Prospective hires are leaving money on the table

AT&T - DirecTV call center - screencap
Employees are coming on board without maximizing their earning power.

Companies are finding that new hires may be leaving money on the table when they are brought aboard, though what may seem to be a money-saving move for employers can have negative long-term implications for quality of work.

Leaving room to negotiate job offers has been a long-standing business practice. And, “in the short term, paying less for employees’ salaries can be a good thing for a company’s bottom line,” said Rosemary Haefner, chief human resources officer of CareerBuilder. “However, it’s important to think long term as well. To retain talent and promote employee engagement, make sure your salaries are competitive and that employees feel they are being fairly compensated for their work.”

More than half (56%) of prospective employees do not negotiate for better pay when they are offered a job, a CareerBuilder survey found.

Those who avoid negotiations say they don't feel comfortable asking for more money (51%), are afraid the employer will decide not to hire them (47%), or they don't want to appear greedy (36%).

It's OK to negotiate with a future employer, said Daniel Duty, CEO of Conlego, a business consulting and negotiation firm. “If done thoughtfully, negotiating with your future employer can demonstrate qualities, like strategic thinking and problem-solving, that will confirm they made a great choice in selecting you and make them more likely to give you what you are seeking.”

While most job candidates shy away from negotiating, 53% of employers say they are willing to negotiate salaries on initial job offers for entry-level workers, and 52% say when they first extend a job offer to an employee, they typically offer a lower salary than they're willing to pay in order to leave room to negotiate. How much is being left on the table? More than a quarter of employers who offer a lower salary say their initial offer is $5,000 or more below what they are willing to offer.

Who is most likely to negotiate?

  • Age: The survey found that a new hire's willingness to negotiate the first job offer may come with more experience. Forty-five percent of workers 35 or older typically negotiate the first offer, which is a higher rate than workers ages 18-34 (42%).
  • Gender: Nearly half of men (47%) say they negotiate first offers, compared to 42% of women who say they do.
  • Industry/function: Information technology workers (59%) are the most likely to negotiate salary, followed by sales (55%), financial services (53%) and healthcare workers (48%).

Money is on workers' minds

When asked what motivates workers to do their job, 71% say the ability to provide for themselves and their families, followed by money (63%) and the ability to create something meaningful or cool (21%).

While finances are a top priority for workers, 79% say they do not earn their desired salary—more than a third (36%) say they don't earn anywhere near it—and more than half say they do not think they are better off financially than their parents.

While only 8% have current salaries of $100,000 or more, 21% say they feel they need to earn $100,000 or more to be successful.

Is cash being left on the table?

Those who don't have the courage to ask for more money might be missing out. More than 3 in 5 employers (63%) say they feel they have to pay workers more because the market is getting more competitive for talent, but more than half of workers (51%) have not asked for a raise. Additionally, more than 7 in 10 workers have accepted a job when they knew their skill set and experience were worth more than what they were getting paid.

Tips for a successful negotiation

Every negotiation situation is unique, but Haefner offered these strategies that can help negotiate the terms and conditions of employment:

  • Ask all of your questions: It's important to have all information on the table before you accept or reject an offer. It's okay to ask questions such as: Is this base only? When would you like an answer? Will there be a sign-on bonus? How will I be evaluated, and will there be an increase based on that evaluation?
  • Treat negotiation like a job interview: Remind the employer of the experience and education you have and why you are worth more, but understand the employer's restraints. There may be a salary cap that no amount of negotiation can loosen.
  • Consider more than the salary: Negotiating a job offer and negotiating a salary are not synonymous; consider the other factors that can be negotiated that greatly impact the role and overall happiness with it, such as responsibilities, location, travel, flexibility, opportunities for development and perks.