The battle for talent means organizations are more apt to collaborate with potential hires to negotiate a mutually acceptable compensation package.
Congratulations. You've just been offered a position as the vice president of marketing for a major Wall Street financial institution. The base salary, bonus incentive, healthcare, 401(k) match, and other perks are beyond top tier. There is, however, one small concern. Your previous organization, a start-up digital gaming company, was a casual, bring-your-dog-to-work, wear-what-you-want culture. Your new position, however, is in a tailored-power-suit type of place. At around $1,000 a pop, the required clothing upgrade can get quite costly. Should you try to negotiate a wardrobe allowance? Do such perks even exist?
The answers to those two questions are yes and yes. Alyssa Gelbard, the founder and president of career consulting and personal branding firm Point Road Group, knows this firsthand; one of her clients negotiated what she describes as a "sizable wardrobe allowance" as part of a recent job offer. To be sure, macroeconomic factors like low unemployment and high job vacancies, coupled with a skills gap and the momentum behind pay equality, mean organizations are more apt to collaborate with prospective talent to negotiate a mutually acceptable compensation package.
Don't get us wrong, it isn't as though organizations weren't willing to negotiate before. It's that job candidates were reluctant to-research shows that around 50% of job seekers don't negotiate after an initial offer is extended. Moreover, the ones who do negotiate often start and end with base salary. "Salary is the most common because candidates assume other benefits are fixed or that the company already told them about everything they offer," says Paula Harvey, vice president of human resources at Schulte Building Systems Inc. and a member of the Society of Human Resource Managers.
Before beginning negotiations, first make sure there is a firm, formal job offer on the table. No one likes a premature negotiator. Once obtained, experts suggest tapping into your network of internal or knowledgeable sources to get a sense of the organization's propensity for negotiating and what precise areas it has flexibility. For instance, it is unlikely that an organization can alter healthcare coverage or 401(k) matching contributions for individuals since those programs are generally run through third parties and therefore out of the recruiter's or hiring manager's control. Gelbard suggests candidates make a list of benefits deal breakers, nice to haves, and love to haves. "If you find out, for instance, that the company has little wiggle room on base pay and what they offered was lower than you had hoped, then you have to decide if that is a deal breaker for you or if it can be made up for with other forms of compensation," says Gelbard.
Maybe the role is a sales position involving heavy travel, and you don't own a car. The organization may be willing to foot the payments on a lease as a way to supplement your base salary. That can be negotiated. Or maybe your new role requires lots of late nights entertaining clients. You can negotiate higher travel expenses and per diem limits as a form of additional compensation. Other perks that can also be negotiated but seldom are include working hours, remote work, vacation time, tuition or professional development reimbursement, gym memberships and other wellness programs, additional insurance, and commuting costs, among others.
In addition to base salary, there are other financial benefits that can be negotiated. Signing bonuses, higher commission rates, stock options grants, and target bonuses are all common negotiating levers to supplement base compensation, as are early reviews for raises and the elimination or reduction of time for non-compete agreements. Depending on the organization and position level, equity and profit sharing agreements can also be put on the table as options.
The important thing to remember is that a negotiation is just that, a back-and-forth between individuals. Like any other interpersonal communication, the best results are achieved through collaboration. Keep it congenial, not adversarial. And know when to cut your losses.
"You need to know what your worth is, but you also need to know what the job pays and what the market rate is for the industry, company size, and geography so you don't ask for too much," Harvey says. "Pay attention to body language and code words during negotiations. If you hear phrases like ‘That's the best we can do' or ‘We can't do anything more,' that's a signal to end the negotiations."