Hiring · Compensation

How do I use a second job offer to improve the lowball offer for the job that I prefer?

Neil Raymond software engineer at self

November 17th, 2015

Here is my scenario:
  • Company A has offered me a salary of 150K (a market level salary).
  • Company B has offered me a salary of 100K (33% below market).
  • The jobs are otherwise similar.
  • If the salaries were comparable, I prefer to work at Company B.

Strategy 1: I could tell Company B that I have an offer for 150K, and see if they can raise their offer to match.

Strategy 2: I could tell Company B that I will only accept a market salary, and see if they raise their offer. Then, a couple days later, I could tell them that I have an offer for 150K, and see if they can raise it again.

With Strategy 1, my thinking is that they might be willing to raise the offer only once, but would be unwilling to raise it a second time for fear of being seen as "weak." So, I would use all my ammunition at once and see how high they can go with a revised offer.

With Strategy 2, my thinking is that 50K is such a substantial gap that there's no way their revised offer would go as high as 150K. So, I would use the "below market" argument to ask them to raise the offer, then use the competing offer to ask them to raise it again.

Which strategy (or another strategy) would result in the best offer from Company B?

Joe Emison Chief Information Officer at Xceligent

November 17th, 2015

If I were making the offer at Company B, I would find Strategy 2 to be obnoxious and an indicator that you are more interested in spending your time and effort on you than on our joint effort together. The hypothesis you have under Strategy 2 is that if you obfuscate more and make things take longer and take more trips to the well, you'll do better off.  That's not someone I'd want working for me.

I think the only appropriate option is your first strategy. Be straightforward and efficient. And I'm sure *you'd* prefer the company that is the same, instead of a company that is trying to pay you as little as possible.

Which brings one ancillary point: companies that are paying 33% below market generally fall into three buckets. The most common is companies that are clueless about what they should be paying. The next most common is companies that are purposefully trying to pay as little as possible. And the rare case--but they do exist--is the company that legitimately has great financial upside for you through options/profit-sharing/etc, and has a good chance of getting there.

I would submit to you that you wouldn't want to work for either of the first two companies, and that the third is so rare that it's unlikely you're in that case. And so my guess is that you actually don't want to work for Company B unless you see something very valuable in the experience--in other words, it's likely that your work experience there will also be disappointing, given that they really don't get what market rate is for the job.

Roger Hoss VP National Asset Management at Sequoia Financial Solutions

November 17th, 2015

If I was Company B, I would want you to just be straight with me and tell me what the number is that you will require to accept the position. Don't play games or use a strategy. This is business. They will either meet your price or move on to someone else.

Rob G

November 17th, 2015

Other than salary are the offers equal?... equity, options, benefits? Employers hate candidates that play games. ..don't play games.  Be straight with them.  Tell B you would prefer to work for them but their offer is considerably less.  If they can match the offer it's a done deal. If not, no hard feelings.  

Michael Barnathan Adaptable, efficient, and motivated

November 17th, 2015

It's not house negotiation - here they usually want to compensate you fairly but also want to see that you're onboard with them. Tell them you have another offer for $150k and want to take theirs, but the economics need to work out. Would $(what you really want, slightly less than $150k if you want to show some good faith) be feasible?

If not, they'll tell you what they can go to, and you can choose to walk or not, but should treat that as the final counteroffer rather than coming back and trying to negotiate more.

Steve Everhard All Things Startup

November 18th, 2015

Salary rates are a negotiation. If you don;t ask you don't get - you may not get even if you do ask but at least you'll know. The pitch for a higher salary will reveal the reason for the low offer - they can't pay or they won;t pay for you or the role. One thing is clear, entering into a company on a low salary hoping for reward later leads to disaster. IF you come in low you are likely to stay low, especially if the next person in is a better negotiator than you.

Be honest as others have said. State your salary and make a judgement based on their response. Look for things they can give you that cost them little but are valuable to you as a backup. Decide beforehand what your lowest price is and try to articulate why the second company seems a more attractive proposition to you. 

 There is no security in employment so you need an employer that will allow you to grow and develop and whose position on your CV will be seen as a positive. Give value and take opportunity. Integrity should not be for sale.

Michael Barnathan Adaptable, efficient, and motivated

November 17th, 2015

One thing to keep in mind: we won't be in an employee's market for much longer in tech. Salaries are currently propped up by unsustainable valuations and skewed demand, and are likely to drop soon. You might want to put a premium on a job that seems like it has more security or is a place you'd like to stick around longer, even if it pays less in the near term. Going to a place you're uncertain about and switching in a year isn't likely to be a winning move in this environment as it was for the last decade.

Carolina Fonseca Team Performance for Tech Startups

November 18th, 2015

Hi Neil,

Ramit Sethi gives you plenty of step-by-step techniques on negotiating your salary. 

Here's something that will help you tons - it's packed with golden scripts (word-by-word) for you to negotiate your salary:

If you'd rather have a quick video (less info), here it is: 

Have a great day! 

Mohammad Siddiqui Staff Completions Engineer (Wolfcamp) at EP ENERGY

November 22nd, 2015

I would compare the two companies to look at the total package (equity, stock options, health insurance plan?). Also, when you go back to negotiate be frank and tell them you have a better offer and if the company can match or beat it you will be ready to sign the paperwork. make sure when you go back to negotiate take three major accomplishments which apply to the pain point for the company (they are hiring you to solve a problem), ask for the higher match and back it up with three talking points, so you are asking for a higher match with some logic associated with it, while displaying that you are a great match (this is a more sophisticated way, which will make them want you more).

Good luck!

Karl Schulmeisters Founder ExStreamVR

November 22nd, 2015

Rule of thumb in Salary negotiations:

ALWAYS ask 10% up from what they offer.... ALWAYS.  Even if they don't come up there are reasons for doing this

  1. To avoid Buyers Remorse.  If they hire you at the salary they offered - the question arises: hmm could we have gotten him cheaper?  or "hmm - he lept at that offer, maybe we offered too high".
  2. Companies inherently DO try to lowball you - its their job in a negotiation.'
  3. By asking for more, you are signaling that you are out to have a career.

So I would go back to company A and ask for $165k

In the case of Company B - clearly you are willing to take a lower salary to work there.  Because you have a preference "if salaries are equal"...  So that means that if Company B came in $1,200/yr less than Company A.. ($100/mo)  you would choose Company B.

So the question becomes, what is that delta?

Lets say that Delta is $10k - IE $140k.  

Then go back and ask for 10% above that.  That way you have room to move down to meet your $140k target

Neil Gordon Board Member, Corporate Finance Advisor and Strategy Consultant

November 23rd, 2015

I've successfully negotiated compensation by bridging the gap between the company and employee with guaranteed step increases. This lets the company pay their lower amount, often at a time when cash flow is limited, and gives them a "win" in the negotiation. On the other hand, guaranteed steps eliminate the risk the employee is perpetually paid less than market, which is also a "win."