Although employees find salary negotiation stressful, employers accept it as part of the job. So when recruiters at a leading business school complained about how MBA candidates were negotiating job offers, the careers service took note.
Were candidates inflexible? Or too tough? No, they were annoying recruiters by claiming that the fat salaries on offer were not enough for them to live on. To encourage a more professional approach, and to meet the demands of students, business schools’ careers services now go to some lengths to coach their students to negotiate good deals and not annoy recruiters in the process.
All the coaching in the world, however, cannot buck global economic trends completely. As the financial crisis peaked in 2008, investment banking jobs evaporated and swathes of recruiters cancelled hiring visits to business schools. Many recent graduates have faced extended job hunts, or long unpaid internships. Many more than usual have gone reluctantly back to previous employers.
But while there are fewer jobs, salaries have largely held up. At Manchester Business School in the UK, the average salary of the 2009 class (graduating in March 2009) rose. According to Geoff Burton, a visiting professor who coaches MBA students at Manchester on salary negotiation, companies take a strategic view.
“It does not make sense for a serious employer to try and save £5,000 by cutting entry salaries,” he says. “In any case, they are competing against other recruiters.”
Even in the middle of the credit crunch, schools report the best students continue to receive multiple – as many as five – offers. As the economy turns, there is surprising scope for negotiation.
Katty Ooms-Suter, director of admissions and careers at IMD, in Switzerland, has seen excellent packages negotiated by the class graduating in December 2009. “We are seeing really good salaries,” she says. “And they are not just negotiating salaries, they are negotiating private schools for their kids, relocation packages, housing allowances, you name it.”
IMD students receive two lectures on salary negotiation from external experts as part of a career skills course at the start of their study. Later in the year, as students are job hunting, the school organises roundtable workshops for those negotiating with employers, where students role play different approaches with a coach. The career service reviews contracts as they are offered, to see what scope there is to ask for more.
Predictably, schools emphasise the value of research. “We advise our MBA students to make sure they have done their market research about the industry, sector and type of role [they are applying for],” says Sarah Juillet, head of postgraduate recruiting at Cass Business School in London.
This is one area where career services can help. They have detailed data about the deals that previous groups of students have secured. They also have contacts with local recruiters and headhunters, and can share data about current trends. Not that MBAs do not have their own information sources. As an item of gossip, who is getting paid what is almost as interesting as who is sleeping with whom. Most students quickly get an idea of going rates in different fields.
Business school networks can also help candidates with job offers to assess whether negotiation is possible. “We put people in touch with an alumnus in that company who can talk about the culture and how much room for negotiation there might be,” says Juillet.
Associate-level roles for banks and consulting firms, which include formal training, are generally not flexible. Firms know that these mid-career entry points are fiercely contested and offer a great stepping stone, and do not feel the need to compromise.
Outside these formal programmes, employers expect – or at least will not be upset by – a little negotiation. And if negotiation and dealmaking are part of the job being offered, it may be foolish not to try. “If you are interviewing for a sales or a procurement function, wouldn’t you expect the person to negotiate and negotiate well?” suggests Ooms-Suter.
So, with all this help at hand, do business school graduates negotiate better than the rest of us? Not according to Daniel Porot, who teaches salary negotiation to students at IMD and London Business School. “When times are hard, and people are scared, MBA students panic and assume, ‘I must cut my price’,” he says. According to Porot, this is strategically naïve. “It sends completely the wrong signal: that you are a commodity whose price rises and falls with the market,” he says. “Candidates should be emphasising their uniqueness and the specific value they bring the employer.”
However, candidates should tailor their pitch to the times, argues Porot. A proven ability to cut costs can be a key selling point in the current environment.
Burton of Manchester Business School agrees MBA students have room to improve. “MBAs tend to focus on basic salary, almost to the exclusion of anything else, because they see that as the determinant of their value. It almost becomes an emotional currency.”
This preoccupation means that students often ignore other elements of the job package. “People sign up for all sorts of contractual restrictions – like six-month notice periods, or prohibitions on working for a competitor – just to secure the big salary,” Burton says.
Shifting the focus from the basic salary can benefit both parties. Employers do not like to move salaries because they are reluctant to create a precedent. Because perks and other benefits can be more personal, a win for both sides is often possible.
Ooms-Suter of IMD cites the case of a student who was moving from an army career into the corporate world. “He negotiated a whole wardrobe on the basis that he did not have any business clothes after years in uniform,” she says.