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To negotiate your
pay package, you first need to identify the right opportunity. It is true that
any time will work, but there are some natural "money moments" that are perhaps
more logical for negotiating a pay package. One obvious opportunity is when you
are interviewing for a new job. In fact, for an executive not to negotiate at
that moment would be considered foolish. If you're not interviewing for a new
job, the obvious moments are fewer but they still exist. Performance review time
is a good time, as are the end of a significant project, and promotion or
change-of-role events.
Start early. At any
level, but particularly at the executive level, the negotiations,
decision-making, and budgeting processes all take time. If you start too late,
you may find yourself being told, "We'd love to, but the raises for this year
have already been budgeted."
After you identify
when to talk, you need to know what to say. Here is a brief outline of some
steps to help think through the process.
- Know your job's
market value. Do some research to know the going rate for people performing
a similar job within your organization and at other, similar organizations. This
is always the best starting point for common understanding.
- Know what
extras are normally included. When you are doing your research for what the
job typically pays, also pay attention to how it pays. Look for mix of
pay among base pay, cash incentives, stock incentives, benefits, and
perquisites. Identify the types of noncash awards you see others getting.
- Know what makes
you special. Although this sounds corny, this is where your leverage will
come from. Look for the types of things you can do, or things you know that are
superior to the performance of the typical person doing your job. If they are
valuable to your employer, some of that value will transfer to you. To
facilitate that transfer, try to have some idea of the tangible value of those
things to your organization.
- Put it all
together in your "dream deal." Establish how much you and your skills are
worth to the employer vis-a-vis your specific skill set. Also identify the
components of pay that are most important to you. Keep in mind that your
employer will have some idea of what is and isn't acceptable. You'll have to
respect their limitations, but sometimes you can get one or two rules bent if
they're important to you.
- Determine the
starting point for your discussion. This is sometimes the most difficult
part. You want to approach the subject of salary increases in a way that is
strong without being confrontational. You also want to be sure you know your
bottom line set of acceptable terms, but you may not want to blurt that out in
your opening salvo.
- Come to
agreement on the facts. The facts here are those specifically about you and
your performance, as well as those about the market standards for the job. Once
you and your boss (or the board, in some cases) come to agreement on the
standards used, you are on a level playing field to begin the process of drawing
the lines between your performance, skills, and rewards with the corresponding
market standards for the job. This is the moment most people think the actual
negotiation begins - but in reality, it began in step 1.
Remember, of
course, the negotiation process is continual. You should always be aware of your
performance; you're always being evaluated.
Some final
words
When you are negotiating for your pay package, be sure to explain
your reason for asking for specific things or amounts. It is not reasonable
simply to say, "I want it." You should have a clear and convincing business
reason for asking for something. Identify the reasons something is supportive of
the business's agenda, or why it is clearly a competitive issue.
Similarly, because
you are negotiating, remember you don't hold all the cards. You are likely to
make more headway if you consider things in terms of tradeoffs and exchanges.
This way you are negotiating the classic "win-win" solution that leaves everyone
feeling they have accomplished something positive.
- Bill Coleman,
Senior Vice President of Compensation
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