What To Watch Out For In A Salary Negotiation

Capt Byron Chen — Fri, 11 Dec 2015 01:49:19 -0500

5 Ways Employers Beat You In A Salary Negotiation - Lessons Learned From My Career Transition

The excitement of getting a new job offer sometimes blinds veterans to the most important part of the process -- getting paid adequately for your services. And this is not something they tell you in transition classes.

Here are 5 things to watch out for during your interview and after you get an offer.

For many people up until this point, the interview is a two-way street. Job seekers are evaluating whether or not the company is as much a good fit for them as the company is evaluating this potential employee. But once an offer is made, most employees get left in the dust. This isn't necessarily because corporations are evil and out to get you. They are just much better prepared. After all, corporate recruiters have much more experience than the process than most of the people they are hiring. On top of that, the company's processes are set up to put you in a disadvantaged position. But if you are aware of it, you can prepare yourself to be much more successful when the time comes to to evaluate and counter the offer. Here are things to watch out for and what you can do about it.

1.What did you previously make?

While you are not legally obligated to divulge this information, companies may make this question a part of the application process. Be wary about it. This information can be used to anchor the offer they give you, as in, the company might try to give you something close to what you previously made. Comparing your new salary to your old one is not how you should analyze an offer. This is especially true coming from the military since the jobs are likely to vary greatly in responsibility and compensation. Instead, you should be considering if the offer is reasonable compared to the rest of the industry for that position. If you do get asked this, you can try to defer. Say that you would rather not divulge that information as it doesn't have any bearing on whether or not you will take this job. Or answer that this is something that you would prefer to talk about later on in the process, when you have decided that this is a position that you want to accept. And if you must answer, be sure to qualify your response. If you can, provide your total compensation including the average of annual bonuses, health benefits, and retirement contributions.

2. What do you expect to make in this position?

This question is similar to the one above. By getting you to answer this early on in the process, the company can anchor you to a lower starting offer or disqualify you before you can make it further in the process. You can defer in the same ways as above. Or, make sure that you have done your research for what is a reasonable range for the market, including any extra relevant skills and experiences you will bring to the job. If you must answer this directly, I recommend giving a range. Make sure that the higher end of the market is in the lower end of the range that you provide. You should qualify this by saying that you are flexible, but given the research that you have done, you believe your range is competitive with what you would accept elsewhere.

3. Getting a lowball offer.

My friend recently went through this with a company he had a great interview process with. Everything was going great and he was surprised when the offer was lower than he expected considering what he found to be the range in the industry. When he countered, the company quickly caved and boosted the compensation package by $10,000 (over 10%)! He was really glad he didn't accept the original offer, but I wouldn't have been surprised if he did. Many employers plan for a negotiation, which is why they may start low. But if you accept, they are not going to say, "Oh, our mistake, take this better offer." This is why it is important to do your research and be confident in knowing what you're worth in the market. Don't accept less.

4. Using a middleman.

Oftentimes, your salary negotiation will be conducted through someone from Human Resources, not the manager with whom you interviewed. In negotiations, this provides a buffer for the company. This third party can hem and haw or drag along the process to pressure you into accepting a lower offer. Understand the incentives of the middleman. His or her job may be to get the best deal for the company, not for you. You have to get this person to either be your champion or be sure to include other interested parties in the negotiation. For example, if your future boss really wants to hire you, make sure to be open about where you are in the negotiation process with HR. The more people one your side, the more likely that a committee decision will be made to get you an offer that will make you happy.

5. Not telling you about the stipulations in a contract.

Even after you've negotiated verbally, be sure to read over the contract for the "fine print". There may be stipulations that you did not discuss. One time, I was offered a bonus that I would have happily accepted at face value. But when I looked at the contract, the bonus was tied to a 3 year vesting period with the company. That means, if I left before 3 years, no bonus. This was much longer than the industry standard, and it made the offer far less attractive. Your evaluation of the offer isn't done until you've signed the contract. Be sure you are aware of and understanding everything that is put in writing. That's what counts!

It may seem like companies are being tricky when they do the things I've listed above. But at the end of the day, they are just practicing hard nosed business. You can do the same by being well informed and prepared. Be respectful, know your value, and communicate that professionally. You will only be more respected for doing so. And you'll get paid better, too.

Originally posted at: http://www.successvets.com/2015/10/24/5-ways-employers-beat-you-in-a-salary-negotiation/

5 Ways Employers Beat You In A Salary Negotiation

Response by SGT Forrest Stewart made Dec 11 at 2015 7:25 AM

SGT Forrest Stewart — Fri, 11 Dec 2015 07:25:22 -0500

Great advice!

Response by SGT Larry Prentice made Dec 11 at 2015 9:29 AM

SGT Larry Prentice — Fri, 11 Dec 2015 09:29:11 -0500

Thank you for sharing this article!!! I will be doing this very thing very soon as I look for a new position. This is all good information.

Response by CPT Private RallyPoint Member made Dec 11 at 2015 9:31 AM

CPT Private RallyPoint Member — Fri, 11 Dec 2015 09:31:46 -0500

Don't forget to negotiate your market value. You may be able to negotiate a bonus for committing to a company "taking yourself off the market". Have an attorney look over the contract before you sign it.

Response by MCPO Roger Collins made Dec 11 at 2015 10:43 AM

MCPO Roger Collins — Fri, 11 Dec 2015 10:43:00 -0500

Sounds great, but my 20 years of so in private industry doesn't validate all this information. Current good jobs are in short supply, econ 101 says "supply and demand". Further, I have worked for civil service (briefly, and three high tech companies rising to middle management. In all, I never had the opportunity to negotiate my salary. Human Resources in most major companies have salary scales that reflect the pay structure for the job. There is some latitude within the band on experience and education. Consideration has to be made for existing employees, or you can lose good people by paying someone more than an individual currently doing a good job for the company. As the decision maker, the interview was the primary factor in hiring, the only time I was involved with the salary offer was if I saw something that would effect employee morale. If you are as good as you think, you will pass up those not so talented quickly, that is the key factor in your salary increases and promotions. Welcome to the real world.

Response by SGT William Howell made Dec 11 at 2015 11:28 AM

SGT William Howell — Fri, 11 Dec 2015 11:28:58 -0500

Be careful with performance based bonuses. My current contract has killed me. My bonus package looked great on paper and has the potential to raise my yearly income by 20%. The only problem is most of my bonuses are based off the entire office and not just what I do. Most people are happy with what they have and there is no way that I can bring the productivity to the level that we can bonus.

Performance based bonuses are becoming more common in the workforce. If they offer you one make sure that your they are actually attainable and that it is based off your performance not what others can do.

Response by PO3 Private RallyPoint Member made Dec 11 at 2015 12:25 PM

PO3 Private RallyPoint Member — Fri, 11 Dec 2015 12:25:47 -0500

I researched the average salary of such position locally and set my target on that. As long as above average, that is a good start. Then, raise and promotion will be the next heavy topic. I told them right out, no growth? I am gone. Don't expect me to stick around more then 3 years, if nothing happen. There isn't a so call job royalty, maybe after 5 years working at the same company, I might consider about some "job royalty", because life is settled down completely and if money is not an issue too.

Response by Sgt Kelli Mays made Dec 11 at 2015 12:27 PM

Sgt Kelli Mays — Fri, 11 Dec 2015 12:27:42 -0500

Do you research for your market and don't be greedy.

Response by CPT Private RallyPoint Member made Dec 12 at 2015 7:42 PM

CPT Private RallyPoint Member — Sat, 12 Dec 2015 19:42:48 -0500

My future holds some work in HR for me. I appreciated the article here. Where is the best place to research current salaries? I tried a site the other night, but it seemed pretty off...claiming that MBAs in HR get paid less than BBAs.

Response by CAPT Tom Bersson made Dec 13 at 2015 5:43 PM

CAPT Tom Bersson — Sun, 13 Dec 2015 17:43:25 -0500

Watch out for golden handcuffs. Where they provide an incentive if you stay for a certain number of years. Opt for cash or a higher salary.

Response by MAJ Michael Scharff made Dec 15 at 2015 6:49 AM

MAJ Michael Scharff — Tue, 15 Dec 2015 06:49:29 -0500

I am now a college professor and have made a number of videos for graduates (which may also be helpful for those leaving the military to civilian jobs) on the interview process and how to answer "tough" interview questions. Two of these videos deal with salary type questions. I go over the question and some good responses:

https://www.youtube.com/watch?v=C6CkV1qeHew
https://www.youtube.com/watch?v=hwDI1hnnfY4

What are your salary expectations part 1: It's all about the money, money, money

In this video I discuss when you should bring up money in the interview process

Response by CPT W Brown made Dec 15 at 2015 8:18 AM

CPT W Brown — Tue, 15 Dec 2015 08:18:55 -0500

As an outlier, I can tell you that I take a different approach to compensation. I'm in my late 60s and am now working for my 7th company since I left the military 40+ years ago.

I earn a comfortable living. I've been usually been paid fairly and at my value in the market. I truly have no complaints. How have I gotten to this point? Because I do not negotiate compensation. Instead I focus on how much potential I have to have significant impact and on the upward chain of command in terms of if they share my values. If both are positive, I let compensation events take care of themselves.

Response by CW3 Susan Burkholder made Dec 15 at 2015 8:23 AM

CW3 Susan Burkholder — Tue, 15 Dec 2015 08:23:17 -0500

I disagree with this article and here's why.

In today's current laws this is absolutely not true. As an employer you can not simply offer health benefits to some employees and negotiate with others.

Under Affordable Care Act an employer pays a tax penalty for not offering or covering an employee under their health care plan. Employers are not going to pay you higher negotiated salary and then pay a tax penalty on top of that. It just not likely to happen.

Even in terms of years past if you had indeed negotiated higher salary in lieu of health benefits most likely your employer was not complying with labor laws. As with other areas of employment such as hiring, promotion, and termination, distinctions in health benefits coverage cannot be made on the basis of an employee or dependent's gender, race, age, national origin, religion, or disability. As examples, an employer providing employees with health insurance may not, among other things: Provide lesser coverage or cease offering coverage to older workers (and others) It's just too risky for the employer - think lawsuits.

Once an employer decides to offer health-related benefits, its plan must be run in accordance with certain standards designed to protect the interests of employees and other plan beneficiaries (such as family members) under a federal law known as the Employee Retirement Income Security Act (ERISA). Under ERISA, employers are required to take certain steps in connection with employee health benefit plan.

Then, there is the fact that larger employers get no reduction in their premium if they don't cover you. So, it rarely if ever makes any business sense for them to negotiate health benefits.

Response by Maj Private RallyPoint Member made Dec 15 at 2015 12:56 PM

Maj Private RallyPoint Member — Tue, 15 Dec 2015 12:56:41 -0500

I retired from the Air Force after 24 years and then spent 24 years in the corporate world retiring completely two years ago as a corporate executive. A lot of the information written here is good advice but let me point out a couple of things about corporations, both large and small.

Bait and Switch: I never was involved doing it because it is unethical but numerous corporations will advertise a job at a certain level never intending to fill it at the position and salary advertised. Walk away from these companies unless you are desperate and/or really want that position.

Bonus plans: A lot of bonus plans might show you could earn 100% of your salary as a bonus in a good year. Do not pay any attention to that. That sounds good but would be rare to earn that kind of a bonus.

Salary range: as a corporate executive I will tell you never ever tell a company this is my range. What do you think they are going to offer you? The high end of your range? Of course not. Figure out what you are worth and some idea of what the position pays and then state that amount as your requirement.

Military retirement: If an HR person or hiring manager even mentions your military retirement WALK AWAY! They wouldn't mention that if you were retired from another company. I had an HR manager tell me, "We know what you will make as a retired major and we are prepared to offer you this amount." Needless to say I was finished as soon as he said that and what made it worse the HR manager saying that was retired military himself.

Take an offer below what you are currently making? Would you ever do that? It depends. I accepted an offer 20% below what I was currently making in order to move back home. I knew I was taking a risk but in the end, with stock options and bonuses that position set me up for retirement plus it didn't take long to make up that 20% and more in raises and promotions. Now many will say you should never take that risk and normally I would tend to agree; however, it depends on how bad you want the job.

Response by SMSgt Steven Cooper made Dec 15 at 2015 1:59 PM

SMSgt Steven Cooper — Tue, 15 Dec 2015 13:59:26 -0500

I found this article 100% accurate. I am currently in this situation and was able to overcome those obstacles Capt. Chen hit on.

Response by PO3 Private RallyPoint Member made Dec 15 at 2015 8:12 PM

PO3 Private RallyPoint Member — Tue, 15 Dec 2015 20:12:10 -0500

One time I was so excited about the pay I was offered after negotiating an extra 4 dollars an hour, took the job and learned later I had no PTO for sick days, or vacation, very disappointed. I just signed the contract with no further questions!

Response by LCDR Steve Didio made Dec 16 at 2015 10:39 AM

LCDR Steve Didio — Wed, 16 Dec 2015 10:39:18 -0500

Here is one important thing that have I learned in negotiating with companies over compensation after transitioning from the military:
1. Employers sometimes research approximately how much a career military person receives in retirement pay. It's not a difficult calculation to make. And they will sometimes develop their offer to you by factoring in that calculated amount. This is a form of "low-balling", just a different one that military folks need to be aware of. This is an example of a company attempting to get you at below market value. This happened to me, and you have to be prepared in advance to deal with this tactic successfully. First, you need to know what the market pays (ranges) for the type of work you're seeking, and the level at which you would enter the company. There are many tools online to help you with this. You then need to stick to your guns about what you're worth to the company after determining a fair and reasonable number in your head. What you need to know is that if your compensation starts at the low end with any company, you may never fully recover and be compensated at the appropriate level. My response to an employer seeking to "offset" my compensation package by including my retired pay is as follows:
"My military pension is compensation is for services previously rendered to my country. My expectations going forward are that I will be fairly compensated by your company for the value I will be bringing to it."
If a company balks at this response, they likely don't value your service enough to deserve you.

Response by SCPO Charles Thomas "Tom" Canterbury made Dec 26 at 2015 1:39 PM

SCPO Charles Thomas "Tom" Canterbury — Sat, 26 Dec 2015 13:39:26 -0500

Thanks for the information provided. I'm about to go into a salary negotiation and this really helped. I appreciate this information and it will prove very beneficial.