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.
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.