Negotiating Your Starting Pay: What You May Not Have Considered
By Fred Clayton, CEO, Berkhemer Clayton
Typically, you are the one doing the hiring but you also have been a candidate in the past; and, dare I say, might become one again in the future if that irresistible opportunity comes your way!
If it does, and you decide to enter the fray, here is a friendly reminder that unless you are among the fortunate few who are offered all they had ever hoped for in a starting pay package, you must take what you have learned as a hiring manager and use it to your advantage as a candidate. When you think you have thought of everything, following are a few more arrows for your quiver:
1) Request a salary review after six months instead of the customary one year. Salary provides the foundation for other components in your pay package: annual bonus is typically expressed as a percentage of salary; and, long-term incentive compensation, including equity, is often calculated on the base. Internal equity, the fairness of your proposed salary relative to the salaries of your peers in the company, often prohibits your prospective boss from upping the starting salary to what you believe is appropriate. If you can get a hearing in six months instead of a year, it won’t cost him/her anything at that crucial moment when others in the company (e.g. the boss’s boss, compensation department, and others) are scrutinizing the numbers in your deal.
2) Frame the signing bonus discussion differently. At the outset, convey the total value of all that you will forfeit if you were to leave your current employer. Executives often focus only on the portion of annual bonus that would be lost. Of course, negotiators for the other side are not likely to agree to the full amount but you will have made your case for a higher number which will increase the odds of your reaching a better result.
3) If the new position requires relocation, include in your proposed signing bonus the amount of personal income tax you will be required to pay on company- reimbursed “non-qualified” relocation expenses. For example, when paid by the company, the real estate broker’s fee to sell your current home is considered taxable income to you. Involve your CPA right away to learn which reimbursed costs will be added to your W-2 income and how much the tax will likely to be so you can include this number in the signing bonus you propose.
I hope you find these tips helpful. If you care to comment and/or offer tips of your own, please share them with us.
