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Common mistakes in salary negotiation

interviewing.io

221–230 of 467 posts

Re: Common mistakes in salary negotiation

#221

I used to work in trading and I think some of the principles I learned there apply directly to salary negotiations. Two key things I think about all the time are price discovery and competition. Price discovery means that in some illiquid markets, you don't really know what a thing will trade at unless you try to trade it (which itself reveals some information to the counterparty but that's not important in the job c…

> From that point of view, I am always surprised to hear people who hate interviewing, are reluctant to interview, etc. Interviewing is the only real way to learn "the market" Interviewing may be the best way to gather market information, but does that make it surprising that people hate doing it? There are very few activities I hate more than taking part in a job interview (on either side of the desk). That it's use…

>but does that make it surprising that people hate doing it?

When an activity validates you, it's tough to imagine other people having the opposite experience with it. Imagine every time you went to a round of interviews you were offered riches and status. It would be tough to understand why others just didn't muster up the gumption to go downtown and get what they're worth.

Re: Common mistakes in salary negotiation

#222

Earlier quoted context omitted.

I don't think how you say it is as critical as understanding the concept. When I am interviewing, I am usually talking to a few companies at the same time, so my answer is usually "While I don't want to throw out a number, just wanted to be transparent that I am talking to a few companies and have/expect to have another couple of offers before I make a decision. Obviously how those offers come in will be a factor in…

yeah but I was raised to be a good kid and do what the teacher or adult authority figures tell me to do. Even though I'm an adult now, when a fast talking recruiter demands to know some numbers I have a hard time not just folding and giving in! I would need to print out those words and paste them on the wall and like practice 10 times with a friend playing the role of sneaky recruiter.

That's a funny and impressive sense of self awareness.

If I may, I wouldn't think of the recruiter as an authority figure (they have none...) Rather they are your partner. Their best case scenario is that you are a good candidate for their job and they get to fill it. Which is also your best case scenario!

So it's more about how do you get there together collaboratively - at least that's how I frame it in my mind. So when they ask for something I don't want to share I respond more from the frame that it's not the piece of info that would help right now but here's how we should play it.

But your script is definitely a good start!

Re: Common mistakes in salary negotiation

#223
post #208

Earlier quoted context omitted.

My rule is that nobody is working for the buyer or seller. Everybody is working for the sale.

Very much this. It is actually a real scandal that realtors make a share of the sale as opposed to a flat fee. The paperwork and all is the same regardless of if it's a condo or a mansion.

Paperwork is the same, but other work is not.

The time, and marketing, costs of a property tend to go up with price. If I'm buying a 12 bedroom mansion, I'm going to expect a lot more photos, better staging, and so on in the marketing compared to a 1 bed apartment.

Equally small, cheap, properties are likely to sell faster (bigger buying pool) than more expensive ones. That $20m mansion is going to take a lot more visits than the $200k apartment.

In other words, there is sufficient variability in the cost of selling to warrant a sliding fee. And generally the best way to do that is as a % of the sale. A % BTW which is negotiable based on how fast the realtor thinks the property will sell, and the sale price expected.

Re: Common mistakes in salary negotiation

#224

How do you avoid wasting your time doing interviews with companies that have no intention of paying you what you expect without disclosing some form of salary range upfront? I've generally taken what I want to make in the role and added 20% to it as a starting point. While this might limit me, it also keeps me from doing 100 onsite interviews only to discover their max is 2/3 of my expected comp.

Precisely. The article misses a third bullet point: 3) Many recruiters will say yes to everything and anything to get you into the interview seat And if you're juggling multiple FAANG offers in the same week, you probably don't need salary negotiation tips.

FAANGs can be _really accomodating_ money-wise if they badly want you. The initial offer is normally final except when it is not.

Re: Common mistakes in salary negotiation

#225
This reminds me of a conversation I frequently have with my dad and family. I have my cash investments in a cash plus account, earning 4.7% interest. They're all hooked on T-bills and laddering, which has a current rate of 5.55%. I'm finishing my PhD program so don't have a large investment. Let's say $10k for easy math. At 4.7% that's $480.26 on return, while 5.55% is 569.34, a difference of ~$90. In my cash account, I am: FDIC protected, can withdraw and deposit money at any time, and am able to employ a "set and forget" strategy. With the T-bill method I need to lock my money in for 6 months at a time and realistically laddering this decreases my gains. I have to be quite active to perform this. Here's the question, is that time worth $90? To me, no. I'd much rather spend that time doing my PhD work or taking breaks to do things like visit HN. Not worry about my finances and squabble over money that isn't significantly meaningful and is small compared to my expectation in a few years. Any time spent following the active strategy is time that would be better invested investing in my PhD work, where the expectation of return is several hundred thousand of dollars a year. Even were my investment 10x, we are talking the difference of This is a common mistake I see in all types of modeling (stock investing, time estimation, quality assurance, etc) and is exactly the same game afoot here. Like the article says, we assume a recruiter's interests are aligned with ours since the more money we make the more money they make. But this is a poor model because we are not our recruiter's only prospect. And, like the article discusses, their returns are diluted. The recruiter's more optimal strategy is to not hold all their eggs in one basket. To diversify and operate on quick turnover rather than a not-so-golden goose. External costs and auxiliary factors often play critical roles in models.

The devil is always in the details. Nearly everyone I talk to believes that a first order solution is at worst non-optimal, but relatively aligned with the target function's trajectory. But when we look deeper and include nuance, we actually realize that our first order approximation is in the opposite direction! I hear "don't let perfection get in the way of 'good enough'" or similar cliques. But there is such a thing as having too naive of a model. Many functions necessitate even considerable "nuance" (orders of approximation), as an example sin(x). The real world is far more complex than the sine function. It thus necessitates understanding the limitations of our approximation, rather than simply approximating.

Don't let "good enough" get in the way of __good enough__.

Nuance isn't equivalent to pedantry.

Re: Common mistakes in salary negotiation

#226
> The main question recruiters ask up front about money is: “What are your compensation expectations?” They claim that it’s because they want to make sure that you’re not so far off in your expectations that interviewing with that company would be a waste of time. This is a nonsense reason — very few companies pay so much below market that it would be a nonstarter. Those companies know who they are, and they know to give you a heads up that they pay below market.

This contradict my own experience with companies who pay below market trying to mitigate this by lowballing with an even more below market offer, acting surprised at the market salary you say you're interested in, and then making a show of reaching deep into their coffers to make you a "generous" offer that's closer to (but still below) market.

Re: Common mistakes in salary negotiation

#227
post #160
post #147

> My general policy with third-party recruiters is to not tell them ANYTHING and to always deal directly with the companies they introduce you, once you establish a point of contact there. You should assume that anything you tell your recruiter is going to get back to every company you’re working with. Why? Because their primary objective is to place your butt in the seat of one of the companies they’re working with,…

> If you want $200,000, $400,000, whatever, just say so. BEFORE you start any interviews. Unless the number you give is significantly higher than any of your potential employers are ever going to offer you, you are shortchanging yourself by giving that number--it means that you have now foreclosed potential higher offers that otherwise might have come your way. That is the basis of the advice given in the article. I…

You argument is essentially hanging on the assertion that the first number an employer would offer is also the maximum number it could offer. I know exactly one company that operated like that: they'd make the maximum offer and if you did not like it there was no further negotiation. Most companies don't do that (neither does that one any more, the CEO who had this policy had retired a while ago).

What I've observed in my experience is that most companies will try the minimum offer regardless if you tell them your requirements or not, which makes sense since they do research too and unlike yourself their HR has much more experience and data for that. If you were asking less than the minimum they were willing to pay they will likely still pay the minimum as the sibling suggests, there is no point to save and get to hire again for the same position in a couple of months.

I think it's an illusion people get when they ask for a number and get it without much fuss. It makes them think they asked too little but in reality the hiring manager had the range like 200-250 and you asked for 210. Why would he bother to try to push you down to 200? On the other hand, why would he offer anything other than 200 if you did not ask?

Re: Common mistakes in salary negotiation

#228

I used to work in trading and I think some of the principles I learned there apply directly to salary negotiations. Two key things I think about all the time are price discovery and competition. Price discovery means that in some illiquid markets, you don't really know what a thing will trade at unless you try to trade it (which itself reveals some information to the counterparty but that's not important in the job c…

> Like if you always get offers at the low end of a range - or if you always fail interviews - is very good signal that you can act on.

Can you elaborate on that? I'm not seeing why these are good signals to act on.

Re: Common mistakes in salary negotiation

#229

I used to work in trading and I think some of the principles I learned there apply directly to salary negotiations. Two key things I think about all the time are price discovery and competition. Price discovery means that in some illiquid markets, you don't really know what a thing will trade at unless you try to trade it (which itself reveals some information to the counterparty but that's not important in the job c…

> Like if you always get offers at the low end of a range - or if you always fail interviews - is very good signal that you can act on. Can you elaborate on that? I'm not seeing why these are good signals to act on.

The signal is that you don’t present well and need to work on that.

Re: Common mistakes in salary negotiation

#230
post #144

Earlier quoted context omitted.

You're right, but I imagine there is wiggle room - both in scheduling interviews from 5PM to 7-8PM, as well as trading day job business hours needed for interviews for "working late" (really making up the time) for stuff that isn't meetings or synchronous. If you're hustling toward a $300-600k/yr gig, I think a lot of temporary insanity can be tolerated in furtherance of that goal. Remember also that salary increases…

Works well in theory but not in practice. Your peers/managers will soon notice and figure something’s up especially if each of the interviews has 5-6 rounds(which is what you’d usually expect for a position paying $300k-$600k) > Remember also that salary increases compound over your working career. Not true. As demostrated by 2021-2 outrageous offers where the market is now correcting itself.

> Not true. As demostrated by 2021-2 outrageous offers where the market is now correcting itself.

Are many people taking salary cuts? Layoffs?

Enough so to bring them back to where they started?

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