Only one person has ever accepted a job offer from me ‘on the spot’ — and that person was the hiring decision I came to regret most. This probably wasn’t a coincidence.
I’m a lawyer. The people I hired to work on my Legal Teams were lawyers. The jobs I was hiring them for required negotiating on a daily basis. If someone didn’t start off by negotiating the terms of his own offer, it should have tipped me off he didn’t have ‘the stuff’ I was looking for.
Career blogs are awash with postings that discuss whether job candidates should screw up their courage and negotiate their offer terms. I’m surprised by how much ‘air time’ this topic commands, but, then again, negotiating comes naturally to lawyers — at least, it had better.
So, should you negotiate your offer letter? Absolutely.
But, like with anything else, you need to know where the guardrails are and take care not to cross over them. Be aware of the following:
Express enthusiasm and thanks
Start off your discussions by letting the other person know how much you value the opportunity to join her company and thank her for offering you the position. Say this with energy. Be sincere.
If the other person senses that you’re genuinely excited about her company and its mission, you’ll build up a sizeable stash of goodwill and have a better shot at getting your changes through.
Your leverage drops the moment you walk through the door
Your negotiating position is strongest at the point where you have an offer but haven’t yet accepted. Don’t assume you can negotiate changes to your employment terms once you report for work.
The terms you sign up for have a long tail
The compensation you agree to when you first join the company will be the ‘baseline’ to which future pay increases are added. If your ‘walk-in’ comp starts at too low a number, it could take years to catch up to your peers.
Leave the nits to the pickers
Whenever I’ve been on the offeree side of an offer letter, my rule of thumb has been to negotiate no more than three points. More than that and you start to sound like a whiner.
In fact, I once retracted a job offer I’d made to a law firm associate hoping to become my Associate GC. This associate thought every term of his offer letter was worth haggling over and – eventually – I just got tired. Very politely, I told him I didn’t see us coming to a resolution, thanked him and suggested that one day we might work together in the context of his law firm.
When the associate realized the consequences of his zeal, he immediately reverted to reasonable behavior. We reached agreement on his two ‘big picture’ changes and spent several productive years working together.
Do your research
Find out the market rate for your job and compare it to the compensation you’ve been offered.
Recruiters in your industry and colleagues who have jobs equivalent to yours will usually have the most up-to-date market information. Salary surveys, such as the one published annually by the Association of Corporate Counsel or those available on websites like salary.com, can also be helpful.
It also helps to know how the company thinks about the components of compensation. This will give you an idea of what flexibility you have in negotiating your offer. For instance, if the company’s philosophy is to pay salaries on the low-end of industry standards, while loading employees up with grants of stock options or restricted stock, you’re probably going to strike out if you ask for a top-of-the-market salary. However, you might have good luck in getting more equity grants added to your offer.
So, where to find the company’s compensation philosophy? If the company is public, read the Compensation Committee report found in the company’s latest proxy filing.
What’s the title beneath the title?
When I interviewed for my first ‘in-house’ job at Reebok, the General Counsel explained that my position was a Director-level position. I nodded and didn’t think anything more about it. After all, I’d negotiated the salary I wanted, my option grants were generous and my title, for purposes of the outside world, was ‘Corporate Counsel.’
What I didn’t realize was that company-wide benefits and perks depend upon your company-wide title — in other words, which layer you’re in on the company org chart. The hierarchy typically ascends from Associate to Manager to Director to Vice President (with several sub-layers at each level).
So, know where you fit on the organization chart, particularly vis-à-vis your future boss and other people in your department.
Ask about compensation ranges
Another thing I didn’t realize when moving ‘in-house,’ was that –- to promote fairness — companies designate a range of possible salaries, cash bonuses and equity shares for each position-level on the org chart.
Sometimes it’s possible to find out what these ranges are for your position. (It all depends on how open the person you’re negotiating with is willing to be.) If you can find this out, you’ll know where the comp package you’ve been offered sits in that range and can ask how the company arrived at its decision to start you out at that particular point.
Don’t give ultimatums — unless you intend to carry through
Don’t back yourself into a corner by threatening to accept another company’s offer or otherwise walk away — unless you’re prepared to do just that. And remember: Making a choice based solely on who’s the highest bidder for your services can land you in a world of hurt.
Express enthusiasm and thanks
Remind yourself of point #1. Remind yourself again….