Are you about to start negotiating your salary (and bonus) with a potential new employer?
Here are the 5 vital insights for a successful negotiation.
Despite a moribund recruitment market in financial services (it is very much a buyer’s market currently), this is no reason snot to negotiate a better deal for yourself than the one on offer originally.
Remember: a lot of time and energy will have been spent on the hiring process and some individuals will already have staked some of their internal credit to get approval for the hire and negotiate a budget for it. Also, demonstrating some strong negotiation skills will do you no harm provided you maintain the right attitude (see point 5 below) and have done your homework. The company should want to hire someone capable of holding their ground, especially if that person ends up negotiating on its behalf as an employee later.
NB – The following points apply to the situation where you are in direct conversations with a potential employer (through a direct approach, a referral or a job ad). We will cover the scenario where a third party, i.e. a recruitment or search consultant, is managing the negotiation process in a future article.
1. Do your homework
Be prepared. You need to know not only what the overall market is paying for the job you applied for (e.g. Emolument.com), but also the lay of the land at the company. Some companies have a very formulaic approach to remuneration and will have bands and grids. There will therefore be very little room for manoeuvre on the basic salary front. Other companies have a more flexible approach. You should know this in advance so you can pick your battles.
2. Know your limits
You should not walk into a negotiation meeting (or pick up the phone to discuss a written offer that has been sent to you) without being very clear in your head about what you are willing to accept. I always advise people to think about three numbers: the ideal one (obtaining it will cause for a large celebration dinner at home), the fair one (it won’t put a big smile on your face but you would be comfortable accepting it) and the walk away one (anything under that number is not acceptable to you.
You also need to decide which components are more important to you: basic salary, performance bonus, stock or stock options (if available), non-monetary benefits (company car, pension scheme, health insurance etc.). This will depend largely on your individual circumstances, your personal fixed cost base, family situation etc. You need to take the whole picture in consideration and know in advance where to focus your negotiation efforts.
3. Create some options
It is more challenging in the current environment but in an ideal scenario, you should be in advanced discussions with two or three organisations and let it be known during your interviews. You should do this carefully and tactfully though as it could backfire if people start perceiving you as trying to hold them to ransom or just as mercenary. Give yourself some options if they exist, it will give you more confidence during your interviews and give you more mental strength when it comes to actual face-to-face negotiation.
4. Play the game
Negotiation is a game. Please try to remember that even when some meaningful numbers are at stake. If you’ve ever played poker or watched good players in action, they keep a straight face and their composure at all times. You should do the same. Make your points calmly, rationally and without ever going into justification mode. After suggesting a higher number than the one they originally offered, please shut up. Count to 10 in your head if it will help you but say nothing. Do not be afraid of silence. It will feel uncomfortable but what are a few minutes of discomfort against an additional £10,000 or more in remuneration for the same amount of work? I would argue that it is worth it.
5. Have the right attitude
Arrogance was never popular with employers. It is even less accepted in the current environment. There is a lot of talent out there looking for work so standing on the wrong side of the confidence-arrogance line is very dangerous. By all means negotiate, hard if need be, but don’t be confrontational. If you feel they’re trying to low ball you, just state your case calmly with well-prepared and rehearsed arguments. If you can’t obtain what you believe is right having done your homework, just agree to disagree on the deal. If you are genuinely prepared to walk away and do it in a controlled and calm fashion, they may surprise you with an offer closer to your fair or even ideal numbers.
Thomas Drewry is the co-founder of bonus & salary data benchmarking site Emolument.com. Before that, he founded and ran financial services executive search firm Veni Partners. Thomas has been advising people on remuneration issues for the last 12 years. He is also a certified NLP practitioner.