Salary negotiations are imminent . . . you’re close to reeling in that great-fit executive job.
You’ve been through a few rounds of interviews with a company you really want to work for, and they’re about to make you an offer.
Or, maybe you’re fortunate enough to be juggling offers from more than one company you want to work for.
Next step is salary and compensation negotiations.
Even the most confident, competent high-level executives quake at the thought of navigating these critical talks.
It’s complex, and can be stressful and unnerving.
And, if you’re entertaining more than one offer, comparisons can be difficult.
No matter what your situation, don’t despair.
Tips to Sail Through Salary Negotiations
According to Deepak Malhotra, the Eli Goldston Professor of Business Administration at the Harvard Business School and specialist in negotiation:
“Job market complexity creates opportunities for people who can skillfully negotiate the terms and conditions of employment. After all, negotiation matters most when there is a broad range of possible outcomes.”
He detailed 15 rules for negotiating a job offer, which include this solid advice:
- Don’t underestimate the importance of likability.
- Help them understand why you deserve what you’re requesting.
- Make it clear they can get you.
- Understand the person across the table.
- Be prepared for tough questions.
- Focus on the questioner’s intent, not on the question.
Where to Research Salary
Obviously, before you can begin negotiating your salary, you have to decide the amount you will negotiate for and just how much your potential employer is willing to pay.
Find out if your state and/or city has implemented transparency laws forcing employers to put salary ranges in job listings. You can use that range as a guideline.
Otherwise (or in addition), a Career Directors International tip sheet recommends these resources for comparative research:
- Visit the company’s competitors’ websites to see if they post salaries
- Professional associations
- Contact your local employment / unemployment office. They typically maintain data on salary averages for the area
- See the book: The American Almanac of Jobs and Salaries by John Wright.
- Career OneStop: https://www.careeronestop.org/Toolkit/Wages/find-salary.aspx, and Career OneStop Salary and Benefits Information: http://www.careeronestop.org/SalariesBenefits/SalariesBenefits.aspx
- Salary.com: http://salary.com/
- Payscale.com: http://www.payscale.com/
- Glassdoor.com: http://www.glassdoor.com/index.htm
- The Riley Guide Salary Guides & Guidance: http://www.rileyguide.com/salguides.html
- SalaryExpert.com: http://www.salaryexpert.com/
- Bureau of Labor and Statistics (Wage Data by Area and Occupation):
- Occupational Outlook Handbook (Earnings): http://www.bls.gov/oco/
- U.S. Office of Personnel Management Salaries & Wages:
- JobSmart Salary Surveys: http://jobstar.org/tools/salary/index.php
- Robert Half International Salary Guides: http://www.rhi.com/salaryguides
Current Salary vs. Salary Requirements
There’s a new twist to the salary issue in job interviews. Instead of asking for current salary, employers are asking “What are your salary requirements?”
This is an improvement, but there are still pitfalls. According to a NY Times article:
“Asking for salary requirements kicks off a back-and-forth that, for job seekers, is rife with confusion and occasional bouts of shame and regret … the high stakes of this question can upend the process.
Candidates try not to reveal their number, worried they’ll leave money on the table. But recruiters often decline to move forward without one. The common advice is to turn around the question and ask recruiters what their range is for the role. In some states, employers are now required to tell you.
Job seekers can say something like, ‘It’s early in the interview process, and I’m still getting to know the role and doing my research, but if you’re trying to fit into a certain range that would be helpful to know.'”
If you are still asked for your current salary, steer the conversation towards a discussion of your salary requirements instead.
4 Steps To Negotiate Salary and Compensation Like a CEO
To finesse the best possible compensation package, Bartie Scott suggests in an article on Inc.com doing what CEOs do, whose compensation has increased by 54.3% since 2009.
This is not necessarily based on their ROI to the company, but more likely on their negotiation skills.
Here are 4 suggestions she made.
1. Know your history.
“Research both the company’s compensation structure as well as the position’s value in the labor market. There’s no doubt that a candidate for an executive position knows the previous CEO’s salary and wouldn’t accept anything less. Find out exactly how the company evaluates raises, bonuses, and other incentives, which would play into their base salary decision and influence negotiation.”
2. Keep your cards close.
“Discuss your current and past compensation and your financial needs, but emphasize that you’re most concerned at the moment with making sure you and the company are a good fit before talking about compensation.”
3. Define your range.
“CEOs rarely settle for just a base salary and the usual benefits. If there’s a perk that’s a deal breaker or maker for you, don’t be afraid to ask for it.”
4. Use your leverage to the fullest.
“If the company has decided that you’re the best fit for the job, you should realize that you’re worth more than anyone else they’ve interviewed. And as such, they may be more willing to pay what you’re worth, or slightly more.”
In a Monster article, corporate recruiter Vicki Salemi noted 5 things you must cover in salary and compensation talks, before signing on the dotted line:
- Wardrobe allowance
- Termination Provisions
Specific Things to Negotiate
To be more specific, here is a partial list of executive perks to negotiate, from a Salary.com article:
- Base pay
- Signing bonus
- Annual incentive
- Guaranteed minimum annual incentive
- Stock options
- Discounted stock options
- Restricted stock
- Loans to purchase restricted stock, pay taxes or purchase a home
- Forgiveness of loan(s)
- Normal employee benefits
- Supplemental executive medical and life insurance, and executive retirement plan (SERP)
- Non-qualified deferred compensation plan
- Club memberships
- First-class air travel
- Financial/tax/estate planning services
- Legal planning services
- Use of company plane
- Company car
- College tuition for children
- Tax gross-ups for taxable benefits
- Golden parachute provisions
- Termination provisions
Even in an Economic Downturn You Should Negotiate Salary
A LinkedIn News article said research shows that, even in a recession, most employers are willing to negotiate salary:
“Most of them said they often provide a lower offer to leave room for negotiation.”
The article cites salary negotiation coach Kate Dixon:
“I don’t really think [your salary negotiation strategy] should change that much at all during a recession. I really think that a collaborative approach, advocating for yourself — those are things that you should do regardless of what’s going on in the economy.”
Guarantee your long and short term security
A FastCompany article advises that, if venture capital funding is not free-flowing, you’ll need to balance these 5 areas with base salary and bonus potential, to set yourself up for long-term financial gain, no matter how the market plays out:
- Due diligence around company performance and expectations
- Executive team compensation aligned with each other and tied to company goals
- Equity instead of short-term bonuses
- Severance pre-negotiation
- The right to monetize your non-competitive expertise through consulting or advisory work
More Tips for Compensation and Salary Negotiations
Don’t jump at an offer too fast.
The same Career Directors International tip sheet says you should hold off accepting the offer right away:
- You need time to allow the excitement of receiving a job offer to settle a bit, so you can think rationally about the offer.
- In order to maintain your leverage, it is important to negotiate all aspects one time only. This will take preparation.
How successful you are is determined by a few variables, such as:
- Knowing what you want and don’t want
- Recognizing what you are willing to give up
- Having full knowledge of what you are negotiating
- Researching your alternatives
- Being able to articulate your position confidently and deciding on a suitable outcome
Don’t accept the initial offer if it’s less than you feel you’re worth.
You’ll come to resent the fact that you did. Besides, hiring managers expect executives to negotiate. They’re equipped to deal with it and will probably respect you more if you do negotiate. And it’s another opportunity to remind them of the value you offer.
Don’t know what you’re worth? Go back to the personal branding, targeting and research work you should have done early in your executive job search. This will help you explain your worth to the employer.
Focus on what you bring to the table, not how much you need to make.
It’s unlikely that your potential employer will care that you need to make a certain salary to cover your expenses. Make them understand what your unique ROI will be. How will you impact bottom line, profitability, revenue growth, etc.? What makes you their best hiring choice?
Don’t discuss salary too early in the interview rounds.
Even if you’re repeatedly asked, don’t give them a make-or-break salary. They know what they’re willing to pay you. Instead, tell them you’ll be ready to discuss this once they’ve decided you’re the one, and they make a solid offer.
Another smart tactic, suggested by job search strategist Rich Marsh, in a comment on my LinkedIn post about this article:
Respond to the salary requirement question with something like this:
“I’m sure you have a salary range approved. Would you please share it with me, and I can tell you if it will work.”
He said this works especially well for people who know their value.
[More about salary history below.]
Get it all in writing.
You’ve probably spent plenty of time going back and forth with various people to work out your compensation package. Any reputable employer will want you to sign a contract, for their own protection. You need a contract for your protection as well. If they have a problem putting it in writing, take this as reason enough to walk away.
And, of course, don’t give up your current job until you have that signed contract in hand.
Remember – those who do well with compensation and salary negotiations have typically done a fair amount of research, and have prepared to represent themselves and their potential value well.
Along with Salary Negotiations, There’s the Salary History Dilemma
Employers and HR professionals have long argued that they need to know applicants’ salary history to make informed hiring decisions. They use this information, among other things, to:
- Weed out people looking for higher salaries than they’re willing to pay.
- Determine applicants’ career trajectory.
- Reveal the overall quality of applicants.
But, according to a Harvard Business Review article by James Bessen, Erich Denk and James Kossuth, new research (by Bessen, Denk, and co-author Chen Meng) shows that CEOs can take one simple, immediate action to substantially reduce pay disparities for Black and women employees: Stop asking job applicants about prior pay.
“Employers can hire just as effectively without using this information. At the same time, employers who avoided asking for salary histories were able to significantly reduce unfair pay differences. Not asking about salary histories is related to a growing trend towards greater salary transparency.”
Does your state have a Salary History Ban?
As of this writing, 21 states now have salary history bans (SHB). Before heading into interviews, see if your state is one of them in HR Dive’s running list of states and localities that have outlawed pay history questions.
The HBR authors analyzed differences between SHB states and nearby counties in non-SHB states.
“We find that these new laws generated substantial pay increases for Black (+13%) and female (+8%) candidates who took new jobs.”
CEOs and other business leaders are responding to the pressure to fight discrimination while increasing diversity. This kind of research supports the growing trend for more salary transparency. The HBR study shows:
“Sharp increases in the use of salary ranges in job postings after state-wide enactment of SHB legislation, and not just by employers subject to the ban.”
The HBR authors sum it up:
“Although employers are more likely to name a salary range in a job posting because of a salary history ban, they would not have posted the job if they did not know what they could afford to pay for it. The SHB simply encourages the employer to make explicit what it likely already had in mind when posting the job.”
What About Salary Negotiations with Your Current Employer?
An article on CNBC has 3 good tips for this salary negotiations scenario:
1. Prepare for your salary discussion
Walking into a conversation where you ask for a salary raise requires having a clear understanding of the market, the value you bring and your financial needs. Raise requests always require justification.
You also want to make sure your timing is right. If your company isn’t doing well — say, it recently laid off workers or instituted a hiring freeze — it might not be able to meet your request.
2. Make your case
Researching the average pay for your position in your city or state can help you make your case, or at least give you a ballpark figure to aim for. LinkedIn and Glassdoor offer salary ranges for many positions, which can help you determine the number you’re going to ask for.
Bring up any skills or knowledge you’ve accrued or honed since your last salary bump. Joining associations, gaining credentials or being recognized for your work, such as through an industry award, deserves to be compensated.
3. Have a backup plan
Always have an action plan in case your initial ask is denied. Consider if there are other options you can negotiate, like your employer funding a new certification or a more flexible schedule. Other benefits to consider include student loan repayment, enhanced paid sick and family leave, child- or senior- care benefits or the ability to work from home.
If you don’t get the raise you want, ask what you need to deliver in order to get one. Then, keep a record of what you accomplish each month over the next year and how your company benefited from it.
What If Your Salary Negotiations Don’t Work?
The same LinkedIn News article advises:
“A salary is not the only aspect of a job offer to negotiate. If a company does not have the financial means to provide the salary you ask for during a recession, it might be able to provide something else instead.
You can actually negotiate for a different title. And that doesn’t sound like much, but it makes you more marketable if you ever decide to leave the company that you’re joining.
Also, consider negotiating for a sign-on bonus or relocation cost coverage if you have to move to a new job. Or negotiate for extra paid time off.”
And, if you decide to take a lower salary than you’d hoped for:
“Leave the door open for future negotiations when the economy improves.
Just acknowledge to the recruiter or the hiring manager that ‘I understand we’re in a recession and it’s not great now … I’d be interested in having sort of a conversation on performance in six months to a year. When the economy starts doing better, I’d like for us to revisit this conversation.’”