Posted by: G. Lane Cavalier | April 2, 2007

Career Development: Compensation Discussion

From recent thread on Execunet’s Forum:

Poster Stated:

I’d like to get the groups opinion on the best approaches to the age old issue of how to best negotiate your compensation package (associated with a new company and job), and in particular the initial discussion “round”.

Everyone probably has heard the age old adage “that the first one to name a price loses.” During the interview process (and even before if working with recruiters), the questions on “what are you making now” and “what do you need” always come up. In a current active opportunity, I have deferred the answer so far and also countered with “what are your thoughts”. I understand the details will vary tremendously by size of company, level of opportunity, industry, etc. However, I’m thinking the approaches are somewhat independent.

I realize its important to see if both sides are in the same ballpark, and I’ve done some research of SEC filings of officer salaries , so I have an approximate idea of the “ceiling” for this opportunity (its a business unit / division VP Mktg reporting to the GM, who in turn reports to the CEO). However, this still leaves a huge potential range.

Finally, the total package is, in my mind, the bottom line — including base, bonus, equity/options, vacation, … Often times many of these items are dictated by company policy, so the hiring mgr has minimal flexibility. So, to this point I’ve acknowledged the likelyhood of the areas he probably can’t control, and asked to get that info so that if I have to provide a base/bonus number, I’ll have some of the other compensation components.

All of your thoughts will be appreciated!

My Reply:
I think you can see that their are a lot of opinions on the subject, but for me there are two different approaches that I have used.

The first approach is to figure out based on what I know, what is the MINIMUM I’m willing to take for the job and what is the MAXIMUM based on research that I think they can “meet” I then take a number at about 80% between the two ( ie: $100,000 is what I take, I think they will go to $150,000 so I come up with $140,000, but I qualify it with the fact that other factors will work to move that number ). I then list the hotest items on my spreadsheet without getting into details of these items like tuition reimbursement, performance based bonuses (both Company and individual), 401k matches, amount of travel, vacation time. This gives you some wiggle room because each of these have a pricetag associated with it. I call this approach A LA CARTE.

The other approach I take I like to call ( AIM HIGH ). In that situation, I give a number based on the Maximum derived above plus I add on the numbers in my major requirements and basically say that I’m looking for total compensation including salary, achievable bonuses, 401k matchese, tuition, perks, vacation time, etc. in a range of 160,000 to 190,000. This also gives you and them some wiggle room.

In the above scenerio, if they came back with a base of 125 with a 25% target bonus and threw in 3 to 4 weeks vacation, 50% 401k match, and tuition payments, then I think I’m golden.

I once ( can’t find it, need to do it again ) developed a Pricing Matrix for my services. I used variables such as relo/no relo, commute time (under 20 miles, etc ), vacation time, bonus percentage, 401k match, etc.

I guess I could do this because though I want to get the absolute highest level of compensation possible, I know that in my mind, it really comes down to I feel I’m getting a good deal. So if I look at my services from a Retail and Wholesale perspective, then I have a better idea of what I will make me content. Let’s face it, if you aren’t content with what you make, you’ll be looking before your office is even outfitted.

$.02 worth of thoughts,

LaneC
 

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