Editors' pick: Originally published August 17.
O.K., college graduates, school is back in session here in the real world.
Guess how much cash you're leaving on the table by not negotiating a fair salary in your first professional job.
D. $1.5 million
If you guessed D, go to the head of the class. If you guessed A, B or C, then you've got more learning to do before accepting any job offers.
"Not negotiating a fair salary at the beginning of your career is like leaving anywhere between $1 million and $1.5 million on the table in lost earnings over a lifetime," says Linda Babcock, a professor of economics and co-founder of Carnegie Mellon's Negotiation Academy for Women.
Babcock isn't alone in sounding the alarm for first-job salary negotiations.
"The reason not negotiating a fair salary at the beginning of your career is so costly is because even a small bump in pay translates into bigger annual raises and possibly bigger bonuses as well, year after year," notes Carla Dearing, CEO of SUM180, an online financial planning service. "Even with so much at stake, Millennials just entering the work force may find salary negotiations awkward and intimidating. Being prepared goes a long way toward feeling more relaxed and confident during salary negotiations."
Dearing is so passionate about the topic, she's listed specific tips college graduates can use to fatten their first professional paycheck.
Here's a quick glance:
- Ask yourself the question first. "The fact is, most people have no idea what a fair salary is for them," Dearing says. "So the first step is to ask yourself: 'What would be a fair salary for me?' Get comfortable with the question. It's important and deserves to be addressed."
- Deflect the salary requirement question. "You may be asked for your salary requirements on a job application form or during an early interview," she adds. "If possible, simply answer 'N/A' on the form. Or, if you are asked the question in person, respond with something like, 'I'm sure we can find a number that will be fair, but first I want to see whether this job is a fit on both sides.' You will be in a better negotiating position after the hiring manager has decided that you are a strong fit for the job."
- Get the data. Don't rely on assumptions or hearsay, Dearing says. "To be in a strong position to negotiate a fair salary, it helps to have current data: For example, what is someone in a comparable role, in the same industry, being paid today? Accurate information will bolster your confidence as the negotiations warm up."
(If you use free salary data sites, like Salary.com, Glassdoor.com and Payscale.com, be aware that these sites typically rely on self-reported data, which may not be as accurate and, as such, less useful, Dearing adds.)
Being patient and setting up a bigger paycheck slowly is highly advisable, other career experts say.
"Don't start negotiating with salary off the bat - instead, try negotiating paid time off, or vacation days," says Ashley Stein, an email marketing specialist at Shred Nations in Denver. Stein walks the walk - prior to working at Shred Nations, Stein spent five years at Dow Chemical. "Employers are much more likely to be flexible with this than salary," she says.
Also, explain your worth and how you will drive the bottom line. "Ultimately, if you choose to negotiate salary you need to show how your work will drive the bottom line of the business," Stein adds. "And, if you aren't able to prove your worth prior to starting your job, ask for a 90-day review in which point your employer can assess your performance and determine if they want to increase your salary or not."
Even some informal chit-chat with other career professionals (especially those who work at the same company you're aiming at), can yield information you can leverage for a higher salary.
"If you know people at the company, get the intel," says John Mauck, human resources director at WLR Automotive Group, in Frederick, Md. "Even use friendly banter with people you meet informally just by showing up for the interview can provide you with insight into the company's pay and benefits."
Another way to get a leg up on a higher salary is to stand out on job interviews. Otherwise, you really have your work cut out for yourself.
"The only way a new grad will ever be able to garner a higher salary when interviewing with me and joining my company is if they come to the table with something proven and valuable that will help my company's bottom line," says Dawn Britt, founder and CEO at one7 communications, in Henderson, Nev.
"The bottom line is 'the bottom line,'" Britt says. "Ask yourself, what can I bring to the table? A new client? Key relationships? Proven ideas that garnered results at a previous internship? Certain skill that the company does not currently have that you can teach and lead? Solid knowledge of the industry and being able to jump in without any major training?"
Britt is not a big fan of touting a solid academic record when talking salary.
"I would never try to negotiate a higher salary because you have a graduate degree," she adds. "I could care less. If you don't have the work experience and some type of proven track record, the additional education means nothing to me."
Negotiating a higher salary right out of the gate is a tricky proposition for a college graduate. But if you do your research, get the right data and impress an employer during the interview process, you have a good shot of getting a bigger paycheck.
And it's certainly worth a try.