If you're looking for a job right now, you probably know all too well that reality -- employers call it sanity -- has returned to the marketplace. Less than two years ago, companies were doling out signing bonuses like free samples at the cosmetics counter. You wanted to double your salary and bring your chihuahua to work, too? No problem! With too many openings and too few bodies, employers were in no position to push back much on employee demands.
Today, of course, getting a job -- let alone securing the pay package you think you deserve -- is a much tougher proposition. Just because times are trying, however, doesn't mean that you should necessarily accept the first offer you get, says Peter Goodman, author of Win-Win Career Negotiations: All You Need to Know About Negotiating Your Employment Agreement (Gut Instinct Press, 2001).
Goodman, a three-time entrepreneur and president and chief executive of career-coaching service MyJobCoach in Washington, D.C., says people who know how to negotiate over compensation usually end up getting paid what they think they're worth. After all, since many companies are currently making do with leaner staffs, they can afford to have only the most talented workers.
Of the 32 million Americans who change jobs every year, Goodman says, few are comfortable with salary negotiations. BusinessWeek Online reporter Eric Wahlgren recently chatted with Goodman about ways to make the process a little less intimidating -- and get what you want while you're at it. Here are edited excerpts of their conversation:
Q: Is your advice on negotiating a compensation package different today than it was a year and a half ago? The ball is clearly back in the employer's court, no?
A: It is in one sense. But the leverage you have depends on what industry you're in. For instance, radiology is hot right now. Radiology technologists are getting signing bonuses of $5,000 to $10,000.
I tell people you shouldn't think that because the economy is poor you have to accept the first offer. If you spend your time in the interview process getting employers excited about your ideas and what you could bring to the job, it creates a natural way for you to negotiate.
Sure, companies are going to be tighter. But they also have to do more with fewer resources. So they need to find exceptional people, and it's worth it to them to pay a little more to get people who will contribute to the bottom line.
Q: You make the point that getting what you want isn't a matter of drawing a line in the sand and persuading the employer to come over to your side. How does it work?
A: The concept I stress is "principled negotiations," meaning this isn't "I win, you lose," or "I lose, you win." Because in career negotiations, you're building a working relationship. You have to make sure that both parties feel good about the negotiation.
You want to define your needs and wants -- what is your ideal, and what is your bottom line. And you want to really understand the company's perspective -- what it wants and where it's coming from.
Q: Can you tell us about some things you can put on the table to come up with an agreement?
A: Let's say you want a salary of $90,000. The company might only offer $80,000. What you, as a sales exec, let's say, could suggest is an $80,000 salary plus a $10,000 advance on commissions.
If the company wants to hire you, and you want to work for the company but have certain cash-flow needs, that's a good way to overcome that barrier. There are a lot of ways to arrive at an acceptable compensation package.
Q: When it gets to salary discussions, does the old rule still apply: Never volunteer your salary requirements first?
A: I agree with that. You want to get people excited about you and what you'll bring to the company. So I think that if you're focused on communicating how you'll contribute, how you'll help the company increase its bottom line and develop phenomenal products, it's natural that the company is going to say, "Hey, what's it going to take to bring you on?" Or, "Let's now talk about salary."
The danger in volunteering salary first is that you might sometimes be shortchanged. Or you might be premature in terms of bringing it up. Or you might be presumptuous, and it might turn the other individual off.
Q: Is there a sure-fire way to get more money out of your negotiations?
A: I think the most important thing to do is research. There are some great tools out there. If you're trying to negotiate a salary, you should know what the low salary is for that position, the median, and the high percentile. And if you want to go for the 90th to 95th percentile, you can use that information to justify the salary to your employer as long as your experience matches up. I think if you just go in saying, "I want this. I need this. I deserve it," but you don't give the company good reasons why, it's going to be hard for you to negotiate that.
Q: What should people know these days about negotiating options packages, given the dot-com bust?
A: Options are complex. But I think that one of the most important things is that options right now are more like icing on the cake than a great way to get rich. You can still make good money on options, but I think it's even more critical that you do your research on the company. Is the company making money?
You should understand the strike price, meaning at what price you can exercise your options. You should look at the price of the stock currently and at trends for one, two, three, four, or five years back in terms of how the stock has performed in various environments.
Vesting is also very important. I think that ideally, you want to get the shortest vesting period. I think quarterly vesting or semi-annually is ideal. Because a lot of companies have annual vesting. If you get fired or leave before the vesting period you lose all your options.
Q: What should you expect in terms of benefits, and what's negotiable? Employers these days seem to be cutting back on all sorts of things.
A: The benefits tend to vary based on the size of the company. Smaller companies can't afford the benefits that a multibillion-dollar company can. But I think that things like car allowance, day-care subsidies, travel subsidies, and gym membership -- those are all negotiable.
Benefits usually are pretty standard -- things like health and dental. If you're an executive, you can negotiate perks like a car or car allowance. But I advise people that you're not going to get everything in a negotiation in terms of salary, signing bonus, relocation, everything that you possibly could want. You want to prioritize.
Q: I imagine that with people being pushed out of jobs more often these days, they might think about asking for severance packages up front, as you mentioned in your book. But if it isn't standard practice at a company to do such a thing, how do you talk your future employer into offering severance at the outset?
A: Severance is one of those things that you usually feel very uncomfortable asking about because you think it's indicating to the company that you're already thinking about leaving. But in reality, it's a smart move, and astute executives will always ask for it. And almost always, if you're a senior-level executive, you're going to get it. If you're an entry level or mid-level individual, it's going to be hard to negotiate a six- or nine-month severance package.
But for executives, absolutely, I would negotiate a severance. Especially if you're relocating or making a significant job change, you have to look out for your family, and you can never control what a company will do once you join. It protects you if there's a change of control, for instance. This is a great way to pitch it.
Q: Early on in the book, you say that it's not about the money. What's it about then?
A: The No. 1 reason people stay at companies or leave companies is, surprisingly, the environment -- your co-workers, the opportunity, your career path, and so on.
There are a lot more human elements or areas to consider when taking a job. If you get a salary that's mid-range but you love the job, you love the people, and you excel at that company, the money will come.