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How to negotiate your compensation package with Ramit Sethi

16 strategies taken from this negotiation roleplay:

You’ve been offered a job with a 50,000€ starting salary. You feel you deserve 65,000€. How would you negotiate it?

“First of all I want to be here. This is the job that I want…”

  • STEP 1: Reassure the recruiter you’re excited about the position and opportunity of working with the company; the recruiter needs to believe they can hire you and that you’re not stalling while another recruiter prepares a better offer. It’s safe to assume the recruiter has a short-list of other qualified candidates, and as a top talent, the recruiter will assume you have other employment opportunities as well. If the recruiter is going to put in the additional work of negotiating your salary and then selling you internally, they need to feel certain they can get you.

    For more on salary and compensation negotiation, watch 20 tips to better negotiate your job offer & compensation package by Deepak Malhotra of Harvard Business School.

“…That being said, I think the experience I bring and the value I’ve demonstrated in prior roles warrants a much higher salary than 50,000€…”

  • STEP 2. Reaffirm your status as a high-potential, high-performing candidate. The foundation for a conversation for greater compensation hangs on several pillars: Pillar one is your demonstrated value, which is your story of your previous experience and accomplishments as communicated by you via your LinkedIn and/or other online profiles, your CV (resume) and your cover letter, and likely validated through recommendations and follow-up interviews with your former colleagues and superiors. It is intelligent for you to assume the recruiter will do some background research on your claims.

    The fact that you were even called in for a job interview suggests the recruiter has deemed you at least ‘good enough’ to be considered for the job, but to beat out the other candidates, and especially to demand a compensation package greater than they may be willing to pay requires you demonstrate more.

    At the same time, you don’t want to be so demanding and make so many promises that you end up setting yourself up for failure and the recruiter regrets having hired you.

    To make your Linkedin profile more attractive to recruiters, learn how applicant tracking systems qualify potential candidates and the 5 basic requirements of an attractive Linkedin profile.

“…In terms of my own research into this particular role with your particular company and others, what I’ve seen is a range between 45,000€-65,000€, and I think that given my experience and success I’ve had in my prior roles… 

  • STEP 3. Do your research & know the industry’s limits. A second pillar in any negotiation is your research: objective criteria and soures uncovered pertaining to the industry. There is always a salary range for a postion, and as a high-performing, high-potential, top talent, it is your responsibility to know that range and demonstrate why you deserve to be at the higher end of that range. It is not the recruiter’s responsibility to tell you the range exists and to offer to pay you at the higher end of that range. As Chester L. Karrass argued, “In business as in life, you don’t get what you deserve, you get what you negotiate.”

    What’s important here is that you do your research. You don’t want to accept a 50,000€ offer only to find out afterwards that your fellow colleagues are earning 80,000€!

…which I believe I’ll bring to this role as well…

  • STEP 4. Associate yourself with a positive future. It’s one thing to have been successful in the past. It’s quite another to be able to take your past successes and lessons learned and bring them forward to benefit your future employers and clients. If you deserve to be paid more than the recruiter is initially willing to offer you, then you had better be worth it, and you’ll need to prove it.

…that I deserve to be at the higher end of that range. So my goal is to actually be at 65,000€.”

  • STEP 5: Unequivocally assert your negotiation position. based on your 2 pillars of job market research and your previous experience – your value. Stating your expected compensation package at the beginning of the ocmpensation negotiation in the way the candidate did can benefit you in several ways:
  1. Anchoring is the tendency to “depend too heavily on an initial piece of information offered when making decisions.” In a negotiation, this can be the first compensation offer made. By stating your salary requirements so early on, you’re controlling where the negotiations begin and what happens next. It is now the recruiter’s position to accept your anchor and negotiate from your established starting point, or not. There is, though, always the risk that the recruiter is so ‘shocked’ by your initial offer that they disqualify you immediately. This is why your research and explanation as to how you arrived at your compensation package is so important.
  2. Assertiveness is “the quality of being self-assured and confident without being aggressive.” To be a high-performing, high-potential, you need to be confident and sure your skills and value. If you are not, the recruiter will be confused and may disqualify you for the position.
  3. Share your objective sources (Pillar 1). If the recruiter is using different job market research than you to come to their definition of a ‘fair’ compensation conclusion, your conversation would turn into comparing sources and determining which source(s) are more accurate. In doing so you may discover that:
    1. You are wrong and the recruiter’s sources are more accurate
    2. The recruiter is wrong and your sources are more accurate
  4. Reveal assumptions (Pillar 2). If the recruiter does not believe you are as valuable as you believe you are, your conversation would turn into comparing your perceived value versus the recruiter’s perceived value. It could be that:
    1. The recruiter is underestimating your actual value and you’ll need to do a better job of demonstrating your value
    2. Your’re overestimated your actual value and you may not be as valuable as you believe you are

By being unequivocal in your request, if the recruiter continues the interview, this means they are still considering you as a candidate. In his book Never Split the Difference, Chris Voss explains that when “Any response that’s not an outright rejection of your offer means you have the edge.” That by default they are at least willing to entertain the possibility of giving you what you want.

Recruiter: “Sorry. We don’t have the money to pay you what you’re asking.”

 “And I totally understand your position…

  • STEP 6. Accept their reality. No matter what their response is, assume it is a legitimate reason and incorporate it into your response. Why?
  1. Disagreeing with their limitations or challenging their logic will not help you build rapport.
  2. Disagreeing with their limitations may be interpreted as calling them an idiot or a liar.
  3. Treating their response as a challenge to overcome allows you to demonstrate your ability to find creative problem-solving solutions
  4. Overcoming their limitations brings you closer to reaching your goal. If that was their only limitation, your solution to that limitation means then have no more reason to say “No.”
  5. People will only change their behavior and consider other alternatives when they can do so without losing face and without looking stupid.

“…at the end of the day I’d look at it as an investment rather than an expense...” 

  • STEP 7. Reframe/redefine their reality. In his book 27 Powers of Persuasion,  Chris St. Hilaire explains that disagreements are usually a matter of perspective. It could be that without making any concessions at all you could get what you want, simply by changing how they look at the situation.

“…Would you rather invest 45,000€ in a candidate who will increase your revenue by 100-200%, or for only 15,000€ more a candidate who will increase your revenue by +300-400%?…”

  • STEP 8. Explain your own logic in a way that benefits them and that they can agree with. Explaining how you arrived at your proposed solution to their problem accomplishes several goals, you are:
  1. Further demonstrating your intelligence and value
  2. Giving them the information they need to agree with you and accept your proposed solution
  3. Giving them the ammunition they need to justify and sell your compensation package internally. For more on this, refer to Deepak Malhotra’s lecture 20 tips to better negotiate your job offer & compensation package at Harvard Business School

“…and I think that given my experience and success I’ve had in my prior roles which I believe I’ll bring to this role as well, compared to other candidates I’m going to more than make up that 15,000€ difference.”

  • STEP 9. Return to your 2 pillars of experience and research. Referring back to Deepak Malhotra’s lecture, whenever a person says ‘No,’ what they are really saying is ‘No, based on how I see things at this moment in time.’ If you truly are a top candidate, the recruiter understands you will come with a higher price tag than other candidates, they just need your reassurance that paying more to hire you will bring a greater ROI, and thus a smart investment; they need more information and ammunition to make their final decision.

Recruiter: “We can offer you 57,000€ instead of 50,000€. Deal?”

“You know, something we haven’t discussed is other modes of compensation…”

  • STEP 10. Expand the pie by being flexible in how you are compensated. Your total compensation package is made up of more than just money. Often times the other party has many other assets they can offer you that means nothing to them, but provides great value to you. Once you have reached the maximum they can/will pay you in money, turn the discussion on to non-monetary benefits. Show that you are flexible by offering to be paid in ways other than money.

    By ideal salary, you must also consider tax brackets associated with your salary. In France, for example, negotiating a salary of from tranche 3 to tranche 4 increases your taxable income by 11%, from 30% to 41% respectively. It may be more lucrative for you to be taxed under tranche 3 and make up the compensation difference in non-monetary, non-taxable assets.
2019 French tax brackets (www.french-property.com)

To further complicate this issue, U.S. expatriate working in France with salaries of over $105,000 (96,000€) would be double-taxed – required to pay taxes on their gross revenue both in France and again in the U.S.

“…would it be appropriate to talk about some of those?…”

  • STEP 11. Control the conversation with questions. Stating “I want to talk about other modes of compensation” is a very direct and aggressive way of controlling the conversation, leaving the other party with the choice of either agreeing and appearing weak, or refusing to appear strong. Either way, you lose.

    Instead, by stating your request as a question, you give the other party the feeling they are in control and saying “Yes, let’s discuss it.”

“…such as stock options, bonus, remote work…”

  • STEP 12. Be transparent with your priorities. Notice the candidate did not say yes and accept the offer. Having agreed to ‘split the difference’ and lower his stated compensation requirement for the job position for no apparent reason could be interpreted as a bad move. Why give away something without gaining something of value in return?

    If there are several points in the compensation package you’d like to negotiate, don’t address them separately and individually, be transparent and let the recruiter know which points are most important to you. Doing this will save time and work, and may lead to an even better compensation package than you were expecting.

    Approaching the negotiation point-by-point may allow you to scrape together a better deal when you add all the pieces together, and under certain circumstances this may be an advantageous negotiation strategy, but in consequence the recruiter might become annoyed or feel manipulated because you now represent more work than they had originally anticipated.

    Lastly, by listing all the compensation points you consider most important, you’re signaling the recruiter that “If you just give me these, I will accept the job offer.”

    For more on negotiation strategy, watch the lecture Common Mistakes, Underhanded Techniques & How to Improve by Stan Christensen at Stanford University.
Cadrenglish Powerpoint Slide - Negotiable components of a compensation package

“…because while 57,000€ is better than 50,000€, it’s still not…

  • STEP 13. Use gratitude to reinforce movement towards your objectives.  Notice the candidate has not expressly thanked the recruiter for the 7,000€ annual increase, but has instead incorporated the updated offer into his negotiation position.

“…given my research what I think that I deserve in this role…”

  • Notice the candidate returns to steps 5 (Unequivocally assert your negotiation position) and 9 (Fall back on your 2 pillars of experience and research.) each time the recruiter shows resistance.

“…And so if there is more flexibility, understanding that you may be constrained from a budgetary perspective right now.”

  • Notice the candidate returns to steps 10 (Expand the pie by being flexible in how you are compensated.)
  • STEP 14. Incorporate their reality into your position. By crafting a deal that incorporates and overcome’s the recruiter’s limitation(s), you essentially remove their reason(s) for not giving you what you want.

Recruiter: “Ok. We can also offer 20,000 extra stock options IF you are actually a top candidate. And we cannot promise where the stock will go. Deal?”

  • Notice the recruiter includes a conditional IF statement to assert their power in the negotiation and to signal to the candidate that he will still need to prove himself during the trial period.

“I think that goes a long way to closing the gap. I really appreciate your flexibility and I am committed to this role and stock options are a great way to demonstrate our commitment to each other…”

  • Notice the candidate returns to steps 13 (Use gratitude to reinforce movement towards your objectives) and 1 (Reassure the recruiter) by reassuring the recruiter the candidate seriously wants the role and thanking him for being flexible.
  • Notice the candidate has once again incorporated the updated offer into his negotiation position while not yet agreeing to the deal.

“The last thing I’d like to talk about is the performance evaluation and review cycle. Can I have a 6-month review to re-peg my salary and candidacy for promotion, knowing you currently have budget constraints?”

  • STEP 15. Keep the door open for future negotiations. IF you are the top candidate you claim to be, and IF you perform at or above the expectations you claimed you would, then it would be only natural for your employer being open to rewarding you with a greater compensation package. One performance evaluation per year means one chance to renegotiate your compensation package, two performance evaluations, however, double the amount of raises you can receive.

    Notice the candidate also returns to step 14 (Incorporate their reality into your position), which makes it that much harder to refuse the candidate’s logic.

“We normally don’t do that, but in this case we you’ve been flexible so we’ll make an exception. This is the best I can do. Deal?”


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