Does the first person to mention a number in a salary negotiation lose?

Question

When talking about salary negotiation (or any negotiation), it's become somewhat of a conventional wisdom that "the first to give a number loses" (example one, example two).

Is this true?

Here are some special cases that I think call this advice into question:

• What about large employers who have the power to absolutely require all candidates to reveal detailed salary history?
• How do you avoid wasting everyone's time by being completely out of range of what the company is willing to pay?
• Isn't it possible to "lose" more by seeming difficult to work with than to simply ask for a generous salary right at the beginning of the discussion (when the recruiter/hiring manager brings it up, of course)?

Answer 1

The basic theory behind "the first to give a number loses," from the job seeker's perspective, is that one might be "leaving money on the table" by naming a salary request. This viewpoint has a deeper root, however, in "positional bargaining," in which the two parties' interests are directly opposed and the relationship is adversarial.

A strict "positional bargaining" strategy, however, is usually not in the best interest of either party to the negotiation. Instead of worrying about who names the first number, do your homework. Determine in advance what your interests are and what you would be willing to accept. The overall package (including benefits, location, type of work, opportunities for advancement, etc.) consists of far more than just salary. Also consider what is typical for hiring someone of your skill level for the type of work you are doing for the type of company in that geographic area. I know that is a lot to consider, but if you do your research, you should be able to arrive at some conclusions.

At that point, you can be prepared for the salary negotiation without worrying about who names the first number. If you are at the point of salary negotiation, the company already wants to hire you. Get on the same side of the metaphorical table -- you are not adversaries! You are pursuing a mutually beneficial relationship. Talk about what is fair instead of simply making salary demands. If you can do this effectively, you can show that you are easy to work with while still maintaining your interests. Further, you make the discussion about the issues, not the people, so no one gets offended.

While I find it aggravating that some companies ask for salary history (which is often irrelevant to what is fair, given what I just stated), if you have to give it, do so. It really does not change the negotiation if you get on the same side of the table. If the employer is unwilling to negotiate in this manner, you may wish to reconsider whether you want to work for that employer anyway.

I realize this answer may be vague, but I'm trying to make the point that, with negotiation based on interests rather than positions, naming numbers becomes far less relevant.

Answer 2

As an IT Contractor in London for the last 20 years, I have had to negotiate salary many many times. To summarise my experience, and how I approach the whole process:

1. I would normally mention a ball-park figure to any agency or client trying to recruit me. If they know the client can only pay less than my minimum number, then it's time to agree not to go further with the process.

2. However, I don't reveal previous rate/salary or expectations in detail. Ball-park only.

3. Once interviewing begins, try to avoid talking about money at all, until you have got them 'hooked'. Interviews should be about 'Do you fit the job', not about 'How much do you want?'. I would normally only talk cash in a second+ interview, if possible.

4. If they ask how much you want, DO NOT ANSWER directly. You must fudge it, or answer with a question: I normally ask them back how much they are prepared to offer. If you answer, then it can only go down. If they answer, then it can only go up. So yes, the first person to mention a number loses.

5. If they come back with a number that's too low, sometimes the best thing to do is not to respond, except perhaps to say 'Hmmm', and look a bit downcast. I've had instant improvements with this technique! Or, ask if there is any way they can squeeze the budget to bring it up, as you were hoping for a bit more. That works too. If that doesn't work, you should outline politely why you think you have the attributes that would attract a better pay rate. Don't be pushy, but make it clear that you would not be happy working at that rate.

6. Remember, they are spending a lot of time and effort selecting candidates, and dealing with (usually wretched) agencies. If they finally get to someone good, they will be prepared to pay, and the person you are going to work for will be pushing on your behalf.

Finally, a true story. I went for interviews at a big bank. Great job, nice people. At the 3rd interview, my future boss asked how much I wanted for daily rate. I asked what he could pay. He asked what I wanted...and so on, as we both knew the 'game'. Finally, I said 'Tell you what. Why don't you go to your budget people, see what your best offer is, and call me with that? If it's OK, I won't haggle or mess around, because I want the job, and I'd be great in this position.' So that's what he did, and the next day he called me with a number much much higher than I had been hoping for. So I danced a little jig, then quietly thanked him and said I'd be starting next week.

Answer 3

Not necessarily. I think you can shoot for the stars and ask for more than even you think you deserve (within reason.. maybe 10 or 20k more than you would accept). In that case, you can wind up winning even when you've named first.

It's also possible that a company will offer a number you can't accept and that they can't go above for beget reasons in which case you both lose.

Special cases:

1. If you need to list your salary history you haven't necessarily lost. If you can justify a step up from your last position, a company may be willing to consider it. I would say (having done some recruiting) that you should try your best not to provide this information. It is rarely disqualifying if you don't provide it (unless not providing it prevents you from even completing an online application form).

2. You can give wide ball-park ranges to a company to see if you're in the right neighborhood of what they can pay. Based on job description alone you should be able to guess what sort of level a position is. The number of times you'll be completely wrong about the level of a job having seen the description will be far fewer than the number of times you're right.

3. I would say it's actually a great strategy to shoot high and then accept a little lower. It makes you seem easy to work with, yes, but more importantly it makes you seem like you know what you want and what you're worth.

You can't be too concerned about wasting time on an interview that turns out to be for a job that's way below your range. It won't happen often.

More importantly though, don't accept less than you want and count on earning more after reviews/promotions. It almost never works out well unless you have a formal review written into a contract with an agreed-upon raise if the review is favorable.

Answer 4

Is this true?

It creates a baseline for negotiation — forget about gaining a substantial (two-digit-percent) increase on your salary.

Your prospective employer will think in terms of "how much more should I give this person so they come and work here?" and not "how much is this person worth to me?".

What about large employers who have the power to absolutely require all candidates to reveal detailed salary history?

They don't have that power. They can only ask. You can answer "I will move for x$" if they don't accept that, say that you will not disclose the sum, but you will move for x$. If they drop you, they don't want you.

How do you avoid wasting everyone's time by being completely out of range of what the company is willing to pay?

Ask them what they want to pay, for example. There's no reason why they shouldn't disclose their range (and in fact, they do it all the time to recruiters!).

Isn't it possible to "lose" more by seeming difficult to work with than to simply ask for a generous salary right at the beginning of the discussion (when the recruiter/hiring manager brings it up, of course)?

No. At the end of the day, someone from recruitment will bargain with you, but someone from the specific department you will join will sponsor you. In the end, if they really want you, they'll go up within their allotted range.

Answer 5

Actually, I've read that the reverse is true. The first offer sets a baseline and basically a framework to work within. Unless your expectations are way outside the initial range that the employer has in mind, you are better off making the first bid. Even if you are higher and the employer says, "That's a bit higher than what we have in mind for this position" you can counter with "Well what would be more in range?" They will respond with a higher number than what their initial number would have been and you can counter with a higher number.

Of course if you bid far lower and they bite, you're leaving a lot of money on the table, but you've also met your desired amount so in the end you still get what you wanted out of the negotiation.

Edit for references I wish I could recall where I read that...I've ripped through a number of books on negotiation and sales over the past year, and at best it would be a wild guess which one of them I picked this up from. But I can tell you from personal experience (over many contract negotiations as an independent consultant) that I've rarely had to take a rate that I couldn't tolerate. And I always lead with my rate when the question comes up.

Of course some of my success also comes from applying other strategies. The biggest one for me is being able to walk away from a bad deal. Just the act of saying no thanks increases your bargaining power sufficiently. I've had several callbacks where they were willing to match my requested rate. Of course contract rates and salaries are different scenarios altogether. In a contract, the agent is usually trying to maximize their profit margins, for direct hire, the manager usually has a set budget range for a req. I wouldn't suggest no thanks as a bargaining strategy for direct hires because it will usually be a dead end.