Salaries & Negotiation
Negotiations
Negotiations can be in person or over the phone. It's best to both start and end them in person, though.
Before you engage in a negotiation process, it will help to keep three things in mind. The first is that it is important to ascertain what is policy and what is guideline; the second is the 3 Times Rule; and the third is to determine your bottom line and stick to it.
Company policy is usually set in stone. The individual manager will not be able to change it, therefore you will want to find another angle of approach. Guidelines, on the other hand, are flexible and allow individual managers options in the negotiation process.
The Three Times Rule refers to the adage that you can ask for something three times before needing to accept NO as final. If the answer is NO, the third time, move on to something else. Note: It's best to ask three different ways rather than reiterating the same question over and over.
Negotiating Salary
If possible find out what your peers at that company and industry are earning before accepting the offer. Check the following links for salary information for similar positions:
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It's okay to ask, "Is this salary commensurate with the others in my peer group"? OR "How does the compensation package that I'm being offered align with that of other people on the team?"
Note that between 30 - 35% of the salary package is usually non-salary compensation (benefits and perks).
Point out your value. "I will be up to speed within 30 to 60 days. I understand your reluctance to go above your midpoint with a currently unknown quantity. Can we agree to the additional $10,000 in 60 days if I meet expectations at that time"? (Be SURE to get these expectations drawn up in writing with a clear agreement that you will be given the additional amount if these expectations are met. Also be sure that you agree with the set expectations before you sign).
Ascertain THEIR motivation for hiring YOU. What is their need and what will you bring into the position to address this need? If you are at the top of your field, obviously you will have different skills and experience than someone just starting and therefore your value to the employer will be different from that of another person.
If you find yourself having to give a salary early on in the interview process, try to give a range rather than an exact figure. This is where doing your salary research prior to the interview will pay off.
A response to a salary history question: "My salary history is not what's going to determine this decision. What are you willing to pay for the position"?
It's okay to leave salary blank on your application or to state "confidential" for salary history or " negotiable" for salary requirements.
Remember that the negotiator will usually offer you an amount in the low to medium part of the range. This is not because they don't respect your skills, but because that's the way negotiations are handled. Ask, "Is there any flexibility in those numbers"? OR "That's great, but I am still looking for something closer to . . . " OR "What are you willing to pay someone to hit the ground running"?
A response to a mid-level offer: "I believe that I deserve the top income level because I bring everything you need to this position". OR "That's great, but I am still looking for something closer to . . ."
Find ways to negotiate more. "What's the possibility of giving me a $10,000 signing bonus now and a raise of $10,000 at the end of the year?"
You may receive the response, "We can't go that high". Ask "How close can you get"? Sometimes, the response will be "That's as high as we can go". Sometimes the response will be that there is some room to negotiate. If you don't ask, though, the answer will always be no.
Other Negotiations
If the answer is no to more money, ask about adding an extra week's vacation in lieu of the extra money. Many departments have discretion over time-off policies, and bonuses. Ask if something is a policy or a guideline. If it is company policy, the department manager won't have the ability to change it. If it's a guideline, they do. It may be a privilege that they haven't exercised previously though, so you will have to ask. One job seeker told me that they were able to add an extra week of paid and another week of unpaid vacation to their final package by asking.
If the money offered is okay, but something else is missing, you might respond: "The money is interesting, let's discuss the whole package".
Profit-sharing plans can add a sizeable additional bonus onto your base salary. Be sure you are clear as to how the profits are to be shared and have the agreement in writing. Find out the revenues and profits for the past three years and the projected growth for the next three. Use this to help you calculate a CONSERVATIVE estimate for the amount of your profit sharing for the next year, BEFORE you sign agreement.
Stock and stock options should be a sweetener on top of the deal, NOT part of the basic compensation plan. Pre-IPO stock shares are dependent on the number of shares outstanding rather than the value of the stock. As far as taxes, the IRS will tax you on the maximum worth for that year of your stock, NOT the minimum. Which means that if the stock loses value, you may end up paying taxes on money you don't have.
If you are asked if you are negotiating with someone else or have received offers from someone else, answer truthfully, but with discretion. If you are negotiating or interviewing with someone else, you may wish to respond "I can't reveal the names of other companies I may be negotiating with, but yes, I am negotiating with someone right now." Recruiters may ask you to name the company. Ask them to give you a name, and you will tell them whether or not you are negotiating with that company.
If you are asked to work for free BEFORE you are hired, DON'T! This is an employment scam. The putative employer will call this a period of 'observation', but it's nothing more or less than a scam. Report this immediately to your local Labor Board so that other job seekers are not victimized.
Severance Package Negotiation Questions
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If things don't work out with this project, or there is a reduction in force, what will happen to me? |
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If there is a force adjustment or redeployment, what could I expect? |
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In the event of an IPO or takeover, what happens to me? |
Before Accepting An Offer
Before you sign the offer letter, ask "What will I be expected to do to achieve this? What may I encounter while doing so?" It's important to have expectations clearly stated on both sides and in writing before signing. Once you've signed the offer, anything not included in writing can be considered re-negotiable and often is. Also, you will find that, 6 months from now, someone else's recollection and interpretation of the conversation may be VERY different from yours.
It's not uncommon for the employer to ask you to draw up the offer letter, especially in a smaller company. Just be sure that both of you have read it and signed it before you start work.
Before you walk in the door, be sure that you have gotten defined in writing, the review period for this position, the mutually agreed upon expectations for your performance and the time frame for your first salary review.
It's good to know the employer's motivation and expectations in hiring you.
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"Why are you hiring for this position?" |
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"What will be my position, function, and authority"? |
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"Who will I be reporting to? What will I be doing? What authority will be given to me to accomplish this task?" |
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"What challenges can I expect to encounter while attempting this task"? |
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"I would like to meet some of my peers (or the rest of my team members) before we complete the negotiations? Can you set this up"? |
You will also want to know the corporate culture; quality of life; industry, products and services; company leadership's management style; corporate vision and goals; and location before completing your negotiations. Do as much research beforehand as you can and then ask about the remaining items.
A background check will usually be made prior to hiring you. This is when your references will usually be checked. Be sure that the company has the correct dates for your education at this point, or the school may not locate you in their system, and you could be refused the job. Some companies also request drug tests and credit checks. You have the right to refuse both, though refusing may be used as grounds for the company not to hire you.
Once hired, keep the agreed upon expectations in mind and be sure to meet them in the timeframes set. This will assist you at review time when requesting a raise. Continue to sell yourself after you are hired.
