maximizing worth: WHEN to negotiate

10/16/2009

by anne lueneburger

I just sat down with a client who is considering a career change.  They have had one round of interviews, and wanted to use their session with me to discuss how best to handle the negotiation process.  Negotiating effectively is hard and having worked through the session, I decided to devote this blog entry to ‘the art of negotiation’.

Negotiating At The Right Time

Organizations want to source genuine talent and ensure that they get the best value for money. Candidates want to find the right company and maximize their compensation package.  How can you, in search of your dream job, effectively bridge this gap?

Well, firstly: timing is key. Hold off on package and salary negotiations until you know that they ‘love you’ and really want you on board; ideally until they make you a formal offer. The ‘sweet spot’ for a negotiation is when a potential employer extends an offer, and you are absolutely certain that this is the organization and role for you, as outlined in this table:

non negotiation

Negotiating Too Early

If salary and package negotiations start too earlier, then you risk losing out:

Firstly, you haven’t had a chance to share all of your positive attributes, knowledge, and the value that you offer to the company with the people who matter.

Secondly, you may feel compelled to undersell yourself and suggest a figure which might be lower than the company is willing to offer (and thus diminish their perception of your value). Or you may quote too aggressively, oversell yourself too early, and risk being screened out.

Thirdly, you may not have had a chance to gauge exactly what the role entails – often the interview process itself clarifies the company’s expectations or, through getting to know you and your skills as part of the interview process, a company may decide to offer you more, or different, responsibilities which could be reflected in the package they offer you.

Fourth, in order to maximize your compensation, you will need to discuss the entire package, not just a salary figure. Standard benefit packages often make up over a third of the overall compensation.  It is too complex to discuss all of this during the early stages of the interview process.

My executive clients generally have no difficulty grasping the concept of postponing salary discussions until they hit the ‘sweet spot’: when they feel certain that the organization really really wants them.  Many do struggle, however, in balancing their desire to develop a good rapport with their innate desire to negotiate!  They have to learn to resist their instincts and hold off until the time is right.

Here are some scenarios and possible responses:

Situation 1:

A potential employer asks what your salary expectations are, or what you are currently earning.

Response 1:

“Right now, my priority is to find the right company. If the position seems and feels right for both of us, then I’m sure we’ll come to an agreement on compensation. Maybe we could discuss this later on in the process?”

Or

“Until you’ve decided that you think I’m the right person for the job – and that I would be an asset to your company – I’d prefer to hold off on any salary discussions.”

Situation 2:

They insist!

Response 2:

“I would be interested to hear the salary range that you planned for when you decided to recruit for this position.”

Or

“Does our moving on to the topic of salary imply that you’re impressed by my skills and suitability for this position, and keen to make me an offer?”

The idea is to have the employer come up with a figure first.

Your initial response should ALWAYS be measured silence.  If the response is close to what you are looking for, you can respond after pausing: “Thank you. I’m sure we can find a compromise around that figure.”  If it is lower than you’re looking for, but still not a reason to walk away from the process, you might say:”That’s lower than  expected.  But I’d be keen to continue discussions, as this opportunity is about a number of variables: salary being only one of them.”  The idea being to make sure that negotiations are deferred to a later point: the ‘sweet spot’.

Situation 3: They do not budge and insist you name a figure first.

Response 3:

Reconsider whether this truly is the place for you to develop the next phase of your career.

Or

“I will be looking for a compensation package in the range of…”

To get this right, you must have done your research.

Some starting points: if you have no idea take a look at www.salary.com, www.salaryexpert.com, or www.salarysource.com (this costs $19.95).

If you have a general idea, then speak to people in similar positions at other organizations, check with your career alumni office at your alma mater, and reach out directly to alumni.  Contact headhunters for general advice and inquire as to the type of compensation you ought to expect.  Make sure you’re well informed.

Negotiating Too Late

The sweet spot for negotiating occurs when the company knows they must have you (and you have already concluded that it’s the perfect fit for you).  But is it ever too late to maximize your negotiation benefits?

The only time that this is the case is when you’ve signed the contract, but didn’t do your research properly, or didn’t read the small-print.  For example, if you’ve accepted the role, and then realize that there were a few items such as healthcare or relocation expenses that you neglected to discuss.

If you miss the ‘sweet spot’ and the company feels like they already ‘have you’, then it can be very tough to re-negotiate and could sour the start of this new stage of your career.  To prevent this, prepare a comprehensive list of all of the items you need to address before you enter negotiations.

Remember: your aim is to maximize your value.

(But also remember that only part of that value is compensation, and that loving what you do is equally (more!) important. If you can get both elements balanced, then you’ve found your calling north of neutral…)

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