Silicon Valley salary negotiation?

August 11, 2012 6:20 PM

Considering a position as a Senior Software Developer in Mountain View, CA. The company has already indicated that they want to hire me - we are in the salary/compensation negotiation phase and I need some advice.

Considering a position as a Senior Software Developer in Mountain View, CA. The company has already indicated that they want to hire me and we are in the salary/compensation negotiation phase. They recruited me from my current tech position (where I am pretty happy). I started at my current company the day after I completed my (relevant) PhD. They made a generous initial offer and I accepted. In the 5 years I have been there they have offered raises and promotions at reasonable intervals and so I have never been in a position to negotiate a salary.

The current company is asking for my "Compensation Expectations" as well as current income/bonus information. I have been told that the person who proposes the first number is in a weaker position but I am not sure how to proceed at this point. I am in the fortunate position where my skill set is quite valued and up to now have been offered compensation accordingly. I am inclined to give the information they ask and name the number that I expect to earn without much room for negotiation. Is this a foolish move?

Since this in anon here are some details. I took home 140k last year (including 12k in bonus, base around 105k and the balance patent payouts etc). This tech salary is in a medium city with a low cost of living (or 3 bed/2 bath home would sell for $240k). Given that the new position is in SV and the type of position it is I intend to ask for around $225k. I have a PhD in Eng from a good university and have worked in software development for a competitor for 5 years since graduating.

I have consulted websites such as glass door and asked the one person who I know to have been in a similar position but now I turn to you (future coworkers and Valley insiders) for help.

So my questions are as follows:

1. How do I best handle this compensation expectations business?

2. Am I reasonable in my salary expectations?

posted by anonymous to Work & Money (14 answers total)

You can ask for $225k, but I think it's a long shot unless you're interviewing at Netflix or somewhere similar that doesn't offer separate stock and bonus and other perks, and everything is just rolled into your base pay. To compare, I know people with more experience than you who went to places like Cal Tech and are making in the $160's, as base pay, plus stock and bonus and such. You'd normally negotiate base salary and stock separately, and see what the company says about bonuses (as they're not normally guaranteed).

Note that you can make $165k base and still clear over $200k easily with stock and bonus.

Also, with 5 years experience it doesn't reall matter where you went to school unless you still have connections from there.

Also, if it's Google, ask for as much as you want, they have lots of money.
posted by tylerkaraszewski at 8:00 PM on August 11, 2012

Really, really depends on the sector and the company. Senior Eng III for example median is 170k at my previous employer (total comp was much higher; bonus target was 17% and they regularly hit it -- unlike most).

memail if you want to talk specifics.
posted by rr at 8:01 PM on August 11, 2012

I can only comment on your tactics, not the relative value of the position. I think if you are happy with your position or willing to stay, I would do exactly as you were thinking. Tell them your number you would need to leave with little room. Explain the cost of living issue. Then see what they say.
posted by JohnnyGunn at 9:48 PM on August 11, 2012

Salaries are certainly higher in SV compared to the rest of the country, but they definitely don't scale with housing prices.
posted by zsazsa at 9:58 PM on August 11, 2012 [4 favorites]

I still don't know where you're getting the $225k number from. You say it's based on housing costs and 'the type of position it is'. Is it a standard payment for "Senior Software Developer"? For "Senior Software Developer" with 5 years of experience and PhD? If so, great. But salaries absolutely don't scale with housing prices in Silicon Valley. They're a bit higher, of course, but it's not a multiplier.

For how to negotiate - my experience has always been that I give a number (either expectation or what I'm making currently, depending on what they've asked for) and they use it more or less to confirm that yes, we're talking about the right position. Then they come back with some number that bears no noticeable relationship to the number I named (at least, none that I can see. Sometimes it's higher. Sometimes it's lower. Sometimes it's much higher). I've asked and it seems like some companies have pay grades defined for different kinds of work and experience levels, other companies go for basically what they think they need to pay you so someone else won't steal you away with more pay.

As a note on the next steps, it's not like negotiating for a car or a house where you actually decide together on a number. Especially once they've decided to make you an offer, they have a number that's approved as part of that. Unless you have a lot of personal negotiating leverage (there are 50 people in the world with your skill set, you're an exec, maybe a director-level position) there's not much they're going to want to do to the base number after that. You might be able to get some perks or a signing bonus or the like, so you can always ask. This IS your best chance to legitimately express your salary expectations.
posted by Lady Li at 11:01 PM on August 11, 2012

Unless you know the company typically offers those kinds of salaries right off the bat, it seems like a pretty huge jump. I can't imagine a difference of more than 30% due to location, in a similar position. And generally, when moving companies, I've seen people ask for the same salary they had or only slightly above.

If you provide salary numbers that are waay too high (like 1.5x of what they consider reasonable), they might just drop the conversation with you by assuming that there's no way they'd be able to meet your needs.

If it's strategically possible, I'd recommend giving them your current salary information and saying that you'd like to make sure it's adjusted for location and an increase over your current salary (if this is what you are looking for), and then letting them come back with an offer.
posted by haykinson at 12:12 AM on August 12, 2012

I have not seen Sr Dev roles at that compensation in the valley except in rare instances. If your PhD is in a specific obscure language/framework that the new company uses, there may be some leverage, but for the most part, I've not seen a general Eng PhD plus the experience you describe get someone much more than, say, $180k. I would not expect over $200k unless there was an additional significant management component, either of people or of product.
posted by judith at 2:22 AM on August 12, 2012 [2 favorites]

$225K for the base salary is an insane demand. You'd be lucky to get $150k.
posted by w0mbat at 10:26 AM on August 12, 2012 [1 favorite]

I know there's a hiring crunch in the valley, but $225k strikes me as unrealistic for an engineer with 5 years of experience. I mean, if it's a really big company and they really want you, you might get $200k total with guaranteed bonus, stock, etc, but I wouldn't hold my breath for it.

I think it's strange that you're including patent payouts in your total salary. If you are getting money for them at your current company, ask about the possibility of that at your new company, but it shouldn't factor in to your base salary either way.

I think you should expect closer to $150K base plus some sort of expected bonus and stock. Feel free to ask for more, but if you won't move for less than $200K you're probably not going to move. Giving them little negotiation room is fine if you're happy with staying where you are.
posted by ch1x0r at 2:38 PM on August 12, 2012

Swing by your local library or bookstore and flip through Ch9 of What Color is Your Parachute for some pointers on salary negotiation. I just finished it today. Some points from the book that focus on your first question and whether it is foolish to give the company your information:

-the purpose of the negotiation is to discover the most the employer is willing to pay to get you
-never be the first one to mention a salary figure
-if asked to name your figure, the countermove should be "well, you created this position, so you must have some figure in mind, and I'd be interested in knowing what that figure is."
-research the range the employer likely has in mind, and then define an interrelated range for yourself, relative to the employers range

In my opinion, don't provide your current income/bonus information.
posted by Hermanos at 2:53 PM on August 12, 2012 [1 favorite]

(Context: I've worked as an engineer for Silicon Valley software companies for the last 10 years, but not in Silicon Valley.)

If I were you, I wouldn't shy away from naming a number if it's really in the ballpark of what it would take for you to make a move. Be ready for them to walk -- that's how negotiation works. You'd rather not waste your time if they're not going to meet your requirements, and often the interview process will leave you emotionally invested enough that you'll be susceptible to a low offer. Great recruiters (figuratively) seduce candidates into bad deals if the negotiation happens at the end of the process, and recruiters in SV know how to push the right buttons to get engineers to sign low offers.

The way I would phrase it is that you're looking for an OTE ("on-target earnings," so including expected bonuses/profit-sharing but not stock options) of $225k and then let them counteroffer. YOU WILL NOT END UP AT $225k, so don't get hung up on that number and don't make it non-negotiable. If they counteroffer, it will either be for less money or a lot less money and a chunk of options, and then you'll go back and forth. If they counteroffer for significantly less (say 10-20%) with nothing to offset it, be polite but drop them. They may call back.

Do NOT tell them your current salary; they will just add 20% to it and tell you you're being unreasonable to ask for more. Ignore the people here who say your demands are unreasonable, since only you know what it will take to make it happen. Ignore salary sites, as they are based on the same surveys HR departments respond to with low numbers and then use to keep compensation down. Glassdoor is a little different, but its numbers for the companies I know are way below what those companies pay their top talent.
posted by backupjesus at 4:56 PM on August 12, 2012 [1 favorite]

I should make it clear when I say you won't end up at $225k, I mean you won't end up at your opening offer, not that no company will pay $225k. If $225k is the absolute minimum you'll take, start at $240-250k to leave room for negotiation.
posted by backupjesus at 5:23 PM on August 12, 2012

I think 225k is probably a reasonable amount, depending on your skills and general abilities. It's not unheard of for talented software developers to be getting 7 figures these days, but that's for the top 1-2% or so. If you can reasonably claim to be in the top 10% and your skills are in demand, I think 250k+ is a going rate.
posted by TheOtherSide at 5:52 PM on August 12, 2012

As another data-point, average developers with 8 years of experience go for 140k on the east coast, and that's with lower costs of living. I've interviewed several people recently who were making 250k, and I thought that their skills were above average, but not extraordinary.
posted by TheOtherSide at 5:54 PM on August 12, 2012