Salary Negotiation

Thursday, December 22nd, 2011

How a candidate thought he negotiated a huge salary but really lost out on a huge opportunity!

I was once trying to fill a position which had a salary that capped out at $105,000.

An employee who was a high level manager referred a candidate to the Vice President of the group whose position I was trying to fill.

The candidate must have known that someone really wanted him because he said he would only take the job for $130,000.

I went back to the project to tell them his salary requirements and they said they were going to pass on him because they couldn’t afford him.

However, the next day the called me back and said the Vice President had intervened and felt like we had to hire this candidate and give him the salary he desired.

Seems like the candidate negotiated well right?  WRONG!

Keep in mind I had told him the most we could pay was $105,000 and within a day I came back and told him we were willing to give him $130,000.  If anyone tells you what the salary max is one day and then comes back to you the very next day saying you know what we can actually pay $25,000 more than what I swore we could pay, there is a good chance that you have more leverage in the negotiation than they do.

What did this candidate lose out on?

We only gave him 15 days of vacation had he asked he would have been granted 20 days just like that!

How much money did he lose out on because of that?

If his salary is $130,000 than 5 vacation days are worth $2,500.

What if he did not use those 5 additional vacation days and saved them every year?  In 5 years those 25 days of “banked leave” would be worth $12,500.  So if he decided to leave at that time he would have a nice little going away bonus!

And actually his payout would be higher than that because this person would have gotten a raise every year and his unused vacation time would be paid out based on his most recent salary not his starting salary.

What else did he lose out on?

He also didn’t even bother or thinking about negotiating for a better internal title.

To fully explain let me break down the different internal titles at this company and what they mean.

  1. Entry level/Junior
  2. Mid-level
  3. Senior
  4. Manager
  5. Director
  6. Vice President

This candidate was given the job title of “Senior.”  However, his role and duties were actually in line with the manager level.  In fact the person who had the job before him had a manager job title.

Why is this important?

While it may not seem important when you first think about it if you are at a lower job title than all your peers who are doing the same exact thing as you, you are not going to be happy.

If he came in as a manager here’s what else he would have gotten:

At this company at the manager level and above you get invited to monthly manager meetings/calls with the CEO and the executive team.  So you get more exposure and there are more networking opportunities available to you.

You were also eligible for a more lucrative severance package.

He would have also been 1 promotion away from being a director.   Here are some of the additional benefits he would have gotten once he was promoted to a director.

  1. Deferred compensation
  2. Stock options
  3. An even greater severance package
  4. A percentage of your salary in the form of a bonus.  I would say the average being around 20-25%, which would have been a $26,000 – $32,500 bonus.

The problem with promotions:

Another thing this candidate lost out on is the fact that many times it’s actually much harder to be promoted once you are an employee then when you are negotiating to come on board.

I’m not talking about your standard yearly promotions.  But in case of these internal job titles many times managers have a really hard time promoting someone due to internal politics.  And many times managers can only promote so many people in their group.

So it doesn’t mean that every year someone is going to get promoted to manager, and then director, and then vice president.  I would say that rarely happens.

You want to find out what the different internal titles and job codes are and their values up front and negotiate then because that’s when you are going to have all the power.

And we all know that once you are on board many things can change.  Perhaps you don’t get along with your boss, or bosses boss or a coworker.  Or maybe you are on a project that doesn’t turn out well because of no fault of your own.

It’s going to be really hard to get a high level promotion then and perhaps because of that you may never get one.

End result:

While this candidate may have held his ground and gained a higher salary he really lost out on some huge benefits in the long run.  He could have easily negotiated for 20 days of vacation time and to have come on with a manager title.

Keep in mind that perks and benefits vary from company to company and if you want to learn techniques to figure out how much of a higher salary or other perks you can get from a company I invite you to read my book Corporate Recruiter Tells All – Tips, Secrets, and Strategies to Landing Your Dream Job!

Or check out my seminars so that you can gain a strategic advantage over everyone else!