Salary Negotiation

Saturday, January 25, 2014

Negotiating remuneration at a job interview can be a tricky business, but not if you know how to go about it and are well-prepared - by ROWAN MANAHAN.

“Quality is remembered long after the price is forgotten.”(Motto of the Gucci family)

Salary negotiation is one of the most delicate parts of the whole job search process, and it is at this stage that many candidates inadvertently disqualify themselves.

At some point in the interview process, you will be asked, “How much do you want?” What they are, in effect, asking you is, “What do you think you are WORTH?” Or, put another way, “Do you have delusions of grandeur (or no self-confidence), are you going to be impossible to control, or are you a total wimp that I can micro-manage into an early grave?”

QUESTIONS WITHIN QUESTIONS
What a lot you can reveal with the answer to a predictable, relatively innocuous question … Another thing you reveal in this answer is whether you told the truth in response to earlier questions (particularly those relating to your motivation and enthusiasm).

Naturally enough, the best response is to not directly answer the question at all, but rather to turn it back on the interviewer – “Well, I'm not sure. Obviously, in an ideal world, I’d love to be coming in somewhere in the top half of your scale, but I presume that you have guidelines for what the starting salary should be for someone of my experience and qualifications, so what do you think I would be worth?”

1ST LAW OF NEGOTIATION - TRY NOT TO STATE YOUR OPENING POSITION. IF AT ALL POSSIBLE, MAKE THEM SAY A NUMBER FIRST.
You should practice this in role-play with friends and relations, so that you get good at batting the ball firmly but politely back into their court. CURRENT PACKAGE In many instances, the interviewer(s) will not directly ask you what your expectations are, they will just inquire as to the level of your current salary / package.

Sticky moment.

Most candidates exaggerate at this point and interviewers have learnt to automatically deduct 10-15% from the figure that you mention, especially if your body language contradicts what your mouth is saying. If you deem that you are currently underpaid and this is a major factor in your reason for leaving your present organisation, then you will have to talk up the package that you are on.

Maybe you are about to have a salary review? A new bonus scheme is being introduced that is going to significantly improve your current take-home situation? There’s a company-wide negotiation being rubber-stamped at the moment, which will give you X% more than your current number and your next review will improve that by a further Y%?
That’s your starting point, not the number that you are on today. It is also imperative that you find out what the norm is in your target organisation, so that you don’t (a) give yourself away too cheap or (b) inadvertently disqualify yourself from the process by mentioning what they regard as a staggeringly large figure. Placement agencies (particularly the larger ones) frequently conduct salary surveys.

You will find this kind of material in the business section of the broadsheet newspapers on an occasional basis too. If you have any contacts in the Human Resources world, they frequently conduct benefits surveys to ensure that their organisation is in line with market norms.
Talk to your network – someone may have at least a ballpark figure that you can work to. This information is not hard to get hold of, so don’t be caught out for the lack of it.

WHEN TO TALK ABOUT MONEY As a general rule of thumb, you shouldn’t raise the subject of remuneration first. The exception to this is if you are dealing initially with a placement agency – ask away. But once you are talking directly with the employer, the polished candidate will let them raise the subject first. More to the point, when they start talking about money can be a useful ‘tell’ as to their attitudes and motivations. If they introduce the negotiation very early, it may be that they are less interested in getting the best possible person for the job and more concerned with keeping the hire cheap. If they introduce it very late in the process, they may be hoping to lull you into a false sense of security and then yank the carpet out from under your feet when you are more than half-committed …

2ND LAW OF NEGOTIATION - DON’T BACK YOURSELF INTO A CORNER. NEVER SAY A HARD, “NO.” If you are disappointed (or insulted!) by the figure that they mention, you have two options:
(a) snort derisively in their faces and say something along the lines of, “Pay peanuts, get employees with simian characteristics. Come on – get real.” or
(b) Don’t confront – say that the figure is way lower than it should be and that you will go away and come back with a counter-proposal (which will be based upon your research and should be very difficult to argue with).

3RD LAW OF NEGOTIATION - IF YOU DO HAVE TO SAY, “NO,” BE PREPARED TO WALK AWAY. How much you will and won’t move for is a critical milestone (millstone?) on your road map for the job-hunt.
That being said, it can be worth your while to look at an holistic picture. If your target organisation pays a little less, but really invests in its employees, it might be worth giving them at least a few years of your time.
Maybe you want to gain a further qualification and they have a particularly generous reimbursement programme for employee education. They might do something very creative on car expenses that leaves you considerably better off over the course of a year than your existing package.
Their bonus scheme is way better than your current one and you have always been good at hitting targets … Don’t be closed- or narrow-minded on this. Drawing a line down the middle of the page and comparing your total net worth in your current role with what’s on offer is more than a clichéd or cursory exercise – it is a vital one.

REMUNERATION DOES NOT EQUAL JUST A SALARY Another common mistake made is to restrict the discussion to salary alone. Do not fall into this trap. Include: Bonuses Working hours – do they offer FlexiTime or job sharing schemes? Overtime rates or time in lieu of pay if they don’t offer overtime Pensions Health and other insurances (do they cover just you or your family too?) Car, mileage rates, car allowances (how often is the car replaced? Are they creative on BIK?) Travel allowance – could be very important if you are looking at a lengthy daily commute Per diem and overnight allowances Frequency of salary reviews Subscriptions to publications Memberships to professional bodies, sports or health clubs Training and personal development Further education Leasing arrangements Preferential loans The list is long and depends on the type of organisation that you are about to join. Time to think broadly and get creative!

HAVE A CLEAR OBJECTIVE As in any negotiation, you should also have a very clear picture of your objectives; in this case your minimum figure. Calculate how much you actually need, how much you want and how much you’d really like – these are your three lines in the sand.
Employers tend not to be interested in how much it costs you to live, but if you can talk in concrete terms about your fixed outgoings (rent / mortgage, utilities, groceries, insurances, savings) it immediately becomes obvious that you are not being in any way flippant in the negotiation.

 

DON’T NEGOTIATE WITH UNDERLINGS – NEGOTIATE WITH THE PERSON WHO HAS THE ULTIMATE POWER TO SAY “YES” OR “NO”. This is very important.
If you go into a garage to complain about the quality of the repairs done on your car, you don’t talk to the employee with grease under his fingernails – you talk to the guy in the suit. In a negotiation on your salary and benefits, DO NOT engage with someone who can say, “I’ll have to get back to you on that.” One of the keys to successful negotiation is that both sides have the same amount of thinking time. If you let the other person out of the room to talk to a boss, that means they have 2-3 times your thinking time. You will be up against the negotiator, the decision-maker and probably at least one other player from their side. Three brains to one? I’m not betting on you.

As soon as someone tries the, “I’ll have to get back to you on that” line on you, it is imperative that you get past that person. Make this a deal-breaker if you have to, but talk directly to a plenipotentiary decision-maker. “WE COULDN’T POSSIBLY …” Irrespective of the level of the player, a stock line used by negotiators from the employer side to keep your entry package low is, “Oh, we couldn’t possibly do that. It wouldn’t be fair on the other staff OR Everyone would want that if we gave it to you.”

Human Resources professionals are particularly prone to trotting out this one. Bull! Your immediate answer to this kind of jaded nonsense should be, “Are you seriously trying to tell me that there is no confidentiality in this organisation and that everyone’s salary and package is an open book to everyone else in the organisation?”
Watch them run for cover! Their stammering response is typically something along the lines of, “Of course not, but you know how these things get out …” Your counter should be to smile sweetly and say, “Well, with respect, that’s your problem. It only becomes my problem if it affects this negotiation. Are you going to let that affect this negotiation?”

GOOD COP / BAD COP Another common tactic used by employers is a ‘Good Cop / Bad Cop’ routine, whereby the person that you will be reporting to hands off the negotiation to a colleague, typically someone from Finance or Human Resources.

Do not let this happen.

The Good Cop doesn’t want to harm her/his working relationship with you at the outset – hence the hand-off. Insist politely, but firmly that you deal with your boss directly for the negotiation. (S)he will ultimately be the person who decides your pay rises and who is aware of your value to the organisation. So it is not unreasonable to ask to deal with the person you will be working most closely with for the rest of your time in the organisation.

THE WRITTEN WORD If you really want to join a new organisation and they are promising you the sun, moon and stars if you do join, get them to put it in writing (particularly if you have to take a step backwards on some aspect of your remuneration for whatever reason).
An airy undertaking of, “Oh, that’s just a starting salary while you’re on probation. We’ll be raising that by XX% after 6 months” is all very well; but if you make them write it into your contract of employment, you will quickly determine whether or not they mean what they say.

Any unwillingness on their part to put their promises on paper should set off alarm bells in your head. It is fair to say that the selection process involves a degree of seduction on both sides, but an employer who is unwilling to provide concrete reassurances on promises made is not going to respect you in the morning … IF YOU DON’T ASK FOR IT, THEY’RE NOT GOING TO GIVE IT TO YOU.

Have a look at this little scale. It outlines the ratio of earnings by CEOs of Fortune 500 companies to earnings by an average line worker in those companies over time.

1980 42 : 1
1990 85 : 1
2001 411 : 1

Do you think those CEOs got that kind of disproportionate pay rise without asking? Maybe the Boards of Management of all of those companies decided, in their infinite wisdom and mercy, to just hand over the cash? If you think so, I have a bridge that I want to sell you. (It will be interesting to see if that ratio changes the next few years dependant on performance – is Monsieur Garnier’s slap on the wrist an anomaly or the start of a trend?)

Know what the going rate is. Know what you are worth. Know what they can afford.

Decide how much you want. ASK! “Never let us negotiate out of fear but never let us fear to negotiate.”(John F Kennedy in his inaugural address)

Rowan Manahan is Managing Director of Fortify Services, a Dublin-based outplacement and career management firm. Visit the site here