8 steps to offer negotiation success in tech
The topic of salary negotiation comes up a lot. I do monthly AMAs over at Instagram and folks ask about salary negotiation quite frequently. So I thought that's probably a good indication that a video on the same topic would likely end up being useful to my subscribers. So, in this video I'm going to give you a detailed 8-step guide to negotiating compensation in tech. The first step of this list is probably one of the most critical steps, and surprisingly one that 99% percent of people completely miss, resulting in a sub-par offer. Alright, let's get started.
STEP 1: Salary negotiation starts long before you get an offer
The biggest mistake you can make is to think about negotiation after you land your first offer. Well, let me tell you this right off the bat, it is simply too late at that point. You should start thinking and planning about the eventual negotiation before you even apply for jobs -- in fact, your entire application process should be structured and informed by the negotiation process, even though the actual negotiation happens only after you land an offer. Instead of saying, "Oh, I've received an offer or two, let me try to increase my total compensation for the offers," think of it like, "This is the compensation range I want to eventually be based on the trends I have researched, what do I need to do to be able to get to that position?"
Don't worry if this does not make sense right now, the next steps will make it clearer.
STEP 2: Learn the trends
Do you know what standard compensation ranges are for various companies? Not the anecdotal numbers you learned from your friend, or picked up from random internet posts or from platforms like Blind, where you have no way to verify the authenticity of those claims. Your research needs to be driven by data. You can leverage sites like levels.fyi to get a more accurate picture. Yes, levels.fyi is also driven off compensation numbers that people anonymously enter, but because they have very high volume of data, they can build up accurate ranges as well as detect anomalies.
One thing you will learn quickly is that every position for every company will have a pretty large compensation range. This is normal. Not everyone gets the same compensation since the exact numbers depend on a lot of things, including years of experience, quality of experience, interview performance, competing offers, circumstantial demand, location and so much more. This leads me to step number 3.
STEP 3: Understand where you fit
This is usually a tricky one. It is natural for people to either undervalue or overvalue themselves. It's difficult to figure out your worth right on the spot. So do your due diligence and make a best guess. Pay special attention to your past experience with relation to what skills are in demand. For example, distributed systems and machine learning experience is in high demand right now in big tech. So, if you have a solid background in either of those, you are probably on the higher end of the compensation spectrum. On the opposite end, experience with something like C++ may not be in high demand in big tech, but if you are very skilled at it, you may do well in fintech. Also, think of how your rewards have been in your current and past companies -- have you been below average, above average, top performer? You can use this to inform your process as well. You get the idea.
STEP 4: Make a list of companies to apply to
But not only that, organize them based on their standard compensation ranges. For example, you may want to apply to Microsoft and Facebook (or Meta) for various reasons. However, from a compensation standpoint, these two companies don't fall in the same bracket. In general, Microsoft's compensation will be a fair bit lower than what Meta will offer. Of course, there are many reasons other than compensation to choose one company over another, but we will get to that later. For now let's just focus on compensation. So if you are interested in big tech and are applying to Meta, Microsoft, Google, Amazon, Netflix, Stripe and Oracle, I'd put - Meta, Netflix and Stripe as Level 1, Google, Amazon and Microsoft as Level 2 and Oracle as Level 3. This is most likely somewhat accurate but these things can change every year, so do your research and let the data inform your bucketing.
STEP 5: Schedule your interviews
This can be a tricky step. The idea is to schedule interviews at multiple companies from each compensation band. But not only that, you want to also schedule them at similar timeframes. For example, if you schedule your interview at Meta in August, and then Netflix in September, it may give you more time to prep for each interview loop, but it will be a disadvantage to you in terms of offer negotiation. You want offers from multiple companies on the same compensation band to arrive roughly at the same time. So if you need time to prep, prep first and then schedule the interviews for one or more companies at the same time. Also, companies may ask you if you are interviewing at other places, be honest and say yes. There is no harm in trying out different interview loops -- remember that interviews are not there just for you to be evaluated, you are evaluating the companies as well!
STEP 6: Ace your interviews!
It seems like stating the obvious but this is quite an important step. There is a big difference between just about clearing your interviews and acing your interviews. Both can yield an offer, but the compensation can vary greatly according to how you performed in the interviews. Interview performance plays a big part in leveling, which in turn dictates your compensation package. Remember step 3 where I asked you to evaluate your fit within the salary ranges? You will need to do that evaluation one more time after your interviews and adjust your expectations accordingly. That being said, even if you didn't have the best interview performance, there is one more thing that may be able to save you to pull your compensation up, and thats the next step.
STEP 7: Land multiple competing offers
Step 1 to step 6 all lead up to one single goal -- landing competing offers from multiple companies in the same compensation band. Pay special attention to the phrase - "same compensation band." Let's say hypothetically that you land an offer from Meta and then land an offer at Oracle, but your mind is set on joining Oracle, chances are extremely slim that Oracle will be able to match your offer from Meta. Sure, you can still leverage your Meta offer to increase your Oracle offer, but you will only be able to maximize your compensation if you get two or more companies from the same compensation band to compete on the offer. Which means, you will need to have the right kind of skills they are looking for, you will have to excel at all of the interviews and you will also need to get the offers relatively around the same timeframe. Hopefully this reiterated why planning is important.
STEP 8: The actual negotiation
This is the step that people find the most stressful because it is bit of a tug of war -- the company wants to get the best candidate at the lowest offer, and you as the candidate want the best offer from the company you want to join. But, if you think of it, this step is only stressful if you haven't planned the process or aren't prepared. If you've followed all the previous steps, it is simply a matter of presenting the data. My suggestion here is to be straightforward and honest. If you have a specific company among the offers you really want to join, let them know and present your competing offers. The conversation can be as simple as this -- "Thank you so much for the offer. X is my top choice and I really love this team or project. However, I have offers from Y and Z as well, and this offer is a a fair bit lower than those. I'd love to join X if you'd be able to match offers from Y and Z." Also, if you are waiting for another offer to come in, it is totally cool to state that and ask for time. Companies are happy to wait for a reasonable amount (like a week or two) to allow you to make an informed decision. Sometimes recruiters can get pushy, resist the pressure and stay calm. If you have direct contact with the hiring manager, you can let them know of your situation, too!
Avoid dishonesty at all costs though. And also, don't do this thing where you ask one company to match, then take that to another company and ask for more, then go back to the first company ... this is just cringe. You may get a little bit more, but it isn't worth losing your integrity over it. If you expect your first choice company to not only match but offer slightly higher, let them know of your research and what you expect right up front. But if they do offer what you asked for, make your best effort to accept the offer and not flip-flop around. I know a lot of folks think about compensation as purely a business transaction in the corporate world, but I think there is still a lot of value in honestly and integrity.
And finally, I do genuinely believe that compensation shouldn't be your top metric in deciding the company or the team you want to join. You will be much happier on the long run if you join a team that you are passionate about, or you have clicked with -- that's worth more than having a few thousand extra dollars every year. At least that has been my experience, so thought I'd throw it in there.
