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Show Me the Money: Negotiating Tech Salaries

By Fran Quittel
Special to washingtonpost.com
Wednesday, April 22, 1998

Even in a hot job market, negotiating compensation for a new job can turn the most stalwart job seeker to quivering jelly. High-powered executives employ pricey headhunters to make moves for million-dollar packages with huge bonuses and benefits. But for those of us who can't afford a recruiter to negotiate that $150K salary, here are a few tips.

Compensation Is More Than Just $alary

First, you should remember that "compensation" doesn't just mean salary or money. It involves title, responsibilities, grade level, perqs, benefits and bonus plans -- not to mention your future. If you only focus on base salary, you might erroneously eliminate some of the biggest "upsides" -- or potential for greater rewards -- a situation has to offer. On the other hand, if you only think about upside, you might be betting the farm on stock options that might never be worth much or might turn worthless overnight. If your view emphasizes only benefits and security, you might lock yourself into a situation that has little growth potential. That is why negotiating is not for the faint of heart, the scared, the hungry, the overconfident or the overeager.

Before You Head in for the Interview

1. Don't jump the gun.
Keep in mind, say the experts, that until you have an offer, there is absolutely nothing to negotiate, and you can blow the whole deal by either under- or over-pricing yourself by mentioning money too soon. "Don't think that when you are asked salary questions right off the bat that the

Avoid These Mistakes

• You don't negotiate at all.
• You start to negotiate before the offer is even given.
• You give a definite salary figure too early.
• You go into the negotiation without a self-marketing plan.
• You are apologetic.
• You lack good information on comparable salaries.
• You say "yes" too soon and don't give yourself time to think.
• You don't convey excitement about the work.
• You are overconfident and arrogant.
• You don't have enough other offers or possibilities in the hopper.

interviewer is helping you," says American University Career Center negotiation coach, Deborah Pratt. "Understand that the employer is trying to figure out if he can afford you, and perhaps that question should be sidestepped until later, when you know what skills you have that will determine the contribution you can make to that company."

2. Know your value.
If your first task is not to mention a specific dollar amount before you understand what you can contribute to that particular situation, your second task is to come into the interview with a realistic idea of what you're worth. You should define the dollar amount, stock options and perqs you're aiming for, as well as the rationale behind these numbers. With a candidate who already has a successful track record, the employer knows what talent he is buying, what problems the person can help solve, and what contributions that person has made. With a less-experienced person, that data is missing or non-existent. Your idea of compensation might be based on what you may imagine your contribution might be, but without a history of work experience behind you, the employer can't attach a hard dollar value to your worth.

"When companies put together multi-million dollar compensation packages, they do so for someone who is experienced," says Eric Vautour, Russell Reynolds' Managing Director for the D.C. area office. "A senior executive at a large company might join a smaller organization which can benefit from applying that seasoned expertise to huge growth markets. Companies don't want to put their fortunes into the hands of someone who has never experienced turbulent waters." Well before you start interviewing, you must know your value and whether your view of yourself reflects reality. Talk to colleagues, counselors and friends and seek out salary surveys. Do research on the Web with WashingtonPost.com's Parachute Net Guide to job resources on the Internet.

Straight From HR
Betty Ann Habig of The Motley Fool, Inc. explains how important work culture is when looking for a new job.

3. Don't neglect benefits issues.
Then there's the matter of how to structure your compensation. Example: Five or ten years ago, many compensation packages, especially those in marketing, finance, development and sales support might have been just straight salaries. But now many packages include a base amount plus a second variable called "performance" or "incentive-based" compensation. Knowing how those variables are calculated is key. Some calculations may depend on your performance, some may be out of your control and based on other factors. Do you know the standards in your industry? The factors that depend on your contribution and your results? What about those that are out of your control and based on the company's overall performance?

"If I'm a candidate looking at a compensation package," says Jim Searing, Partner and Managing Director of Korn/Ferry International's Tyson's Corner office, "I want to know how this position is leveraged in terms of incentive compensation, what is base and what is bonus. If I do "X," what do I make and what are the measurement factors that go into that? I want to know what I have to do to exceed the target bonus and what is the experience of other like employees in their tenure with that company." These are critical pieces of information.

4. Consider the ramifications for your future personal wealth.
You need to know the value of what you are losing by leaving your old job, the dollar value of raises that might be imminent, stock options that are not yet vested, or retirement plans that you cannot take with you. If you are relocating, what is the relative cost of living in your new area? Depending on where you're moving, a lower offer might put more money in your pocket or a higher offer might have a lower bottom line. "Think about your spouse's work," advises Marilyn Staley, Managing Director of Management Recruiters' Washington, D.C., office, "your relocation costs, whether your spouse will have a new job, and also leave stock options on the table. Be sure you factor those in."

5. Be confident.
Attitude counts. Good negotiators know the art of compromise. They are calm and confident, not scared, hurried, arrogant or inflexible. "I was working with two candidates who at first glance were on the surface quite unassuming," says Karla Leavelle, Vice President of Manchester Partners International. "But they had a real quiet confidence about themselves. They were clear in their own minds about their skills and abilities and the value they would add to a new employer. While they had questions about whether they had 'oversold' themselves during their interviews, they were also very clear about the value they would add to a company, not their estimate of what they were worth. 'Now that you understand the value I offer, let's talk about what it is worth for you to have me come here.'" And both of these people were successful.

Into the Interview Room

Now, let's assume that during the interview, you absolutely must give some sort of salary target.

Tips From Another
Salary Seeker
How do you give a salary target? Speaking from experience, Bell Atlantic's Josh McCloud suggests giving a range.

What should you do then? Should you give a number or a range, stall, or try the honest approach? What about "take it or leave it," playing cat and mouse, or providing competitive data?

If you are pressed and feel you must give a number, experts agree that it's better to give a range of compensation rather than one set dollar figure. However, if the range you give is over what the company is willing to pay, you might be screening yourself out of a job you really want or a situation that has great potential. If you lowball compensation, underbidding your worth, the company certainly won't tell you. Once you give the number, you cannot later say: "Oops, I made a mistake." You must live by it. Remember too that in giving ranges, the employer often hears the lower number while the job seeker fixes on the higher number. Additionally, when the employer tells you that the position pays a range of $60,000 to $65,000, says Management Recruiter's Marilyn Staley, "this does not mean he feels you are worth that amount."

If you want to try the direct approach, be prepared for the consequences. Example: "My buddies from MBA school started working here last year, and they already told me what they were making. So, I would only be interested in this job if it pays (big bucks) and includes membership in a private club." Using this sort of swagger and bluster will likely alienate an employer. Remember: Always be gracious.

An honest approach can help you throw the ball back in the potential employer's court in a clever way. Example: "I know I should wait to give a dollar figure until after I interview and know this is the job for me. I understand that by giving you a dollar figure now, I can blow it. What would you like me to do?" Or you might try the "stall" approach: "I have an idea of what I'm worth in the open market, but I am a lot more comfortable giving you a dollar figure or range once I understand how I can be of value to your company and your project." If you follow the "cat and mouse" approach, when they ask you how much you want, you ask their range, and you go back and forth to see who will be the first to answer with numbers. Finally, the "competitive data" approach depersonalizes the situation and provides data: "You know, I was just doing some research on the compensation ranges for this type of position and experience, and the data from studies ABC showed the range for this level of expertise to be "$Y."

The most important rule is to try to link your desired compensation to your anticipated contribution to the company. Let the employer know the skills and accomplishments you have that will benefit the new company. The more you know about the company's needs, the better you can define how you can match those needs. "Don't talk about the wrong two things that the company doesn't need," adds Marilyn Staley. When you talk about money, be aware that if you have a certain dollar amount in mind, it's best to have enough other doors open to you so that you know one of them will pay you what you want. Once you give a number, you must also be prepared for the employer to say "yes" or "no."

Negotiating the Offer

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