maximizing worth: HOW to negotiate

10/22/2009

by anne lueneburger

My client, Warren S. – a senior executive with almost 16 years experience in the biotech industry – was well prepared for the salary negotiations that he knew were about to take place:

1. He knew his ‘worth’ and had established his ‘desirable’ salary range.

2. He had viable alternatives, and was prepared to walk away if a satisfactory offer didn’t materialize.

3. He had successfully managed to hold back negotiations until he was certain of his enthusiasm for the role, and he had waited until the firm had formally extended an offer: “Warren, we have been very impressed with your candidacy, and we would like to have you on board. Could you tell us what kind of salary you’re looking for?”

Warren knew he was on his home stretch…and he thought of the “Compass of Salary Negotiation” that we had talked about during our previous coaching session:

NON negotiation compass

© north of neutral LLC

O Deal with decision makers

Only negotiate with the person who has the authority to hire you. An organization’s HR department is always involved in parts of the process, but it is typically the hiring manager – your future boss – who has the ultimate decision making power. This is the person with whom you need to discuss your compensation – nobody else in the company.

(Possible Exception: If there is a headhunter in the mix, then it may be to your advantage to work with them directly: headhunters tend to be your friend – even if they were hired by the organization you are applying to. They are generally compensated a percentage of your first year’s salary: so it’s in their interest to negotiate the highest possible salary for you. Try to follow ’standard protocol’ and have them go first, but if they insist then give them a figure right at the upper end of your range.)

O Follow, don’t lead

Whoever mentions a number first generally ends up on the back foot in the negotiation.

It is a difficult balance between being assertive yet collaborative; don’t come across as being stubborn… A tip: mirror the interviewer’s body language and tone of voice and be positive. AND: bear in mind that the interviewer may be asking you to name your number first to test whether you can stand your ground, and to see whether you have effective negotiation tactics – a skill that they may well be checking out…

Here are some responses that have worked for my clients:

“I’d rather hear what you had in mind for this position.”

“I think I’d rather wait until I have a better understanding of what you think this position is worth to your company.”

“I’d appreciate it if you could extend your offer, perhaps based on what you have budgeted for this position?”

If the employer is pushing back hard, tell them the range that you had set yourself having considered your research and your perceived self worth. Make sure you cite a wide range with a slightly higher upper number; this gives you sufficient room for negotiation. Recognize that the employer will orient themselves around the lower end of the range you provide…

Consider using very specific numbers in your range (in other words: somewhat odd numbers) as this communicates the fact that you have some insight into the pay scale for the position you are looking at.

Finally, look into discussing monthly salary levels, as you will be looking at smaller, more digestible numbers. Some organizations, particularly in Europe, do offer a 13th or 14th month of salary per year.

O Pace yourself

Never accept an offer on the spot:

1. Repeat the number that you have been offered.

2. Then count to seven, silently: silence is your ally.

3. The most likely outcome of this silence will be additional concessions on the part of your employer.

4. If they do not speak during this pause, it is time for you to respond…

Scenario 1: The offer is too low

If it is the job that continues to interest you more than the salary, then be creative. Here some possible responses:

“I am really enthusiastic about the role we discussed and about joining your organization. I think that I can add significant value to your team and I think we would work really well together. But I’ll be honest: the offer seems low for my level of experience. I’d need a few days to think this over. Could we set up a meeting in a week’s time to see how we can work things out?”

If the compensation is significantly out of your range and the organization is not coming towards you, then walk away. Good organizations see employees as valued assets: not as expendable resources.

Scenario 2: The offer is just right, or above what you expected

If this happens, the key thing is: don’t accept immediately. Thank them, and ask that they give you time to reflect upon the offer. You may well find that this leads to the offer of further benefits.

O Think beyond the number

In other words: negotiate the whole package, not just the number. Before you start clarifying the package, remember: in a good negotiation, both parties feel like they got the better deal. Make sure that your potential future employer senses that you are looking for a win-win solution. For example, rather than demanding a higher variable bonus structure, ask to review what’s on the table: “The variable bonus is less than what I had anticipated, could we look at that?” (In this context – assuming that you are confident in your own abilities – consider trading in a smaller base salary for a higher performance bonus.)

Secondly, skilled negotiators always make this a multi-issue discussion. Look at the respective parts of the compensation package and negotiate these. In addition to base salary, you could negotiate any of the following (or ask for them if they’re not on the table):

Sign-on bonus, relocation support , cost of living allowance , level of bonus (before or after tax), stock options, leverage, carry , vacation , health plan, 401K and retirement plans, sabbatical leave, option to telecommute, on-site childcare, and severance agreements.

Any of these could be worth thousands of dollars a year, so remember to look at the package: not just the number.

O Get it in writing

I recently started working with a client who shared a ‘lesson’ that they had learned: He had negotiated a total compensation package worth well into seven figures… Some of this agreement, however, was only agreed verbally and by a nod and a handshake. It transpired that, due to changes within the organization, he ended up with less than half of that the original ‘offer’… Insist that your offer and all of the stipulations agreed upon be made in writing. This also communicates that you are professional, and will ensure that – despite the turnover of your superiors – you will be compensated as agreed.

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