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Compensation Negotiation is a Delicate Matter

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Negotiating a compensation package is the most delicate part of any career move. The right strategy can begin to position you for the future – the wrong one can cost you the job offer.

In the last few years, salary negotiations have been particularly difficult. Many employers have become down right stingy about starting salaries as pressure on their bottom lines intensifies, and with so many companies downsizing capable executives onto the job market, the law of supply and demand has swung in the favor of employers. Here are a few thoughts to keep in mind as you enter into salary discussions:

  • Research your pay level. If you guess, you will probably guess wrong. Know what the going rate is for comparable positions in similar size companies in the industry and location you’re seeking. The Internet, executive recruiters and peers at other companies can help sketch a salary picture; so can compensation surveys from newspapers, trade associations and compensation/benefits consultants. Use salary survey information only if you know when the data was collected rather than reported so it can be updated for inflation.
  • Beware of company promises. The problem with promises of future compensation is that they’re not worth anything. One example: Promised raises evaporated for one trusting soul when the maker of the promise left the company. If you really want the job, get the promises in writing and be sure the conditions for cashing them in are specific and attainable.
  • Get an employee manual or a company information packet. Company policy varies widely on this, but as soon as possible, get your hands on an employee manual. If you don't know what's included in the company's standard package, you may be asking for something that's already part of the deal, but you didn't realize it.
  • Find out the expectation level of the position. You must obtain not only a clear understanding of the job and its responsibilities, but more importantly, you must know what results are expected of you.
  • If at all possible, don't talk about money in the first interview. Also stay away from self-serving issues such as day care, benefits and profit sharing. But this doesn't mean you can't indulge in a little gamesmanship. If you feel you may be a unique fit with some unique value to the company, it benefits you to convey that message to the company.
  • The # 1 mistake made during salary negotiations, in my opinion, is giving up too quickly. You must remember that the salary you accept will affect your earning capabilities for several years to come.
  • Think strategically. Intend to negotiate. Most job hunters don’t negotiate at all. They listen to the offer and then decide whether they want it. Candidates say, I don't want to offend my future boss, so I'll accept the offer. This can prove to be a major mistake.
  • De-personalize any salary and benefit request. For example, say “would the company consider” instead of “would you consider.” Make the request to the company, not the person you are speaking with.
  • Utilize your leverage. Always keep in mind that your bargaining position is much stronger BEFORE you accept the position. While being recruited, you're treated as an individual case. However, once you accept an offer, all future raises are likely to be in line with broad corporate guidelines, and you're no longer unique.
  • Prepare a list of your concerns, including all the areas where you might take a financial hit. Then prioritize each item on its importance to you and the likelihood of the company granting your request.
  • Consider the trade-offs. Sometimes it's possible for savvy candidates to trade unwanted benefits for those not included in the package. You may want to give back several items in exchange for ones that are more important to you.
  • Reconfigure the job. If the job you are interviewing for has salary that’s too low, try upgrading the position. Add responsibilities until the job is worth your while.
  • Conduct yourself in a professional manner. How you handle yourself during salary negotiations also gives employers insight into what they can expect from your on-the-job behavior. This demonstrates how you handle conflict, people and problems.
  • Remember, you don't score any points if you allow yourself to be exploited during salary negotiations. The key to effective negotiating without being exploited is to link each negotiable item to the job itself. How might it affect your ability to perform the job effectively? How will it affect your satisfaction with the company?
  • Strive for a good “win-win” agreement. This type of agreement often features several concessions (on both sides) to create feelings of satisfaction on both sides. You definitely want to establish a win-win collegial atmosphere and not an adversarial relationship. Always ask for an agreement, not a binding contract. Binding contracts usually are reserved for senior executives.
  • Establish a “walk away” number. Based on your personal situation, it is imperative to ascertain a minimum amount when setting your salary.
  • A major concern for many candidates is securing severance agreements in case their jobs don't work out. A company can blow you out in a heartbeat, so you'd better have protection. Always ask for a severance-pay agreement even if you don't get one so you'll know what to expect if you're dismissed. For example, if a company says it only provides two weeks pay for every year of service, you'd better manage a tight lifestyle because you have no safety net at all. On the other hand, if a company says that it typically provides six months severance, you'll know there's a pretty good precedent.
  • Always negotiate your exit when going in. Don't ignore the worst-case scenario. Know what severance benefits you're entitled to and keep written severance agreements simple. Never state that you need this agreement because you might not work out in the job, but rather, as an option in case of major changes that could possibly occur with the company.
  • Some benefits such as retirement plans and group health insurance programs aren't negotiable because federal law prohibits discriminating in favor of individuals or classes of employees. But cafeteria plans will allow you some degree of flexibility in making choices.
  • Regardless of what is offered, you need to consider what portion you'll pay if you want a true comparison of proposed take-home pay compared to your previous job situation.
  • Most companies expect you to counter their offer in some way. As a matter of fact, some bosses may even think less of you because you don't try to negotiate a better package. However, once you reach an agreement, don't keep returning to the well.
  • A company's salary structure can become inflexible because of comparability to other existing positions, especially those filled by long-term employees. That's why sign-on bonuses are sometimes used to compensate for this inflexibility.

There's an old phrase that says "money won't buy happiness." But neither will poverty. Nothing can buy happiness, so the entire premise is absurd. As Abe Lincoln said: "People are about as happy as they make up their minds to be."

The next time someone tells you money isn’t important, ask him if he would turn down a raise or refuse an inheritance. Just be sure to place money in its proper perspective.



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