When the job offer is on the table, the time has come to negotiate a compensation package. The company is emotionally invested in you, believing that you will benefit their team. To vindicate their investment of time and resources in their employee search, securing you as an employee becomes their goal. All this means that the employer is willing to spend more on you than she would have been at the end of the first interview.
The prospect of negotiating the terms of employment surges through some like adrenaline and others like an imminent fainting spell. If you do not tend to get the results you want from negotiations, or the mere prospect of discussing money makes you squirm, consider these guidelines for more effective negotiation.
Know what you are worth. You can almost guarantee that the person negotiating the terms of employment on behalf of the company knows your value. When you begin negotiations, you should also know how much your work is worth. Using internet resources, do research on the salary and compensation ranges for comparable jobs in the area. Be sure to use sources that account for differences in cost of living between cities. Glean information during interviews and from your network of sources that indicates the relative value of the position in the company. Are you applying to be a CFO or an entry-level accountant?
Set a clear goal. Studies on negotiation consistently show that people who set clear and aggressive goals achieve more favorable settlements than those who aim low or do not set goals at all. If you want a salary of eighty grand and a total package worth 100 grand, shoot for it by throwing out an anchor worth more than 100 grand.
Set a walk-away price. You know your own financial goals, responsibilities and liabilities. If you cannot take anything under seventy grand and still make sense of accepting the position, do not pretend that you can. Your walk-away price depends not only on your financial needs, but also on the attractiveness of your alternatives to accepting the offered position. If you are currently making sixty grand and there are no other offers finding you, settling at sixty-eight grand might not be a bad idea. If, on the other hand, you have been offered a position for seventy-five grand and a generous benefit package, sixty-eight grand seems less reasonable.
Use fairness as your standard. The idea of fairness strikes a cord in most everybody, even though people have differing perceptions of what that means. Obtaining a compensation package that both you and the employer consider fair is particularly important since you are entering into an ongoing relationship. If you discover four months into the job that you are making twenty percent less than your counterparts, your enthusiasm for your new job can sour. If your employer feels like you bullied him into a costlier package than the company authorized him to offer, he could easily become resentful toward you.
You must be able to make a case for why your self-serving version of fairness is appropriate. Are you worth more than most people because you have more experience or because you have a track record of attracting big clients? Perhaps the rationale for your standard of fairness has little to do with you personally, and everything to do with asking for the median market value of your work. Maybe you are asking for a salary that is commensurate with others performing the same role in the company. Remember: if your negotiating counterpart makes concessions, she needs to be able to justify her concessions to her boss. Reciprocally, it is helpful for you to identify what your employer considers fair.
Identify all your interests. Both you and your employer probably have concerns or aspirations that are not strictly monetary. You might want CFP training without having to pay for it. The employer can satisfy this interest in more than one way: by building a cushion into the salary that would cover schooling costs or paying for the schooling on your behalf. You might also want one flex day per week or the ability to work from home a few times a month. You may value being able to leave by five o’clock consistently to pick up your children, rapid promotions, a gym membership or full health care.
Before you walk in to the negotiation, prioritize your various interests and identify places where you are willing to trade one thing of value for something else. Is the salary more important than stock options? Is a gym membership more important than a review and likely promotion in six months?
When you negotiate the terms of the deal, discover what your employer’s various interests and reveal your own insofar as this would benefit you. Maybe the employer cannot go above sixty-five grand and still maintain equity of salary within the company. Find out whether the negotiator has full decision-making capability, or if he is representing someone else who makes the compensation decisions. Your employer may be able to offset a concession on your part by paying for your education, offering stock incentives, or giving you a signing bonus. Be creative.
Compete and Cooperate. If your counter-part is using hard-ball tactics like being forceful, brisk or patently stubborn, you will do better not to lie on the ground and wait for him to stomp on your back. If you encounter someone who wants to play hard-ball, respond strategically. Do not allow the person to bait you. Remember your goals and why your requests are fair. Withhold information that might weaken your position. On the other hand, if your counterpart makes a concession, it is important that you also appear cooperative. You might need to make a concession as well. Negotiating is not about winning, so much as it is a dance towards a certain goal. Each person makes moves with reference to the moves of the other person. When both people dance together, it becomes less likely that either person will suffer bruised toes or damaged egos.