By Michael Solomon, 10x Management Co-Founder
As co-founder of the first tech talent agency, I’ve made a living negotiating deals for freelance technologists (programmers, engineers, developers, data scientists, designers, etc.), and I’ve increasingly been asked to lend my skills to negotiating full-time job offers. I started my career working in the music industry, co-founding a music management company, Brick Wall Management, where I negotiated deals on behalf of musicians like John Mayer, Citizen Cope, and Vanessa Carlton. One thing I’ve noticed in my years of negotiating is the unfortunate tendency of employers to offer a one-size-fits-all contract to potential employees without evaluating what is important to the candidate.
For instance, let’s say a company is looking to hire a director of engineering and has 2 candidates:
- A 28 year-old, single candidate.
- A 37 year-old candidate with 2 kids.
The job offering should probably be very different, but sadly, most companies neglect to see it this way. What’s good for one person might not be good for another, and more companies should start paying attention to the desires of their candidates if they want to land a dream employee.
For those considering a job offer, it’s important to prioritize what matters to you. Is the salary high but the hours are brutal (essentially making your effective hourly rate much lower)? If you’re someone who values work-life balance, then that job is probably not right for you. Low salary but great hours? If you want a mansion and a Rolls Royce, probably not right for you. Again, it comes down to what’s important to you. Not just for your job, but for your life and lifestyle.
I’m often asked how anyone should know exactly what they’re looking to get out of a deal. Of course, that question always starts with the person asking the question. If you know what you want, negotiating is a lot easier. The best negotiations occur when both sides recognize how to maximize the value of a deal. I try not to look at negotiations as a win/lose scenario, where one side wins and the other loses, but rather a win/win scenario, as cliche as that might sound. While it’s not always possible, it exists in large and small ways a lot more than one might think.
Negotiating as An Engineer
In the tech ( and many other) industry, there’s a well-known paradox regarding something called the quality-speed-price triangle; you can have two but you cannot have all three:
- You can have something that is high quality in a short time period, but it will cost you dearly.
- You can have something fast and cheap, but it will likely be low quality.
- You can have something cheap and high quality, but it will take forever. And so on.
As an engineer, when you’re trying to land that perfect job, thankfully the quality-speed-price triangle does not exactly apply. But some lessons can definitely be learned from it. You likely won’t get a job offer that fulfills your every dream, but if you prioritize what matters to you, you’ll understand better what you want.
At 10x Management, we’ve created a matrix to help our Ascend clients understand what is important to them. Because as strange as it may sound, a lot of the time, people might not realize what they want until they actually spell it out. It’s a great exercise: write down what’s important to you, and try to quantify your list by assigning values to different variables. You only have 100 points, so you need to really contemplate what is most important to you in relation to the other variables. All the points assigned need add up to 100.
For instance, I might say salary is the most important thing to me, and I’m giving it 80 points. That means I have 20 points left for things like vacation, flexible work hours, benefits, etc. When I’m negotiating, I’ll know that if the salary number is high, I’m likely ready to sign the deal.
How should a job offer be structured? Take a look at some of the things that might be on your list below, and how to deconstruct each point.
This is likely at the top of many lists. Financial compensation is for many people the most important part of a job. If you’re paid well enough, you might tolerate brutal hours, a bad boss, a bad culture, etc. You have the right to give this 100 out of 100 points and essentially say nothing else matters to you. But for fun’s sake, let’s keep going.
In almost all cases, I’d say having a higher base salary is more important than a bonus, because a bonus is generally a percentage of your base salary, and you’ll have a hard time translating your bonus at one company or job to another. But to each his/her own, and if your bonus isn’t based on salary, maybe you’ll value a bonus more. You will also want to know the details of the bonus. Is it 100% at the company’s discretion? Your boss’ discretion? Based on your performance? Based on the health of the company? How are those measured? The list goes on but you get the idea.
If your skills are in high demand, you may be offered a signing bonus. A signing bonus by nature is a short-term incentive to entice you to accept a job offer. If earning money this second is important to you, then a signing bonus might carry a lot of weight.
Maybe the starting salary isn’t great, but the company is a tech startup and you believe that its prospects are amazing for the future. In this case, equity might be very important to you. Imagine getting equity in Facebook when it first started. That would be worth a lot more today than a high salary at the time. Equity is often a gamble, so make sure you think long and hard about your prospects before you accept. The exception to this is when the equity is liquid, because the company is publicly traded or because they offer buy back provisions.
Accepting equity might also come down to what phase of life you’re currently in. If you’re single and out of college, gambling on equity might not be a bad decision. If you’re married with children to support, you probably care a lot more about salary than the promise of equity. Factors like vesting schedule, the instrument of equity, and length of term to exercise need to be considered here, as does liquidity. A publicly traded company where you can sell your RSUs whenever you want vs. a privately-held startup in which you have to wait for a liquidity event are two totally different animals.
Weeks of Vacation Time
For those that value work/life balance, vacation is important. Is getting four weeks of vacation time more important than a higher salary with three weeks of vacation?
Length of Commitment
Think about the length of the contract. Do you see yourself moving in the next couple of years? Or would you prefer the stability of a long-term commitment? Be careful here, because committing to a job for an extended period of time and then realizing you’ve made a mistake can damage your reputation in an industry, and it will almost certainly damage your relationship with that company.
Think about how important health insurance, a retirement savings plan, dental insurance, life insurance, and other benefits are to you. Would you accept a lower salary if more benefits are included?
If you’re traveling a lot for work, is it important to you how you travel? We all know business class in any line of transportation is an amazing luxury. Think about how important this is to you and how often you’ll be on the road.
For those that value independence and freedom, you should inquire about the reporting structure of your job. Will you have a boss that micromanages you? Will you have to report minor details to superiors? If you’re individualistic, this might present a problem. Don’t underestimate the value of independence if you’re an independent thinker. Or imagine coming in to a start up where you report to the founder and CEO and then discover yourself a year or two later reporting to middle management.
Location of Work
If you value being in the heart of a city, it’s probably not best to take a job in suburbia. There are a lot things to consider with location of work: is it close to a subway, is there parking, how long is the commute, will you have to relocate to work there. The list goes on. But this should be on your radar.
If working a 9 to 5 sounds constraining to you, then flex time is obviously important to you. Flexibility with your schedule and dictating your own hours can be a dealbreaker for many people.
Office or Desk
If you’re good at working and shutting out the rest of the world at the same time, then you can probably manage a desk. But if you value privacy and quiet, having an office should be a priority for you. For some, getting into a flow state requires privacy and this becomes a huge priority, particularly for engineers and other creatives.
Budget for Operations
If you have grand visions for your job but the company you are applying to has made it clear that you won’t have a large budget, you might want to search elsewhere. People can get frustrated easily by wanting to instill change without having the financial support to do so.
How important is your title to you? You may be someone who doesn’t care at all about titles. For the most part, I don’t, but it will likely have a direct impact on your next job. It is also something that cost the company nothing to give (unless it has an adverse impact on existing team members).
Visa Sponsorship (if applicable)
If you’re applying for a job from a foreign country or as a tourist, then Visa Sponsorship should probably be at the top of the list and garner the most points on this matrix.
Relocation Budget (if applicable)
If you have to relocate to accept a job, you should certainly inquire to see what kind of budget the company allows for to cover moving expenses and what your moving accommodations will be in the first month or so.
Room for Growth
I’ll draw a little bit of a comparison here to the Equity section, because I think this depends on what phase of life you’re in. If you don’t mind starting small and working your way up because you see a lot of potential for growth at a company, then Room for Growth should garner a high quantitative value on this list. If you don’t have time to grow into a role, this goes to the bottom.
There are surely other variables we encounter but this list is a good start to get you thinking about the big picture.
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Michael Solomon is an established entrepreneur and the founder of 10x Management, a prominent tech talent agency. He remains a sought-after voice in the business technology world and makes frequent appearances on Bloomberg Television, MSNBC, and BBC. Michael’s sharp eye for business has helped 10x Management revolutionize the technology sphere.
Originally published at www.10xmanagement.com on May 17, 2018.