How to Maximise Your Value in Compensation Negotiations

Here are strategies and techniques to help you negotiate with both new and current employers to achieve the salary you want and maximise your value.

By Robert Hall in conjunction with Harvard Business Review

 

Compensation is always a difficult subject

For many, compensation can be a difficult topic. On the one hand speculating over a new peer’s earnings is fascinating and will easily draw a crowd around the watercooler. Yet discussing one’s own income is another matter and feels uncomfortable to many.

The Society of Human Resource Management found that 79% of people surveyed did not like to discuss money or negotiate employment terms.

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Female candidates are even more effected by this apprehension. According to Sara Laschever and Linda Babcock, authors of “Women Don’t Ask: Negotiation and the Gender Divide,” 2.5 times more women than men feel “a great deal of apprehension” about negotiating. Laschever and Babcock found that while 46 percent of men report “always” negotiating their salary only 30 percent of women do so.

For senior executives in the Biotech, Pharma and Medtech sectors I know the numbers are not so high but maximising your value in compensation negotiations is of interest to everyone.

I’m based in Asia where the approach to compensation can be much more aggressive even at regional executive level. Whether it’s from a global Biotech or a regional Biopharma start-up I’ve heard candidates handle negotiations badly and listened to horror stories from hiring managers who have had their fingers burned. All of them were situations that could and should have been handled better.

Every situation is unique but some strategies and techniques can help you negotiate with an employer and address many of the issues that might be faced. Here are some tips to consider that will help you succeed in your negotiations.

Get them to like you

This is so basic I shouldn’t need to say it but I do. People will fight for someone they like and if they don’t they won’t. It’s as simple as that.

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Approving compensation, especially when it is outside of original allocated budget or banding requires approval whatever the level. That may mean a number of signatories and / or passing through a committee. This requires a sponsor that will fight your case and push hard to get it approved. This won’t succeed without you being well liked.

This is about much more than merely being polite and a firm handshake. It’s about managing inevitable tensions during negotiations, such as how you ask for what you deserve without appearing greedy, highlighting the issues you have with the offer without seeming pedantic, and being persistent without being a nuisance.

Show them why you deserve what you are requesting

More than just liking you they need to believe you are worth the offer you are asking for. Your proposal on its own will not be enough you need to paint the picture and tell the story behind it.

Whether it’s an improved offer of 20% or to work from home one day per week, you need to see it from their perspective and sell them the benefit. For example, your children come home early on Friday afternoons and you would like to do the school run which takes 30 minutes in total. Working from home saves a total of 2 hours commuting for that day so it’s a net of 90 minutes more you can spend working and everything is accessible remotely. This will also achieve a better work-life balance and you can always be in the office when necessary.

Practice, prepare, rehearse

Many executives find negotiating for themselves hard. They may negotiate large transactions, acquisitions, or deal with governments successfully but when it comes to their own compensation package it becomes very personal and brings a different set of emotions.

A surprising number of executives stumble when negotiating for job offers, promotions or pay raises. Some don’t know the best way to reach agreement, while others simply feel uncomfortable advocating for themselves. “When you negotiate for yourself it can be quite emotional” says Deborah Kerr, author of “Negotiating at Work”.

If you were entering a major negotiation on behalf of your company, then you would probably thoroughly prepare. You would determine the outcome you want to achieve and work out how best to get there that’s beneficial to all parties. Your approach to negotiating your own compensation should be no different.

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To grasp the needs of the person sitting round the other side of the table “You must do role reversal, putting yourself in their shoes,” says Stuart Diamond, emeritus professor of negotiation at University of Pennsylvania’s Wharton School.

He advises you act out the part of the other person while a friend or partner plays you. “By doing this you get to watch yourself negotiate,” Stuart explained. Expanding on this “Reverse role playing provides a lot of insight into how to start the negotiation,” he says. “You frame everything as being in the interest of both parties.”

“In the interest of both parties,” that is the clincher right there and if you can get this message across clearly you will be on the right track to maximising your value.

Be clear they can hire you

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Getting an offer approved which is improved or beyond the original budget is going to require expending political or social capital by your sponsors. They are not going to be inclined to try and do this if they believe you might turn around and say “No thanks”. Trust me it leaves a bad taste in the mouth.

Some people take the approach to getting wanted by one company by painting the picture that everybody in the market wants them. While this can work, it can also make you look like an ego manic or even worse make the company you do want to join think the odds of hiring you are not in their favour so they don’t even try. Do not get a hiring company to jump through hoops with an improved offer unless you are serious about joining them.

Address multiple issues simultaneously

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If you have an offer on the table and you have issues with more than one aspect of it then you are much better off addressing them all in one go up front. Imagine this conversation playing out from the perspective of the hiring company “the salary is a little lower than I was expecting can we look at that?” that gets resolved then you follow up with “Great. Now the stock compensation package…” it gets resolved then “Thanks. Now the housing allowance….”. At this point the other party will probably set fire to your offer in front of you.

The approach to take is to highlight the parts you are happy with; then present the aspects you are unhappy with. Also, I would advise to point out which of the aspects you want improved are most important so that they apply the correct weighting in the considerations.

Use an offer from a competitor as leverage

This is not a tactic I like but it can work so I will share an example with you as some people use it.

A close connection of mine, let’s call him Clive, who was based in London and heading a national commercial team at a Japanese Life Sciences company took a rather aggressive approach to achieving what he believed was his correct worth.

Clive was head-hunted by a company that was starting up a small operation in the UK. He met with them, went through the interview process, and was presented with an offer that was a huge 48% increase. It had to be as nobody in their right mind would make the move he was considering without offsetting the risk with a lot of cash.

Upon receiving a written offer, he asked for a meeting with his boss. Clive stated that he felt his income was considerably below market, pushed the offer across the table for his boss to see and asked why he isn’t being compensated around this level given that his current job was running a bigger department, a larger team and higher budget. His boss asked for some time to consider it and shortly afterwards raised his salary by 40%.

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A very risky approach many of you would rightly say. Especially when you consider that Clive was not interested in this new company at all, they had no platform, a mixed reputation and senior management did not impress him. In short, he did not want to join this company and just used it as a tool to get what he felt was deserved.

The point is he asked for a meeting specifically about his compensation. He presented facts, made a coherent case for an increase not by threatening to leave (he made clear he would not accept the offer from the other company) but by illustrating his worth to the market at that time.

That was is 2007 and he is still with the same company and now in a more senior role. This is not an approach I would personally advocate but it depends on your appetite for risk.

Don’t walk away, stay at the table

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Just because something isn’t negotiable today doesn’t mean it won’t be tomorrow. With time, situations change and obstacles are overcome. When an answer is no it means “No, given the situation as it stands today”. Two weeks down the line the pieces may have moved and it becomes possible or even essential that they revise their offer and get closer to your expectations.

Should a situation arise where the company can’t meet your expectation for a reason let them know that you remain firmly interested them and should the situation change you would be keen to pick up talks.

The FBI hostage negotiator approach

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Ok I admit this one is a bit ‘leftfield’ but let’s run with it anyway.

Chris Voss, former lead kidnapping negotiator for the FBI, says people respond to ranges much better than specifics. He says first you need to identify the range without pushing the other side out of their comfort zone.

Chris gives this typical conversation scenario and how he would handle it:

Hiring company: “How much are you looking for?”

You respond: “Are you making me an offer or are you just fishing?”

Hiring company: “We’re trying to get a sense of what kind of expectation you have.”

You respond: “I’m sure you have a range in mind”

Chris says if they give you a range at this point, then take the end of that range that favours you. They will be relieved at this point and want to stay at that number.

If your expectation is out of that range, then respond by saying no but keeping the conversation going.

Chris recommends a favourite phrase for this: “How am I supposed to accept that?”

He says that lets them know that this is a problem for you but gives them the opportunity to make it back with an improved number that should be closer to what you are looking for.

“You must be pleasant” says Chris Voss

Chris insists it’s critical that you be pleasant throughout. You must be able to say no politely as you are being evaluated throughout on how you would represent their company and interests. Remain polite, pleasant, and professional throughout as a company can change their mind about hiring you at any point.

While I certainly agree with Chris on his last point about being pleasant I wouldn’t encourage people to use his approach to negotiating your salary. You shouldn’t need to apply hostage negotiation tactic unless your interview has gone very, very wrong.

Yes, people are absolutely more comfortable discussing ranges than specific numbers and this is a good place to start if you prefer to be cautious.

My advice would always be if you get asked directly about your salary expectation then answer the question directly. Getting into a game of chicken and waiting to see who blinks first will aggravate some people it creates an impression of you as someone that wants to avoid a difficult topic or can’t negotiate well.

 The approach I would personally recommend?

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Each approach has its merits and your situation may call for one over another. However, I do advise executives to use one or two methods over the others but I won’t put all my cards on the table here. To find out which approach I favour that will work best for you get in touch with me at rh@ardent-search.com

Enjoy your negotiations, it’s always exciting!!

I wish you good luck and I hope you achieve your full and fair value.