Salary Negotiations: Avoid This $100K Mistake

Neglect this item when you negotiate salary, and you could lose a pile of cash. Yet, a lot of people never even bring this up during salary negotiations. Learn from what happened to a client we’ll call Michael–and don’t let this happen to you!

Michael gets an amazing offer

Michael jumped when offered an opportunity with a rapidly-growing Chicago firm. In a heartbeat, he left a job that was lucrative and secure and moved halfway across the country to get equity in this company. He had, of course, done his due diligence and found the company to be solid. He pulled the kids out of their circle of friends and headed for Illinois. The new job was fabulous, and Michael immersed himself in the work.

Then things went wrong

For the ten months, the company lived up to his expectations. But things quickly went south. When a competitor’s unethical business practices hit the news, his company was tarred with the same brush, though they’d done nothing wrong. The explosive growth stopped, and soon they were losing money.

Michael gets laid off

One day, Michael was summoned to a conference room and informed that the company was laying off several people—including him. Michael got a grand total of three weeks severance—after moving over 1300 miles to take the job. The company also provided “outplacement” that consisted of a lecture on how to write a resume. Looking back on the experience, Michael says he should have asked for more, but he was in a state of shock.

A long job search

Michael was so devoted to the job and the company, that he hadn’t thought about taking steps to build a network in Chicago. Building a network from scratch was very time consuming, and it took another eight months to land another job. This extended period of unemployment cost Michael well over $100,000 and nearly depleted their savings.

Salary Negotiations Lesson?

Be sure to put severance on the table during salary negotiations. Many people don’t feel comfortable asking about severance, but the alternative is to end up in the same sinking boat that Michael found himself in.

How to negotiate severance?

Here’s the coaching we gave Michael on how to have this conversation when he got the next offer. Michael:  I’m really impressed with this company. It looks like you are in great shape and getting better. The Boss:  Absolutely. We are an outstanding company. It’s a great place for you to build a future.
ture.
Michael:  It seems that way to me too, and I’m sure I’ll do a great job for you. But I do have a concern. I don’t imagine that you anticipate a merger, buyout or some other change that might endanger my position, do you? The Boss:  No way. There is nothing like that being discussed. Don’t even think about that. Michael:  I thought as much. So I imagine you won’t object to a severance agreement that would protect me if something unanticipated like that were to actually happen. With our help, Michael got a compensation package that protected his interests: several months of severance, a good outplacement package, and an extension of his medical benefits.

What Should You Ask for During Salary negotiations?

Typically, companies will pay one or two weeks severance for each year of service, outplacement, payment for accrued vacation, and an extension of medical coverage. However, a top executive might negotiate several months severance, particularly when there are special circumstances like Michael’s where he moved a great distance to accept the position.

Finish off Salary Negotiations by Getting It in Writing

Any time salary negotiations extend beyond salary and a standard benefits package, it’s a good idea to protect yourself by getting a written agreement. Should the company official object, tell them something like this, “It often happens that people in the same conversation come away with a different understanding of what was discussed. I’m excited about working here, and it would be a shame to start off badly because we’re not clear about exactly what we’ve agreed to.” Should the boss still refuse, you can the boss a letter summarize your agreement. This letter can be enforced as though it were a contract.

Don’t worry that you’ll sound ungrateful or even desperate

Getting an agreement about severance is smart—and it can save you many thousands of dollars if things change at the company. Want to discuss your career or your negotiations? Contact us today.

Tired of Being a Wimp in Salary Negotiations?

If you’re tired of being underpaid and underappreciated, it’s time to learn some new tactics. Let’s start with laying a solid foundation for negotiations. Obviously, there’s lots more to negotiations than can be explained in a short article, but let’s make a good start. What’s a fundamental rule for gaining true power in any negotiation you become involved in?

Salary Negotiations Fundamental: Be willing to say no.

Granted, sometimes you can’t. Sometimes you REALLY Need that Job. So walking away doesn’t always work. When the bank account is low (or you’re living on credit cards) and you’ve got to pay the mortgage and buy groceries and fix the car and…  You may need to grab onto that job offer, even if it’s far from ideal. Still, many people who aren’t desperate accept job offers they should reject. They ignore a feeling in their gut that something is wrong.

The hiring process and dating

Whether the relationship is a romantic one or an employment relationship, the conflicts that destroy relationships commonly appear right at the very beginning. If the relationship doesn’t begin right, it’s unlikely to get better with time. But too often, we dismiss things when we ought to pay attention. Just as with dating, job interviews and salary negotiations have one thing in common: if the first date is bad, it’s unlikely to turn into a happy marriage. Sure, the man (or woman) showed up for the date two hours late, but you tell yourself there must be a good reason. But usually, it turns out to be a pattern. And it drives you crazy.

My job interview with a corpse

Years ago, I was new in town and needed a job badly. I sent in my application and then called to follow up. The boss, whose name was Herman, answered the phone. “I have your application,” he said, “and if I determine that I would like to talk to you, I will call.” I felt like I was talking to a corpse.

Herman calls for a job interview

A while later, Herman called me in for an interview. I didn’t like the man any better in person. But soon, he called to offer the job. In that same corpse-like voice, he told me what the pay was (not great), and said, “If that’s not enough money, we can stop talking right now.” I thought, “How rude!” But I needed a job, so I swallowed my pride and accepted. Not surprisingly, things with Herman were never good. We never could get on the same page. I left after two months.

Our belief in scarcity sabotages us

Sometimes jobs are in fact scarce, but more often, it’s our belief in scarcity that leads us to take jobs that aren’t right for us. If we’re convinced that it will be really difficult to get another offer, our leverage in negotiations crumbles to dust. We accept jobs that are less than what we deserve and we don’t get fair pay. In dating and employment, people who feel they have no other options tend to get mistreated and are perceived as less attractive.

Jerry Gets An Insulting Offer

Every once in a while, someone calls thinking we have magic that can transform negotiations that are stalled. One of them was a Highland Park executive we’ll call Jerry, who interviewed with a company in the Chicago suburbs. He called saying that although his sterling record of achievement warranted a six figure-offer, the employer sent him an offer letter that was downright insulting—$90,000. Jerry was savvy enough to know that he should negotiate with the hiring decision-maker instead of Human Resources. He requested a face-to-face with Bill, the man who would be his boss. But Bill said, “No can do. I’m very busy for the next couple weeks. All I can spare are a couple minutes on the phone.” Bill wouldn’t budge on the salary, so Jerry tried to negotiate for another week of vacation. No. Travel allowance? No. Paying for some training? No. Bill said no to everything Jerry asked for. On top of that, he told Jerry that he had to decide no later than 5:00 that day.

Looking for magic in salary negotiations 

Jerry called to seek coaching in the negotiations. Surely, he said, there are some magic words that can make the negotiations turn in his favor. Many times, we can provide magic phrases and make negotiations go spectacularly well, but not always. Jerry had played his cards well, but Bill didn’t want to be fair. Bill didn’t want to negotiate. Maybe he sensed that Jerry wouldn’t turn down the job. We gave Jerry what we believed was the best advice: reject the offer. But Jerry didn’t want didn’t want to hear this and accepted Bill’s insulting offer. We wish Jerry the best, but believe he will regret this decision.

Pay Attention to Signals In Salary Negotiations

Of course, you should be on your best behavior during the job interview/salary negotiations process, and the employer should too. They should want to make you want to come on board. But Bill lowballed Jerry, wasn’t willing to make time to meet with a high-level employee, wouldn’t budge on anything, and he demanded a response that day. In short, he was disrespectful. Though we advised Jerry to decline the offer, he decided to take it. We think he made a big mistake. We think Bill’s disrespectful treatment will not only continue, but will get worse. Trust your gut reactions. If it feels like the employer is being disrespectful, they probably are. Sometimes, we need to take a job. Any job. If that’s you, then take the offer. If that’s not you, be willing to say no. That’s a short lesson on salary negotiations. If you’re hungry for more, pick up Jack Chapman’s book on Salary Negotiations.  Jack is also available for personal salary coaching.