I’m a big fan of lists. I broke this down into 8 topics.
Tip #1: You’re on the same side
Companies want to make offers that are accepted. There’s no point for them to get lots of signatures on your offer approval, only to have you turn it down. Companies also don’t want to throw lots of money at you for no reason. If you get an offer, it should feel good for everyone. This is an exciting time! Help them help you.
Approach the conversation as a partner.
Help them understand where you’re coming from, so you can get what you want. Don’t start high, thinking they are about to lowball, hoping to get something in-between.
Conduct yourself just as how you’d conduct business once you start. These compensation conversations are a barometer on your character.
Tip #2: Let them know you want the job
Only do this if it’s true. Always be honest.
In order for a company to go to bat for you, they need to know that it’s worth it for them. They want to know they can get you.
Tell them that you want to join the company. Tell them you want to accept the position, as long as the compensation details are worked out. You have other options, but they’re your number one choice.
They’ll breathe a sigh of relief knowing you’re not simply going to take their offer to another company or to your current boss. Then you’re both on the same side, working this out together.
Tip #3: Have empathy for their side
Realize that companies have parameters and limitations. Many have salary bands, and can’t go above a certain base salary for your title. If you’re moving to a city with a higher cost of living or different taxes, some will take that into consideration and some won’t. Many times companies look at your future peers and want to be fair to them, so you’ll make what they make.
Let the company know that you understand their parameters, and you want to make this work for the both of you.
Ask where they can flex, and where they can’t. If not base salary, then consider different bonuses or equity grants. Listen to them. A little empathy can go a long way.
Tip #4: Know what you want, and tell them
Everyone has opinions about who should speak first in a negotiation. In all my years of executive search, the person who says what they want ends up getting what they want. They’re bold about it from day one. They set expectations. The company knows what they’re signing up for with this candidate the second they meet them.
Here’s what people who get good offers say: “I’m looking for X total compensation. I also have Y amount in unvested equity that I’d be leaving on the table here.” They then explain how much the unvested equity matters to them.
Sometimes they say: “Currently I’m making X. I’m looking for an uptick from there.”
They don’t say “I’m flexible.” They don’t ping pong the question back and ask for a range. Usually when someone evades the question, the search firm will think they're too junior.
In my experience when it comes to the most senior positions, it is rare for a company to throw a number at you without having any idea what you’re looking for.
The search firm is your advocate. The company will ask them what you’re looking for, and you don’t want them guessing.
How do you find your expectations? I wrote about this recently, click to read more on this topic.
Tip #5: Avoid going back and forth
Companies don’t want to throw darts at you. How about this offer? Whoosh. Nope. This one? Another dart. Didn’t even hit the board this time. Try again?
Companies also don’t want to play ping pong with you, going back and forth on comp where every call gets more and more awkward and painful.
You’re likely speaking with the messenger, not the person who has ultimate authority over your offer. The person you’re talking to has a good idea of what the company can pay, but the buck doesn’t stop with them.
Maybe you’re talking to the search firm. Maybe you’re talking to the internal recruiter if you found the role on your own, or the search firm is hands-off for some reason. This person is going to present your numbers to someone else. Help them out. Arm them with the info. Let them know what you’ll take. Let them know what you won’t. Let them know what you’ll consider.
Tip #6: Give them multiple options, all that work for you
Big round whole numbers are great when we’re in the earlier stages of the process, but at offer stage you’re expected to be very specific. Every single number matters.
There are different components to compensation: base salary, cash bonus, annual equity, sign on bonuses, and future spot bonuses or equity grants. These are your levers. Play with the combination. Give them options, but make sure they all work for you.
Help the company get to your total compensation number. Does the company have more flexibility on the base salary, annual cash bonus, equity, or sign-on bonus? Can they give you a spot bonus every year for the first three years? Can they guarantee your first year bonus? These are all questions you can ask, and scenarios you can throw to them.
Tip #7: Help them understand why you want what you want
You have the best chance of getting the offer you want if you back it up with data. Companies don’t come up with numbers “just because.” So if there’s a reason you’re asking for something in particular, tell the recruiter why.
Tip #8: Don’t forget the details: timing, bonuses, vesting, and clawbacks
The recruiter is going to ask you for any types of clawbacks, retention bonuses, and unvested equity, anything you'd be forfeiting or have to pay back if you were to leave your job today. Now's the time to not forget about anything. You can always tell them you need to look things up and will send it over asap, but do let them know the types of compensation you'd be walking away from that you expect to be covered.
Usually sign-on bonuses cover compensation that you’d be walking away from. They’re a way to make you “whole.” For example, let’s say you’re due a $100k bonus in February. It’s November. The new company wants you to start now, and not wait for your February bonus. It’s reasonable for you to ask the new company to give you a sign-on bonus to cover what you’re walking away from.
Companies will ask you for documentation backing up these numbers. They can’t always ask you your current annual compensation due to local laws, but they can ask you for proof of unvested equity or anything else you’d be walking away from. Be prepared to get these papers together. You may need to log into your bank. If you work at a company with private stock or options it’s tricky. Do the best you can do. If you have documents backing up what your equity is worth share it.
Every company has a different way of dealing with equity you’re walking away from. Let’s say if you quit today, you’d be forfeiting $600k in equity: $300k in a year, $200k two years from now, and $100k three years from now. Your new company may give you all $600k on a similar vesting schedule, in their stock. Your new company may care more about the $300k that’s vesting soon, and use a calculation to determine how much of the other equity they’ll cover, but won’t cover all of it. Your new company may say they don’t cover unvested equity. Anything is possible, and every company treats this differently. If you’re working at a public company and going to another public company, it’s much easier to compare apples to apples since stock has value. Usually you’re given the new company’s RSUs (restricted stock units). If you’re currently with a private company that may go public one day, the new company isn’t likely going to write your lottery ticket, but it doesn’t hurt to ask for a sign-on so you can pay your current employer to keep your options.
Conclusion:
There’s great advice out there, and it’s all right. These tips are my two cents, as an executive recruiter and friend. Hope this helps you navigate the conversation. As with anything, approach the compensation conversation with curiosity and as a partner, sharing your thoughts and asking questions along the way. If you embrace the conversation, you’ll see that it’s not awkward at all.