“How much you are worth starts with you and how you feel inside,” Shane Phillips, Managing Director at Shane Phillips Consultants.
DUBAI, UAE (SHANE PHILLIPS CONSULTANTS)–Even the savviest executives struggle with salary negotiation. It is a critical moment in the job search process and one that will affect your wealth creation ability for the rest of your career. For example if you start a job at $100,000 versus $110,000 the table below demonstrates the value difference over 5 years based on an average annual salary increase of 10% per year.
Thus a $10,000 can be a $67,156 difference over 5 years. So the extra time you put into your salary negotiation will pay dividends for years to come. If you are following the process in the Job Search That Never Fails you would have already done a lot of the preliminary work required for a successful negotiation.
How Much Are You Worth?
Most people think the answer to this question is determined by how much the market will offer them. Or if the industry average for your position is X then that is how much you are worth. Both approaches are incorrect. How much you are worth starts with you and how you feel inside.
Whatever the mind conceives it achieves, but you have to believe it before you can achieve it. Start thinking about exactly how much you want to earn and how much money you would be content with. You should have a definitive number in front of you.
The web can be a very good tool for benchmarking your salary. For global benchmarks you can go to various websites such as;
www.bls.gov/oco; The United States Bureau of Labour Statics for an average salary for almost every job on the market.
www.jobstar.org, which has over 1.5 million jobs listed with average salaries and all of this is completely free.
www.salary.com. Run by Keneca Corporation it provides a great touchstone for your salary research.
Once you have compiled all of this information about your profession it is not just something you will use for your salary negotiation but something you will use for the rest of your career.
Priorities and Strategy Sheet
Every executive has different priorities. Early career training and development may be more important than pension contribution and stock option plans will be later career. As well a single professional will have different needs than a single mom who may need more flexible hours or education assistance.
Starting the Negotiation
Now that you know how much you are worth, have a clear idea of what your priorities are and how much you value all of the elements of your package you are ready to start negotiating. If you can your best strategy is to begin the negotiation by anchoring high. Your best option is to choose a salary at the top end of the salary band or maybe even 10% or 15% above it.
This will keep the employer stretched to over the maximum the position has to offer and starts the discussion in your favor. You want to be aggressive here and not outrageous. Taking first mover advantage and anchoring high is great tactic but not if you over do it. Picking a salary point that is 150% over the top end of the salary band will only make you look foolish and as a result you will lose credibility with the employer.
Remember you will most likely have to work with this person after the negotiation is done and the basis of any working relationship is trust and credibility. So work within acceptable boundaries and try to get as much as the employer is willing to give without turning them off. Do not use unethical approaches or deceptive methodologies; build trust and credibility throughout the process.
Being well informed and researched is extremely critical to this point of your Job Search That Never Fails. Once you anchor high the employer may counter offer with a low ball to try and offset your high anchor point. When they do this do not ask him to explain his position. This will only help your opponent strengthen their stance. Instead laugh his low ball off with a joke by saying something like “You can’t be serious?”. Then drawing on all of your research explain to him what the industry is paying for this position. Site examples from direct competitors and people in the industry with your experience level who are getting similar salaries.
Quantify your position with hard facts; hard facts that your research has allowed you to unearth. You can also direct the employer to the salary surveys you have found. You need to present convincing evidence to validate your position on the upper end of the pay scale. Any third party unbiased salary info you have acquired will be a welcome addition to the discussion.
Often CEOs will use this information to make a case to have the entire team’s salaries increased, including their own. Generally they will be interested to see a salary survey because they will want to make sure they are being paid an equitable amount as well.
As you begin the discussion around salary be confident and bring up your allowances and extras you would like. Always present these items in line with the interests of the company. For example rather than saying you need a golf club membership try saying the following;
“If we are going to drive new business I think we need to be where our target clients are. Last year I actually signed my biggest deal at the golf course. Have you had similar experiences? I think it would help my sales if I had access to the golf club, what do you think?”.
Aligning your requests with the interests of the company will increase your chances of a warm reception. If you are met with a frosty reception and things start getting too tense, a good ice breaker is simply to call the situation for what it is, say “You look a little tense, is everything okay?”. This will generally help cool things off. Feel free to take a washroom break and let the temperature in the deal room come down. If things are really coming to a head and you have been negotiating for over an hour and a half, it is appropriate to say;
“This discussion has been very helpful and I am more excited about this opportunity than ever before. There has been a lot of new information presented and I would like to sleep on it and come back tomorrow fresh and in a better position to bring this to closure. Would that be okay?”
Stepping back from the deal table is a great way to take pressure off yourself and put it on the employer. Remember that your time costs are very low and their time costs are very high. If a few more weeks go by without landing a job it is not overly expensive for you. For the employer it can be very expensive, they are racing the clock to hit quarterly targets and a near miss with a senior hire can cost them hundreds of thousands of dollars if not more.
If you do not accept the position and they have to go back to market on the position it can take anywhere from 3 to 6 weeks to find a new suitable candidate. These kind of time delays can seriously threaten quarterly and annual targets.
So do not rush the offer stage of the negotiation but do not stretch it for more than a few days. Some employers in the Middle East are high spirited and can take offense if their offer is not accepted with haste. They can often rescind the offer if a candidate is taking too long to decide or they feel he or she is exhibiting “Diva” behavior.
It is always better to have someone such as an Executive Search Consultant negotiate on your behalf as they can mitigate these issues for you and can help mediate between a passionate employer and an opinionated candidate. Of course often there is not an Executive Search Consultant involved and you have to negotiate yourself.
If you are leading the negotiation yourself be sure to follow these three Don’t Dos;
Never ask “Is this item negotiable?”. Of course the employer is going to say no. Just try to negotiate and you will soon find out. If an item does seem like it is non-negotiable try and trade one of the non-priority items on your list for wiggle room on the more important items.
Never say “no” during a negotiation. Say “not now” or “not under these conditions”, or use open ended statements that always leave the door open. That way the other side can come back with a win-win solution or a resolution can be found.
Never accept the first offer. You should always try and negotiate even if you are content with the offer. If not for the least reason but to hone your negotiation skills. Nothing can be tougher then negotiating your own salary so it is the best training ground.
With the Don’t Dos under control be sure to follow these simple Do Dos;
1. Always start the negotiation with an aggressive high bid; take first mover advantage and anchor high. Be ready to justify your position and feel confident asking for a top salary in your field.
2. Be well educated on the company’s salary bands and organizational structure and demonstrate this knowledge in the meeting.
3. Be well researched on industry compensation standards and be ready to cite examples from the market place. Be comfortable presenting information to validate your position. It is fine to mention your other offers by saying things like “I have received three offers to date and they all have given more than 30 days vacation. Don’t you think you guys can meet the market on this one?”.
4. Creating a strategy document and scoring sheet, and be prepared to present every item. Do not get side tracked by a huge win on base salary or guaranteed bonus in the middle of the negotiation because three years in, you will be upset if you have less vacation days than all of your peers in the company. Stick to your strategy document and don’t be afraid to ask for all your extras.
Once you have a written offer in hand that is acceptable and you have negotiated as much as you can bring the deal to swift closure. Be sure not to make unwarranted concessions, if you make concessions to close the deal make sure you justify them otherwise you can lose credibility. Once you have an offer from a company you want to work for at the salary you are comfortable with go ahead and sign the deal.
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