Sacramento Professional Network HIRE Experience!
The Compensation Negotiation
Process Robert-Jan Enzerink
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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
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Sacramento Professional Network HIRE Experience!
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Definition of Negotiation
Negotiating is:
the art and science of securing agreements between two or more interdependent parties.
Sacramento Professional Network HIRE Experience!
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Sacramento Professional Network HIRE Experience!
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
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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
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Sacramento Professional Network HIRE Experience!
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
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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.
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Sacramento Professional Network HIRE Experience!
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
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Research & Preparation
Understand Needs – Your own needs – Employers’ needs Understand the Market
(Comparative Compensation)
– Temporally – Regionally – Competitively Data Sources
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Sacramento Professional Network HIRE Experience!
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
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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
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Comparative Compensation
Know what you’re worth Salary Information: – Networking Contacts – Recruiters (!,?) – HR Professionals
– Business Publications and Salary Surveys
– Internet sources – see backup slides
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Comparative Compensation
From:http://salary.money.cnn.com/salarywizard/ orwww.salary.com
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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
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Comparative Compensation
From:http://salary.money.cnn.com/salarywizard/ orwww.salary.com
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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!
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Sacramento Professional Network HIRE Experience!
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
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Sacramento Professional Network HIRE Experience!
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
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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
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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!
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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
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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 22
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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.
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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.
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Collaborative Negotiation Strategies Friendly Advice Technique Unacceptable Offer Negotiation Technique Acceptable Offer Negotiation Technique
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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.
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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.
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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
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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
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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
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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
Sacramento Professional Network HIRE Experience!
Salary.com - Job Assessor
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Sacramento Professional Network HIRE Experience!
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
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Offer A
Rate Pts 3 75
5 100
2 30
3 39
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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
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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.
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Summary
Learn what is negotiable
The Process – Research and Preparation
– When to Negotiate – The Negotiation Process Strategies and Gambits – Evaluating the Offer
Try!
Ask!
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Sacramento Professional Network HIRE Experience!
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
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Back-Up
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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
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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
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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.
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