Sacramento Professional Network HIRE Experience ! The Compensation Negotiation Process Robert-Jan...

Sacramento Professional Network HIRE Experience!

The Compensation Negotiation

Process Robert-Jan Enzerink

1


Compensation Negotiation Agenda What is Compensation Negotiation? What is Negotiable? The Process

– Research and Preparation

– When to Negotiate – The Negotiation Process - Strategies and Gambits

– Evaluating the Offer Resources

2



5

5

Definition of Negotiation

Negotiating is:

the art and science of securing agreements between two or more interdependent parties.


5


The Best Negotiators... Gather information

Know the subject matter Know what they want before

beginning the negotiation Aim High Prepare. Prepare. Prepare.

Research &

Preparation

Listen Read signals Ask good questions Express themselves well Think clearlyÉunder

pressure

Skill of

Negotiating

Put personal integrity first Integrity First! 4


5







What’s Negotiab le? Gov’t Industry Biz Sector

Small Large Company Size

Entry Executive Job Level

Cash-poor Loaded Finances

Oversupply Job Skills/ Job Market Scarce & In-

Demand


What’s Negotiable? – handout Monetary

Salary Bonus Signing Bonus Promised Increases Profit-sharing Stock Options/ESOP

Research/Lab stipend Éetc.

Near-Monetaries Benefits*

OT/Comp-/Flex- Time Accelerated reviews Company Car/Car reimbursement Travel Awards Relocation

House sell/buy expenses Training/Education reimbursement

Expense coverage Spouse/partner job hunt assistance

Cellphone T&E reimbursements Tool allowance

Conference, membership, or association fees Parking Éetc. 7

Non-Monetary

Contractor vs. Permanent Title

Technology access Health facility on-site Travel/PTO/FTO Home office/equipment Telecommute options Vacation Éetc.


9






8


9

Research & Preparation

Understand Needs – Your own needs – Employers’ needs Understand the Market

(Comparative Compensation)

– Temporally – Regionally – Competitively Data Sources


11


Determine Your Needs

List ALL components of the compensation

package What does the perfect job look like to

you? Personalize your priorities! – What is most important to you? – What are you willing to give up? Know your BATNA

10


11

Understand the Employer’s Needs

Understand the position you are applying for

– Why is the position open? – What defines success in this position? – How scarce are my expertise and skillset? Understand the valuable skills or solutions

that you can bring to the employer – Technical – Management – Personal skills – Others.... Be prepared to demonstrate ROI


11


Comparative Compensation

Know what you’re worth Salary Information: – Networking Contacts – Recruiters (!,?) – HR Professionals

– Business Publications and Salary Surveys

– Internet sources – see backup slides

12



From:http://salary.money.cnn.com/salarywizard/ orwww.salary.com

13


Comparative Compensation Area: Sacramento--Arden-Arcade--Roseville, CA

Period: May 2009

Occupation (SOC code) Employment(1)

Annual mean wage(2)

Annual median wage(2)

Chief Executives(111011) 3010 152040 132660 General and Operations Managers(111021)

12210 114870 100480

Marketing Managers(112021) 1050 101060 90530 Footnotes:

1.Estimates for detailed occupations do not sum to the totals because the totals include occupations not shown separately. Estimates do not include self-employed workers.

1.Annual wages have been calculated by multiplying the hourly mean wage by 2,080 hours; where an hourly mean wage is not published, the annual wage has been directly calculated from the reported survey data. SOC code: Standard Occupational Classification code -- see http://www.bls.gov/soc/home.htm

Data extracted on June 23, 2010

From: Bureau of Labor Statistics: http://data.bls.gov:8080/oes/areatype.do

14



From:http://salary.money.cnn.com/salarywizard/ orwww.salary.com

15


What about this tight job market?

Even in a poor job market, as soon as an offer is

extended, the ‘power’ shifts to you. It’s only a negotiation if: 1.You ask for something; and 2.You are willing to engage the other side in a give-and-take dance for the tangible and intangible values you want. Do not make demands, but do ask for something.... Employers expect you to negotiate!

16



Compensation Trends No surprise: overall, executive compensation has dropped

The Bright side; 2010 is expected to be better than 2009: No forecasted salary reductions Salary increases expected at ~3% SHRM, “2010 Salary Increase Budget

Update: Thaw as Confidence Improves”, 3/15/2010, http://www.shrm.org/hrdisciplines/compensation/Articles/Pages/Thaw.aspx 17



Compensation Trends Base Salary Changes

Table 1: Base Salary Increases by Global Region

2009 Average Actual

Base Salary Increases

2010 Average Budgeted

Base Salary Increases

Geographic Region

Excluding Companies Freezing Salaries (without zeros)

Including Companies Freezing Salaries (with zeros)

Excluding Companies Freezing Salaries (without zeros)

Including Companies Freezing Salaries (with zeros)

Global/Worldwide (Aggregate) 3.21% 2.77% 3.23% 1.90%

United States 2.91% 2.47% 3.05% 1.66%

2009: 1.66% Increase

2010: 2.47% Increase

SHRM, “2010 Salary Increase Budget Update: Thaw as Confidence Improves”, 3/15/2010, http://www.shrm.org/hrdisciplines/compens 18

ation/Articles/Pages/Thaw.aspx






19

Negotiating Timing Your fessional Network Sacramento Pro

HIRE Experience!

The best time to negotiate is when the employer is convinced of your value and is aware that they must have you, as evidenced by an offer.

We’ve GOT to have you!

We love you.

We like you. We got you!

Who are you? You signed, Too Late.

Resume / App’n

Employment Offer

Interviews &

ref checks

Offer Signed

Agreement Time 20

Too Early Too Late Best Time!


The Salary question

Do NOT disclose your previous salary or salary history. Ignore it.

– Too high: screened out. – Too low: devalues you, screened out.

Q: “What is your salary expectation?”

– A: “The salary would depend on the entire compensation package, which we haven’t yet reviewed.”

– A: “Competitive for this role.” – A: “What is your salary range for this job?” – A: “What do you feel is an appropriate range for

this position?”

– A: “Are you offering me the job?” 21





– Evaluating the Offer Resources 22


Negotiation Strategies Is the Substantive Outcome Very Important?

Yes No

Is the Relationship

Very Important?

Yes Trustingly Collaborative

Openly Subordinate

No Actively Avoid Negotiations

Firmly Competitive (Game Theory)

Trustingly Collaborative Negotiations : Openness and Collaboration Seek a win-win outcome

Lewicki, et.al., “Consider both relationships and substance when 23

negotiating strategically”, Negotiation, 1999, pp 32-49.


Definition/Rules of Collaborative Negotiation

Collaborative negotiating is:

the art and science of securing agreements between two or more interdependent parties, É

and without damaging the relationship, when neither side has the power - or the desire to use the power - to get its own way.

24


26


Collaborative Negotiation Strategies Friendly Advice Technique Unacceptable Offer Negotiation Technique Acceptable Offer Negotiation Technique

25


26

Collaborative Negotiation Strategies – Friendly Advice Technique For dealing with someone who does not have

the authority to negotiate or make changes...

Ask for their advice. – "What would you recommend . . . ?" – "How would you recommend . . . ?" May give you the keys to unlocking some

of the doors in negotiating.


26


Collaborative Negotiation Strategies - Unacceptable Offer Technique

The company wants you Ð they made the initial offer Ð but it’s really unacceptable, and they have no requirement to negotiate Use with Caution! You are putting at risk the job offer – Really understand your BATNA – Contract law

Process: – 1. Communicate unacceptability in no uncertain terms: Keep the outlook for resolution positive Specific shortcomings 3.Provide a proposed solution 4.Appeal to their position and vanity "If it is in your power..." Use Negotiating Tactics: – Multiple Items in play - know your priorities – Test “Hot Potato” conditions If needed, give a polite, "Thanks, but no thanks." and

move on CAUTION: this negotiation technique is the best approach when the offer is truly unacceptable,

but it does run the risk of the entire deal falling through if you cannot come to terms. Use with caution.


Collaborative Negotiation Strategies - Acceptable Offer Technique

To "sweeten" an acceptable job offer – Good to ‘redefine’ parts of the offer – For significant changes: use unacceptable offer technique Appeal to the ego and power of your new manager – Accept the position – gives them a “win” – Ask for his/her assistance in meeting your needs Two benefits: – Zero risk: secures your acceptance of the job

– Leaves open additional concessions that may be given to you at no cost. Why does this technique work? – It's a win/win situation. – Appeals to ego and altruism The Nibble or “Floor mats” technique: – Ask for a small addition when negotiations are done. – Cock your head, smile, SAY THEIR NAME, ask, É then shut up

28



31 31

Negotiation Guidelines – the ‘how-to’ guide – slide 1 On the phone or in-person only Know exactly what job is being offered and all details! Be Nice Start with a baiting statementÉthen, be silent Support your case – comparative data and value-add demonstrations Be flexible

– Never counter with a fixed number (range, or $100k vs.

$8500) – Know your BATNA, but never give an ultimatum P a t i e n c e pays Be comfortable with silence


31


Negotiation Guidelines – the ‘how-to’ guide –

Gambits Ask for more The “Flinch” The Trade-Off The Higher Authority The ‘slip’ – Another offer / interview/ interested party? The Nibble or “Floor mats” technique

30


31

Compensation Negotiation Agenda

What is Compensation Negotiation? What is Negotiable? The Process

– Research and Preparation – When to Negotiate – The Negotiation Process - Strategies and Gambits

– Evaluating the Offer On-line evaluators Quantitative Assessment Resources


Salary.com - Job Assessor

32



JOB OFFER COMPARISON SHEET

(Rating Scale: 1 - 5)

Job Factors Job Factor Weight

Ideal Job

Rate Pts 1.Job Content

Will I enjoy the position? Challenge? Creativity? Social acceptance? Leadership potential? On-the job freedom/autonomy?

25 4 100

1.Career Path Is it what I want? Promotion prospects? Training and

experience?

20 3 60

1.Financial Aspects Compensation package? Starting salary and potential? Other

benefits? Working hours?

15 3 45

1.Geographic Location Does it suit me? Is it isolated?

Political and natural climate? Work available for spouse? Schooling?

13 3 39

Offer B

Rate Pts 2 50

2 40

5 75

3 39

33

Offer A

Rate Pts 3 75

5 100

2 30

3 39


JOB OFFER COMPARISON SHEET

(Rating Scale: 1 - 5) Job Factors Job Factor

Weight Ideal Job

Rate Pts 5.Working Conditions Suitable? Comfortable? Stress factors? General employee morale? Will I fit in?

(chemistry)

12 3 36

1.Company Stability Is the company sound? Quality of product? Employee turnover and attitude? Reason

for vacancy?

10 3 30

1.Fringe Benefits Is the package suitable? What are the

various plans? What is vacation allowance? Any unique factors?

5 2 10

TOTAL

320 (total points

for ideal position)

Offer A

Rate

Offer B

Pts

Rate Pts

4 48 1 12

2 20 4 40

5 25 2 10

337

266

Total points

for

Total points for Offer B

Offer A

34


38


THE DECISION To accept or decline an offer should not be decided with one method:

Check your gut! Look at the offer quantitatively.

Consider circumstances! Sometimes accept something less than our ideal

job. contingency or transitional position...?

Keep your search active! Do not stop search prematurely.

Family and trusted colleagues only.

35



38

Summary

Learn what is negotiable

The Process – Research and Preparation

– When to Negotiate – The Negotiation Process Strategies and Gambits – Evaluating the Offer

Try!

Ask!


38


Compensation Negotiation Resources

Extra information in backup slides and notes

On www.sacpronet.com Website: – The Negotiating Process Final.ppt – NegotiationsTechniques.doc Handout: list of benefits Handout: list of websites Robert Enzerink: –[email protected]

– 916-704-3031 (m) 37


38

Back-Up


38

Sacramento Professional Network

HIRE Experience!

Compensation/CoL Resources http://bostonworks.boston.com/salary/http://salary.money.cnn.com/

http://www.bestplaces.net/html/cost_of_living.html

http://www.computeruser.com/resources/careers/calculator/http://www.datamasters.com/

http://www.erieri.com/index.cfm?FuseAction=CareerPlanning.SalaryPotentialhttp://www.monstermoving.com/

http://content.salary.monster.com/?WT.srch=1http://www.salaryexpert.com/ http://www.careego.com/CareerResources/Negotiating/http://career-advice.monster.cawww.workopolis.comwww.homefair.comhttp://www.careermag.com/js/careerresources/salary-finder.aspwww.move.com

Recommended: Regional Labor Statistics, BLS:http://www.bls.gov/bls/blswage.htmxls for salaries by region, EDD: http://www.labormarketinfo.edd.ca.gov/?pageid=152Salaries by job description:www.salary.comSalary calculator, CoL comparison, School and City info, Homefair.com:http://www.homefair.com/index.asp?cc=1

39


References

SPN website Recruiters (!) Web: –www.Starmakercoaching.com –www.hiresites.com –www.Salary.com –www.careerfriend.com –www.procareercoach.com – Various Chambers of Commerce: Median home prices, etc. (usu. Chamber.<cityname>.net/com, etc.) – Bureau of Labor Statistics:www.bls.gov

40


References

• Books:

– Bargaining for Advantage: Negotiation Strategies for Reasonable People by G. Richard Shell – Negotiate Your Job Offer by Mary B. Simon

– The Tao of Negotiation: How You Can Prevent, Resolve and Transcend Conflict in Work and Everyday Life by Joel Edelman and Mary Beth

Crain

– Negotiating Rationally by Max Bazerman and Margaret Neale – Negotiation by Lewicki, et.al.

41

Sacramento Professional Network HIRE Experience ! The Compensation Negotiation Process Robert-Jan...

Documents

Transcript of Sacramento Professional Network HIRE Experience ! The Compensation Negotiation Process Robert-Jan...