After a chaotic year that saw widespread layoffs, furloughs, and closures, the class of 2021 can’t be blamed for feeling less than confident entering the job market. Though they may feel inclined to take the first offer presented to them, research suggests that graduates have nothing to lose by negotiating a better compensation package, and plenty to gain.
According to a recent study conducted by Hired, a job-placement service for tech and sales professionals, negotiation can help increase pay equity, improve the employee experience, reduce turnover, and increase earnings for years to come.
“It sets the trajectory for the growth that you can expect over your career, so knowing your fair value early on can actually help you grow your pay in a fair way throughout your career,” says Hired’s CEO Josh Brenner, adding that equitable pay can also reduce turnover. “Our research found that two-thirds of tech employees are paid less than their counterparts, and when they found out, over 40% of them started to look for new positions.”
Hired’s research also found that greater transparency is slowly chipping away at the pay gap, but there is still plenty more progress to be made. Men were offered higher salaries than women for the same job 59% of the time in 2020—down from 65% in 2019—with total compensation averaging 3% less for women, down from 4% the year prior. Younger employees, however, were more likely to demand—and receive—fair compensation, compared to other generations. “My advice for new grads is that they should always be negotiating for a fair salary,” says Brenner.
Here are five ways new grads can ensure they are paid what they deserve:
1. Always Negotiate
Hockey hall of fame inductee Wayne Gretzky famously said, “You miss 100% of the shots you don’t take.” Entry-level employees might be hesitant to push for a better compensation package, but experts suggest there is very little downside to trying. In fact, negotiating, even when unsuccessful, can make candidates seem more attractive to prospective employers.
“Even though it’s super scary for a lot of people, even senior leaders, it shows that you’re advocating for yourself, and that’s a good quality for a young adult to have,” says Jenny Foss, a job-search strategist and founder of career consultancy JobJenny.com. “This is not about getting more money or more perks for yourself, but showing right out of the gate that you’re somebody with confidence, that you’ll advocate for yourself, and those are great traits.”
2. Know Your Worth
The key to a successful negotiation is a strong understanding of what skills you bring to the table, and what the market has deemed as appropriate compensation for those skills. Fortunately, today’s graduates have far greater access to salary information and employer data than any generation previous. Before sitting down for an interview, it’s important to seek real-world compensation data specific to your industry, region, employer, and skill set.
“Negotiation isn’t going in and saying, ‘I need more money because of my car or my rent.’ They don’t care,” says Foss. “You want to go in having done some research and really thinking about the value you can offer, and why it would command a larger salary, so do research using the tools available today.”
Foss adds that junior employees are often made to feel like they’re interchangeable, and naturally fear that pushing too hard will cause them to be disregarded. She emphasizes that it’s important not to lose sight of the value you offer, even without significant prior experience.
“You’ve just invested four years, five years, six years, eight years of your life learning skills that are going to be directly beneficial to your first employer, and companies don’t hire entry-level people if they don’t feel that people right out of college are of value to them,” she says. “Know that you’re wanted, know that you’re needed, and understand that most reasonable companies expect negotiation.”
3. Use Non-Salary Compensation to Find Middle Ground
There’s a lot more to employment than just salary, so when it comes to negotiation, it’s important for new graduates to take the full compensation package into consideration.
According to Andres Lares, a managing partner of the Shapiro Negotiations Institute and author of the forthcoming book Persuade, limiting negotiations to a single number reduces the opportunity for a mutually beneficial agreement. “When you’re negotiating over one thing, there’s going to be one winner and one loser; it’s very difficult for both to feel good about it, which is the worst-case scenario starting a new job,” he says.
Lares explains that there are a wide variety of factors that could be included in that conversation, from job title to vacation days, remote-work policies, bonuses, healthcare plans, and other perks. That is why it’s important for both parties to be up-front about their priorities.
For example, if the employer’s top priorities are keeping salaries consistent with those of existing employees and maintaining a strict vacation policy, the employee could negotiate for a more flexible work schedule, a home-office stipend, and a more prestigious title.
“You’re pushing for your priorities, they’re pushing for their priorities, and because you’re negotiating over multiple aspects you’re much more likely to not only get more of what you want, but you’re also more likely to both be satisfied,” says Lares.
4. Know When to Broach the Subject
Finding the right time to have the compensation conversation can be a challenge, especially for those with less practice. “If you do it too early, it insinuates that you think it’s already in the bag. If you do it too late, it feels like it’s sprung on,” says Lares.
That is why he recommends delaying the subject if it comes up too early, and returning to it once you have a better understanding of the role. After all, you shouldn’t negotiate compensation before knowing exactly what’s expected of you anyway.
“If you can work five days remotely and don’t need to move from Iowa to New York City, you would expect a different compensation package,” he says. “You can say, ‘Let’s get back to that further down the road,’ which is a good negotiation tactic to use, because depending on a lot of factors, you might change things.”
Lares adds that candidates should aim to return to the subject once it comes down to a few finalists. “You want to push it back until the point where you feel like you have a good chance to get the role,” he says.
5. Let the Employer Make the First Move
When the time is right for that conversation, candidates should insist on letting the employer make the opening offer.
“If you throw out a number right away, and they were planning to pay a higher amount, you’ve just locked yourself into the lower amount,” says Foss. “Likewise, if you throw out a number that’s too high but were willing to accept something a little lower, you might price yourself out of consideration.”
Instead, Foss advises candidates to ask the employer what they typically offer employees in similar roles or with similar levels of experience. In some cases the offer will be in line with their expectations, but if not, it’s incumbent on the candidate to advocate for what they feel they deserve, using research and data to back up their demands.
“Most companies—particularly larger companies, but even some smaller companies—they put out the first offer, no matter if the person has zero years of experience or 30, with the anticipation that the person may come back and want to negotiate,” she says. “Most companies won’t put out their absolute best offer right out of the gate.”