offer negotiation

This tag is associated with 3 posts

The highest offer isn’t always the best offer.

My other half and I have been down the house buying path together a couple of times.

The first time was in 2006-07, right in the eye of the real estate chaos. After losing a few houses we gave up and decided to rent. (One of the best choices we’ve made, in retrospect.)

We decided to re-enter the home buying market in early 2010. We figured with banks ratcheting up approval criteria for home loans about 1000%, it would be a buyer’s market. Wrong. We lost out on two houses before we came upon another, a nicely kept Tudor in our target area.

I found it about an hour after it first hit the MLS, around 9pm. I sent the listing to our realtor. He called before 8:30am the next morning. “That house is a peach. If you’re interested you need to see it today because it’s going to sell.”

By the time we walked in the door at 8pm that night, 24 realtors had toured the house (in 1 day!) and there was already one offer. After a 20 minute walkthrough, we decided to make an offer.

Two hours later, he called. “I have good news and bad news. The bad news is there are four offers on the table–and one of them is substantially higher than yours.” My heart sank.

He continued: “The good news: The seller likes the terms of your offer better.” I was confused. How can our offer, which wasn’t the highest, be better?

The answer is: The offer is a better fit for the individual. And this also holds true in your job search. Money isn’t the only thing.

You need to carefully prioritize what is most important to you:

  • Is it work/life balance–you want to be able to arrive at 8 and leave at 5 every day?
  • Is it base compensation more important than…
  • …Bonus or incentive compensation? Are you someone that wants to control how much you make (commission-based environment)?
  • How important are benefits to you? Do you need them, or are you covered under someone else’s plan? What about cost of coverage?
  • Is location and commute a factor? There are some people that will go nearly anywhere for the right job; others don’t want anything longer than a 20 minute commute by bike or bus.
  • How about corporate social responsibility factors–is working for a company that is a good corporate citizen, and pays its employees to volunteer/matches donations/etc a strong driver?

You need to look at all of these factors in considering a job offer. It’s imperative that you know how the above factors are prioritized for you in order to make that decision.

As a recruiter, I’ve occasionally extended an offer to a candidate when the company I represent doesn’t have the highest dollar offer they are considering. But occasionally, after the candidate walks through all of the decision factors, they realize that the best offer isn’t the highest.

Oh, and the house? Our counter-counter offer was accepted at about 11:45 that night. We went to bed in a bit of a daze, not quite believing that in the short time since dinner we’d bought a house.


How do you evaluate benefits as part of the total offer?

In a prior post, I discussed some ways of obtaining information that can help negotiate a job offer. When you receive a job offer, it’s easy to only focus on the hard numbers:

  • Base salary
  • Bonus (if available)
  • Sign-on bonus (if included)
  • Stock/Stock options (if included)

These are the data points most easily benchmarked against your current position (or against the market). But if you focus only on those numbers, you are not evaluating the entire offer effectively.

Benefits are extremely important to you (and, potentially, your family). They are also a significant part of your compensation.


A great benefit package:

  • Ensures you can stay well–and provides great care in the event of a serious accident/illness–without bankrupting you (I mean this quite seriously)
  • Provides enough paid time away for work that you can have a great work/life balance while not worrying about lost income
  • Invests in your future by providing things like employer matching funds in a 401(k) or offering discounted employee stock purchase plans
  • Ensures you have insurance coverage for unforeseen events (short- and long-term disability; life insurance)
  • Offers other things that make your life easier and heathier, such as a transit pass; onsite bike lockers/shower room/gym (or discount to a local gym); discounts on food; etc.

But how much do these cost–and how to weigh them as part of your offer? The Bureau of Labor Statistics calculated that, on average, benefits cost an employer 30.9% of the overall cost of employment. A 2011 SHRM report states that, on average, employers spent 19% on mandatory benefits (such as unemployment compensation, workers compensation, and Social Security); 19% on voluntary benefits (such as health insurance, flexible spending accounts, vision plans, insurance); and 11% on time not worked benefits (paid holidays, sick leave, vacation, personal/bereavement leave).That’s 49% of the total $ spent on employing you.

Now you have a sense of how much you should value that benefits package as part of your offer. What should you be looking at specifically?

  • What does the health plan cost you per month compared to your current plan? What are the annual coverage maximums and co-pays? Can you keep your current providers under the new plan? It’s important to understand these differences as they can add up to real money out of pocket.
  • Does the new company offer a flexible spending account or health savings account for medical expenses? That can save you $ in paying for these costs pre- versus post-tax. If you have–and use–an FSA with your current employer, and the new employer doesn’t offer an FSA, that can impact you financially.
  • How much does the new employer contribute to retirement (401k, 403b, etc)? This is $ to you, so it’s important to know what the delta is (if any) between your current employer and the new one.
  • How much paid time off will you receive? Does it increase over time with certain anniversary dates? Is it paid out when you leave? Companies with PTO plans do not usually let you ‘bank’ time & roll it over into the next year. It is also not often considered compensable time. If your current employer has a vacation plan that lets you bank time–and cash it out if you leave the company–and the new one does not, that’s something to consider. Also look at how many paid holidays you will receive, how much sick time, etc.
  • What are the other perks/benefits of working for the new employer? Do they offer a parking subsidy or transit pass? What about an onsite gym? Do you receive free/discounted food or drink? Can you purchase company products at a discount? (Microsoft Employee Store, I’m looking at you…)

Altogether, the differences between benefits packages can mean large overall differences in your compensation–or how much $ will be coming out of your paycheck (or pocket) that isn’t with your current plan today–with a new employer vs. current. It’s well worth taking the time to crunch the numbers and discuss the differences you find with the recruiter. It’s worth noting that most recruiters will not be able to make changes to benefits–with very few exceptions (seniority-based vacation accrual for one) they are usually the same for all employees. But they may be able to make a case for increasing your base compensation a bit if your out of pocket expenses will increase under the new plan.

How to gracefully turn down a job offer

Hello everyone. Sorry I’ve been radio silent this week. Busy week at work + crazy long weekend painting the house = not much time to write blog posts.

Hypothetical scenario: You’re interviewing for a job with Company A and make it to the final round. You don’t have any other offers on the table at the moment–and aren’t currently expecting any. You tell the recruiter so.

The day before your final round of interviews, you receive a request to interview at from Company B that next afternoon. As your final interview with Company A is in the morning, you agree. Both rounds of interviews go well, and you inform Company B that you had a final interview with Company A that morning and are expecting to hear back from them within the week.

You leave the interview with Company B not expecting anything more than possibly being asked back for a second round of interviews. Instead, that night they email you an offer. You’re taken by surprise, of course, but as you think about the company, what the position would offer to you, who you would be working with and for, and the package you realize that it seems like a very strong fit.

Company A extends an offer to you the next afternoon. Obviously the recruiter is taken by surprise when he hears you have an offer. You ask for some time to really consider both offers, as both positions are appealing in different ways. In the end, you decide to go with Company B’s offer.

But how do you tell Company A that you’re not taking their offer?


This is a great problem to have, admittedly, but a tough one. I recently had a candidate in a similar situation who handled it beautifully. Here’s what they did:

  1. Begin with the end in mind. How do you want these people to perceive you? You want the hiring manager and recruiter to walk away thinking that how you handled this situation exemplifies all of the reasons they chose to make you an offer in the first place. That requires…
  2. Inform them early. Inform the recruiter or hiring manager that you may have a competitive situation developing as soon as you are aware. If you don’t have the opportunity to do so, explain very clearly how it came about–and that you weren’t expecting it. A good recruiter will check in with a candidate multiple times during the evaluation and offer process regarding status of other potential opportunities. If a candidate throws a curve ball at them late in the game, it may seem like the candidate hasn’t been engaging in good faith. Which leads to…
  3. Always put relationships first. This is but one position. It may not be reflective of your interest in working with the company, or this manager/team/recruiter. Also, as you develop your career (especially in a specific metro area) the hiring team/recruiter engaged in this offer process will move to other companies in which you may have more interest. Isn’t it worth having them walk away from the situation thinking that you’re worth keeping in touch with for potential future opportunities, rather than blacklisting you because they felt burned by your actions?
  4. Walk through your thought process. Ask questions. Gain clarification. A good recruiter should be part career counselor (see this blog for evidence!). They should help you compare and contrast both opportunities, filling in gaps in your knowledge about their opportunity to help you make the best, most informed choice possible. What drives a recruiter nuts is when a candidate treats them like a used car salesman. The candidate won’t discuss their thought process, instead just declaring they’ve taken another offer (often by email). This makes us think that rejecting our position was always in the candidate’s plan–that the candidate was likely using us (and our offer) as negotiating leverage for the other company’s offer (or to get more $ from their current employer). These things do happen, and unfortunately it’s shortsighted on the part of the candidate. Please see #1 and #3 above for why.

Do this with integrity and transparency, and you’ll reinforce their belief that you were the right candidate.

October 2018
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