Table of Contents. When Is it Appropriate to Negotiate? Understanding Your Value. Discussing compendation during interviews
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2 Table of Contents 3 When Is it Appropriate to Negotiate? 4 Understanding Your Value 5 Discussing compendation during interviews 6 7 You Got an Offer - Now What? Components of an Executive Compensation Package 8 Employment Contract 9 Negotiating a Pay Raise from Your Current Employer Ultimate Executive Career Guide - Part Five - 2
3 WHEN IS IT APPROPRIATE TO NEGOTIATE? After months of career planning, connecting with executive search consultants, optimizing your career documents, networking, and interviews, you ve been offered a sensational, new executive position. While it may be tempting to accept the offer right away, it s important to take some time to think about the offer and respond with a counteroffer. As a senior-level executive, you are used to negotiating in your day-to-day work life. You negotiate contracts, products, and services for your company and department every year. Yet, like many other executives, you get uncomfortable when it comes to negotiating your compensation. In the case of negotiating your compensation, you ll need to ignore your gut and put in the effort to negotiate the most optimal package possible. Utilize this guide figure out your value and develop your raise or compensation negotiation strategy. In addition, this guide will go over when you should negotiate, how to figure out your value in the marketplace, how to handle compensation discussions when they come up during an interview, what to do when you ve gotten an offer, components of an executive compensation package, what to look for and ask for in your employment contract, and how to negotiate a pay raise or re-negotiate your compensation at your current employer. Ultimate Executive Career Guide - Part Five - 3
4 UNDERSTANDING YOUR VALUE (Section 1 of 2) You must be prepared to answer compensation-related questions before you start interviewing. Unfortunately, these are not always easy questions to answer. By gathering information from these sources, you should be able to come up with a salary range and compensation package needs and wants to use if these questions are brought up during an interview, during negotiation process, or when requesting a raise. CURRENT COMPENSATION One of the primary factors that will gauge your value to your next employer is your current compensation. Figure out the total monetary value of your current compensation and benefits, and of any payments you will lose by leaving your employer (such as this year s bonuses). Then, consider how this differs from the compensation increase you want or need. You ll also want to consider which benefits and perks (medical insurance, dental coverage, etc.) are necessary or desired. NEW ROLE RESPONSIBILITIES If your role is a step up, rather than a lateral move, you will have higher value to the hiring organization. Will you have more responsibility? Will you manage a larger team? Will you have P&L responsibility? Consider the added responsibilities and requirements of your new role when creating your target compensation range. INDUSTRY, FUNCTION, AND GEOGRAPHIC AREA Your compensation level can be highly impacted by the industry, function, and geographic area you work in. When considering compensation based on your geographic location, you should ask yourself: Am I in the top location for my industry? What commute am I willing to make? Do I want to move to a new location? What location is most suitable for my personal/ family life? Would I prefer to telecommute? When considering compensation based on your industry and function, your country government might have useful labor statistics related to trends by industry. For example, in the USA, the Bureau of Labor Statistics publishes information on unemployment rates, employment by occupation, salaries, and more. Ask yourself: Are executives in my industry and function in high demand? Am I in a developing or deteriorating industry? ONLINE RESOURCES AND SALARY BENCHMARKING TOOLS As you research your compensation, you ll find it useful to look into various types of online resources as a way to benchmark your Ultimate Executive Career Guide - Part Five - 4
5 UNDERSTANDING YOUR VALUE (Section 2 of 2) desired range. Some of these include trade or professional associations, executive-level websites, or magazines, several of which publish annual salary surveys. In addition, public filings, such as proxy statements, and sites like Equilar.com, Salary.com, SalaryExpert.com, and Glassdoor. com, will provide compensation data for specific companies, functions, locations, etc. ENVIRONMENTAL CHALLENGES The current economic market not only impacts the availability of executive positions, but it also can influence the compensation raise you ll be able to earn. When the job market is crowded, you may have difficulty obtaining a position if your compensation requirements are too high. Other challenges that could impact your compensation include very specific location requirements or a recent reorganization at your company. Both of these scenarios could cause you to have a lower perceived value in comparison to other executives vying for the same position. X FACTORS Are there any unique factors that give you an edge on your competition for the role? If so, these could help bump your salary range up from the employer s perspective. Some of these can include: Unique experiences that go beyond what other executives in similar roles may have. A well-developed network that could help you perform your job better than others. Specialized knowledge or skills that could give the employer a competitive advantage. Ultimate Executive Career Guide - Part Five - 5
6 YOU GOT AN OFFER NOW WHAT? An offer is most often given by a representative of the company or through the search consultant in two stages: 1) the offer of the position and 2) the offer of the compensation. Cases where both are offered at the same time are not as common. The main thing to remember at this stage is NEVER accept an offer right away. Most first offers are not the best the company is willing to give. Plus, changing jobs is most often going to be the only time you can earn a large compensation increase. For these reasons, you should thank the company or search consultant for the offer and let them know you will need a few days to think about it. Even if the offer seems to be higher than you expected, you ll need to take a close look at each part of the package to be sure before you commit. Certain parts will be non-negotiable as they are standard at the company for every employee. Nonetheless, you ll want to negotiate on any parts that are partially or extremely important to you. If you don t have strong compensation negotiation experience, you may consider requesting the help of a career coach or trusted advisor or hiring a compensation lawyer or specialist. If you ve been working with a search consultant, he or she will be available to help clarify parts of the contract, but his or her role will be more like a mediator between you and the hiring organization at this stage of the hiring process rather than an advocate. Once you ve reviewed the offer and have defined your wants and needs, be confident as you negotiate. The negotiating power is on your side now that the offer is on the table and you know the company wants to hire you. Be calm and don t get emotional when explaining your counteroffer. You should go into the negotiation with flexibility and a willingness to give on some wants that aren t as important. If you feel that there may be room for additional adjustments to the agreed upon compensation offer in the future, request a review and a possible adjustment for six months after you begin working. Last, but not least, get all parts of your offer in writing and make sure the employer representative and yourself sign it. Ultimate Executive Career Guide - Part Five - 6
7 Ultimate Executive Career Guide - Part Five - 7
8 EMPLOYMENT CONTRACT Formal employment contracts are mostly common for C-level roles, but they are beginning to become more commonplace at lower executive levels too. In most cases, an executive will receive an employment letter with details of compensation and responsibilities instead of a formal contract. This does not usually specify a fixed employment period. Even if you don t receive a formal contract, you need to clarify the terms in the employment letter and negotiate any terms that you do not agree with. Your employment contract or offer letter is a legally-binding agreement and should not be taken lightly. Work with your trusted advisor or compensation lawyer or specialist to ensure everything is listed as agreed upon during negotiations. And remember, you re not officially hired until the employment contract or offer letter has been signed and executed, so don t resign from your current position until this has happened. Ultimate Executive Career Guide - Part Five - 8
9 NEGOTIATING A PAY RAISE FROM YOUR CURRENT EMPLOYER If you re satisfied with your current company and role, but not your compensation, you may decide to negotiate a pay raise rather than seek out new employment. Depending on the current situation at your organization, this may or may not yield the results you re hoping for, but either way it s best to go into these negotiations with a strategy. WHY YOU DESERVE A RAISE Almost all employees believe they deserve better compensation, but why they deserve this may not be fully apparent to their employers. If you want to get a raise, you ll have to convince your employer that you re value is higher than it was during your last pay period and that you have plans that will continue to bring value to the company going forward. You can prepare this ahead of time by keeping a file of the achievements and accolades you have received in real time. It will help you recall your contributions in your role. It can also serve as a way to gain perspective when you are having a bad day! Some newly acquired traits that might be useful to point out to your employer when requesting a raise include: Special skills or talents Job achievements that deserve a raise or promotion Degree, credentials, or designations New talents or skills acquired Personal life events, such as buying a new house, expecting a baby, or debt are not an acceptable reason to request a raise. Come to the negotiation table with tangible results and contributions, and you ll convince your employer that you truly deserve higher compensation. ASK AT THE RIGHT TIME One of the most important things to consider when asking your employer for a raise is timing. First of all, you should schedule a meeting with your superiors and let them know what the meeting will be about so that they can prepare. The best time to re-negotiate salary is right after you ve completed a successful project or after a glowing performance review. It s highly unadvisable to surprise your employer with a compensation negotiation meeting. Other less-desirable times to attempt a salary re-negotiation would be after the release of negative financial forecasts, prior to a board meeting, or during a company re-organization. If you plan out the timing and reasoning, you ll likely be successful in your raise request. DO YOUR HOMEWORK How much are you worth to your employer? Why are you worth that amount? Go into the re-negotiation with thorough research and evidence so that you know what you ll be asking for and why you deserve to be asking for it. Use the resources mentioned at the beginning of this guide to help. Practice presenting the reasons you should get a raise as you would for an interview using sound bite stories with notable figures and testimonials from your achievements, customers, coworkers, or superiors. Whatever you do, do not go into a salary re-negotiation underprepared. This could lead to your termination or damage your reputation. PRACTICE Much like preparing for an interview, practice can help you prepare for your compensation re-negotiation. Knowing what you want to say and doing so in a succinct, professional style, will allow you to be confident during your raise discussions. After you ve figured out your raise request and your pitch content, practice in front of a mirror, record yourself, or practice with a friend. Get ready for any questions or objections the employer may have as well. KEEP AN OPEN MIND Even if your employers aren t able to offer you a higher salary, they may be able to provide other benefits or perks, such as additional vacation days, longterm bonuses, etc. Come into the negotiation with these things in mind and bring them up if it seems like your raise requests will not be feasible. Even if your employer turns down your requests, stay positive and thank them for their time. Try to find out why your request was denied. If it was due to lack of budget, you can request a follow-up at the time of the next budget review. If the motivation is performance related, then strive to work on improving to certify your requests will be fruitful next time. Ultimate Executive Career Guide - Part Five - 9
10 ALWAYS NEGOTIATE FOR OPTIMAL CAREER SUCCESS Negotiating compensation can require similar research, preparation, and interpersonal skills that are used during the interview process. But unlike interviews, there s the uncomfortable addition of money, which can be a touchy subject that many people choose to avoid. Set yourself up for success in your career both professionally and financially by negotiating your compensation whenever you are offered a new position. If you don t go after what you want, you ll never have it. If you don t ask, the answer is always no. If you don t step forward, you re always in the same place. Nora Roberts UP NEXT IN THE ULTIMATE EXECUTIVE CAREER GUIDE THE JOURNEY CONTINUES WITH PART SIX: MASTER YOUR NEXT INTERVIEW, WHICH WILL DIVE INTO: Preparing for your interview The types of questions you may be asked How to perform well Following up after your interview And more! Ultimate Executive Career Guide - Part Five - 10
11 BlueSteps, the executive career management service of Association of Executive Search and Leadership Consultants (AESC), can help you achieve your career goals. As a member of BlueSteps, you ll have access to numerous tools and services you can use to progress your career from one stage to the next, including: A confidential profile that s only searchable by AESC s 9,000 search consultants Hundreds of executive-level job opportunities Personalized career consultation with complimentary resume/cv review An international directory of AESC member search consultants A full archive of executive webinar recordings delivered The entire Executive Search Insights Vault Live Q&As with search consultants and career experts Visit bluesteps.com to become a member or learn more. Ultimate Executive Career Guide - Part Five - 11
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