Best Salary Negotiation Tips for Executives
Underpinning the Executive Salary Negotiation Process is the need to be fully prepared and undertake a fair amount of employment market research. The salary negotiation process often fails because of a lack of preparation, planning and insight, especially so, if having worked so hard to achieve an executive interview in the first place! ExecutiveCV.net has identified tweleve main things to consider (also see our related article successful salary negotiation strategies for further advice).
The Executive Salary Negotiation Process
1) Effective research on the company, employment market analysis and salary benchmarking tools all to help define relative market value or salary for executives. Research the company to define pay structures, benefits and other aspects that have both a tangible and intangible value. Review employment vacancy boards to identify what companies are willing to pay in the same and similar sectors, before comparing salaries and benefits using an international salary checking tool such as Payscale.com. Just as executives would do when making important decisions, use market intelligence to define an employment market value. Internet research and annual reports are particularly useful resources regarding executive remuneration.
2) Identify unique and value added elements to bring to the role – having a unique selling point, special blend of experience or specialist knowledge will incur an employment market premium. Be prepared to discuss this at interview and back this up with credible examples. Value added expertise can give an advantage in the executive salary negotiation process.
3) Evaluate executive salary needs by costing and determining minimal salary requirements according to executive responsibilities, distance to work, commuting time constraints and other opportunity costs of taking the role. There must be an economic, lifestyle and work life incentive to take (or not to take) an executive position, below which the role becomes less viable. By identifying minimal expectations, it means that there is a price (salary) below which executives will not accept and is uneconomical – it makes common sense to define this level as it helps wider executive salary negotiation processes.
4) Executives must be prepared to negotiate terms. Having established a market value and minimal acceptable level, it becomes easier to maximise salary negotiation opportunities. This includes executives negotiating (positioning for) higher or more realistic salaries. Let employers negotiate the level downwards rather than executives going in at a lower level and then having to make the employer move upwards on salary negotiation figures.
5) Be confident in during the executive salary negotiation process – having a convincing business case, knowing market value and offering something different makes the whole process much easier. Executives will be more in control and more often than not, will achieve a higher executive salary.
6) It is important to consider the whole executive package, rather than just salary. Companies offer a whole range of benefits packages, share options and bonus incentives that could greatly increase overall salary. This may help determine whether executives choose between two alternatives by considering other tangible benefits. Equally, it is important to research company culture, prospects and future developments which may offer exceptional and exciting opportunities in the future – these are less tangible benefits, but need to be considered as part of the overall executive package (i.e. consider long-term opportunities) and integral to the executive negotiation process.
7) Try to find out reasons why the vacancy has arisen and use this to an advantage. For instance, the company could be expanding into new/emerging markets, so there is an opportunity to showcase value added international, commercial and cultural credentials at interview. It makes it much easier to proactively negotiate executive salaries if candidates make skills and expertise relevant to company activities.
8. First interviews are more general and it is a judgement call as to whether executives should openly mention salary expectations. It is best to only bring up executive salary expectations if asked a first interview. Second interviews tend to discuss more specific contractual terms and arrangements, so it is an excellent opportunity to discuss executive salary expectations ready for entering the salary negotiation process (i.e. salary discussions are certainly expected at second interview).
9) Receiving a formal offer of employment dramatically strengthens executive salary prospects because it endorses the candidate and shows formal/genuine interest. This may assist executives in negotiating a slightly higher salary, though handle negotiations sensitively in case increased executive salary expectations are declined. Allow the employer to refuse.
10) Executives can negotiate on things other than salary – for instance, executives may wish to negotiate share options, bonus incentives or continued professional development such as MBA or Leadership Development Programmes (i.e. think long-term progression).
11) If executive salary expectations are too low, ask for more time, find out whether there is room for negotiation or politely refuse the offer, if final. This may force the company into making a decision and therefore seek to negotiate a counter offer that maybe more suitable. This executive salary negotiation strategy is more applicable should there be other offers from other employers otherwise the risks of missing out altogether dramatically increase.
12) If negotiating a lower executive salary to secure a position, it will be much harder to increase overall salary over successive years (i.e. candidates would be starting from a lower salary base or benchmark, thus potentially playing salary catch up for years to come). Do not set salary expectations too low initially!
Executive Salary Negotiation Process – Conclusion
In conclusion, the overall Executive Salary Negotiation Process in underpinned by effective preparation, planning and awareness. Spending sufficient time on short-term research can pay dividends in the long-term by increasing executive salary negotiation effectiveness and remaining in more control over setting salary expectations, improving negotiation bargaining power and achieving the primary goal – a higher executive salary!