Getting a job offer letter can be exhilarating. Knowing that you're the one they want. That you beat out the competition. What an ego booster. But it can also be overwhelming. In fact, for some people, negotiating a job offer letter ranks right up there with undergoing a root canal. Ok, maybe I'm exaggerating, but there's no denying the fact that most people loathe the thought of asking for more money or more perks.
You don't have to be a lawyer to negotiate a job offer letter (although it can't hurt to have a lawyer review the job offer). And you don't need any previous negotiation experience to successfully negotiate your job offer letters (though it could be helpful). Like anything else, achieving success in negotiating a job offer letter is a matter of preparedness, and willingness to make compromises.
Before we get into how to negotiate a job offer letter, it’s important to understand the components of an offer letter. The best way to do that is to look at a sample job offer letter. So let's look at one:
Sample Job Offer Letter
Dear ______:
After careful consideration, ABC Company is pleased to extend you an offer for full time employment.
Job title: _________________
Base salary: Will be paid in bi-weekly installments of $_________, which is equivalent to $_______ on an annual basis, and subject to deductions for taxes and other withholdings as required by law or the policies of the company.
Bonus eligibility: Based on the goals and objectives agreed to with your manager, you may be eligible for a bonus. The bonus plan for this year and beyond, should such a plan exist, will be based on the formula determined by the company for that year.
Benefits: Eligibility for benefits including health, life, disability and dental insurance coverage, 401(k) and tuition reimbursement will be as per company policy.
Stock Options: Eligibility for stock options will be as per company policy.
Vacation and Personal Time Off: Vacation is accrued at x.xx hours per pay period, which is equivalent to two weeks on an annual basis. Personal days are generally accrued per company policy.
Expenses: Company will pay you the following amount for moving and other transition expenses: $________.
Start Date:_______________
Car/Phone/Travel Expenses: Normal and reasonable expenses will be reimbursed on a monthly basis per company policy.
Your employment with ABC Company is at-will and either party can terminate the relationship at any time with or without cause and with or without notice.
You acknowledge that this job offer letter, (along with the final form of any referenced documents), represents the entire agreement between you and ABC Company Name and that no verbal or written agreements, promises or representations that are not specifically stated in this offer, are or will be binding upon ABC Company.
Your employment is contingent upon your signing and returning a copy of this offer letter, plus the following documents and passing a drug test:
Sincerely,
_____________________
(Your signature)
____________________
The above job offer letter contains the most common components of an employment offer including information about salary, benefits, and vacation. Most job offer letters are also accompanied by a confidentiality agreement and a non-compete agreement. Depending on the specific job, there may be other attachments to the offer letter, such as a sales compensation plan. Let's review each component of the job offer letter:
1. Job title: In most cases, a job title is disclosed in the job description so you were likely well aware of the title when you applied for the job, in which case it’s a non-issue. However, there may be situations, for example, where although you were aware of the job title from the start, you were hoping that the company would consider giving you a more senior title based on your qualifications and experience. If the company has made its position on title clear, you may want to ask for wording in the job offer letter to the effect that consideration will be given to a more senior title at your first performance review. The job offer letter would reference a specific date by which the performance review will take place. Although it's not a guarantee, it commits your new boss to giving you a performance review by a certain date, and if you've demonstrated your value to the company, there's no reason why you won't at least be considered for the title you want.
2. Base salary: It's not uncommon for employers to hold off giving salary details until they provide you with a job offer letter. However, hopefully by now you have a good idea what the salary range is, which means you probably know the maximum the company is prepared to pay. If you feel that the salary presented in the job offer letter is below the top end of the company’s range, there's absolutely nothing wrong with asking for more, provided you can justify it based on your experience, skills and prior accomplishments. You also need to remember that not all companies pay the same for comparable jobs. There are lots of resources online to help you determine what your salary should be based on the industry, job description, level of responsibility, years of experience, size of the company, location of the company, and many other variables. A great source of salary information is www.salary.com.
3. Bonus eligibility: Many companies have bonus plans that are based on company and/or individual performance, and the bonus amount may depend on your job title, seniority and other factors. Exceptions to company policy are rarely made so it may be difficult to negotiate bonus. However, it's not unheard of for companies to pay signing bonuses, especially as an incentive to get you to leave your current employer or if you have another job offer on the table. If you're out of work or you have no other offers, on the other hand, you won't have much leverage to get a signing bonus. If you are in a position of strength, ask the company what a standard bonus is for someone in your position. One you have that information, ask if they would be prepared to pay it as a signing bonus. To enhance the odds of getting it, you can offer to take it in installments (for example: 50% on signing the job offer letter and the balance 12 months later.
4. Benefits: Most benefits such as health and dental care are governed by company policy, so it may be difficult to do any negotiating here. Sometimes some benefits such as 401k matching may not be available until you've worked for the company for at least 6 months. It's not unreasonable to ask that this condition be waived.
5. Stock options: Eligibility for stock options is governed by company policy, but companies often have some flexibility here. There are various types of options and some will only vest if certain performance metrics are satisfied, so you may want to ask for some stock that vests based on the passing of time. Stock options are a good alternative when you can't get the company to agree to a signing bonus.
6. Vacation and Personal Time Off: Many companies have strict vacation and personal time off policies but there's often some degree of flexibility. Most companies don't want to risk losing a great candidate over some vacation days. Be reasonable and you should be able to negotiate this, especially if your current employer gives you more vacation than the new employer is offering.
7. Expenses: Expenses are typically paid to cover things like relocation if you have to move for the job. Most employers are reasonable about this, but don't go overboard. If you feel you're not being offered enough, provide your prospective employer with a list of reasonable expenses that you can substantiate.
8. Start Date: This isn't usually an issue. An employer will understand that you may have certain obligations to fulfill and that you may need to provide your current employer with notice.
9. Other parts of the job offer letter:
Confidentiality Agreement: Most companies ask their employees to sign a standard confidentiality agreement that protects the company's confidential information and trade secrets. There's nothing unreasonable about this but don't hesitate to ask questions about anything you don’t understand.
Non-Compete Agreement: It's fairly common for companies to ask their employees to sign a non-compete agreement that prohibits the employee from working for a competitor for a certain period of time after they leave the company, and may also prohibit them from soliciting business from clients of the company. These agreements can be quite complex and can impact your ability to earn a living once you leave the company, so it's wise to get a lawyer to guide you.
The offer letter may be accompanied by other documents such as a sales compensation plan. Like all the other elements of the job offer letter, the extent to which you can negotiate terms like commissions will depend on your experience, qualifications, and previous accomplishments. The more leverage you have, the more successful you'll be at getting what you want, but if you really want the job, make sure your requests are reasonable.
Senthil-Post date:2009-11-24 05:42:02