Company has low-ball job offer, refuse to negotiate, is this a common hardball negotiation tactic?

Question

Company A has a job opening that I have applied for, interviewed for, and received an offer for. Their culture is awesome (very family-oriented) and I already like a lot of the people I have met. Long story short, it knocked everything off my checklist for what I wanted in a place of work. Initially it seemed like a good opportunity until this happened:

Their offer was almost 30% below market for the bottom of the typical salary range

Something else to note is that this low pay is not made up in any way through other benefits such as lots of vacation etc...

This is compared to nearly identical jobs at companies in the same industry within ~15-30 miles (I did my homework). I started the negotiation process by informing them of the current industry standard salary and told them that their offer is well below market value. Instead of making a direct counter-offer, I asked them if they could make a better offer (I had heard that this is a good negotiation tactic for very low offers). Although the company culture seems to be a good improvement, I cannot afford the pay cut (this offer is even lower than my current salary).

Their Response: We are well aware of the standard salary range, however we feel that we are offering reasonable compensation for the job. They also said that several other interviewees had expressed the same concerns about pay, but they are not willing to budge any further.

I had already talked to a few friends who had heard that this place was struggling to hold onto people and that their pay was low, but I did not expect this. They are also a pretty big company, so I am unsure of why they allow policies like this to exist (over 4000 employees in 6 or 7 countries) or if they treat all employees like this. If this is the case, I am unsure why anyone works here.

I cannot accept an offer with this low of a salary, and now I may not accept even even if they increased the offer due to their treatment of the situation. However, I would still consider it if they were willing to significantly improve their offer to something actually competitive.

Is this a common sort of hardball negotiating tactic? What would be a good response as a last ditch effort for them to increase the offer so that I can consider the job?

There seems to be a huge disconnect between their expectations and reality, and if they do not improve the offer I will unfortunately have to move on.

Note: I am currently employed and am not desperate, I just am ready to move on to new opportunities. Also, I have a few other leads but nothing promising yet.

Note: I am still a student. I am actually asking this question for a friend and thought that asking it in first person would be more beneficial for creating good responses and discussion. I am well acquainted with his situation, and thought I would ask on here to see if anyone else had any further thoughts.

Answer 1

Is this some sort of hardball negotiating tactic?

Of a sort, yes. They might be friendly people and believe their family atmosphere offsets the salary issues. They may even want people for whom money isn't a driving factor. Nonetheless, it is, basically "This is our offer, take it or leave it", which is hardball.

What would be a good response as a last ditch effort for them to increase the offer so that I can consider the job?

Tell them "Thanks for the time to interview me and for the job offer. The work and your company culture are very attractive. Unfortunately, I cannot (or will not if you prefer) take a salary that low. I wish you Good luck going forward." Then don't look back (unless they make a new offer that meets your needs, but that seems extremely unlikely).

Answer 2

Their Response: We are well aware of the standard salary range, however we feel that we are offering reasonable compensation for the job. They also said that several other interviewees had expressed the same concerns about pay, but they are not willing to budge any further.

Some companies emphasize higher pay to attract candidates. Others emphasize an awesome company culture.

I had already talked to a few friends who had heard that this place was struggling to hold onto people and that their pay was low, but I did not expect this. They are also a pretty big company, so I am unsure of why they allow policies like this to exist (over 4000 employees in 6 or 7 countries) or if they treat all employees like this. If this is the case, I am unsure why anyone works here.

But 4000 employees do work there. So they must be doing something right.

Is this some sort of hardball negotiating tactic?

Probably not.

You have already heard that "their pay was low". You haven't heard that "they make a low offer but eventually will up their offer to meet some 'standard salary range'".

Most likely, they can find other candidates who would be willing to work there for what you consider an unacceptable salary. Perhaps their awesome culture is appealing to enough people.

What would be a good response as a last ditch effort for them to increase the offer so that I can consider the job?

Your best bet is to ask for a salary that is the least amount you'd be willing to accept to work there. Just be ready to walk away if they still offer less.

Sometimes a company that "knocked everything off my checklist for what I wanted in a place of work" except for the salary just isn't the right place for you.

Answer 3

When I read things like "lowball" and "hardball" and "I said x because I heard that's a better tactic" I hear that you're completely immersed in negotiation techniques and game theory and saying one thing while meaning something slightly different and all of that. What you need to remember is that not everyone else is.

They have a need. They have some money set aside to meet that need. The two don't match. You've told them that and others have told them that too. They aren't changing the money. (Note: they're not pretending they can't change the money but secretly they would if you just said or did the magic thing to unlock it. They aren't changing the money.)

If you ignore the industry standard and market value, could you live happily on their salary? Could it meet your needs in terms of where you live, what you drive, and so on? If so, that's how they hire people: some people are happy with a nice workplace, good working conditions, and enough money to live on, and don't get all "but I could get 30% more elsewhere" about it. You're not that person, so you probably shouldn't continue trying for this job.

Answer 4

This is probably not a hardball negotiating tactic; they probably don't pay employees well and are sticking to it. It's not unheard of for companies to offer lower salaries and stick to them, and it's really consistent with a company that struggles to hold on to people. Some companies that have really good benefits offer the benefits instead of paying competitively as well.

As far as a response if you want to try to work there (although why you'd want to work somewhere that is adamant about paying below market value is beyond me) you could try something like this:

I'm very interested in your company and flattered that you have extended me an offer. However, I find the offer to be well below what similar jobs are offering. If you can offer me a salary of $X then it'd be an easy decision for me to come work for your company.

You can add justification for why the offer should be at least $X (markets, other job offers, your current salary, etc.), but I wouldn't get my hopes up if I were you. Most likely they pay what they pay and look for people who are willing to accept it.

Edit: personally, I try to avoid these companies. In my experience, these companies get a disproportionately high number of less-skilled employees because of the lower pay, as well as a large number of people who don't have much in the way of career goals. The result often turns out that capable people get overworked as a way to fill in the gaps. Companies usually aren't okay with projects falling behind and work being low quality just because they don't offer financial rewards on par with the industry.

Answer 5

is this a common hardball negotiation tactic?

No, they're not negotiating. Any number of things might cause this, anything from they have no control over the amount, to their perception of the market is different from yours. Or even just an equation between how much % of the revenue stream this worker will generate compared to his/her cost.

You can analyse it all on incomplete information until the end of time and come up with endless possible reasons.... but realistically if the money is a show stopper, then just stop the show.

Answer 6

Honestly I'd say just turn your back and forget about them. It is unlikely to be a negotiating tactic and you are unlikely to get them to increase their offer by the ~50% (100k market, 70k offer. 30k more to get back up to market is ~50% increase) needed to match the market rate but let's pretend for a second you did get them to make a reasonable counter offer I still wouldn't recommend accepting it.

If it was that hard to get an reasonable offer initially how hard do you think it would be to get reasonable raises once you are working there? Not only because they apparently aren't used to paying well but because you'd also be making significantly more than your co-workers. You'd be virtually guaranteed to be slowly or not so slowly falling behind the market rate as you got little to no raises that may not even cover inflation/cost of living increases.

You'd also likely be in a situation similar to when someone gets a counter offer to stay at a job. They'd probably be looking to replace you with someone who is wiling to work for that 70% that they originally offered you at the first chance they got and may be assuming you are looking to jump as soon as you can too.

When their offer is so low-ball and they are apparently well aware of that fact since you aren't the first to bring this up things will not change quickly or likely at all until they are forced to by being unable to actually find anyone to fill their open spots.

Answer 7

Some of the fortune 500s in the US (exponentially larger than 4k) in the US offer fixed salaries for position tiers. So you'll have something like software developer 1 - 3 and 1 can't break a certain amount regardless of skill or experience.

Thereby, if you've applied for a position with less skill / experience requirement than what you have, you'll fall into that lower range. The solution is to apply for the higher position when available or get promoted while working at the lower range if you're confident.

Answer 8

Recognizing that I'm a little late to the party here, I still don't think any of the existing answers is quite right.

First, everything is a negotiation. Everything. So, is "refusing to negotiate" a "hardball" negotiation tactic (scare quotes on both!)? Kinda.

If you walk into your local hardware store and ask what the price of some flooring is, they will generally refer you to the sticker price on the shelf. That sticker is an offer to sell at some price, so it's a negotiation. If you just call someone over and try to haggle, you wont's usually have much luck. That's a "refusal to negotiate" on price, but it's pretty normal practice. It especially isn't something we would usually call "hardball." Your deal with them is fungible, and they have no interest in offering you a non-standard deal.

Second, you can usually negotiate price anyway, but you need flexibility and information. Continuing the flooring example, three months ago I walked in to Lowes and got hardwood flooring at 30% off sticker price. I was redoing a closet, so I needed a small amount (no bulk discount). I looked at what they had on display first, to see what options were being offered. Afterwards, I waited until it wasn't disruptive, chatted with the sales associate, and described the problem I had. He mentioned that they had a pallet of remnants that they needed to get rid of: too few matching sets to display, but no-one wanted to haul it away. We found it, I found some flooring that worked for me, and took it off their hands.

Cool story; so what?

That worked out for me because I kept the overhead cost of talking to me low, made the negotiation collaborative instead of oppositional, and critically, found out enough about their problems and motivations to offer value in a different way (they got money, and they got to get rid of something that to them was just heavy trash).

Which brings us to the third point, Dollars only measure dollars. Money is fungible. If you have a dollar and I have a dollar, we can trade them one for one and each be exactly where we started. IF I have an apple and you have an orange and we trade, at least one of us has something he likes better than before. Benefits that aren't money have value, but that value is extremely personal.

For quick example: Assume you have a job banging rocks where klaxons play constantly. You are considering another job banging rocks, where the salary is $10 less per year, but they play your favorite music instead of klaxons. Is that a good deal? Depends. Essentially, it's a good deal if you would pay at least $10 to have music instead of klaxons. If you would otherwise be willing to pay $10000/ year, it's a great deal.

Unfortunately, "great company culture" doesn't come with a dollar sign. But you can estimate its value to you. Write down all the perks of working at this place which are not part of a "standard" employment. You're only looking for things that matter to you, so if they have free childcare and you have o kids, that's eat for someone but valueless to you. Then estimate what those perks are worth TO YOU. If you could buy that perk outside work (e.g. onsite dry-cleaning vs going out in town), you can use the cost avoidance as the value to you. If it's something more ephemeral like a dedicated parking space, you'll have to assign it purely based on your feelings.

Finally, You can negotiate anything. (which is also the title of a really cheesy book from the '80s. Cheesy and effective - worth reading of you're the sort of person who sometimes interacts with other humans). So, you can negotiate on salary after all?! Probably not. But you absolutely can negotiate with them. Think of all the perks you just wrote down. Some of them have real value to you, right? There are doubtless other things you could have, and are a lot less likely to be tightly-controlled on their side. Here are some examples:

• an office with a door
• a dedicated parking space
• a device allowance
• use of company spaces for your hobbies
• flexible hours
• a company car
• tuition for something
• additional vacation time
• credited time towards something vesting or retirement
• a mariachi band to follow you around at all times (hey - you do you)
• etc.

Ridiculous? Sure. But figure out what options AREN'T ridiculous from their perspective, and which things you values.

One last word of advice: all of this depends on you not being fungible (i.e. perfectly replaceable with many other readily available employees). Don't be fungible.