21 Oct Strike The Right Tone, Get The Right Compensation: Negotiation Tips For Executives
Even at the executive level, negotiating salary and job offer can be intimidating. You’re only human and it may feel uncomfortable to ask for what you want outright, but if you don’t successfully navigate that discomfort you will be undervaluing and underselling yourself. According to economist Linda Babcock of Carnegie Mellon, failing to negotiate your salary can lead to a loss of anywhere from $1 million to $1.5 million over the course of your lifetime. Furthermore, negotiation skills aren’t only imperative for ensuring that you capture a salary commensurate with your skills and experience, they’re an essential part of any business leader’s day-to-day arsenal.
Focusing on negotiation for jobs in specifically, it’s critical for executives to be completely ready for the salary and benefits discussion. With that in mind, here are the essential steps for upcoming and seasoned executives to negotiate their ideal compensation package.
Set Your Negotiation Priorities
A successful negotiation strategy approaches the conversation from a holistic perspective. When considering your total compensation package, outline and define your expectations beyond simply the salary. Additional points that can, and should be negotiated include:
· 401(k) matching
· Health, dental, and vision coverage
· Tuition reimbursement for yourself and/or a dependent
· Company equity and stock
· Company car
· Training and certifications
· Eligibility for bonuses
· Scheduling flexibility
· Additional PTO, sick time, and family leave
· Health and wellness stipends
· A platform for promoting your work—for example, opportunities to speak at public engagements, publishing credentials, etc.
This is an extensive list because your preparations for these conversations should be extensive. One approach is to create a grid of each of these benefits where you rank them in order of importance and flexibility. This will arm you with the ability to enter a negotiation knowing where you are prepared to make adjustments to your expectations and how you can request fair compensation in other realms that the company may be more willing and able to accommodate.
Next, you’ll want to prepare by setting those baseline expectations for each of these elements. Add to your grid what your minimum and ideal amounts for each item. Do you have any red lines that you’re willing to walk away from a job if they aren’t met? If so, lay them out for yourself explicitly so that you’re not caught off guard. Resources such as salary comparison sites, Ivy Exec’s company and salary data, and trade journals can help you to set realistic expectations. If you’re still struggling to define these priorities for yourself, consult a supportive mentor outside of your organization but ideally in your industry.
Keep Your Tone Collaborative but Confident
You’ve gotten to where you are through determination and strength, but you want to ensure that your potential employer always feels like you are creating a win-win situation in your negotiations. You can increase the perception of a win-win negotiation by making sure you give your counterpart a real voice in the decision. Be sure to acknowledge the company’s perspective and invite the negotiator on the other side of the table to express their views and thinking behind their offer. Understand that to be in a win-win situation, the employer has to feel both you and they got a fair shake, and that concessions were fairly equal on both sides. This doesn’t mean acquiescing though, it means being conscientious of your tone and your attitude. Remember, you want to work with the folks you’re negotiating with and this is an opportunity to establish yourself as a person that they want to work with too and in doing so you’ll likely find them more open to meeting your expectations in order to achieve that goal.
Don’t Neglect the Severance Conversation
Negotiating as an executive is particularly unique because you will want to ensure that you address any potential separation from the company, before you’ve even started. It feels awkward, even unnatural, but it is essential. The best way to approach it is summed up by Mark A. Herschberg, author of The Career Toolkit, Essential Skills for Success That No One Taught You, “think of it like a prenup—no one wants to talk about divorce before you’re even married. An executive is a key hire and so making sure the transition is smooth on the way out, no matter what the reason, is important. Like a prenup, this is best approached when everyone is on good terms and trying to make things work.” An executive position is a commitment, for you and the company, just like a marriage and making sure that you’re covered for every eventuality is part of your basic responsibility to yourself and your dependents. Note that six to twelve months of pay is the baseline for severance expectations, if you are the CEO or similar you should ask for more.
When considering and negotiating your severance, be aware to address not just the dollar amounts but any provisions and clauses surrounding the package. For example, you’ll want to ensure that there are no performance-based provisions tied into the severance package because you’re entering new territory and you don’t have the tools and information to evaluate whether those performance provisions are feasible. The last thing you want, is to give a job everything you’ve got for as long as you can only to walk away empty-handed because you committed to unrealistic performance goals. You’ll also want to address whether severance would be paid in a lump sum or installments, and whether it will reflect any bonuses earned. Before you sign a contract with a severance clause, have a trusted friend or colleague take a look to catch any gaps you may have missed.
Know Your Value and Hold to it
Negotiation only works if you are actually prepared to walk away if your basic terms aren’t met. If you lack this surety, it will be reflected in your confidence and your discussion will be affected from the outset. Be polite but firm when discussing your requirements and what you have to offer to the company. If you’re unhappy with the job offer, consider your other options. If you can wait to find the right opportunity, that might create a better long-term outcome than taking a role that will make you unhappy or jeopardize your reputation. If you and the employer truly reach an impasse, you can also delay the negotiation by asking to revisit the terms of your employment after the next budgetary review. As an alternative, you could also request consideration for a raise or bonus that’s contingent on a 6-month review.
Holding to your expectations isn’t only going to benefit you, ideally by securing you the compensation you’re seeking, but it actually improves your relationship with your new employer and sets you in a higher standing from the outset. Researchers at Northwestern University, the University of Southern California and leadership consultancy Ruda Cohen and Associates studied reactions to initial offers in negotiation and found that negotiators whose offers were immediately accepted were less satisfied with their agreement than were the negotiators whose offers were accepted after a delay. If you are someone who finds negotiations uncomfortable, keep in mind that it’s actually part of your reputation management strategy, not only a way to get what you want.
A Final Thought
Negotiation isn’t an event, it’s a lifelong skill. Cultivating and developing your negotiation skills well in advance of a new job opportunity will ensure that you feel practiced and confident when the time comes to advocate for yourself in your new role. Practice different styles of negotiation in your current work and day-to-day life to figure out what your personal style is and to become steadier at holding your lines. Whether you use books to develop this skill or simply make a conscious effort to implement negotiation tactics wherever possible (and reasonable), committing to making negotiation a solid part of your toolset will make you a stronger professional wherever your career takes you.