Do’s and Don’ts When Negotiating a Compensation Package

Do’s and Don'ts When Negotiating a Compensation PackageOnce you receive an in-house job offer, you have a lot more leverage with your potential new employer than you did at any time previously. Many lawyers wonder whether they should take advantage of this shift in bargaining power to negotiate their compensation package. If you’re planning to accept the offer and are very enthusiastic about the opportunity, then you may be concerned about rocking the boat, but on the flip side, there’s a lot to gain from negotiating. If you consider the fact that most companies set their employees’ target bonus payments as a certain percentage of base salary, and also determine the amount of their employees’ annual raises by making the increase a certain percentage of the current base salary, even a difference of $5,000–$10,000 in starting base salary could make a huge difference down the road. On the other hand, it’s not uncommon for GCs to want to pay new hires a lot more than their HR and/or finance departments will allow, so a GC or recruiter may tell you there’s no wiggle room in base salary. When that happens, there are ways to be creative about increasing the total value of your compensation package. By following the tips below, you can help ensure that you are being paid fairly for the value you will add to your new company:

  • Do your research. It’s common for companies to have HR personnel dedicated to studying compensation benchmarks, so in all likelihood, the company with which you are negotiating has done its research and has a good understanding of the salaries that other corporations are paying for comparable positions. Large companies have the resources to gain access to a lot of data, which can give them an advantage. Fortunately, there is a lot of information now available online for free, so do the best you can to get comparable data to use during your discussions. You also can gain valuable insight by asking probing questions of the potential employer during your discussions (i.e., by asking them what resources they checked to establish the base salary for your offer letter, what information those resources showed about the low, average and high salaries for attorneys at your experience level, etc.). 
  • Accept that sometimes a salary cap is not negotiable. Many companies establish a rigid compensation structure that applies to all employees. Typical pay structures classify employees by groups, or “bands,” so that employees with comparable responsibilities are grouped together and all paid within a pre-established range. For consistency, all of the company’s employees are included within the groupings, so a lawyer with a VP title and VP responsibilities will fall into the same pay band as other VPs in other departments. Accordingly, all VPs are paid a salary that falls within the range designated for the VP grouping, and most companies aren’t willing to make one-off exceptions. As a result, there truly may be a cap on the amount of base salary and bonus that the company can pay to you. If you find yourself in this situation, and if the base salary and bonus percentage offered to you are below what you feel is fair, consider whether there are other perks that would be of value to you. For instance, some attorneys value additional vacation time and are willing to take a reduction in pay in exchange for more time off. Other perks some employers offer include the option to telecommute, a company car, free or low-cost childcare, a 401(k) match and free parking or gym membership. 
  • Always negotiate equity. At many public companies a significant portion of the executives’ compensation is in company stock, and at many private companies, the management-level employees are granted stock options. This form of compensation often isn’t subject to the same strict banding constraints outlined above, so a GC or CEO may have more wiggle room in offering equity than he/she does to increase the base salary and bonus percentage being offered. As a result, if you don’t need the added liquidity that comes from a larger weekly paycheck or annual bonus, consider asking for more equity in order to increase the value of your total compensation package. 
  • Be creative when negotiating benefits. HR departments typically establish the benefits package for all employees at the company, and HR personnel routinely (and wisely) make a commitment to treating all employees consistently in all regards. Accordingly, don’t expect that a company will change any of its standard benefits in order to accommodate you. However, understand that if you are the best candidate for a job, the company may be willing to be creative in finding ways to accommodate a reasonable request. For instance, if the company’s standard FMLA policy requires all employees to wait 12 months from their hire date to be eligible for FMLA leave yet you anticipate the need to take FMLA leave prior to your one-year anniversary, ask for the option to take unpaid personal leave for up to a certain number of days within your first year. Or, if the company’s standard health insurance package requires you to be employed for two full months before being eligible for coverage, consider asking the company to reimburse you for the COBRA payments you’ll have to make to keep your prior policy in effect until you become eligible for the company’s insurance coverage. 
  • Be selective. I have seen employers lose interest in candidates who ask for extensive changes to the compensation package offered to them. As a result, the approach of asking for 10 things with the hope of ultimately getting five of them may not always be the best approach in this situation. Instead, you may want to pick the 2–4 items that are most important to you and focus on those. Also, remember that in most cases an offer can be rescinded at any time before it is accepted, and also keep in mind that the person with whom you are negotiating may wind up being your boss for many years to come. For those reasons, it’s best not to convey the impression that you are difficult to work with before you even start the job. 
  • Reiterate your interest in the job during each conversation. When you are focused on outlining all of the reasons why the compensation package offered to you should be changed, it’s easy to inadvertently create the impression that you are ambivalent or undecided about the job offer. To avoid this, make sure that at the start and end of each conversation, you reiterate your interest in the role. That way if you ultimately do accept the job offer, you won’t show up for your first day of work to find your new boss questioning your level of commitment to the role. And if you don’t wind up accepting the offer, you don’t want to be worried that you may have burned bridges with members of your professional community by leading them to feel that you wasted their time in interviewing you. 
  • Be concise in your communication. I also have seen employers lose interest in candidates who send lengthy emails with a detailed analysis of all the reasons why the compensation package offered to them is too low. GCs and CEOs are busy and value concise communication. Moreover, if they already have made you a job offer then they already have determined that you can add a lot of value to their team and organization. Accordingly, consider using bullet points in your emails and going to meetings armed with brief talking points. 
  • Focus on your unique skills and differentiators. By focusing on your unique skills and differentiators while selling the company on the potential value of your contributions, you’ll be able to make your case while also keeping the conversation brief. The company chose to give the job offer to you over all of the other interested candidates, so try to figure out what it is that set you apart. By reminding the company of the value that only you can add, you may get them motivated to close the deal. 
  • Remain courteous and friendly. When negotiating something as personal as compensation, it’s easy inadvertently to come across as adversarial, especially for lawyers. Keep this in mind and monitor your tone and body language during the discussions. Another way to keep the negotiation cordial is to focus the discussion on fairness. For instance, you may want to begin with a comment such as, “I’m really excited that you chose to extend an offer to me as I’m sure you had a lot of interest from many qualified candidates. I really think your company would be a great fit for me, but want to figure out what a fair compensation package would be based on the contributions we both feel I can make to your organization.” Another helpful tip is to keep your statements based on facts (i.e., the results of your research), not desires (i.e., your hope of buying a vacation home in the near future). 
  • Remember that if you don’t ask for something, you aren’t likely to get it. If something is really important to you, now is the time to ask for it. If you aren’t comfortable negotiating, consider role playing with a friend or family member who is willing to give you honest feedback. The process may seem awkward at first, but it can offer valuable insight and help boost your confidence. 
  • Be prepared to respond quickly. In all likelihood, the company interviewed multiple candidates for the job and has a “back-up” candidate it will hire if you don’t accept the offer. The company also may be eager to fill the open position quickly, so for these reasons you may be asked to respond quickly to an offer letter. As a result, it’s best to do your research and prepare for the negotiation as soon as you expect you’ll receive an offer because you may not have much time once the offer letter shows up in your inbox.  

Above all, keep in mind that even though there is a shift in bargaining power once you receive a job offer, you still are being evaluated by the company and still are in the process of making a first impression. While salary negotiation is typical and generally expected, how you handle yourself during the process could do a lot to set the tone for your future relationship with the company. Even if you don’t ultimately accept the job offer, you may wind up working in the same small community with the person who made you the offer, and you never know when that person may be in a position to help you down the road. It also goes without saying that your reputation always is extremely important, so be sure that you leave a positive impression regardless of the outcome of the negotiation.

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Kimberly LermanKimberly Lerman is a Director in our In-House Practice Group's Atlanta office. She specializes in placing attorneys in corporate legal departments in a wide range of industries, including financial services, retail, technology, manufacturing, healthcare and consumer services.

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