BUSINESS: The Ultimate Resource

February 2003 Upgrade #5

ACTIONLIST
Negotiating a Better Package When You Start Work
Getting Started
When you start a new job, you have a unique opportunity to position yourself as a valuable asset in the organization and to set your level of compensation accordingly. To achieve this you need to establish an appropriate asking price. On one hand, you dont want to oversell yourself and price yourself out of the market. On the other, you need to avoid selling yourself short, for it is likely that your compensation upon hiring wont change significantly for a while, unless you are quite assertive and work your way upward with early promotions. There are no hard and fast rules about how or when to conduct your negotiation. Every situation is different and each employer has a different set of thresholds. Understanding the context in which your negotiation is going to take place and being sensitive to the culture of the organization is therefore essential. Having said that, there are some practical steps you can take to position yourself sensibly.

FAQs
I am in the process of applying for a new job. How should I prepare for the negotiation on the package? You need to do your homework before entering the negotiation so youre supported by accurate, current information. This means familiarizing yourself with the company itself, as well as the range of salary and benefit options that are being offered. You may be able to tinker with the combination of benefits, if not the salary itself. Dont assume youll be offered more than your former salary, especially if youre competing with someone who is equally qualified but willing to work for less. If the salary offered is less than you had hoped for, you can discuss the benefits package and request an early salary review. I feel extremely uncomfortable talking about how much Im worth. What can I do to make this easier? Many people dislike the negotiation phase of finding a new job. Here are some simple steps to make this easier. ! Try and avoid discussing your package until you have been offered the position. ! Prepare in advance to advocate in a convincing way for the package you want; its important that you believe you are worth the price youre asking and can demonstrate your assertions with facts ! When you start negotiating, make sure you have in mind the minimum salary you are prepared to accept. (Dont reveal this figure, though!)

Bloomsbury Publishing Plc 2003

BUSINESS: The Ultimate Resource

February 2003 Upgrade #5 !

! !

Try and elicit the salary information first. If you are offered a range, go high or even slightly above the top end. If youre offered a specific figure, assume it falls in mid-range and try to push it up. If you are asked to name a figure, dont lie, but offer a range within which you would be prepared to negotiate. If your negotiation is successful, ask for the agreed terms and conditions to be confirmed in writing before you resign from your current position.

Im applying for a job that is a dream come true, and I dont want to put off my prospective employer by asking for too much. How can I safely position my worth? You can put off a prospective employer by pitching too high or too low, so its important to get your level right. Study the want ads to get a feel for the market rate, and draw information from your professional network. Some listings on the Web will help you, too; some of these are indicated below.

Making It Happen
Position Yourself In applying for a job, youre effectively a salesperson promoting a product, and its up to you to demonstrate that the product is valuable, high-quality, and superior to anything a competitor can offer. Potential employers, or buyers, are looking for the best value for their money, so will be driving the deal in the opposite direction. If youve positioned yourself well, they wont want to risk losing you, however, and might well be prepared to settle at the top of the market rather than the bottom. Leave the Salary Discussions As Late As Possible It is preferable to leave salary discussions until you are offered the job, but its not always the case that salary will be left until the final stages of the process. Many recruiters ask for salary expectations and details of current salary early in the process. Some even screen people out on this basis. If this is the case, you may need to spend some time researching the question of salary at the application stage or before the first interview. Think carefully about your aspirations and be absolutely sure of the career step you envision for yourself, the experience you would like to gain, and the context in which you would like to work. If you are forced to answer a question about your salary expectations at the beginning of your interaction, have a figure in mind at the higher end of the scale. You can always supplement this with a request for a particular package of benefits. Consult the Right Sources In deciding on an appropriate salary level, here are a number of pointers that can help you settle on a figure. ! Look at the range of packages offered for similar positions in the want ads. ! Ask for advice from people in your professional and personal network. ! Ask your mentor, if you have one, to advise youor use his or her own network to access the information. ! If you are a member of a union, they will have information on acceptable salary ranges for your profession

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BUSINESS: The Ultimate Resource

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Professional and executive headhunter companies will have ideas and figures for you; you will have to pay them for their knowledge, however. Go to some of the Web-based salary information services listed below.

Consider the Package, Not Just the Salary Some employers have fixed-scale salaries, in which case there is little room for negotiation. You may find, however, that the total package of pay and benefits raises the value of the salary to an acceptable level. For instance, you may be offered excellent medical coverage, an unusually good pension plan, a company car, and significant bonus potential. You may be able to negotiate a cash equivalent in place of a benefit, particularly in a smaller organization that has some flexibility. When bonuses are mentioned ask how the bonus is paid so youre absolutely clear on the terms and conditions attached to it. Some companies spread the payments over several years as an incentive to stay with the business. Get the details of the way the company delivers on promised benefits, and decide on balance whether the package is attractive or not. Tax Implications It is worth remembering that all benefits are subject to federal and, in some cases, state income tax, even a company car. See what the company may be able to offer as a way to reduce your exposure to taxation. For example, a company that has a fleet of cars may be able to offer you a car without it being considered a taxable benefit. Likewise, through careful planning, you can reduce your taxable income through bigger tax deferred contributions to your individual retirement plan (IRA) or through a deferred compensation plan. Doing so, however, means learning to live with less cash now in exchange for more being put into savings, where tax is deferred until you withdraw the money, presumably when you are in a much lower tax bracket. Explore the Boundaries Job ads commonly list salary ranges to give applicants an idea of the boundaries of the negotiation. You can be sure, however, that the negotiation will start at base level. If you find that the company isnt responding to your sales pitch, consider negotiating an early pay review instead: for instance, if you meet or exceed certain performance, sales, or other criteria during your first six months of employment, youll get a specified raise. Make sure that the criteria are clearly established and are included in your contract of employment. Some advertisements state that the salary is negotiable. The onus is then on you to move in with an offer. Again, try and defer discussion until the end of the recruitment process, and be sure that youre up to date on the going rate for equivalent jobs in your industry. Stay Calm Project a calm and assertive demeanor during pay negotiations; your goal is to be professional and self-confident. You dont want to appear to be arrogant, overeager, or, conversely, too timid. Giving any such impression can diminish your opportunities.

Bloomsbury Publishing Plc 2003

BUSINESS: The Ultimate Resource

February 2003 Upgrade #5

Common Mistakes
Not Doing Your Research Asking for a lot of money, in and of itself, will not be enough to convince your prospective employer of your premium value. You will have to supply the company with ample reasons to support your assertion that you are worth so much. If you dont have a rational argument, you look ill-prepared and unprofessional. Time spent on research is always well spent. It allows you to argue your case logically and professionally. Bluffing Dont bluff in your negotiation and try to play off fictitious job offers against the real one youre hoping to get. Employers generally dont respond to this kind of pressure, and instead of receiving a speedy offer youre likely to be left with nothing. Being Too Interested in the Package Behaving as if youre more interested in your package than in the job is a mistake. Every employer knows that you want a fair package, but you need to demonstrate that your financial concerns are balanced with a genuine desire for the job.

For More Information

Books: OMalley, Michael. Are You Paid What Youre Worth?: The Complete Guide to Calculating and Negotiating the Salary, Benefits, Bonus and Raise You Deserve. New York: Broadway Books, 1998. Risher, Howard, ed. Aligning Pay and Results: Compensation Strategies that Work from the Boardroom to the Shop Floor. New York: AMACOM, 1999. Web Site: Monster.com Career Center: http://content.monster.com/military/articles/negotiatesalary/

Bloomsbury Publishing Plc 2003