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.   

The moment has arrived.  You’ve been through six or seven rounds of interviews, impressed everyone and emerged as the preferred candidate: they now want to make you a formal offer of employment.

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.
Good luck!

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. 

See more at: http://www.emolument.com/career_advice/negotiate_your_salary#sthash.qafSbtSP.dpuf

There’s no doubt that the banks’ scandals have had a major impact on public perception of financial services. And, as the EU prepares to cap bonuses, there are those that feel any efforts being made to restore confidence again are steps in the right direction. But, could these new measures actually be making the situation worse?

It’s important to look at the bigger picture. For instance, if bonuses are capped, banks will be forced to look for other ways to hold onto their talent, with one method being to increase base salaries. The result of this is that they will no longer be able to keep their fixed costs low and the flexibility of their overall cost base will likely be reduced. If profits then fall, banks may have to lay off staff instead of simply reducing bonuses as they did in the past.

And, even if redundancies don’t have to be made, it’s expected that top talent will look for higher paid roles outside of the EU – the skill sets in financial services are globally mobile and in high demand. We could then see banks relocating overseas taking their talent, tax revenues and income with them.

This would have a detrimental effect as the UK financial sector is hugely important for our economy. In fact, a report undertaken by PWC for The City of London Corporation, found that it contributes £27.7 billion in employment taxes – which at almost 12% of government receipts is by far the biggest contributor. And when you include all the other contributions such as corporation tax, the figure rises to around £63 billion – again a massive 12% of total government tax receipts.

The proposals could ultimately mean that the UK becomes a ‘zombie country’, handing its position as a world financial centre to the likes of New York or Hong Kong. And the nightmare scenario is surely something none of us want to see.

Adrian Kinnersley

Managing Director

Twenty Recruitment Group

http://www.twentyrecruitment.com/

Employment lawyer, Philip Landau, explains why it’s good news for bankers.

The Court of Appeal last week ruled in favour of 104 ex-employees of former Dresdner Kleinwort Limited who merged with Commerzbank (“the Bank”) and agreed they were contractually entitled to bonuses worth approximately €50m which had been “verbally” promised by the Bank.

Background

The Bank had made an announcement to a group of employees in 2008 to the effect that there would be “a guaranteed minimum bonus pool available for distribution”.  Commerzbank subsequently argued that the now-integrated Dresdner Kleinwort subsidiary was justified in drastically cutting such bonuses as their losses threatened the survival of the business.

What the court said

The informal promise by the Bank to pay the bonuses was, in fact, “contractually binding” (despite the contractual bonus terms having being discretionary in nature) and that the information given to employees had been intended to give rise to a legally binding commitment. In addition, the Bank was not within its rights to introduce a subsequent “material adverse change” (MAC) clause in bonus letters after the Dresdner takeover in 2009.

What this means for employees

The more an announcement of this kind is made in a public and open way (in the Commerzbank case at a town hall meeting), or on the Bank’s intranet (which also happened in this case as the announcement was repeated), the harder it will be for the Bank to backtrack. The bonus announcement or discussions would have to be sufficiently certain enough to be enforced as a promise or guarantee, but the banks won’t be able to use the excuse that there has been a later change of circumstances such as “mergers or liquidity problems” to avoid payment.

As to how the banks would try to backtrack, they would probably look to invoke an express power reserved in your contract of employment or in the employee handbook to make unilateral changes to your terms. But first, there has to be such a power reserved, secondly the power has to be tightly drawn to make clear in what circumstances variation will be effective. Thirdly, this is unlikely to assist a Bank where there is a public and open display of a bonus intention (this is where the bank fell down in the Commerzbank case).

What about if you have had informal bonus discussions which includes a promise, but with only your line manager? Are such discussions also enforceable in light of the Commerzbank case? Well again, they would need to be sufficiently certain enough to be enforced as a promise or guarantee, although line managers may now be more wary of any “informal” bonus discussions in case they are capable of being construed as a promise or otherwise. There is also again the possibility of the bank subsequently attempting to unilaterally change the terms.

Banks may now be more wary generally about making general announcements that are capable of giving rise to a binding contractual commitment on their part. But meanwhile, bankers are likely to be happy with today’s ruling, and it does leave the door open for further similar challenges against banks to be made in the future.

Philip Landau who is an employment law solicitor and partner at London firm Landau Zeffertt Weir Solicitors is pleased to give CityJobs.com users a free initial consultation on any UK employment matter.

If you have a specific enquiry or require further information in relation to your employment law rights, please email Philip at pl@lzwlaw.co.uk or call him on 020 7357 9494.

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LINKS

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Nothing makes an employment lawyer’s ears prick up like the word “banter”. Once the “banter” defence is invoked; “yes I said those things, and yes on the face of it they are offensive – but I was only joking!” it’s a very bad sign for the employer on the wrong end of a discrimination or bullying claim.

So how do workmates tread the fine line between being humourless and being offensive?

1. Tasteless jokes are often cited in discrimination claims, so be aware of the different types of discrimination. If you’re about to comment on someone’s sex, race, sexual orientation, religion, disability or age in a flippant or negative way then alarm bells should be ringing. Step away from the comment. No good can come of it. Age discrimination is the one that still tends to catch people out. It was the last of the different types of discrimination to be made unlawful – in 2006 – and many people will still make a joke at the expense of the office “old fogey” when they wouldn’t dream of commenting on someone’s race or sexual orientation. Something to bear in mind when you’re asked to sign the next birthday card doing the rounds.

2. “Really, when you think about it – what I said was a compliment” No, no, no. Even “compliments” can make someone feel awkward, especially in relation to sexual harassment.

3. It’s not just discriminatory comments that should be avoided. Any unpleasant or negative comments to a colleague could constitute harassment. Sometimes good friends do build up relationships which involve constant mickey-taking of each other. But don’t let this style of humour become your default for anyone who isn’t a close friend. It’s often a natural instinct for someone to laugh along and pretend they’re not bothered, when really they are. Unless you know someone really well, you won’t be able to tell the difference.

4. Consider the position of the other person: are they more junior than you? Have they recently joined the team? Are they in a minority in the team, e.g. a women working in a predominately male environment? All these things may make them feel more sensitive to comments, and less able to complain about it.

5. Consider your position: if you are senior and have a hand in management decisions, you need to be beyond reproach. Otherwise, any comments you make won’t just be evidence of harassment in themselves, they could also be used as evidence that you may have discriminated in decisions about hiring and firing.

6. Think about the rest of your team. Any comment you make doesn’t exist in isolation, it also contributes to an environment where that type of humour is accepted. You may only make one joke, but if you are the tenth person to make a similar of joke that day, the recipient’s sense of humour will wear thin pretty quickly. If one person always seems to be the butt of office jokes, don’t wait for HR to tell you to cut it out.

7. Be especially cautious of email. It’s all too easy to forward a “hilarious” joke or video to several recipients at once, but if some of them find it offensive then it’s not much of an excuse to say that you were just passing it on. Your employer is likely to have special rules about use of IT systems, plus there will be a paper trail showing exactly what you sent. If you wouldn’t be happy to copy in the head of HR and the head of IT, then don’t click send.

8. Here’s a good rule of thumb – imagine your comment being read out in a barrister’s withering tones in front of a scowling judge. Stripped of its context in the jokey back-and-forth between workmates, anything close to the knuckle is going to sound that much worse.

9. If your boss takes disciplinary action against you for comments you’ve made; it’s usually best to apologise, promise to be more sensitive in future and suggest that you’d be happy to participate in equal opportunities training. This puts the ball back in their court and will usually stand you in better stead that insisting that you haven’t done anything wrong because it was all just a joke.

10. Nobody, not even employment lawyers, wants to ban office humour. But sometimes derogatory humour can become a habit that can land you and your employer in hot water. Think of a different joke that’s self-deprecating or that doesn’t put anybody down. If you still want to make your original joke, check your mantelpiece for a Perrier Award. If there’s nothing there, then your office can probably survive without the benefit of your wit on this occasion

Lauren Hillier

Slater & Gordon Lawyers

http://www.slatergordon.co.uk/