Let’s separate two definitive forms of negotiation. First, and most frequent, that which occurs during networking and interviewing, PRIOR TO any offer of employment. Your mission is to treat the issue of money as just another bit of information. However, in this case, remember,
“He who mentions money first, often loses in salary negotiation.”
Second, negotiation often occurs as a result of an offer of employment. Your mission, of course, is to maximize the actual offer. At the very least you will want to maintain and enhance current value of your employment. Base salary is simply a part of the “position WORTH” package.
These two forms of negotiation call for very different skills. Staying with our context of effective PRE-OFFER Negotiation tactics, let’s utilize the basic guidelines for answering questions effectively, this time relative to the discussion of money…
- ANSWER THE QUESTION… The implication, here, is that you have heard and fully understand the nature of the question. If this is true, simply answer the question in a straight forward, brief manner… and then stop talking! Often the challenges come in knowing when to stop talking.
- LISTEN FOR OPPORTUNITIES TO INTEGRATE AND CONFIRM YOUR STRENGTHS… Your purpose is to drive home your communication strategy–that set of key words and strengths that define your “message.” So, when a question is asked that relative to a job related strength, answer the question and confirm the strength by stating a behavioral example.
- AT LEAST ADDRESS THE ISSUE OF A QUESTION Before blocking, turning around, or in any other way changing the subject… Salary negotiation, illegal questions and other non-standard questions often call for extraordinary responses. Stay focused, get results… but never manipulate or deceive with your answer. Q: How much did you make in base salary last year? A: Last year? My former position was worth $ X, but the responsibilities we have discussed seem to be worth a base salary much closer to $ X+… don’t you agree?
What is a position WORTH?
While most any working condition of employment and relocation is often negotiable, it is to your advantage to negotiate utilizing the total monetary value of an employed position.
- Base Salary… That structured part of total value that is paid to you on a regular and frequent basis. This is usually the most visible, and emotional, component of the value package, your position worth.
- Structured additions to salary, or other actual monies… also paid on a regular and frequent basis. For example, sales commission or project completion bonuses. Once paid, it is your to keep. These first two items are regulated to factor in to 401K Plans, and often drive pension formulae…
And now “the rules” shift…
- Unstructured additions to salary, or any discretionary monies… these payments can be huge or insignificant (a holiday turkey), taxable or not, and come in a wide range of creative descriptions. They are typically not used in retirement or pension equations– but can be. Discretionary is the keyword, here.
- Benefits… For budget purposes, standard benefits are usually calculated at a fixed percentage of structured salary monies. Health care, sick pay, short term disability, etc can represent 20-50% or more of structured monies within a position’s worth.
- Perks… Payments made on behalf of an employee, before or after taxes. These are usually non-standard things relative to certain positions, like company cars, country club memberships, special equipment allowances, expense money, etc.
- First Year Vacation… While most companies pay vacation money on a very standard timetable, it is paid out of existing budget–usually your structured salary monies. This makes vacation monies essentially a negotiation giveaway for those who ask. Using the fairly standard two weeks, that’s roughly 4% of position worth.
- Start Date… Yes, start date. For employed professionals making a career transition, even start date may influence their total value package. Once again, the drivers are structured monies paid to the employee.
For more information on negotiation strategies, GO TO Resources and read the handout on Money-Speak