Job negotiation for programmers - the basic principles

src: Job negotiation for programmers: the basic principles

Abstract

1. negotiate early (during the recruitment process)
2. do your research (on the market)
3. have a BATNA and suggest a win-win proposal
4. use some tactics, e.g. ask for more

You need to negotiate at a new job: for your salary, or benefits, or my personal favorite, a shorter workweek. You’re not sure what to do, or how to approach it, or what to say when the company says “how much do you want?” or “here’s our offer—what do you say?”

Here’s the thing: that final conversation about salary might be the most nerve-wracking part, but the negotiation process starts much much earlier. Which means you can enter that final conversation having positioned yourself for success—and feeling less stressed about it too.

The way you can do that is following certain basic principles, which I’ll be covering in this article. I’m going to be focusing on salary negotiation as an example, but the same principles will apply when negotiating for a shorter workweek.

In particular, I’ll be talking about:

1. An example from early in my career when I negotiated very very badly.
2. The right way to negotiate, based on four principles:
   1. Employment is a negotiated relationship.
   2. Knowledge is power.
   3. Negotiate from a position of strength.
   4. Use the right tactics.

The wrong way to negotiate

Before moving on to the principles of negotiation, let me share a story of how I negotiated badly.

During my first real job search I interviewed at a company in New York City that was building a financial trading platform. They were pretty excited about some specific technologies I’d learned while working on Twisted, an open source networking framework. They offered me a job, I accepted, and my job search was over.

But then they sent me their intellectual property agreement, and I actually read legal documents; you should read them too. The agreement would have given the company ownership over any open source work I did, including work on Twisted. I wanted to ensure I could keep doing open source development, especially given that was their reason for hiring me in the first place. I asked for an exemption covering Twisted, they wouldn’t agree, and so we went back and forth trying to reach an agreement.

Eventually they came back with a new offer: in return for not working on Twisted I’d get a 20% salary increase over their initial offer. I thought about it briefly, then said no and walked away from the job. Since I had neither a CS degree—I’d dropped out—nor much of an employment history, open source contribution was important to my career. It was how I’d gotten contracting work, and it was the reason they’d offered me this job. And I enjoyed doing it, too, so I wasn’t willing to give it up.

I posted about this experience online, and an employee of ITA Software, which was based in the Boston area, suggested they were happy to support contributions to open source projects. It seemed worth a try, so I applied for the position. And when eventually I got a job offer from ITA and they asked me for my salary requirements, I asked for the second offer I’d gotten, the one that was 20% higher than my original offer. They accepted, and I’ve lived in the Boston area ever since.

As we go through the principles below, I’ll come back to this story and point out how they were (mis)applied in my two negotiations.

The four principles of negotiation

You can think of the negotiation process as building on four principles:

1. Employment is a negotiated relationship.
2. Knowledge is power.
3. Negotiate from a position of strength.
4. Use the right tactics.

Let’s go through them one by one.

Principle #1: Employment is a negotiated relationship

If you’re an employee, your employment relationship was negotiated. When you got a job offer and accepted it, that was a negotiation, even if you didn’t push back at all. Your choice isn’t between negotiating and not negotiating: it’s between negotiating badly, or negotiating well.

Negotiate actively

If you don’t actively try to negotiate, if you don’t ask for what you want, if you don’t ask for what you’re worth—you’re unlikely to get it. Salaries, for example, are a place where your interests and your employer’s are very much at odds. All things being equal, if you’re doing the exact same work and have the same likelihood of leaving, would your employer prefer to pay you less or more? Most employers will pay you less if they can, and I almost had to learn that the hard way.

Applying the principle: In my story above, I never proactively negotiated. Instead, I accepted a job offer from the financial company without any sort of additional demands. If they were happy to offer me a 20% raise just to quit open source, I probably could have gotten an even higher salary if I’d just asked in the first place.

Negotiation starts early, and never ends

Not only do you need to negotiate actively, you also need to realize that negotiation starts much earlier than you think, and ends only when you leave to a different job:

• The minute you start thinking about applying to a company, you’ve started the negotiation process; as you’ll see, you’ll want to do research before you even talk to them.
• Your interview is part of your negotiation, and you can in fact negotiate the interview process itself (e.g. suggest sharing a code sample instead of doing a whiteboard puzzle).
• As an employee you will continue to negotiate: if you always say “yes” when your boss asks you to work long hours, your contract for a 3-day weekend will mean nothing.

In short, your whole relationship as an employee is based on negotiation.

Distinguish between friend and foe

A negotiation involves two sides: yours, and the company’s. When you’re negotiating it’s important to remember that anyone who works for the company is on the company’s side. Not yours.

I once had to negotiate the intellectual property agreement at a new job. My new employer was based in the UK, and it had a US subsidiary organized by a specialist company. These subsidiary specialists had provided the contract I was signing.

When I explained the changes I wanted to make, the manager at the subsidiary specialist told me that my complaint had no merit, because the contract had been written by the “best lawyers in Silicon Valley.” But the contract had been written by lawyers working for the company, not for me. If his claim had been true (spoiler: they were not in fact the best lawyers in Silicon Valley), that would have just made my argument stronger. The better the company’s lawyers, the more carefully I ought to have read the contract, and the more I ought to have pushed back.

The contracts the company wants you to sign? They were written by lawyers working for the company.

Human Resources works for the company, as does the in-house recruiter. However friendly they may seem, they are not working for you. And third-party recruiters are paid by the company, not you. It’s true that sometimes their commission is tied to your salary, which means they would rather you get paid more. But since they get paid only once per candidate, volume is more important than individual transactions: it’s in their best interest to get you hired as quickly as possible so they can move on to placing the next candidate.

Since all these people aren’t working for you, during a negotiation they’re working against you.

The only potential exception to this rule are friends who also work for the company, and aren’t directly involved in the negotiation process: even if they are constrained in some ways, they’re probably still on your side. They can serve as a backchannel for feedback and other information that the company can’t or won’t share.

Principle #2: Knowledge is power

The more you know about the situation, the better you’ll do as a negotiator. More knowledge gives more power: to you, but also to the company.

Know what you want

The first thing you need to do when negotiating is understand what you want.

• What is your ideal outcome?
• What can you compromise on, and what can’t you compromise on?
• What is the worst outcome you’re willing to accept?

Do your research

You also want to understand where the other side is coming from:

• What is the company’s goal, and the negotiator’s goal? For example, if you discover their goal is minimizing hassle, you might be able to get what you want by making the process a little smoother.
• What resources are available to them? An unfunded startup has different resources than a large company, for example.
• Has the company done something similar in the past, or will your request be unprecedented? For example, what hours do other employees in similar positions work? How much are other employees paid?
• What do other companies in the area or industry provide?
• How is this particular business segment doing: are they losing money, or doing great?

The more you understand going in, the better you’ll do, and that means doing your research before negotiation starts.

Applying the principle: In my story above I never did any research about salaries, either in NY or in Boston. As a result, I had no idea I was being offered a salary far below market rates.

As a comparison, here’s a real example of how research can help your negotiation, from an engineer named Adam:

Adam: “Being informed on salaries really helped my negotiating position. When my latest employer made me an offer I asked them why it was lower than their average salary on Glassdoor.com. The real reason was likely ‘we offer as little as possible to get you on board.’ They couldn’t come up with a convincing reason and so the salary was boosted 10%.”

Glassdoor is a site that allows employees to anonymously share salaries and job reviews. Five minutes of research got Adam a 10% raise: not bad at all!

Listen and empathize

If you only had to make yourself happy this wouldn’t be a negotiation: you need to understand the other side’s needs and wants, what they’re worrying about, what they’re feeling. That means you need to listen, not just talk: if you do, you will often gather useful information that can help you make yourself more valuable, or address a particular worry. And you need to feel empathy towards the person you’re talking to: you don’t need to agree or subordinate yourself to their goals, but you do need to understand how they’re feeling.

Share information carefully

Sharing information at the wrong time during a negotiation can significantly weaken your position. For example, sharing your previous salary will often anchor what the company is willing to offer you:

Adam: “I graduated from university and started working at the end of 2012. At my first job I worked for way under my market rate. I knew this and was OK with it because they were a good company.

Then I switched jobs in 2013. What I hadn’t accounted for was that my salary at my first job was going to limit my future salary prospects. I had to fight hard for raises at my next job before I was in line with people straight out of school, because they didn’t want to double my salary at my previous company.”

In general, when interviewing for a job you shouldn’t share your previous salary, or your specific salary demands—except of course when it is helpful to do so. For example, let’s say you’re moving from Google to a tiny bootstrapped startup, and you know you won’t be able to get the same level of salary. Sharing your current salary can help push your offer higher, or used as leverage to get shorter hours: “I know you can’t offer me my previous salary of $$$, but here’s something you could do—”. Just make sure not to share it too early, or they might decide you’d never accept any offer at all and stop the interview process too early.

Most of the time, however, you shouldn’t share either your previous salary or specific salary requirements. If the company insists on getting your previous salary, you can:

• If you work somewhere with relevant laws (e.g. California and Massachusetts), point out that this question is illegal. Asking about salary expectations is not illegal in these jurisdictions, so be careful about the distinction.
• Ask for the company’s salary range for the position, as well as the next level up in the salary tree. Chances are they will refuse to share, in which case you can correspondingly refuse to share your information.
• Say something like “I expect to be paid industry-standard pay for my experience.”

Applying the principle: I shouldn’t have told ITA Software my salary requirement. Instead, I should have gotten them to make the first offer, which would have given me more information about what they were willing to pay.

Principle #3: Negotiate from a position of strength

The stronger your negotiation position, the more likely you are to get what you want. And this is especially important when you’re asking for something abnormal, like a 3-day weekend.

Have a good fallback (BATNA)

If negotiation fails, what will you do? Whatever it is, that is your fallback, sometimes known as the “Best Alternative to a Negotiated Agreement” (BATNA). The better your fallback, the better your alternative, the stronger your negotiating position is. Always figure out your fallback in advance, before you start negotiating.

For example, imagine you’re applying for a new job:

• If you’re unemployed and have an empty bank account, your fallback might be moving in with your parents. This does not give you a strong negotiating position.
• If you’re employed, and more or less content with your current job, your fallback is staying where you are. That makes your position much stronger.

If you have a strong fallback, you can choose to walk away at any time, and this will make asking for more much easier.

Provide and demonstrate value

The more an organization wants you as an employee, the more they’ll be willing to offer you. The people you’re negotiating with don’t necessarily know your value: you need to make sure they understand why you’re worth what you’re asking.

For example, when you’re interviewing for a job, you need to use at least part of the interview to explain your value to your prospective employer: your accomplishments and skills. Once you’ve established the value of your skills, asking for more—more money, unusual terms—can actually make you seem more valuable. And having another job offer—or an existing job—can also help, by showing you are in demand.

Finally, remember that your goal is to make sure the other side’s needs are met—not at your own expense, but if they don’t think hiring you is worth it, you aren’t going to get anything. Here’s how Alex, another programmer I talked to, explains how he learned this:

Alex: “Think about the other person and how they’re going to react, how you can try to manage that proactively. You need to treat your negotiating partner as a person, not a program.

Initially I had been approaching it adversarially, ‘I need to extract value from you, I have to wrestle you for it’ but it’s more productive to negotiate with an attitude of ‘we both need to get our needs met.’ The person you’re talking to is looking to hire someone productive who can create value, so figure out how can you couch what you want in a way that proactively addresses the other person’s concerns.”

Principle #4: Use the right tactics

Once you’ve realized you’re negotiating, have done your research, and are negotiating from a position of strength, applying the right negotiation tactics will increase your chances of success even more.

Ask for more than you want

Obviously you don’t want to ask for less than what you want. But why not ask for exactly what you want?

First, it might turn out that the company is willing to give you far more than you expected or thought possible.

Second, if you ask for exactly what you want there’s no way for you to compromise without getting less than what you want. By asking for more, you can compromise while still getting what you wanted.

Applying the principle: If I’d wanted a $72,000salary,andresearchsuggestedthatwasafairsalary,Ishouldhaveaskedfor$80,000. If I was lucky the company would have said yes; if they wanted to negotiate me down, I would have no problems agreeing to a lower number so long as it was above $72,000.

Negotiate multiple things at once

Your goal when negotiating is not to “win.” Rather, your goal is to reach an agreement that passes your minimal bar, and gets you as much as is feasible. Feasibility means you also need to take into account what the other side wants as well. If you’ve reached an impasse, and you still think you can make a deal that you like, try to come up with creative ways to work out a solution that they will like.

If you only negotiate one thing at once, every negotiation has a winner and a loser. For example, if all you’re negotiating is salary, either you’re making more money, or the company is saving money: it’s a zero-sum negotiation. This limits your ability to come up with a solution that maximizes value for you while still meeting the other side’s needs.

Applying the principle: In my story above, the financial company wanted intellectual property protection, I wanted to be able to write open source, and we were at an impasse. So they expanded the scope of the negotiation to include my salary, which allowed them to make tradeoffs between the two—more money for me in return for what they wanted. If I’d cared less about working on open source I might have accepted that offer.

Never give an answer immediately

During the actual negotiation you should never decide on the spot, nor are you required to. If you get a job offer you can explain that you need a little time to think about it: say something like “I have to run this by my spouse/significant other/resident expert.” This will give you the time to consider your options in a calmer state of mind, and not just blurt out “yes” at the first semi-decent offer.

Having someone else review the offer is a good idea in general; a friend of mine ran her job offers by her sister, who had an MBA. But it’s also useful to mention that other person as someone who has to sign off on the offer. That gives you the ability to say you’d like to accept an offer, but your spouse/expert thinks you can do better.

Notice that the employer almost always has this benefit already. Unless you’re negotiating with the owner of the business, you’re negotiating with an agent: someone in HR, say. When you make a demand, the HR person might say “I have go to check with the hiring manager”, and when they come back with less than you wanted it’s not their fault, they’re just passing on the bad news. The implication is that the low offer is just the way it is, and there’s nothing they can do about.

Don’t fall for this trick: they often can change the offer.

Beyond negotiating for salary

You can negotiate for a higher salary—or rather, you should negotiate for a higher salary. The Adam I interviewed in this article is now a partner in DangoorMendel, who can help you negotiate a higher salary.

But salary isn’t the only thing you can negotiate for. You can also negotiate for a shorter workweek.

And yes, this is harder, but it’s definitely possible.