Salary and compensation 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 the critical salary negotiations talks.
It’s complex, 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 and Compensation 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.
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.
4 Steps To Negotiate Salary and Compensation Like a CEO
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
More tips for salary and compensation negotiations.
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.
And, there are hundreds of salary calculators out there that should help, such as JobMob’s Where to Research Job Market Salaries, and Salary.com and Hired.com.
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. [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 negotiations have typically done a fair amount of research, and have prepared to represent themselves and their potential value well.
Along with Salary Compensation 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, 14 states now have salary history bans (SHB). 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.”
Before heading in to the interview process and then salary negotiations, check to see if your state has a SHB which protects you from having to answer salary questions in interviews or beforehand.