Over the last twenty years of practicing, advising and serving as an agent in the arena of executive search, I have seen the offer process go very well and I have also witnessed pure disasters. Most often, executives do not know how to negotiate an offer. Even though an executive may be very talented at negotiating deals, when it comes to getting the most out of a job offer, they do not have the wherewithal to negotiate to their advantage or to a successful close. In fact, I have witnessed executives negotiating themselves right out of an opportunity. Following are some tips on how to successfully negotiate an offer.
In an earlier post regarding step four of preparing for interviews, I discussed how to handle what seems to be the most difficult question for executives in the interview process – what is your current compensation? How you answer this question is the platform for how the rest of the negotiating process will go, should you get to that stage. This can lead to a great success or your biggest misstep. Should you get past the trap of discussing compensation too early, you will likely mitigate having already started negotiating against yourself.
If you must and have no other alternative, you should try to get the interviewer to talk first and share what they view as the salary range for the position. If that fails, then initially speak in terms of ranges, not specifics, and more so in terms of what the market demands. Without being too redundant, try not to set yourself up and negotiate against yourself!
I am not a fan of “verbal offers”, because they can simply disappear. A tactful way to handle this is to state that it will help you better review the offer if it is in writing. As you start the process, ensure that you meet with the hiring executive so you can express that you are thrilled about the offer, eager to start, but that you have a few questions – set an appointment. This is the tee-up for your negotiation.
Now at the meeting, open the discussion on a positive note, emphasizing that you think this is a terrific opportunity and that you are excited about the offer. Then lead into the fact that you have a few questions. Remember that you are asking questions and not making demands. Ask open-ended questions, then be silent and let them respond. These questions can range from how your research shows that the market demands are significantly higher than what the offer is, asking about how signing bonuses are handled, what you could expect with the bonus and/or stock option structure/program.
To justify your position on negotiating compensation, emphasize how you will either make them more money, drive profits, save them money, or solve their problems. You can also play the card that you already have another offer or still have your current role that you are quite happy with. You should end the meeting repeating how excited you are about the role and emphasize that is has been a great meeting. Close with that fact that you both have things to think about, but how you are also definitely looking forward to reaching an agreement and getting started.
There are items you can negotiate and other items that you should never attempt to negotiate. You can negotiate total cash compensation and equity (base salary, incentives, bonuses, guaranteed portion of bonus, signing bonuses, stock options or equity). You can also negotiate your title and composition of your staff, as well as severance and outplacement (part of the employment agreement) and vacation time and/or sabbaticals.
Other items can include the elements of a relocation package, international relocation, expense accounts, travel requirements and benefits, temporary living arrangements, club memberships, professional organization dues, raise and review schedules and accelerated promotion and salary increases. The elements in relocation packages are frankly not as generous as they used to be, so be sure to do your research in this area before broaching the subject. Alternatively, items that you should not negotiate include health insurance and benefits, sick leave and retirement plans.
To be realistic, you will not get all of the items you are asking for, so it is important to prioritize. Create a top ten list of items to negotiate with item one being the most important. You should be asking about at least five items but no more than ten. Create three columns – best case, worst case and most likely. Map each item into each category and decide what is most important to you. From there you have your priorities and that is what you negotiate for. In my opinion, you counter one time and only one time.
All in all, patience is the key ingredient. It is the most difficult part of the process. Let them get back to you and try your best to temper your eagerness. Most importantly, never negotiate yourself out of the offer.