Okay you’re interested in them and they are interested in you. How do you negotiate the job or the contract you want? And what are stock options anyway? What is important to you? How do you figure out your bottom line?
One of the questions asked frequently at The Job Forum is how to present your salary requirements to companies at which you’d like to work. So, here are some tips.
- Total Compensation
- How do I know what is a fair range for salary?
- How to Handle Salary Questions
- How much can you increase your salary?
As you think about your potential salary, it is helpful to frame your thinking in terms of total compensation (this is the way most contemporary organizations do look at “pay” for employees). Total compensation includes:
- Base salary: This is typically a salary range matched to similar jobs in the same labor market. The higher end of the salary range indicates that the job and the level of skill the company expects are valued as highly important
- Variable or Incentive Pay: This is additional pay that employees can earn as a reward for performance and/or for meeting specific, pre-defined challenges. Sometimes incentive pay is rewarded to the company or department broadly, as when the whole company achieves stated goals (company meets revenue growth goals),or variable or incentive pay, which is linked to delivering on individual objectives (as when n individual negotiates a contract with x customer and receives a reward).
- Benefits or Indirect Pay: Company benefits usually include health and medical benefits, retirement, and paid vacation benefits. Managers and executives may also be offered stock programs, cars, signing bonuses, or benefits for longevity on the job. Some companies offer employees a choice among kinds of benefits depending on employee performance and stage of life (e.g., child care benefits versus eldercare benefits).
How do I know what is a fair range for salary?
The best way to determine the fair compensation level for you is to do some informal research. You can do this via networking with people in similar jobs at other companies or via the Internet, checking for job titles (and published salary ranges) in company employment sections of web sites.
Timing is important when discussing salary. On the one hand, you want the chance to be considered at a company that you are excited about. On the other hand, you want to know that the firm defines the job at a similar level of responsibility and importance as you do, and compensation is one indicator of this.
When you are early in the “getting to know the company” process, you may be questioned about your salary requirements or past salary. You can parry the questions by saying, “Tell me some more about the job responsibilities please, so I can better understand the opportunities and challenges”, or “What range have you (the company) defined for this job description or this function? Have you already decided on the level of person you are seeking, or are you kind of open to exploring?”.
It is preferable to negotiate the compensation after you understand as much as you can about what the company and hiring manager want to fill the job. Once you know their objectives, you can better present your talents and assess their motivation to fill the job. It is preferable to negotiate the salary after the employer wants to hire you.
How to Handle Salary Questions
When a company asks you in person or via the Internet for your “salary requirements”, you are free to provide a range and also to reference the other aspects of a total compensation package you are particularly seeking. For example, you could say, “I am interested in a position with managerial responsibility in the range of x-y (could be a 20-30% range) and a bonus/incentive package consistent with your other mangers at my level. I am also interested in whether your firm provides dental care”.
How much can you increase your salary?
When individuals transfer from one company to another, there is often an increase in total compensation paid by the new company that is part of the incentive to switch firms. Therefore, when switching jobs, the compensation you should present to companies is the range you want and can be justified based on the labor market for similar jobs. It is normal in a managerial position for this to be a 15-40% increase versus your last salary, depending on how competitive the job market is and how you judge the fit of your know-how and experience to the job challenges.