Download - Negotiating executive compensation 2014
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Negotiating Executive
CompensationPractical Insights
Nicola James
Thomas Brooke International
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Foundations
When & How
Who
The Offer & The Close
Case Studies: Winners And Losers
Company Dynamics
Recruiters
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Foundations of Successful
Negotiation
“Left Brain”
Preparation
Analysis
Strategy
Clarity
Good
negotiator
balances both
“Right Brain”
EQ
Trust building
Patience
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#1 Take ownership of the process
Do you want to
negotiate this?
Or shall
we do it
for you?
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Involve all stakeholders
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Acknowledge anxieties/concerns
Make sure you are in agreement
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#2 Have a negotiation road map
Develop strategy/scenarios
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Establish your own needs
before entering the process:
• Rank importance and priority
• Know what you’d walk away from - your “must” and
“give” items
• Do NOT assume you will have all information you want
at offer time – know what you really need to know
• Research typical packages for the position – data driven
- think real estate comps
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Salary
Annual bonus
Signing bonus
Profit sharing
401(k)/pension
Long-term incentive
Stock
Equity
Relocation support
Typical package components
Health benefits
Vacation
Travel
Title
Promotion/succession
Contract
Severance
Non-compete agreement
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#3 Recognize that long-term
relationship & substantive
outcome are both high value –
proceed accordingly
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#4 Treat every interaction as part
of the negotiation process
• Research and ask questions
o Strategy
o Motivations
o Values
• Discover leverage and limits
• Build trust – ultimately you are negotiating with people, not
just corporate entities
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When And How
To Bring Up The Subject
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ASAP to qualify on
basics/ballparks/musts
• Identify strong opportunities
• Avoid wasting time on marginal or poor opportunities
• Position as initiator/leader
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Who gives the first number? It
depends…
• Don’t assume it should be the company – frankness often
benefits you
• If you are significantly over/undercompensated currently, better
to lead than follow
• The Anchor number has significance
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Ask questions - explore landscape
on the company side
• Find out what you can – every data point is useful
• Qualitative as well as quantitative
• Frame your own priorities accordingly and positively
• LISTEN and remember even the small things
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Align with company goals/needs
• Develop/revise value proposition according to their priorities
• Show ROI – investment vs. cost. This is essential!
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Share peripheral information such
as priorities/rank order
• Build trust by sharing without painting yourself into a corner
• Gather additional pointers about the other party’s approach
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At preliminary/unofficial offer time
exchange “musts”
• If not already discussed, this is critical
• If already discussed, revisit/confirm
• Find out how the process needs to unfold from company side
(e.g. do they even negotiate after an offer?)
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Who To Negotiate With
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Always with
decisionmaker/influencer-
Never the gatekeeper!
• ID real decisionmakers and stakeholders early – not always
who you think
• OK to use gatekeeper to qualify the opportunity (qualify ≠
negotiate)
• BUT – every interaction with every person counts!
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The Offer & The Close
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A deal is like a seedling
• Requires nurturing/gentle handling
• Easily damaged by slight fluctuations in surroundings
• Can grow and become strong with the right conditions
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How to handle the offer to a
successful close
• Be authentic
• Be straightforward
• Avoid last-minute surprises and additional demands/requests
• Keep all options on the table: not one at a time - need
flexibility
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• Keep emotion out – focus on objectives
• Humor can be helpful to defuse tension – but be careful
• Remain engaged – keep dialog going
• Clarify “musts”
• Be prepared to say YES
• Be ready to say NO and walk away
• Be timely – don’t wait too long to give your answer
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Case Studies- Winners And Losers
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VP Sales & MarketingSmall Company
Winner
• Established clear priorities and needs at the outset
• Researched company and decisionmakers
extensively to find needs and common ground
• Tailored all interactions to support this value prop
• Demonstrated added value in the process
• Trusted
• Remained engaged in negotiations on all points
• Gave on some, held on others
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VP MarketingLarge Company
Winner
• Established clear priorities and needs at the outset
• Provided clear evidence of past ROI in similar role
• Sensitive to matrix organization, made case to
multiple stakeholders in different ways
• Recognized there would be little room for
negotiation on major items later – established value
early
• Little substantial negotiation at the end
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COOMid-sized Company
Loser
• Stated clear priorities and needs at the outset
• Provided clear evidence of past ROI in similar role
• Failed to understand true decisionmaking structure
• Had wrong assumption of spouse’s position
• Not willing to give on key requirement – did not see
big picture of opportunity
• Offer withdrawn based on concern over judgment
of risk factors
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VP R&DLarge Company
Loser
• Unwilling to provide basic qualifying information at
outset but technical fit seemed good
• Demonstrated ROI successfully
• Unwilling to trust
• No give
• When initial preliminary offer was low, did not
engage constructively to find solution
• Offer withdrawn based on concern over cultural fit
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When And Why Companies Stray
From Their Original Compensation
Range
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Large Company Influence Factors
• Well informed/benchmarked on market
• More rigid comp structures
• LTI or signing bonus
• Strategic initiatives with big ROI may raise the limits
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Small-Midsize Company Influence
Factors
• Often less well informed on market
• Sticker shock
• More flexible
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Cultural & Historical Influence
Factors
• Entrepreneurial/PE
• Family
• Corporate/bureaucratic/centralized
• Highly regulated/government
• Public/private
• Early stage vs. established
• Parent company HQ – national culture
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Other Influence Factors
• Function/level - flexibility may vary
• Supply/demand
• Location, COL etc.
I am uniquely
qualified to
lead your
company
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Role Of The Recruiter
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• Looking out for client is #1- but overall for the right match!
o Recruiter can be your advocate too
• Influence with decisionmakers
• Keeping eye on prize:
o Who can close?
o Many factors - comp is one - NEED to qualify $$
• Managing expectations – both ways
• Reputation – perceived candidate risk factors play a role
• Authentic & trusting relationship is ideal; trust but verify
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Recap• Take ownership
• Be prepared
• Ask questions
• Treat every interaction as negotiation
• Demonstrate relevant ROI
• Collaborate & build trust
• Balance analytical and relational aspects
• Help the recruiter help you
• Take care with the close
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THANK YOU!
You can reach me at:
Nicola James
Managing Partner
Thomas Brooke International
www.thomasbrooke.com
www.linkedin.com/in/nicolacjames
(888) 896-3330 x22