Best Strategies for Negotiating Compensation Packages

Best Strategies for Negotiating Compensation Packages

Applying for a job is a difficult process, but for many job seekers, the challenge does not end after receiving a job. Before you can start your new job, you must negotiate your compensation package with your new employer.

How much freedom you have with negotiating your compensation package depends on the type of job you are applying for, as well as the company. Typically, the higher the job ranks in the company, the more freedom you have to negotiate your compensation packages. Lower ranked positions have minimal benefits available, so there is not as much to discuss. Pushing for too many benefits in one of these positions hurts your chances of getting the job, since there are other applicants with less demands to hire.

A common misconception when negotiating compensation packages is focusing too much on your starting salary. If you only focus on money, you may lose other important benefits, such as health coverage, personal days, pension plans and paid holidays. If you do not present a strong negotiation, you may end up losing important benefits. Your negotiating tactics may change depending on the job, but there are a few general pieces of negotiating advice you can follow to build a strong negotiating plan.

Plan Reasonable and Supported Compensation Packages

In a traditional negotiation, a common tactic is to make your first offer something much larger than what you actually want. When using this tactic, the other party denies your initial request, but is more willing to accept your next request because it seems more reasonable in comparison. This tactic does not work well in a professional setting. If you set unreasonable demands, it makes it seem like you are more concerned with how the company benefits you, not how you benefit the company. In addition, it tells your hiring manager you expect top quality treatment from the start, even if you have not earned such benefits from the company.

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For the best results, you need to take the time to plan your compensation package in advance. Compare your proposed compensation plan to those offered to employees in similar positions to get a better idea of what is or is not unreasonable. In addition to looking at the actual positions, compare your past job experience with the job listing for the new company. If you have additional skills benefiting the position you are applying for, you can risk asking for additional benefits. Even if you are overqualified for the position, do not push for too many extra benefits. It is not uncommon for hiring managers to tell a candidate he or she is overqualified for a job, and while he or she is a good fit for the job, the company cannot reasonably afford his or her rates.

While research is important, you need to be careful with how you present your research during negotiations. If the hiring manager says you are asking for too much, it is okay to point out other positions paying the amount you are asking. You do not want to phrase it in a way where it sounds like you received offers from other companies, as this creates an ultimatum for your hiring manager. Typically, these situations end poorly. Even if you get the job, it makes your first few months uncomfortable.

Negotiate with your Boss

Ideally, the person you negotiate with is the person you are working for directly. Some businesses have you negotiate your benefits with human resources (HR) instead of your supervisor. Negotiating with HR is more difficult than negotiating with your future boss. When you negotiate with your boss, it is easier to stress your value as an employee, putting you in a more favorable position.

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Your boss knows your value and is more likely to meet your demands because he or she wants you working for the company. With HR, it is easier for the representative to be neutral, which is one of the reasons some companies may send you to HR in the first place. If this happens, ask if it is an option to negotiate directly with the hiring manager instead. Your request may be denied but asking does not harm your chances of getting the job.

Set an Absolute Minimum

When you go into a compensation package negotiation, you need to set a reasonable minimum package for yourself. If you do not set a reasonable minimum package, you risk your negotiator talking you into a deal which seems good at the time, but ultimately ends up not meeting your basic requirements once you start working.

Unless you have no other option, it is a good idea to keep your absolute minimum goals to yourself. If a potential employer knows your bare minimum, he or she may turn down any offers above your minimum, since he or she knows your base threshold for what is acceptable. If multiple companies fail to meet your bare minimum for compensation packages, reconsider whether your requests are reasonable, or if you are reaching too far.

It is Not Just About You

In most other negotiations, you only need to consider your own needs. Job compensation negotiations are different. In order to be successful, you need a deal fair for yourself as well as your employer. Do not think of the company as an enemy in your negotiations. You and your employer need to get along well. When you join a business, it is effectively the same as joining a team, and if it seems like you focus too much on yourself, you are less likely to get the benefits you want. You may even risk losing the job all together.

Common Negotiation Points

If you want to successfully plan your compensation package negotiation, it helps to know what may come up during the negotiation. Prioritize your negotiation based around the areas most important to you. Consider the following subjects when planning your job compensation negotiation:

  • Your job title.
  • Severance packages.
  • Extra vacation days, including whether you receive paid vacation or can bank your unused vacation days.
  • Outfit requirements.
  • Reimbursement for costs like child care or commuting.
  • Housing subsidy, if applicable.
  • Office space.
  • Additional training, whether on the job or from continuing your education at school or from a professional development course.
  • Flexible schedule or telecommuting options.
  • Guaranteed future benefits, such as a raise after your first year.

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By Admin