Compensation Negotiations

Melody Fogarty

Dear Reader:

One of the toughest conversations you will have in your career will be about compensation. It is made most uncomfortable when you have little or no information and only hope that the other person will willingly offer you more money for doing the same work you are currently providing to the organization or will provide your new employer. It doesn’t have to be this way.

The best deal is made at the initiation of your employment, not with the new organization or at promotion but rather your very first job after you have completed your undergraduate education. If you have not completed your undergraduate education, then your compensation will be based on your first full-time position after high school. It is the result of one simple question, “what are you making or what were you making in your last position?”

Massachusetts led the way in abolishing the practice of using your current or last job as an anchor in salary negotiations. Several other states are following. However, anchoring to your current or last position is still part of the salary negotiation process. My advice is to gather intelligence on yourself, your future peers, the last person who held the position, the hiring manager, and the organization (internal and external market). 

Before you enter the negotiation, know how you are viewed in the organization from a performance, image, and exposure perspective (PIE). Note: Image is more than appearance. It has to do with approach ability, emotional intelligence, emotional management, ability to take criticism, and responsiveness. Exposure is related to special projects, advocacy for you by others, global exposure and most importantly potential/bandwidth.

Your PIE will be compared to your peers and the last person to hold the position you are accepting. You must properly position your PIE by helping the hiring manager and/or Human Resources/Recruiter advocate for a total compensation plan that recognizes where you sit in the continuum with your peers and the last person to hold the position. Keep in mind the goal for the hiring manager and organization is to save money while getting greater skill and capacity.

You will also need to know what the market is paying for your skill set in that location, that industry, sub-category, position (title and responsibilities) for your company’s size (revenues and number of employees).

Begin the conversation by reminding them what you bring to the table that they did not have. Remember, there is a very thin line between confidence and arrogance, so don’t overstep. Ask more questions than you provide answers. The first questions should be what is the salary range for the position? What was the last person in this position making? How does my background compare with my peers and with the last person?

Let them make the first offer. Counter with what is reasonable and appropriate for both where you sit in terms of your background against your peers and what the external market will pay for your expertise. Should they say “the jump from your current salary and your requested salary is too much” …” they have never given a person a jump so large”…etc. Remind them that your prior compensation is based on knowledge, skills, and abilities (KSA) you had not yet acquired. Now, you have those KSA’s, and they will have full benefit of them.

Final note, compensation negotiations are best managed from a total compensation perspective (e.g., salary, bonus, time-off, car allowance, and non-healthcare related benefits).  Negotiations are adversarial by nature. That said, remain pleasant, calm, and humble. Know what you are worth and ask for it. Never tell the prospect employer what they must do to get you. And, always say thank you not matter how it ends.

Warm regards,

Melody Fogarty

Managing Partner, Chief Business Strategist

Dakota Gray, LLC.