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I can only speak for start-ups (5-150 people), but here's some general advice given the context of how the business is likely managing the process. After inter

I can only speak for start-ups (5-150 people), but here's some general advice given the context of how the business is likely managing the process. After internal stakeholders have agreed that new hires are needed, a salary range is agreed upon verbally or in email by the CEO/CFO and the person asking for the new hire (lets call them the hiring manager). Experienced hiring managers will probe for things they can offer that are non-cash compensation, like stock and benefits. Accounting/finance is then roped in to make sure everything being offered is sane, and we're just hoping they don't scare the CEO by telling them we're 25% above plan for new hires (this happens a lot). You end up with something like "Front-end Programmer $120-140k", and finance updates their models to include the new hires so that execs can see the impact to cash burn. Chances are high that many other roles are open at the same time, because doing this ad-hoc is a PITA. This can take a few days to a few weeks depending on the maturity of the team, and the end-result is some job requirements that get posted on the company website and used to push out to recruiters or personal networks. At this point the CEO is already updating org charts and thinking about how to communicate the new hires in the next board meeting deck, and how to market the work the new hires will be contributing to. Why is this all important? Because this is the weight of the work you're pushing against when your salary negotiation goes above the high-end of the range. You see, if your salary is within range then no extra work is needed by the hiring manager or company to make things work. Better yet, if you come in at the lower-end of the range then the company has saved money! Big win, since it always feel like cash burn is faster than expected. Maybe the "extra" cash is added to the remaining new hires pool, or better yet returned to the company for other uses But if you're above the high-end, the hiring manager has to go back to the business and "fight" to get approval. The CEO has already approved the updated financial model, which the team spent a week or more updating with furious back-and-forth and long nights. So when the hiring manager broaches the subject of needing an extra $X to make this new hire work, a dance begins with internal stakeholders that have already spent weeks on already-agreed-upon numbers. Going through the process of updating all of this can seem daunting. An inexperienced hiring manager may not know how to tackle this situation, so rather than deal with defending the extra money will just pass on the candidate. Maybe the candidate is a close friend or former colleague, so even an inexperienced hiring manager will figure out how to make a "plea" even if communicated poorly. Experienced hiring managers will have a few tricks, such as communicating the benefits of the extra cost in a way that appeals to management. Really context-dependent. I've even seen some offers doubled, because the candidate was so appealing and the hiring manager so good at marketing their contributions. Now here is the hard part - how do you, the candidate, know what the upper range is so that you can ask for it without telling them your prior salary which may anchor you to the lower-end? This is why you want the company to make the first offer, because then you know a bit more about the range. They offer $120k, so you know you can probably safely go to $130k without much trouble and $140k with a little effort. $150k? Well, now the hiring manager needs to begin to negotiate. There may also be a recruiter in the picture, which doesn't change the internal negotiation dynamics but does make the experience "lighter" for the hiring manager and candidate because there's less face-to-face emotional turmoil. My advice? Keep in mind the importance of the range, and that you're asking the hiring manager AND other people in the company do more work to accommodate your ask. Don't expect your hiring manager to know how to navigate this process, and be prepared to help them make the case that you're worth it.

darkerside 5y ago
Great comment that I hope doesn't get lost at the bottom.
xyzzy_plugh 5y ago
This sounds correct in theory but in practice nothing you mentioned actually matters. I'll explain why. If you hire 1 in 15 employees for significantly more salary than the other 14, it makes almost no difference for budgeting, forecasting, burn rate, etc. If every employee costs you $250k/yr, and you have 15 employees and no other costs, your burn rate is $3.75MM/yr. If you have $25MM in the bank, you have 6.66 years of runway. If you pay a single employee $50k/yr more, then that's 6.57 years of runway. If you pay them twice as much ($500k) that's 6.25 years. The larger the company, the easier this becomes as so few people actually negotiate higher salaries, or are important enough to warrant dramatically larger salaries, that it becomes a rounding error. Model, projections, salary bands -- and of course rules -- were all made to be broken.
- tomnipotent 5y ago
  > but in practice nothing you mentioned actually matters I've run P&L (and hiring) for a long time, so far from just theory. It absolutely makes a huge difference. Salary is easily the largest expense for a vast majority of businesses, and especially for fast growing start-ups it can quickly get out of hand. If a company lives long enough, it will eventually have a lay-off or some sort staff reduction event like post-acquisition bleeding. It's a right of passage. > If you pay a single employee $50k/yr more Except it's not just one employee, especially in the growth stage. You end up with a situation where you have 10-15 new open hires, and over the course of a few months you fill them and several of them end up going over budget, because the needs of hiring outweigh financial sense in the thick of getting things done. Each decision was made individually and in the throes of running a company, so what seemed fine as 1-off decisions quickly aggregate into a problem. So then you do your next budget review and compare to plan, and you're suddenly 15% above plan. You were supposed to add $1M in payroll to SG&A, but the latest sheets show it at $1.25M. Keep in mind you're a start-up, so revenues are not stable and if you're Series C may be operating under the assumption that no new cash is ever going to come in. > then that's 6.57 years of runway No start-up is operating with 6 years of cash to burn, and certainly no early-stage companies where investors are putting pressure on you to spend to grow. Nice thought, though. > the larger the company, the easier this becomes as so few people actually negotiate higher salaries Larger companies have more flexibility, but even more strict budgeting. The flexibility is because of the float on min/max of salary bands, which when combined gives HR a lot of room to customize packages. But overall, most companies still tightly manage payroll and headcount expenses because it can literally break the bank.

darkerside 5y ago

Great comment that I hope doesn't get lost at the bottom.

xyzzy_plugh 5y ago

This sounds correct in theory but in practice nothing you mentioned actually matters. I'll explain why. If you hire 1 in 15 employees for significantly more salary than the other 14, it makes almost no difference for budgeting, forecasting, burn rate, etc. If every employee costs you $250k/yr, and you have 15 employees and no other costs, your burn rate is $3.75MM/yr. If you have $25MM in the bank, you have 6.66 years of runway. If you pay a single employee $50k/yr more, then that's 6.57 years of runway. If you pay them twice as much ($500k) that's 6.25 years. The larger the company, the easier this becomes as so few people actually negotiate higher salaries, or are important enough to warrant dramatically larger salaries, that it becomes a rounding error. Model, projections, salary bands -- and of course rules -- were all made to be broken.

tomnipotent 5y ago
> but in practice nothing you mentioned actually matters I've run P&L (and hiring) for a long time, so far from just theory. It absolutely makes a huge difference. Salary is easily the largest expense for a vast majority of businesses, and especially for fast growing start-ups it can quickly get out of hand. If a company lives long enough, it will eventually have a lay-off or some sort staff reduction event like post-acquisition bleeding. It's a right of passage. > If you pay a single employee $50k/yr more Except it's not just one employee, especially in the growth stage. You end up with a situation where you have 10-15 new open hires, and over the course of a few months you fill them and several of them end up going over budget, because the needs of hiring outweigh financial sense in the thick of getting things done. Each decision was made individually and in the throes of running a company, so what seemed fine as 1-off decisions quickly aggregate into a problem. So then you do your next budget review and compare to plan, and you're suddenly 15% above plan. You were supposed to add $1M in payroll to SG&A, but the latest sheets show it at $1.25M. Keep in mind you're a start-up, so revenues are not stable and if you're Series C may be operating under the assumption that no new cash is ever going to come in. > then that's 6.57 years of runway No start-up is operating with 6 years of cash to burn, and certainly no early-stage companies where investors are putting pressure on you to spend to grow. Nice thought, though. > the larger the company, the easier this becomes as so few people actually negotiate higher salaries Larger companies have more flexibility, but even more strict budgeting. The flexibility is because of the float on min/max of salary bands, which when combined gives HR a lot of room to customize packages. But overall, most companies still tightly manage payroll and headcount expenses because it can literally break the bank.