Negotiating Compensation

Adriana Cowdin is a PE-Backed executive, and an experienced large corporate executive, as well as an entrepreneur and executive coach with Be Bold executive coaching. She has served as an executive coach for over 25 years and has worked with more than 5,000 clients. She recently facilitated a discussion of Negotiating Job Offers for the Career Transition Council. This article serves as a written summary of the discussion.

 

Do Your Research and Know Your Worth

Adriana started the conversation by encouraging executives in transition to do their homework to know their true, relative, value. Your worth in your own local market may be different than your worth to an employer in another geography. It is important to understand your relative value. Employers based in low salary markets that enable employees to work remotely will not likely be willing to pay New York or San Francisco salary levels to those who choose to work remotely in these high-salary areas. Size of company matters, industry-specific salary levels vary, as well.

Consider your role, industry, your experience, your competition, and the employers in your area in order to calculate a range of what your competitor set should expect in terms of compensation for roles you are seeking. You might use sites such as Salary.com, Payscale.com, Glassdoor.com and others to understand the relative compensation you might expect in different parts of the country. 

 

Analyze the Offer

Having done your research, you can analyze the points of the offer and determine where you see room to negotiate. This may be because you feel the company might be offering too little in certain areas, or it might be because specific benefits are very important to you. Either way, the next step is negotiation.

Forty-eight hours is a reasonable period for you to respond, and a total of five days to conduct your assessment of the offer before you come to the negotiating table after due diligence and your attorney’s review. 

 

Make an Investment in Legal Counsel Who Understands Private Equity

You should consider the investment in legal counsel as you would other investments – an upfront cost that may pay dividends in the future. In addition, the investment could also help you avoid blind spots or potential negatives and enable you to negotiate out of a risky proposition.

 

Do Your Due Diligence

There are several documents that you may wish to request from the Company after you have signed their NDA. You will want to see proof of their current financials (in part because your compensation may be tied to some extent to improvements). You may want them to articulate in writing precisely how they want you to add value. You may want to see tangible proof of performance at this time in non-financial ways that could relate to your role and your ability to demonstrate your value and improvements over time. Making these requests shows interest and commitment.

 

Negotiate Once, Comprehensively (not Piecemeal), and Know Your Non-Negotiables in Advance

You may negotiate a few aspects of a job offer. For example, you might have specific, unique requests when you are negotiating the terms of your next job offer. You should be prepared to clearly explain what you are asking for, why, what the related value is to the company of enabling you to gain this request (paid time off for educational pursuits will result in an ROI, for example) and why you believe the request is reasonable.

It is important to think in advance about what requests are most important, in priority order. Then, think about a range of acceptable outcomes of those requests. For example, you may request the ability to consult on the side. If you are allowed to consult, but not to clients within your industry, or not for more than 10 hours per month, is that acceptable? What would be?

Negotiating salary is expected by 70 percent of employers, yet surprisingly only 22 percent of job seekers negotiate salary. 

If you receive a call from a hiring decision maker who tells you that you are being offered the job and that the finer points will be sent in an email, the Company is sending a message that they expect negotiation.

That said, it is important to avoid “death by a thousand paper cuts” by forgetting certain relatively small negotiating points up front and then delivering these additional requests one at a time much later. The one caveat to negotiating an offer is if the employer states the offer is their best and final. 

Balance Your Financial Ambitions with Those of Your Employer

While you may want to maximize take-home pay today, your employer may be aiming for a successful exit in three years and may be willing to reward you with outsized bonus or warrants or equity in return for working at sub-standard salary levels. Or the inverse of that may be true. Either way, you must weigh the risks and rewards and consider your goals as well as the company’s interests to determine if there is an overlap.


Request Equity so You Have Skin in the Game

In Private Equity, C-level executives should expect some form of equity. Generally speaking, investors reserve about 10 percent of equity for management. Much of this goes to the CEO, followed by the CFO, of course, but it is appropriate to request equity.


Negotiate Your Exit as You Enter a Company

It is appropriate for you to negotiate compensation, benefits, and other terms should certain conditions lead to you involuntarily having to leave the Company. This negotiation need not come across negatively. You may use your attorney as the bad guy, who insisted that the negotiations include exit planning. And it may make sense to let this be your final point in your negotiation – not the most important, simply the last step to cover.


Embrace Empathy

As discussed in prior learning sessions and discussions with experts, likability matters. And Adriana explained that one way for people to like you is for you to show them empathy. In any negotiations, it is important to reflect to the other party what you are hearing them state/request. Then acknowledge how and why that request is understandable or at least that you understand the need being conveyed before responding with your own counterpoint or request.


Negotiate Live and In Person (not over email)

Tone matters. And tone, sincerity, empathy do not carry through very easily over email. Eye contact, body language, and your pitch of voice are also important non-verbal cues to your potential employer. They may pick up on how important your request is, or why it is important, better in person than over email. It is important enough to request to meet in person or request the CEO to meet with you at a location near you.


Be Prepared for Tough Questions

Some common questions that may be tricky to navigate if you have never heard them before include: 

● Are we your top choice?

● If we simply raise the salary, can you accept the offer now?

● Tell us about any other offers you have at this time?


Let the Other Side Experience Small Victories

It is helpful for your negotiation to enable the other party to win on points up front. By letting them win, you set a positive tone for them, and you also cause them to think twice before saying No to something that is a reasonable request. In other words, requesting 16 weeks of paid vacation may elicit an immediate “No, absolutely not.” Then, when you make a request for a small amount of cash to organize your home office, it will be more likely that they would agree to that request. So, you may want to have some stretch requests that you pepper the other side with, in between requests that are more reasonable and that you would expect them to agree to.


Use Silence to Your Own Advantage

Expert negotiators know that your silence, after the other party makes a negotiating point, can result in the other party jumping back in to fill the void. And when they speak, they often hem and haw, offer exceptions, or even negotiate against themselves by changing their original offer. All simply because you remained silent.


In Conclusion

Negotiating is expected. It matters. It can have a significant impact on your happiness and job satisfaction. However, the onus is on you to be bold (!) and ask! Thank you to Adriana Cowdin of Be Bold executive coaching for facilitating this discussion for the Career Transition Council!

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