What to Know When Negotiating Compensation
Nancy Bush @Invest_In_Ed
As a Finance Leader, outside of work I often get asked for advice or tips on salary. After almost thirty years in private industry I can attest to the fact that sometimes you have to get creative to earn what you deserve. Before you go envisioning Wolf of Wall Street, the answer isn’t corruption- it’s compensation. There are many things an employer can provide of value other than cash (although let’s not get carried away, cold hard cash is always a winner). So, what should you know when negotiating compensation?
First, know that compensation is a broad category, and it’s not unusual for organizations to offer the following: base cash salary, bonuses, commissions, commute reimbursement, parking reimbursement, education reimbursement, training, stock, 401(K) matches, health and wellness benefits, paid family leave, remote work, promotion potential, paid time off, and volunteer days. Some of these benefits will be more important to you than others - ranking them can help you to understand what your priorities are and develop questions that you want answered either by research or in an interview. Even air conditioning can be a huge benefit- it was outright luxurious in comparison to the farm that I worked on growing up. If there’s something else that you think a company could or should offer you, I’d love to hear it. There’s always more to learn!
Speaking of learning, now that you know about these categories, go out and research them. Look up definitions, search for companies that provide these benefits, browse career pages, check out the labor and workforce development pages for various states (in case you are considering moving, this could affect your decision of a state in which to work). Learn what benefits are protected by either federal or state law (California’s site http://www.labor.ca.gov). Find out if states are looking at employers to ensure compliance with regulations. Look for studies that provide salary details. There are many job categories with salary ranges depending on a skill level. Believe me, your employer has this data internally and, if not, it’s a red flag. Find out if your friends or parents of your friends are willing to discuss these items with you. It pays to be well educated on the topic prior to considering a job with a company or pursuing advancement in a career once you are with a company. Annual raises and promotions provide opportunities for this discussion. If you become a manager in the future, it will provide you with a framework for understanding and answering questions employees may have.
Once you’ve done your research, put together practice questions and do some role play with a friend or mentor. Know your number and know your worth! You may want to engage in some financial planning or forecasting to see what is required for your basic needs (not wants!). I have pointed folks to Ellevest, but there are many other great companies out there. This will help you feel comfortable asking and discussing these questions with a potential employer. If you are not planning on taking a full time role, doing the research will still help you to better understand what hourly/daily rates or fixed rates to quote.
Remember that you have spent a great deal of effort, time, opportunity costs, and money in acquiring your current skill set. MAKE SURE you are being paid fairly for that skill set and that you are working towards obtaining more skills. An annual increase doesn’t really wind up providing for wants such as a vacation in Patagonia. Only promotions or advancement in master craftsmen skills (something such as welding, etc) secure your future in a broader way. Don’t be shy. Negotiating compensation is just another skill.
I have always valued employees or friends who set aside time in a meeting to ask me for help on these items. It shows that you are interested in the economics of your employer as well as your own. This indicates to me that a person is interested in learning about the business and invested in all parties becoming economically successful. It also fosters a sense of shared responsibility between management and employee, which can help both parties to feel that these conversations are constructive rather than stressful. Even if you don’t possess the negotiation tactics of a vetted car salesman, showing interest and a willingness to speak about these topics will set a framework for future conversations at your current company and the next.
Sometimes these conversations don’t always flow easily- they certainly haven’t always for me. One tactic for dealing with this is to make it less personal by steering the discussion to skills and value of skills. That way it’s not about your personality and opinions but about what results you provide with skills. I’ve seen countless women hesitate to ask for a raise while plenty of men simply assume it will happen. There are any number of reasons why this occurs but, ladies, don’t sell yourself short! You don’t have to possess every quality or perfect every talent to obtain the market rate compensation.
My first paying job was at a canning factory in Georgia, monitoring machines to ensure that they wouldn’t overheat and scour myself and everyone else with boiling water. Between the sweltering 105 degree heat of the machines and the exertion of running around I managed to lose 15 pounds in just a summer. I only made $1.25 an hour. Fast forward to 2005 and I was being promoted to Vice President at Maxtor- I was absolutely floored. I was a farm girl from the middle of nowhere, and I still felt like it every time I went in to negotiate my salary or ask for a form of compensation. But I’d attribute a lot of my success to being willing to have those awkward conversations. I think part of what helped was my background in accounting, where I had the unique experience of seeing salaries from every level of an organization. I knew what I was seeing was not what everyone should be making, but what they could be making. If they could, why shouldn’t I?
So let me make it clear- no matter how little you may think you’ve earned based on where you’re from or how much you’ve accomplished, it’s ok to start a dialogue! Ask for more, or ask what else you can do to get to that “more”- whatever it may be for you. Do your research, practice your negotiation, and above all else remember that you deserve to get the return on your investment.
If you have any questions or comments, don’t hesitate to send them my way! I’d love to hear your feedback and know what you might like to learn more about next.
A big shout out to my daughter and editor, Payton Bush (@payton_h_bush), who regularly puts up with my lectures on a strong work ethic. She got to skip the farm part.