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Deal or No Deal:

Five Winning Strategies to Negotiate Executive Compensation

Although the economy is in a state of flux, the first quarter of 2016 is proving to be a robust market for executive recruiting. We've visited the topic of executive negotiation in the past, but now might be a good time for a refresher course on negotiating an executive compensation package.

Believe it or not, but many a seasoned executive has blown an attractive opportunity by mismanaging the offer process. Here are five things worth remembering:

1. Put your best foot forward

While negotiating an employment offer is technically not part of the interview process, your future peers will be evaluating you. How you conduct yourself as you negotiate the myriad components of a long-term employment package matters.

2. Negotiating an employment offer should be fluid, personal and collegial

Negotiating an employment offer is different from negotiating the purchase of a car or a house or even a business transaction. Think of it as more like negotiating a prenuptial agreement. Compensation negotiations should not be an adversarial "us-against-them" process.

Remember, appropriate compensation is in the best interest of both parties. Your compensation package is a vote of confidence by the company or Board and allows you to lead from a position of authority. If the package is too rich, it could send the wrong message to future colleagues and external constituents. If the package is too low, it communicates a lack of value. This can lead to potential long-term resentment and lack of long-term commitment to the new employer.

3. Understand the company’s compensation philosophy

Do your research via SEC filings and online sources. If a company places a high value on large year-end bonuses in lieu of high salaries, don't start negotiations asking for a high salary. Try to understand the company's constraints If you are using online salary data, be forewarned that it can be wildly inaccurate. Do not base your demands on salary information that is not verifiable.

4. Disregard market or word-of-mouth salary data

While compensation tables and other market data may be relevant for lower level positions, executive compensation packages are always tailored to the individual.

Several factors specific to the position and the executive candidate will have a bearing on the compensation package, and can include company size, overall years of experience, management experience as well as a candidate's current compensation and other factors.

If you are an executive at a public company, you know that it is fairly easy to find C-suite salary data. Using that information to define the parameters of your counteroffer can be helpful in some cases. For example, use the data to avoid countering with a number that is significantly higher than executive compensation for a similar role. You could prevent yourself from souring the deal with your new employer.

5. When Possible, Negotiate in Person

Do as much of the negotiation process as possible in person. A face-to-face meeting can nullify the well-known pitfalls of email and telephone conversations. In person, you not only get to display your negotiating skills, but you also get to "read the room" and assess the non-verbal communication that will be happening during the process. Another benefit of in-person negotiation is that your emotional intelligence and soft skills will be at the forefront.

For both sides, you want to come to the table with a spirit of 'let's get this done quickly and collegially so that we both look back on this negotiation as an easy beginning to a long-term relationship.' One client characterized it this way, "It is a shared risk, the executive candidate has to trust that we will take care of them long term and I have to trust that the executive candidate will make me look good for hiring them."

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John mann

John M. Mann

Managing Director, Alex & Red