It’s an employer’s market, so Walt Hawtin came up with ten great suggestions to avoid the pitfalls of negotiating your salary when you are under offer and under pressure!
Negotiating a salary package with a new company is fraught with potential traps for the unwary. The secret is to be prepared for all eventualities:
Know your current value
During the interview process for a role you are keen on, if you are asked for your salary details, be ready with up-to-date and accurate information.
You may be tempted to pretend that money is unimportant to you: “It’s all about the challenge and the right environment! This is cute, but it is a short term approach that you may regret. No-one would willingly work very hard for less than they believe they are worth, so be realistic and balance your desire for the role by emphasising that the position is of interest to you when the role’s responsibilities are balanced against the rewards for performing the role well. You are entitled to be well-rewarded if you do a good job.
Do not exaggerate your current package
Never inflate your current package to a potential new employer in the hope of securing a bigger package.
If a company asks for evidence of your package further down the assessment process, as most clever companies should, you will have to provide evidence in the form tax returns or letters from your current employer to prove your earlier claim.
Keep in mind, though, that your current package value should include all elements that are of value. These elements include the gross annual value of a company vehicle, any company retirement fund contributions, health or salary continuance insurance premiums, performance bonuses, etc.
These components all add up, so keep the details at your fingertips.
However, do not include work tools. Work tools include laptop computers, mobile phones, home phone and internet costs, etc..
During the interview process, avoid increasing your current salary package and expectations
Once you have supplied your salary details to a search consultant or a potential future employer, do not be tempted to increase your package after the fact and in order to leverage a higher package if an offer is imminent. Unless you are 100% certain that you are the only serious contender for the role, an unlikely event, you may fatally damage your credibility.
Be sure, however, to flag clearly any imminent pay increases, potential bonuses or planned annual leave which is not reflected in any formal documentation you might provide as evidence of your package.
Having said that, by all means ask for a bigger package, with a reasoned rationalisation, if the package offered is below your expectations! For example, you may be offered a package of value=x. Based on the size of the role, and the increase in responsibility over your previous role, you believe that the package needs to be 15% greater than x. Present your case back to the employer in an objective and professional manner, preferably in writing via letter of email, and it will usually be treated seriously and professionally.
Be prepared for an unexpected verbal offer at any time
Occasionally, a potential boss will run a package offer past an unprepared candidate. It can be a trap to catch out the unwary candidate, and to test their motivation for the role and their ability to think on their feet.
Be prepared by having a good idea of your minimum acceptable salary package as soon as you are clear on what the job entails. Be aware of the value of all the elements of your current package so you can enter an ad hoc negotiation with confidence. It is prudent to have a firm idea of what your minimum acceptable package is before each meeting with your potential employer or your consultant in case one of the meetings results in a verbal offer. Basically, try to be prepared should a financial offer be verbally presented to you unexpectedly. Oh, and it’s okay to say: “I’ll think about it, but that sounds a little light” or “Is this a formal and final offer?” before you agree to anything.
Do not expect ridiculous increases in salary…
… unless you are taking on a ridiculous increase in responsibility and risk!
If you are unclear on what level of salary to aim at, the 10%-15% rule of thumb is a safe way to go. That is, add 10-15% to your current salary package for a role at a similar or slightly more senior level, or discuss industry norms with your consultant or another colleague. Take into account the context of whether you were approached for the role or did you apply to a public advertisement, and also whether there is a raft of quality competition for the role apart from yourself. Put everything into context, and do not be swayed by a search consultant who tries to over value you or undervalue you for what may be their own agenda.
Avoid presenting surprises
Discuss your general salary expectations with your consultant or potential employer at the earliest opportunity, and ensure that he or she has discussed these expectations with the appropriate decision maker.
The company can then become acclimatised if your expectations are higher than they expected. However, If you are an exceptional candidate, this gives you chance to reach their expectations, which will mean you are more likely to get the package you seek.
Alternatively, no further time is wasted if your expectations cannot be met. Having said that, you may feel it is better to wait until you have marketed yourself effectively before raising salary, especially if you feel it will be an issue. Each situation needs to be read carefully, but the professional approach is to avoid introducing surprises to the recruitment process.
Build some creativity into the package to soften the harsh reality of ‘cash only’.
If you are negotiating for a preferred package (Package A) that is found to be out of reach of your potential employer, be prepared to accept an alternative (Package B) but only if a range of concessions can be met, such as arranging for your first performance review period to take place at six months instead of twelve months in return for achieving certain clearly stated performance objectives.
The review can then be the platform for your increase to the desired Package A. The result should be that the employer receives an above-average performance from their motivated and flexible new hire.
Building added components into the package that may be more acceptable to the employer, such as professional development courses, especially residential courses; or an additional motor vehicle for your partner; school fees; professional memberships; increased annual leave; sabbatical leave; etc. are all great ways to get the value you are seeking, but in a way that is acceptable to your new company.
Increasing the performance incentive element of the package so that if you overachieve, you will be rewarded for it to the level that you desire. This is a particularly strong argument for roles with a high business development component.
By carefully negotiating concessions, you are demonstrating astute commercial skills, an attribute that is appropriate to every senior role.
Beware of the High Flyer’s Conundrum
Beware of negotiating for yourself a very high salary package, only to find that your boss cannot give you an increase in one year’s time because of corporate restrictions on salary benchmarks.
The best way to avoid this problem is to be sure that your package is within the parameters originally set. The Human Resources department or your consultant may help here. Also, gain some general agreement from your potential new boss that you expect an increase based on performance at your first 12 month review, especially if you have settled for a package that is beneath your expectations.
Beware of setting unrealistic targets
In addition to the conundrum above, if you have negotiated a great package, you may risk being put under unrealistic pressure by your new manager when starting out in your new role. Avoid this situation by establishing clear performance expectations over your first 12 months in the role.
Take notes and present them when you turn up on Day One to have your objectives set with your manager.
Deal with the detail sooner rather than later
Get a draft copy of your potential new company’s draft Letter of Offer template as soon as you become aware that you will progress beyond a single interview. It will not have the financial details included, but it will allow you to iron out any contractual issues you may face, such as non-compete clauses, or notice period policies.