State of the art
Companies want the best candidates (they can afford) as cheaply as possible, but it’s hard for them to know what’s possible. No one knows what to pay engineers. There are whispers of engineers getting ridiculous sums of money. Maybe those are outliers, maybe they aren’t you, but companies can’t be sure.
Companies will tell you they’re sure; they’ve got proprietary software, market research, and compensation benchmarking. But companies don’t know – they are guessing. A good portion of a company’s guesswork (on what to pay you) comes from the signals you send throughout the process; the idea is to tighten up everything in your purview. Not all of us are going to make ridiculous sums of money. Most of us won’t. But…
All of us can grow 10% “job-over-job”. If we do that over a 1-3 decade career, now we’re 100s of 1000s in the green. This post will help you take a step in that direction; don’t get fleeced, take what’s yours. Though the 30 heuristics in this post cover every stage, the focus is on the (more complex) later stages of the negotiation process.
The easy way
There’s nothing better for your bargaining power than multiple offers. Interviewing with a large pack of companies gives you more shots on goal. And the easy solution is to have ApplyPass’s human-monitored AI rack up interviews for you. If you’re curious, there’s a 1-week free trial. Now, let’s talk money!
Limitations
If you’re on a short F1-OPT timeline, running out of runway, or need a job quickly, the urgency of your situation severely restricts your ability to negotiate. Godspeed to all of you!
Those not negotiating in a rush will get the most value out of this post.
Meta-Heuristics (throughout the process)
These heuristics are true in all stages of the negotiation process. As opposed to being limited to specific use cases, think of them as general rules of thumb.
Heuristic #1: Balance FOMO and FOLLI
Purposefully and selectively inspire FOMO (fear of missing out) in companies. If they have zero FOMO, it’s because you told them you have no other options or they think you’re desperate, in either case, they will assume you can be gotten for cheap. Too much FOMO means they have no chance, so why try; for example, this can happen if you tell a startup you’re interviewing with Google.
Instilling just enough FOMO gives them a chance but not a guarantee of landing you. This inspires them to act (and change your compensation package) because businesses don’t do what they want, they do what they must. If they’ve already got you, they don’t have to change the offer. The same is true if they have no chance. The sweet spot is to be winnable but not an easy win.
Picture from StudySmarter
In the same way, thoughtfully control their level of FOLLI (fear of looking like an idiot). Everybody has someone they are accountable to, and the cost of disappointment can be their livelihood. A hiring manager cannot do anything extraordinary with a high level of FOLLI; going above the band, making an exception, or doing anything outside of the normal process (granting an additional interview, changing your level, etc.) is impossible if they think their boss will call them an idiot.
If there’s zero FOLLI that means the other side can take advantage of you. If there’s too much, they won’t do what you want because of the potential blowback on them. But asking them to take a reasonable risk, which they can justify because of the benefits to them… that’s the ticket.
Heuristic #2: “Before a company can increase their valuation of me, I have to improve their opinion of me.”
This line is from one of the best negotiators I’ve worked with. If you want an above-market offer, every single touch point is an opportunity to impress. It’s a long view (the negotiation starts when you get introduced) and also a short view (each moment is important).
Heuristic #3: Six minutes decide the outcome
Harvard’s Program on Negotiation says most negotiations are determined in the first and last 180 seconds. In the first “180”, the key point for candidates is to remain non-committal on price: do not name a price or agree (implicitly or explicitly) to their price. When you give your final counteroffer in the last 180, lower FOLLI (Harvard calls it “reduce regret”) by writing their victory speech for them. Meaning, describe a vision of the future they’ll like. Such as “You can tell Prama, we now have the expertise to ship that new product before the end of the year.”
Heuristic #4: Having multiple offers > *
I have never seen someone with only 1 offer get a huge bump; the hugest bumps I’ve seen (with competing offers) are around 2-3X the original offer, and I consider huge bumps to be anything over ~75k. To get a huge bump, you have to be very good (in the interview and, usually, on paper) and you have to have multiple offers. If you’re looking to get a ~5-10% increase from the original offer, you can do that with 1 offer like clockwork. But if you’re counting on significantly more, consider managing your expectations (unless it’s an extremely unique case).
Heuristic #5: Turning an offer down can be revolutionary
Saying “no”, especially to an offer, is a milestone in every engineers’ career. I’d bet most have done it, but for the other folks it’s worth asking “Do I go along with whatever the company says?” Turning down an offer gives you agency. It makes you a better negotiator. Good negotiators are not tied to an outcome. And if you say “yes” every time no matter what, you are tied to an outcome.
Assuming you’ve done several job searches, if you’ve never turned down an offer you’ve probably taken an offer that was below your worth. Consider the engineer who got three different offers, and the salary gap between the lowest and highest was more than 30%! So, if you get an offer that doesn’t cut it, and you negotiate and it still doesn’t cut it, say goodbye! For engineers, jobs are like buses, if you miss one just wait fifteen minutes and another will come.
Image from The Chronicle of Higher Education.
Heuristic #6: Companies can pay you whatever they want
In certain situations, companies pay double or triple what they offered initially. But those same companies started by saying they have pay bands, maxes they can’t go over. How does that compute? The reality is that companies want as much talent for as little money as the market will allow. They have a budget, yes, as well as a ridiculous war chest which they won’t proactively tell you about because it’s bad for business.
Companies feign that the warchest doesn’t exist so you settle for less. Every inch given by a company, smartly, will be framed to candidates as skin off of the company’s back. A real burden, they “fought” hard for you to get a part. That is smart because, if you get a bump, and it came easy, you’d wonder if you could’ve gotten more. But if they “fought” hard, you’d feel you got a better deal.
Early-stage (pre-offer) heuristics
Anecdotally, candidates can lose ~20-30% of their total compensation when early conversations are botched. This isn’t due to a lack of skill. It’s because of an uncomfortability with deflecting questions that are designed to take your leverage.
Heuristic #7: Withhold information until it’s time to bargain
A recruiter’s job is to gather information and get commitments, the more the better, and the earlier the better. Sharing details about money and interviews (what companies and what round) before you’ve received an offer can only hurt you. After the point of an offer, you can share that information as bargaining chips. But before that point, you want to remain opaque. Early stages are not the time to divulge.
You know how on Law and Order SVU, they say “Anything you say can and will be used against you”? That’s not just true “in a court of law” it’s also true for “when talking to recruiters.”
Thanks, NY Post!
Money
In my experience, roughly 80% of recruiters won’t push for compensation expectations more than 3 times, so three good pre-programmed responses are all you need much of the time. No matter how aggressive they are, remember, recruiters do not reject good candidates for not naming a price.
Regardless of how they ask (there are many ways they can ask), answer with the preprogrammed responses. The most common questions are “What are your compensation expectations?” or “Did you have a range in mind?” “Yes or no” questions are the trickiest; “Did you see the range on the job description?” An aggressive recruiter might say they “need a number to move forward.” Do not answer any of their questions or statements directly. Wait for your turn to speak, and then use the pre-programmed responses.
First Response
“I’m glad you asked! Compensation isn’t my top priority. My concern is finding the right fit. For me, that’s about learning and growth.”
Second response
“Evil Corp has way more data than I do about competitive pay for engineers like me. I trust Evil Corp will make a competitive offer.”
Third response
“I’m interested in Evil Corp. I promise if you make me your best offer, I’ll give it my best consideration.”
Tip: If it helps, act as if you’re Steve Wozniak; this archetypal character cares about programming above all else, he deflected business things and trusted someone else to take care of them. And if you’re wondering, no, that narrative will not make the other side lowball you; it increases their opinion of you because it’s refreshing and associated with engineers who love what they do (and those folks are usually talented).
Thanks for the pic, Business Insider.
If they ask about compensation in an online form
If the form allows text to be written, then enter “Compensation isn’t my top priority. My concern is finding the right fit. For me, that’s about learning and growth.” If it only allows numbers, enter “1.” Personally, any company with this question in their application gets a red flag. You never see Google, Facebook, or cutting-edge startups ask this in their applications.
Interviews
Withholding information about other interviews is easier because recruiters push less. However, it’s as important to get right! If you tell them the companies or stages you are at, and it’s mismatched with their position, you can lose money or the opportunity or time.
If you tell them you have an onsite with Google next week, and they’re at an offer stage… you can lose time and money when they give you an exploding offer which they might do so Google won’t finish in time. They can even choose to fail you on a recruiter screen if you’re too far along in the process with another company or if your priorities seem mismatched.
As with the questions about money, these can be asked in different ways. As straightforward as “Where else are you interviewing” or as nuanced as “How’s your job search?” Give the pre-programmed responses regardless of the question asked.
First Response
“I’m talking to a mix of companies right now, and they’re at a variety of stages.”
Second Response
“Nothing is finalized yet. And I promise I won’t make any big decisions without chatting with you first.”
Remember, what you say can and will be used against you! So, don’t tell ‘em any details about money or interviews until after you get an offer.
Offer heuristics (for the moment you receive an offer)
The strategy for how to receive an offer is often platitudes like “express enthusiasm” which misses the point: this moment isn’t purely for receiving, you can also go on the offensive or gain leverage. Avoid common mistakes here based on assumptions or lack of information.
Heuristic #8: The easiest negotiation is the one they do against themselves
If they don’t know what you want (because you haven’t given a price) and they make an offer and then they increase it, who are they negotiating against? Exactly. This heuristic is for savvy negotiators only, this one ain’t for beginners. When they present you with the initial offer say “This is lower than I was expecting, but in the ballpark of a good starting point.” I have seen offers increase by 30k from this technique alone. Best case, they up the offer, worst case, even if they don’t up it immediately, your bargaining power is increased for later.
Heuristic #9: A company’s opinion is as valid as yours
If you get an offer from a startup for a position they’ve never hired for before, you could assume the numbers and title they gave you are a fact. “This is what Lead Engineers get paid”, or worse “This is my value.” Negotiating that way is using their starting point as authoritative. The truth they won’t say is that companies are making their best guess. That means, if they give you a title or a package that’s far away from what you were expecting, you can begin to educate them on your best guesses. This way, there is no authority, both sides’ opinions are equally valid, and the conversation begins with “That’s how you see it, this is how I see it, let’s figure it out together.”
Heuristic #10: First figure out the role, then figure out the money, and finally figure out the start date
This is the order of operations, which begins when they give you an initial offer. Since comp is dependent on the role, the first order of business is determining the role. Oftentimes engineers who’ve been misleveled try to get more money first, and that’s confusing for all sides. Likewise, if you want to start working 3 months after signing, figure that out after the comp is nailed down. If a company tries to go out of order, politely redirect them back to this order. “Correct me if I’m wrong but, I’m thinking the order of operations is…”
The heuristics for all stages (except bargaining) have been covered. Hopefully you learned something.
That’s the end of Part 1! Click here for Part 2
