with negotiating a job contract when an offer is on the table.

Why negotiate?

The nonprofit sector is in the midst of large demographic shifts, and consequently what David Hutchinson, CEO of the Hutchinson Group, calls “the biggest leadership transition in modern philanthropy.” While the question of supply versus demand varies regionally as well as among roles within the sector, organizations are increasingly struggling to find qualified, experienced candidates, especially for many senior leadership roles. This is further aggravated by the fact that many younger potential employees are willing to find work in social enterprise or in corporate social responsibility in the private sector rather than in nonprofits. All of this adds up to more negotiating power for qualified candidates especially those in strategically valuable positions.

But it goes beyond power issues. Figuring out the terms of employment is a kind of dance, says Denise Lloyd, chief engagement officer of Engaged HR. “It is a collaborative process. As a job candidate, you need to know what is most important to you and let the employer know what you need to make the job work. Supply and demand don’t necessarily play a role if an offer is $20K less than what you can live on.” Chantal Rackley, career advisor/facilitator at WorkBC Employment Services Centre – North Shore agrees. “We want to target nonprofits that meet our values, but the fact of the matter is that we also have bills to pay and need to be able to afford to live.”

Why people don't negotiate

There are a wide variety of reasons why people are reluctant to negotiate a job contract. Particular to the nonprofit sector is a possible orientation toward cause rather than career, says Hutchinson, but there are other factors.

“One of the biggest myths about negotiating is that if you try to negotiate an employer will change their mind and choose someone else,” observes Mikyala Clayton, director of human resources, Fund for Global Human Rights. “Once an employer makes an offer to one candidate, it is very unlikely that they will change their mind. Negotiating is a natural part of doing business and most employers understand that.”

Another myth, says Rackley, is that most positions are non-negotiable.

For many people, a key factor in their reluctance to negotiate is their gender: studies consistently show that men are far more likely to negotiate jobs than women. Lloyd says, “It is certainly not true of all women but if there’s ever a candidate who is likely to soft-sell themselves in negotiation, put forward hopes rather than expectations, and to say they will accept lower compensation until they have proven themselves, it is a woman.”

Some of this can be a question of self-esteem, says Rackley. “Those who have been out of the labour market for a while may undervalue themselves and are just happy to be given a job offer. They may think that negotiating will make them look ungrateful.” She adds that partnering with organizations that empower women, such as the YWCA or women’s networking groups, can help such job candidates to practice assertive communication and other negotiating skills.

At the same time, women’s instincts around negotiating also have basis in fact: studies have shown that there is a “social cost” to negotiation, especially for women. Hannah Riley Bowles, who teaches executive programs for women at the Program on Negotiation at Harvard Law School and Harvard’s Kennedy School, suggests women can use an “I-we” strategy to “explain to your negotiating counterpart why — in their eyes — it’s legitimate for you to be negotiating.”

How to negotiate

1. Nancy Ingram, president of Foot in the Door Consulting, says, “Go into negotiation with curiosity and to build a conversation. Ask for reasons behind a no — the answer might not be something you would expect. Understand where the points of leverage or flexibility are. Maybe they can’t do one thing, but can do another as part of the negotiation.”

2. “Candidates need to find a good balance between sticking to their own worth but also letting the employer know that they really do want the job, that they aren’t just in it to get as much money as they can,” says Lloyd. “Negotiating in good faith with this attitude helps the employer have confidence that they are making the right choice in hiring you.”

3. Lloyd also suggests to work creatively and collaboratively. “Have an approach of how can we make this work, rather than one that says, this is what I need or I walk.” Don’t make ultimatums, says Ingram. “Understand where the employer is coming from. You can tell the employer, ‘I thought this might be priced here, it is a bit low. Once past probation, would you be open to letting me try?”

4. Demonstrate that you meet or exceed qualifications for position, says Rackley. Back this up with tangible examples that support you in that negotiation position.

5. Don’t underestimate the importance of likability, writes Deepak Malhotra, professor of business administration at Harvard Business School. “This is about more than being polite; it’s about managing some inevitable tensions in negotiation, such as asking for what you deserve without seeming greedy, pointing out deficiencies in the offer without seeming petty, and being persistent without being a nuisance.”

6. “Don’t cut an interview short — even if an employer discloses a salary that is too low — unless the employer is unrealistically unfair,” advises Rackley. “There may be things beyond numerical value that can be negotiated, especially if you build a rapport with the interviewer.”

7. Pay attention to your gut, counsels Ingram. “Even in the interview and negotiating process, you learn about the culture of the organization. If there is rigidity and lack of willingness to have a conversation, this tells you there is more going on.”

8. “When negotiations hang up on one issue when everything else is acceptable, it’s normally because of ego and emotion. If you sense this is the case, try to find another place to make up for it or just let it go!” says Thomas J. Friel, retired chairman & CEO of executive search firm Heidrick & Struggles.

9. Ask the employer to clarify anything you don’t understand and get those explanations in writing,” says Clayton.

10. “Sometimes candidates need to walk away – they will regret taking a job if they weren’t happy going in. Be very careful – there are lots of great causes, but at the end of the day, you’re still a professIonal with expectations. If you are the wrong person, walk away,” says Hutchinson. “It’s unwise to negotiate just for the sake of negotiating,” Clayton says. “Consider whether it’s really worth it to extend negotiating for an extra $100 over a year’s time.”

11. Rely on mentors to help consider a contract, says Rackley. Lloyd says, “Reach out to colleagues and people in the industry or HR people with any questions.”

When to negotiate

Much of the ground for negotiating is laid before an offer is made. Clayton advises job candidates at all levels to be aware of their salary and other requirements at the start of the hiring process, while Rackley encourages job seekers to do research about the organization and its place within the sector and region, saying, “Know the average pay scale within the area and industry for the skills you are offering.” Job postings and information meetings can be a good source for such numbers, as can CharityVillage’s 2017 Canadian Nonprofit Sector Salary & Benefits Report.

However, Rackley strongly cautions job seekers not to start negotiating prematurely: “Don’t mistake a question about your salary expectations in an interview as a signal to start negotiating.” This question instead simply makes sure the candidate and the organization are in the same range.

Negotiating actually begins when a job offer has been made. Rackley says, “People need to know that your negotiating power is greatest at the time of a job offer — not before or even once you are in the role.”

What to negotiate

When we think about negotiating a job contract, we most commonly think about negotiating salary. This is definitely part of the equation, although Lloyd reminds job seeker, “If nonprofits don’t have funding, they don’t have funding. Often there is only so much room to negotiate in this sector.” Many organizations offer a salary range: Ingram says that a candidate offered a contract at level 2 can initiate a conversation if they think they should be a level 4.

Negotiating goes beyond salary, however. Hutchinson suggests, “If a candidate is giving up an opportunity for a higher salary to work for an organization, the organization has to recognize they have to give something in return.” Nonprofit organizations that want to attract excellent candidates can provide other valuable kinds of compensation. Candidates can propose a wide variety of non-salary compensation, including professional development, flex time, mentorship, benefits, a compressed work week, relocation expenses, job title, negotiating responsibilities up or down, lieu time, telecommuting, start time, international travel, etc. Clayton reminds job seekers to keep these kinds of compensation in mind when deciding between organizations: “Just because one position offers a higher salary, doesn’t always mean that you’re getting more overall.”

Tips for employers

In any negotiation, we want to get the most value for the least money, but this can sometimes lead nonprofits to take a short-sighted view of negotiating job contracts with prospective employees. “This is a retention issue,” says Hutchinson. “If you see don’t see the potential value of the employee you are trying to attract and only look at overhead, that equation won’t get you the right people.”

Rackley advises organizations to give as close as possible to market rates. This is particularly important in markets such as Toronto and Vancouver where cost of living is particularly high. Hutchinson says, “If you’re choosing to run your charity in Toronto, you have to be mindful that people have to be able to live in Toronto to do their job.”

Clayton cautions against using prior salary history or lowering a salary range because a candidate requested less. “These practices have been proven to perpetuate pay disparity for equal work.”

Rackley reminds employers that things are changing. “People are coming to the sector with higher levels of education (and possibly student loans they need to repay). They are less likely to stay with an organization through long-term salary increases, so they want to negotiate earlier in the process than previous generations might have.” While this approach to negotiation can feel foreign and even off-putting to some older managers and boards, Ingram offers this reminder: “You actually want your employees to have the skill of skillfully handling sensitive conversations.”

Ingram also advises organizations that the negotiating process can run more smoothly, saving time and money, if they publish their salary ranges in their job ads.

Finally, Lloyd says, “The hardest thing for employers happens when they fall in love with a particular candidate and capitulate to requests on the part of the candidate to make sure they secure that candidate.” She advises, “Don’t get caught up in trying to make things work at any cost —that can backfire. Keep in mind you have equity in your organization you want to maintain: don’t say yes to something you’ve said no to internally, don’t pay a new candidate more than the existing team.”

“Negotiating a job contract is an art as much as a science,” says Rackley. She adds, “In the nonprofit world, it is important to feel fulfilled in our role. A big part of this comes from feeling that we ourselves are valued, and sometimes comes down to a bit of cold hard cash.”

Susan Fish is a writer/editor at Storywell, a company that helps individuals and organizations tell their story well. She has written for the nonprofit sector for almost two decades and loves a good story.

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