Commencement season is here, which means many college grads are feeling the thrill of accepting their first job offers.
Research has shown that around half of workers take the first offer they receive, without considering the possibility of asking for a higher salary. But a young employee has a lot to gain from negotiating: It can not only mean a higher annual figure, but also better benefits and flexibility. And it can set them up for a more comfortable situation in the long run.
Employers expect candidates to negotiate salary, said Lydia Frank, editorial and marketing director at the salary information site Payscale.
"Employers are giving themselves a bit of room, around 5 to 10 percent," Frank said. "It’s better to let you feel like you’re negotiating, so they build in a buffer. If you don’t, then they get you at a bargain."
Twenty-somethings may be reluctant to broach the topic, fearing they may jeopardize their job offers, but experts agree that the best way for young professionals to approach the negotiating table is to arm themselves with market research. Sites like Glassdoor, Payscale and Salary.com offer insight into the average pay range in a variety of industries.
"If they offer you a number and it’s toward the middle or fairly low in the range, you have knowledge that there’s room," Frank said.
College grads seeking a salary increase should above all present a business case to support their argument. "Don’t focus on you, and what you deserve or want," said Lindsey Pollak, a millennial career expert and author of Getting from College to Career: Your Essential Guide to Succeeding in the Real World.
"Focus on what benefits their company: You’re producing at a higher level, or taking more leadership roles," Pollak added.
Young people should also remember that if an offer has been made, employers are already invested in the candidate.
"It’s a pain in the neck for them to go find another candidate," Frank said. "Usually new grads feel they don’t have any leverage because it’s their first job, but they already want you."
Candidates can also reach out to other alumni and contacts in the company to get a sense of the typical progression for compensation. College career offices often have resources about expected salary ranges as well, since many employers recruit heavily on campuses. And candidates should be aware of whether they hold a valuable degree in a hot profession. "Every company you can think of needs a good software developer," Frank said. For that, "companies are willing to spend a little more."
If new grads miss out on the initial negotiation round, that could translate to a loss of hundreds of thousands of dollars in the long run, once you count in yearly increases and wage inflation. A study published in the Journal of Organizational Behavior found that a $5,000 raise to $55,000 annually would result in an extra $600,000 earned over a 40-year career.
"Your first job can impact the trajectory of pay," Frank said. "And employers do ask about salary history, so if you allow yourself to take a lower job offer, you could be setting up yourself lower."
And more importantly, a discussion about salary indicates that the college grad is invested in his or her longer-term role in the company, rather than possibly moving to another company in order to get that salary increase somewhere else.
"It’s less about what everybody else is paying, and more about where this position can go," Martin said. "Employers will see value in the fact that you’re planning two, three years down the road."
It’s easy to get fixated on the numbers, though, and experts caution against focusing on salary alone. Health benefits, mentorship opportunities, continued education support and other perks are just some of the things to look out for in a compensation package.
"Time off, leave and the benefits of an organization, those all have value," said Tony Martin, who heads talent management and recruitment process outsourcing in the Americas for Hudson, a global recruiting firm. "Not just from a monetary standpoint, but it’s time you’ll have to experience other things in life."
Millennials tend to be interested in flexible hours and vacation time, and that might be something to bring up as well during negotiation. "This generation is so focused on having a life and making sure they don’t get burned out," Pollak said. "Because they grew up with the technology to work on the go, they feel like work-life balance is something everybody should have."
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