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To Negotiate, or Not to Negotiate

If you’re a first-year MBA student, chances are better than even that you’re currently in the midst of internships interviews. And, although negotiating a job offer is normally a topic of consideration for full-time positions, I’ve increasingly encountered the question with regard to internships too.  And the short answer is “no,” internship offers (with the exception of a fundamental question such as whether the internship is paid or not) are not negotiable; they tend to be standardized, and all MBAs who summer at a particular company are paid the same amount, a fact which does not necessarily hold true when it comes to full-time offers.

For ~8 to 10 weeks of summer work, the question is not how highly one can be compensated, but whether the effort leads to a full-time offer. The compensation should be enough to bridge the gap, financially, between the first and second year of school for those enrolled in two-year programs. Whether or not to negotiate the terms of a full-time offer then becomes a more interesting question, but not in the ways that most students necessarily expect.

Primed by the skills and strategies acquired in MBA negotiation classes, conscious of unfair gender-based wage gaps, and all too susceptible to the feeling that someone else out there might be driving a harder bargain, many of the MBAs I meet feel they are short-changing themselves if they don’t bargain for more favorable terms. The focus for most students, thus, is on “how to” negotiate a job offer, and the act of negotiating itself feels like a foregone conclusion and a necessary part of the process, not least because many MBA recruiting guides list “negotiating your offer” as simply the last, inevitable step in a job search process that begins with research, leads on to applications, interviews, and offers, and culminates, inexorably, with trying to extract a better deal.

For those students who seek individual guidance from MBA career service advisors, the approach usually becomes more tempered. Maximizing one’s compensation often takes a back seat to, or is at least balanced with, ensuring that goodwill and positive perceptions are maintained in the months before a new MBA graduate joins a company. Being able to eke out another $20-40K in an effort to maximize one’s signing bonus or minimum guaranteed performance bonus, for example, seems less significant in the long-run, especially when being recognized and truly well-rewarded for one’s efforts in any new role is almost always a function of how one does on the job rather than what one was able to secure during the offer period (for additional thoughts on how companies view this process, see also The Opportunity Cost of Hiring an MBA from the Employer Perspective, Part 2).

If a student does negotiate a full-time offer, there must always be a distinctive difference, a clear reason why that candidate deserves more than the standard offer relative to his or her classmates. (Simply wanting more money for its own sake is not an unusual motivation, but not one that tends to impress hiring managers, in my experience.) But, of course, those reasons do exist. … A candidate may have significantly more experience in a specific field than her MBA classmates with the same offer, for example. Or, significant personal circumstances may differ: for example, the amount of relocation money required to transfer a new MBA hire from Philadelphia to New York City might not be that great, but this is not the case if the MBA graduate’s spouse and kids live in Switzerland and must move to the U.S. to rejoin that grad.

In most instances, base salary and signing bonus, though they tend to attract the most attention, are usually the most difficult items to negotiate. Companies are hard-pressed to justify hiring students at different rates when all of those new employees often join the company as part of a single “MBA class,” experience the same on-boarding, job titles, and levels of responsibility, and are held to a roughly uniform set of performance standards. However, the non-compensation based aspects of one’s offer – the so-called intangibles – can offer a meaningful source of value for new MBA hires.

Two offer terms that can often be successfully negotiated include: choice of start date and/or choice of office. In the former option, shifting the start date to a later time actually gave companies a reprieve during the most recent economic downturn by allowing them to secure new MBA hires, while letting them take more vacation time (effectively) or giving them an opportunity to pursue other projects prior to starting their full-time positions (including company-sponsored language learning, in some instances, that was thought to benefit the hiring organization in the long-run) – and, thus, keeping those hires off the balance sheets until business picked up once again.

The latter option, negotiating joining a different office location, varies depending on the circumstances. Getting a great offer to join a company’s Midwest office, only to declare that one would really prefer to live in New York City or San Francisco is not only (and almost without exception) very difficult, it’s also a good way to destroy the goodwill described above. Something of material consequence needs to have changed in the student’s life to explain why a different city is now the more logical place for a new hire to start his or her career with that organization.  A last word of caution for those who succeed in switching their offer to a new city: the collective warm, fuzzy feelings about a candidate that have been built up during the application and interview process are likely to be cancelled out by switching offices, and the new MBA hire may face the prospect of joining a new team and a new set of colleagues who feel that they’ve had relatively little buy-in and investment in that individual.

But, there are still other options. I’ve worked with an international student who was given an offer to work in his home country (where his skills and marketplace knowledge were most directly applicable from the employer’s perspective), but who managed to negotiate a guaranteed rotation back to the U.S. after a set period of time working in that home country office … a neat way to join a multinational company in a part of the world where one has clear competitive advantage vis-à-vis other MBA hires, but also to be guaranteed a stint (and potential longer career-path) back in a major U.S. city, right at the time when that MBA hire could expect to be promoted to a higher level of responsibility and to be on track to take on a true leadership role in the company.

Another option, for those who may have greater domain expertise or more years of experience in a given field, is not to ask for greater compensation, or a higher title and rank, but to request an accelerated performance review timetable. Instead of being evaluated for promotion at the end of year one or year two as an MBA associate, that new hire would receive a performance review, and potential promotion, at the end of six to nine months, and would then be working at the level he or she might have felt was a better fit all along. … It’s a good way to signal confidence in one’s abilities and expected level of contribution (assuming, of course, that one can deliver greater value than the other MBAs hired at the same time).

The take-away for all MBA candidates is to think carefully before negotiating an offer, to avoid thinking of it as an automatic rite of passage, and to be careful about burning up one’s social capital in an effort to eke out a momentary gain. For those who do negotiate their MBA job offers, the focus should then be on ways in which the candidate differs from other new hires (whether through prior experience or personal circumstance), and on creative ways in which the offer can be made more valuable to the candidate when the compensation terms are fixed. With regard to aspects of “how to” negotiate your offer, and how to balance the other factors – from requesting stock options to optimizing a benefits package – I leave that to the enterprising MBA with access to a good negotiations class as well as an internet connection and a good browser.

Ivan Kerbel  – bio:

Ivan Kerbel is the CEO of Practice LLC, an educational services firm that conducts an intensive, annual pre-orientation program for newly-admitted MBAs, The Practice MBA Summer Forum.

Ivan served previously as Director of the Career Development Office at The Yale School of Management and as a Sr. Associate Director at Wharton’s MBA Career Management office. He is a Wharton MBA alumnus and a former management consultant at Katzenbach Partners, a New York City strategy consulting boutique. Ivan can be reached via LinkedIn.