5 Tips for Negotiating a First Job Offer
For many of us who have kids, it’s the season of graduation. For parents with college grads, it’s a particularly meaningful time – after nearly two decades of school, they’re transitioning to working world and will face a challenge they’ve never encountered before: getting their first job post-college and understanding and negotiating their first offer.
Getting a job offer right out of college is an exciting prospect for a parent – our kids are finally on the path towards financial independence! But recent grads often feel intimidated by their lack of work experience, and often feel like they can’t negotiate the terms of the job offer.
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Just four out of ten recent college graduates attempt to negotiate their salary and benefits when receiving their first job offer, according to research conducted by NerdWallet. Even though they are hesitant to negotiate, 84 percent of employers say candidates are not putting their job offer at risk by negotiating, and 80 percent of recent grads who did negotiate were at least partially successful in securing a more favorable offer.
It’s important that college grads understand the value of their entire compensation package and know how to negotiate if the terms aren’t quite right – starting out in the workforce by accepting an offer you’re less than thrilled about can be a huge detriment to how you are compensated in the future. Here are 5 tips you can offer to help your child understand and negotiate a first job offer.
1. Perform Industry Research
It’s hard to negotiate a job offer successfully if you don’t know what the average starting salaries and benefits packages look like in a particular industry. Fortunately, it’s fairly easy to locate this kind of information now, starting with websites like Salary.com and PayScale.com.
On these sites, your child can enter information about his or her level of education, skills, industry and city and receive a report with entry-level salary ranges. These ranges can serve as the starting point for salary negotiations.
Many college career centers also have salary information about entry-level jobs in different fields and industries. In addition, your children can talk to other recent grads who have landed jobs in their field to find out first-hand what current salary ranges look like.
2. Consider More Than Just the Salary
The salary is the first thing that most people look at when reviewing a job offer. But many companies offer benefits and perks in addition to salary that can increase the total value of the offer considerably. In fact, benefits beyond salary account for about one-third of the typical compensation package, according to the Bureau of Labor Statistics.
Among the most commonly offered benefits are health and dental insurance, retirement plan contributions and paid time off (or PTO). But in an effort to attract the best and brightest young employees in a tight labor market, many companies are getting creative with their benefits by offering perks like student loan repayment assistance, health club memberships, commuting allowances, Free Food Fridays and even equity compensation in some instances.
3. Negotiate at the Right Time
One common negotiating mistake is trying to negotiate a job offer at the wrong stage of the job interview process. For example, many professional jobs require multiple rounds of interviews. It’s usually inappropriate to discuss salary and benefits during the early interview stages while both the company and the candidate are getting a feel for each other.
Instead, your child should wait until a formal offer has been made so he or she can see the value of the total compensation package and compare this to the industry research that’s been gathered. If the offer appears low based on the research, your child can then make a counter offer and present the research to the employer as evidence to support a higher compensation package.
4. Practice Your Pitch
As noted earlier, recent college grads often feel intimidated when it comes to negotiating a salary offer with a potential employer. Practicing their salary pitch is the best way to get past the nervousness and make the pitch boldly and confidently.
You can help your child rehearse the salary pitch by roleplaying with him or her. Your child’s college career center may also be able to offer assistance, guidance and coaching when it comes to preparing for and perfecting a salary pitch.
5. Build a Budget
The bottom line when it comes to any job offer is whether or not the salary and benefits will be enough for your child to meet his or her living expenses. And the only way for your child to know this is to prepare a monthly budget.
Budgets don’t have to be complicated. Show your child how to create a basic budget by listing all monthly expenses on a sheet of paper or in an Excel file. These typically include mortgage or rent, utilities (including cell phone), insurance, groceries and incidentals, such as entertainment and eating out occasionally. It’s also a good idea to add a miscellaneous column for unexpected expenses, as well as a column for savings.
Multiplying the monthly budget by 12 will give your child a good idea of the annual salary needed to pay his or her basic bills. Don’t forget to factor in federal and state income taxes that will likely be deducted from salary, which will reduce monthly take-home pay.
Keep these tips handy if your recent grad is entering the work force. Understanding and negotiating a good compensation package for their first job is an important skill to have and will provide a springboard for future salary conversations.