Career Advice
How to negotiate your offer letter
Negotiating an offer letter can be intimidating. Here are some strategies you can use for smart counteroffer negotiations.
You've polished your LinkedIn profile and resume, nailed your interview questions and received an offer for an exciting new position. But when you view the offer letter, the compensation isn’t as high as you expected. Now what?
Negotiating an offer letter can feel intimidating, especially if this is your first time. It’s natural to worry that if you ask for additional compensation, you might risk losing the offer altogether. We call this a “scarcity mindset”– you’re so focused on what could go wrong, you’re paralyzed and can’t take action.
Here’s the good news: if a company is ready to hire you, a reasonable counteroffer would rarely cause them to withdraw their original job offer. You may not get everything you ask for, and in some cases, the company may be unable to budge. However, you’ll never know what’s possible if you don’t ask.
5 strategies for counteroffer negotiations
Below are some strategies for smart counteroffer negotiations:
- Start with your base salary. Many hiring managers and recruiters will check with you during the interview process to confirm your base salary expectations align with the expected salary range for this position. For example, perhaps you’ve been told this position has a range of 125-145K based on experience and interview performance. Does the base salary you’re offered fall in this range? Using this example range, let’s say you the company offers 128K. This number is towards the lower end of the range and it’s okay to come back and ask for 140K or 145K. Asking for 200K, however, wouldn’t be a reasonable counteroffer as it’s significantly outside the expected salary range. If the company holds firm on their salary offer, ask about expected salary increases in the next 12-24 months. If you meet performance expectations, could your salary be bumped to the top of the range after 12 months? Be sure to get any agreements for future salary adjustments in writing.
- Negotiate a signing bonus. If the company won’t budge on base salary, one option to make up the difference is a signing bonus. This approach can be beneficial for both of you: you’ll get additional compensation, and the company could add certain conditions to the bonus, like a separation clause, requiring the bonus to be paid back if you leave within the first 90 or 180 days. Depending on when you’re leaving your current company, you may be walking away from your annual bonus. If that’s the case, this is another point to include in your compensation negotiations. For example, you might be able to negotiate a signing bonus to offset part or all of your expected annual bonus.
- Ask about a retention bonus. Another creative solution for closing the salary gap is a retention bonus. Like a signing bonus, the company can add stipulations for payout, like completing at least one year with a satisfactory performance review. Suppose the company is concerned about talent retention or entering an especially crucial business cycle. In that case, this type of bonus can be very appealing because it incentivizes your continued employment with the company. The bonus may have a tiered payout structure over several years with payout increasing each year. For example, you might receive 20% of the bonus after year one, 35% after year two, and 45% after year three.
- Consider remote work benefits. As hybrid workweeks gain popularity, where you work could be a negotiating option. For example, if the company currently has a flexible location policy, but you’re concerned this may change in the coming months, you could have a remote work clause added to your contract. If work from home is the norm for this company, you could also negotiate a stipend to upgrade your home office with more ergonomic furniture or even offset the costs associated with high-speed fiber internet or a mobile hotspot. Compared with a salary increase or bonus, these benefits may be “low-cost” for the company but offer a significant quality of life enhancement for you.
- Consider other benefit options. There’s a range of benefits to consider from health coverage and gym stipends to flexible PTO days and continuing education. Even if your company offers unlimited time off, you could negotiate for a future sabbatical or the option to take several consecutive weeks off. Don’t overlook possible benefits with tuition reimbursement, skill certification, paid conference attendance and more.
A creative approach to offer letter negotiation can help close the compensation gap even if a base salary can’t change. While countering an offer letter can feel scary, when you go in with a clear plan and backup options, you’ll feel more confident asking for what you’re worth– and the company will have more opportunities to meet you in the middle. That’s a win-win for everyone.
To learn more, contact us today.
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