Smart Lemming Diary: 6 Tips on Salary Negotiations for Total Compensation Package
August 8, 2005
It’s Sunday afternoon, after my first week as Director of Marketing. During my drive home from the Revenge of the Sith at the Cinerama, my former colleague, Jonathan, called me, wanting to discuss the job I’m recruiting for. The position is role is for a senior marketing coordinator or entry-level marketing manager position. As founder, Tom is the decision maker and negotiator for all company hires, but I have told him I want Jonathan, so Tom appears eager to make it happen.
Six Tips on Total Compensation in Salary Negotiations
Jonathan called to discuss my confidence in the company and advice about salary negotiations. This position would be Jonathan’s third job since graduating college. He’s senior in most of the skill set that we’re recruiting for, but he wants to learn other marketing functions that I’m would be happy to teach him. Here’s what I told Jonathan:
- Increase salary base: he was lucky that his existing boss increased his salary based by 29% and gave him stock options during the year of our former mutual employer were acquired. This rarely happens for his job class. Because his boss appreciated him, he was able to get additional compensation. I was frank with him, telling him that the only way he will continue to move up the salary ladder is to change companies. The only way I started increasing my salary base was when I changed companies, improving it 23%. This time though, it had more to do with the level of responsibility of the director position. Jonathan must protect his total compensation that includes existing salary base, annual bonus, cost-of-living adjustment (since he would be changing cities), and add a percentage increase.
- Cost-of-living adjustment: he should calculate the cost-of-living figure, add it to his current salary, use this figure as his base, and then add 20%. The figure should be his best-case scenario salary in negotiations.
- Bonus percentage: he should calculate this annual bonus as a percentage of the cost-of-living adjusted salary base to ensure he protects his complete compensation package. This helps him protect his total compensation amount.
- Negotiation goal: he should calculate 20% of his current salary, adding it to the cost-of-living, and to the base. This should be his goal, which I think is achievable.
- Top of his game: he must see himself as an expert in his existing skill set and use it in negotiations. If the initial counter offer comes in lower like at the 25th percentile, he needs to assert him by letting Tom know he’s a little disappointment, stating they he expected something around the 75th percentile because of the roles and responsibilities we’re going to give him.
- Stock options: he should use the amount granted to him during his current employment and use it as a reference in negotiations.
Jonathan’s new at changing jobs and having to negotiate for total compensation. He sounds fairly confident in representing what we discussed. I could be perceived as a conflict of interest, but Jonathan’s a friend first. I view my advice as basic salary negotiation advice. I didn’t disclose the my marketing position’s salary range or what I thought Tom would negotiate. This would have been a conflict. I also wanted to set realistic expectations for Jonathan.
This Week’s Upcoming Highlights
Besides moving forward in trying to recruit Jonathan for my marketing position, I’m looking forward to this week since there are a number of exciting things going on:
- Tom will be flying my former sales coworker in for an interview to move quickly on securing her for our direct sales position.
- Tom will have Jonathan come for a meeting to try to get him to join us.
- The CEO and CFO of a potential acquirer are in the office on Wednesday.
- I have Tuesday deliverables with our first channel partner for Tuesday.
- I have the first draft of my 100-Day plan due on Friday, but need to review it with Amanda and VP of Engineering first.
- I have my second Management Team meeting on Friday morning.
The Smart Lemming Diary is a series that chronicles a journey of laid-off worker, who becomes a Vice President of Sales Operations & Marketing for a small entrepreneurial healthcare technology company.
