Back in September of 2012, I published an article in this e-newsletter titled, “Salary Negotiation: 21 Rules of the Game.” The piece provided specific tips and techniques for increasing your salary offers.
In this article, we’re going to “step back” and take a broader view of the salary issue. To really maximize your success in negotiating compensation, it’s important to have a “big picture perspective” and approach the process strategically.
To start with, your strategy needs to be based on knowing EXACTLY what you WANT out of the negotiation, vs. what you NEED. Most people don’t know the difference, which gets them into a lot of trouble. So, let’s look at a sample “side-by-side” comparison:
Need Maintain your current standard of living; not lose your home or skip the annual family vacation, etc. $70,000 Base 2 Weeks Vacation Benefits in 3 Months Management Role Paid Transportation or Car Allowance Decent Workspace Severance Pay Want Make your family’s life much more comfortable; make a real step-up in lifestyle, etc. $90,000 Base 4 Weeks Vacation Benefits Now Director Title Company Car Private Office Outplacement
The bottom line is that you need to know in advance what you’re willing to trade, and what you’re not! Make your own list BEFORE you enter into negotiations!
Now, you might be asking yourself, “What’s negotiable, and what’s not?” The answer might surprise you!
* SALARY (always finalize first!) * Insurance (life, medical, dental, disability) * Vacation Time * Office Location * Retirement Plans * Relocation Assistance * Training Allowances * Work Space * Bonuses (sign-on and performance) * Commission Rates * Expense Accounts * Memberships and Dues * Accelerated Reviews * Stock Options * Profit Sharing * Company Car or Auto Allowance * Home Purchase or Mortgage Assistance * Outplacement Assistance * Flex-Time * Etc., Etc., Etc.
The employer will give you anything you ask for – IF they want you badly enough. And it’s YOUR job to sell yourself so effectively that they decide they MUST have you!
Now, let’s discuss the REAL value of an offer.
When an offer is extended to you, it’s very important that you know what the offer really is – and what it isn’t. Many people make poor decisions about job offers, because they misunderstand the package! So, let’s take look at a simple example:
Let’s say you’ve just received an offer for a base salary of $50,000. But you’re used to earning a base of, say, $70,000 – with little or no benefits. So you say, “I’m not taking that job. The pay is too low.” But did you take the time to analyze the whole package? Take a look at the chart below:
Base Salary – $50,000 Health Plan – $17,500 Vacation – $$$ Retirement Plan – $$$ Training & Development – $$$ Auto Allowance – $$$ Bonus – $$$ Commission (at plan) – $12,500 Etc. – $7,500 TOTAL COMP – $87,500 to $100,000++
Can you see now, that you might have been foolish to turn down this offer based purely on the base salary?
Another mistake that many people make when they’re negotiating compensation is that they tie their old salary to their new or anticipated salary. This can be deadly.
The assumptions go something like this:
– “I’m out of work, so I’ll be lucky to get any job that pays what I was earning before – or even close to my old salary” AND – “The job market is tougher than it was when I got my last job, so I’ll have to settle for a lower salary” AND – “If I can get a good job paying even 5% more than before, I’ll be thrilled!”
Now, what do all these comments have in common? They are all based on the assumption that the OLD salary is somehow connected to the NEW or anticipated salary. But – IT’S NOT!
That’s right. There is NO CONNECTION; no relationship of any kind!
How can I make such a bold statement? Because I have worked with so many clients who have successfully added 25, 50 even 100% to their salaries by switching to jobs that were a MUCH BETTER FIT!
At your old job, a $50,000 salary may have been appropriate for the VALUE you brought to your employer, at least in their eyes. But what if you got a different job where the FIT was much better? With a new company, at a different time, offering a different product or service, in a different business culture and environment, in a new industry, and so on? What then?
Let me illustrate by sharing a brief story …
A client I worked with recently named Robert had been working at a software development firm, with a salary of about $70,000. He was dissatisfied with his compensation and was looking around for a better opportunity. He did a lot of networking, pursued a very active job search, and eventually got an interview with a wonderful company right in his area. He found out that their specific needs, goals and challenges almost directly mirrored his specific skills and accomplishments. This turned into a very interesting interview, which lasted not ½ hour; not 1 hour; but 2½ hours! By the end of the interview, Robert knew he was onto something! They agreed to meet again the following morning. By the time Robert got to the second meeting, the interviewer had already drawn-up an agreement and was practically begging Robert to join the organization. Why? Again, because his skills, accomplishments and achievements directly matched the employer’s greatest needs, problems and challenges. Not only that, but the salary the employer was offering almost knocked Robert right off his chair. It was twice the amount he was used to earning! That’s right. A base salary of $140,000. Not a bad payday for Robert!