Follow me on Twitter Most people who follow our basic job-search suggestions are in the position of negotiating salary, perhaps a bonus or commission, and perhaps a training program, association membership, or the timing of the first salary review. (See the link at the bottom of this article for additional information on salary negotiation.)
Others have a more complex situation. For example, a senior executive may say (at the appropriate time), “You’d like to know how much I’m now making? Let me write it out for you.” (Or perhaps he or she would go into the meeting with the information already filled out.) The following table contains the current year’s compensation, the next year’s compensation (if it is relevant) to account for bonuses, pay increases, and so on. The third column would contain a skeleton of what you are looking for or would be left blank and used as a worksheet. Be sure to write footnotes as commentary on those lines requiring it. For example, you may want to document that if you leave before April you will lose your year-end bonus. Therefore, you could not start work until after April, or the hiring company would have to make up for your loss:
|
2012 |
2013 |
Looking For |
|
|
Base salary |
$89,000 |
$95,000 |
$95,000 |
|
Bonus |
26,000 |
35,000 |
|
|
Deferred Comp. |
20,000 |
30,000 |
|
|
Car Allowance |
8,000 |
8,000 |
|
|
Stock Options |
40,000 |
40,000 |
|
|
Addtl Medical |
4,000 |
4,000 |
|
|
TOTAL COMP. |
187,000 |
212,000 |
250,000 |
You may leave the third column completely blank and fill it in as you are speaking. For example, you could say, “This is an exciting opportunity you are presenting, and I want to be part of it. To make it easier for you, I could imagine staying at my present base compensation level for next year, $95,000. To make the move worth my while, I could imagine a total package of $250,000, for example, and we could figure out the numbers in between.”
In stating your requirements in a collaborative way, there is plenty of room for flexibility as well as for their comments and input. You do not run the risk of having the offer fall apart before you have actually gotten one. As you will see later, you want to hear their best offer, and then you can accept it or reject it.
CASE STUDY: Betsy
Simplifying the Request
Betsy went to Europe on a consulting assignment and was later offered a full-time position. She had a list of 20 or so expenses that she thought the company should cover: moving expenses, household purchases, trips home, phone calls home, gym, and so on. When we added up the entire package it exceeded $200,000, but it would have been too clumsy and too unprofessional to itemize all the things on her list.
Instead, we came up with a very neat package that included having the company pay completely for her apartments in both Prague and Dusseldorf, where housing was very expensive. Those items alone more than made up for the extra expense of phone calls and other miscellany. The resulting package was well in excess of what she had originally wanted and gave her the comfort of knowing that unexpected expenses would not cause her great loss.
You are trying to postpone the discussion of salary until after you have an offer, but in real life that is not always possible. Therefore, postpone it if you can. And if you can’t, be sure you know how you want to answer the questions:
- “What are you making now?”
- “What are you looking for?”
No Absolute One Way
Salary negotiation is the most nerve-racking part of the job-hunting process. At the beginning of your job hunt you are at loose ends—not knowing where you are going and feeling like you will never get there. But salary negotiation is the part people fear the most. It is a surprise monster at the end of your search.
You’re in a great negotiating position if you can walk away from the deal. Therefore, make sure you have 6 to 10 things in the works. If this deal is the only thing you have going, see how quickly you can get something else going.
Search Firms
Search firms must know the range of salary you are making or the amount you are looking for. They do not need an exact amount.
Ads
In answering ads, you will rarely give your salary requirements. The trend at the moment is for many ads to read, “Please state salary requirements.” Most job hunters do not, and the hiring company does not exclude them. Stating your salary or requirements not only puts you at a negotiating disadvantage but also allows you to be eliminated from consideration because you are too high or too low.
On the other hand, some ads state, “You will absolutely not be considered unless you state your salary requirements.” Then, you should state them.
What Is Negotiable?
Everything’s negotiable. That doesn’t mean you’ll get it, but it is negotiable. First, think of what is important to you. Make a personal list of what you must have versus what you want. Decide where you can be flexible, but know the issues that are deal breakers for you.
Think of your musts versus your wants. If you get everything you must have, then perhaps you won’t even mention items on your want list. Go in knowing your bottom-line requirements, what you would be willing to trade off, and what benefits/perks could compensate you if you hit a salary snag. Have your own goals in the negotiation clearly in mind.
Salary is not the only form of compensation that might be negotiated. Other items might include:
- the timing of the first review
- closing costs on a new home or a relocation package
- use of a company car
- association or club memberships
- reimbursements for education
- bonus
Which is the most meaningful or valuable to you?
The pay is good and I can walk to work.
John F. Kennedy, on becoming president, quoted by
Ralph G. Martin, A Hero for Our Time
Forms of Compensation
Basic Compensation
- the timing of the first review
- base salary
- deferred compensation
- incentive compensation (short and long term)
— performance bonus
— sales commission
— sales incentive plans
— stock options
- sign-on bonus
- matching investment programs
- profit sharing
Vacations
- extra vacation: vacation length is becoming tied to level or length of work experience rather than time spent with one company.
Perquisites
- expense accounts
- company car or gas allowance
- memberships
— country club
— luncheon club
— athletic club
— professional associations - executive dining room privileges
- extra insurance
- first-class hotels or air travel
- personal use of frequent-flyer awards
- paid travel for spouse
- executive office
- private secretary
- employee discounts
- financial-planning assistance
- C.P.A. and tax assistance
- tuition assistance
- continuing professional education
- conventions
- furlough trips for overseas assignments
Relocation Expenses
- moving expenses
- mortgage-rate differential/housing allowance
- mortgage prepayment penalty
- real estate brokerage fees
- closing costs, bridge loan
- home-buying trips
- lodging while between homes
- company purchase of your home
- mortgage funds/short-term loans
- discounted loans/mortgages
- temporary dual housing
- trips home during dual housing
- outplacement assistance for spouse
Related to Severance
- severance pay and outplacement
- consulting fees after termination
- insurance benefits after termination
Glossary
Deferred compensation: Ability to make deposits to a deferred salary plan from your pay on a before-tax basis so that amount of income is subject to taxation in the year you make the deposit.
Employment contract: A formal written agreement between yourself and the employer guaranteeing certain benefits, such as severance pay should you lose the job through no fault of your own. At high levels sometimes known as a golden parachute.
Letter of intent: A written confirmation of a job offer summarizing the items agreed upon (salary, benefits, perks, etc.). Not a formal contract but hard for a company to rescind. If you write it, it’s called a reverse letter of intent.
Matching investment programs: Savings incentive plan in which company matches employee basic award or personal contribution toward investment.
Performance bonus: An amount of money to be paid to you contingent on your performance on the job. May be a specific amount or a percentage. Can be tied to individual, group, or corporate performance.
Perks or prerequisites: Extra benefits that come with the position, such as executive dining room privileges or company car. May be negotiable or standard company policy.
Profit sharing: Cash award based on corporate earnings. Unusual outside of banks.
Sales commissions: Compensation directly related to sales at a predetermined percentage.
Sales incentive plans: Additional compensation based on sales volume.
Signing bonus: A one-time amount of money paid as an inducement for you to join the company. Also known as a signing, or up-front, bonus.
Stock options: A grant to purchase stock at a fixed price.
Want a Signing Bonus?
Everyone’s getting them, right? But those who do are often giving up something—usually base salary. Most companies give signing bonuses to keep payroll costs down!
Louis Uchitelle reports in The New York Times: “The hiring bonus is just the latest tool that companies have turned to in recent years to hold down wages. The others include profit sharing, flexible schedules, tuition subsidies, stock options, health club memberships and ‘performance’ bonuses in lieu of raises for those already on the payroll. While wages are now rising a bit faster than they have in a decade, hiring bonuses are ballooning and spreading across the work force—absorbing some of the pressure for still-greater income” (Louis Uchitelle, “Signing Bonus Now a Fixture Farther Down the Job Ladder,” New York Times, June 10, 1998).
The bottom line for you? You’ve made a deal when you get a signing bonus to make up for a lost bonus if you leave your present job. Otherwise, try to get money in your base rather than in a signing or other bonus.
For a dozen articles on salary negotiation, click here.
For more information on The Five O’Clock Club series of books for job hunters and career management, click here.
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