Let the boss blink first

By MARK STORY

Like many job seekers, executives can feel anxious, embarrassed and even uncomfortable when the time comes to discuss pay-stakes for a new position. But with today's employers less likely to make "take it or leave it" job offers - especially as labour markets tighten - some execs are starting to push the remuneration envelope a lot harder.

Executive recruiter David Doyle says there is often much more to salary negotiations than meets the eye. How much you earn can depend on how well you've played the negotiating game. But what is also overlooked is that how an exec performs during interview and salary negotiations can reveal their true colours under pressure.

"It can be seen as a dress rehearsal into how an exec is likely to perform on the job," says Doyle, principal with Chamberlin Doyle & Associates.

While there's no set protocol governing salary negotiations, Doyle says it is usually done over three different phases: Clarifying salary range, the interview, followed by final negotiations. If execs know the salary range before the interview stage, Doyle says the final negotiations should be more about minor details than resolving major differences.

"A recruiter's first job is ensuring there is daylight between the lowest figure the exec will accept and the most the employer will pay - so that salary issues are minimised," says Doyle.

So what does the typical exec salary package look like? Together with (fixed) base salary, exec remuneration generally comprises benefits (such as healthcare and superannuation), short and long-term bonus elements, plus a significant component of remuneration "at risk" (20-30 per cent) based on performance.

But establishing the right "at-risk" element within a total remuneration package is something many employers fumble with, says Ian Taylor, managing director with executive recruiter Sheffield. He says too few boards give the right signals - through performance-based or "at-risk" pay - on where they want senior execs or CEOs to have the most impact.

What amuses specialist remuneration consultant Kira Schaffler is the number of execs - especially those within sales and marketing - who shy away from performance-based remuneration. From her observations, the exec who locks in a variable pay rate will always earn more than someone without a performance-based upside.

"An exec must be confident about their performance levels," says Schaffler, former director with Higbee-Schaffler Limited. "However, within the current risk-averse environment, only a few are prepared to take an 'at-risk' stance."

But if a company is serious about results, Schaffler says risk-takers are the very people it wants. She believes the minority of firms that don't link an exec's pay to an "at-risk" component are effectively limiting performance. "What they're really saying is come and do a comfy job. Yes, you're expected to perform but we won't compromise your base revenue either way."

While executive salary ranges are benchmarked by so-called remuneration specialists, Doyle says salary setting tends be a free-form art fashioned by an individual's leverage and negotiating skills.

So what do execs need to know to strike the best deal? Comparing salary negotiations to buying a new car, Doyle claims execs should always aim to take everything on the bargaining table. He says they need to pre-qualify an employer's salary expectations, plus other benefits to establish whether it's worth their while proceeding.

This ensures both parties are on the same remuneration wavelength well before salary discussions begin. What it also does, advises Schaffler, is give the exec a psychological advantage.

"The party that declares money first puts the power in the other party's hands."

Schaffler claims negotiations are more likely to break down over common oversights than the dollars. In fact, she says most negotiations stall because the terms of reference - including things such as a company car, parking, leave entitlements, start dates or other benefits - aren't thrashed out before the emotional negotiations take place.

A classic problem, adds Doyle is the restraint of trade issue. For example, a big hitter who has applied for a job with a rival company can't sign a deal because of (overlooked) restraint of trade clauses within their existing contract. Other issues relate to health and safety, and there are execs who wouldn't pass a medical in a million years.

"It is important to get everything out in the open at the get-go. This ensures the exec isn't negotiating in apples when the employer is negotiating in pears to achieve the same outcome," says Doyle.

So what distinguishes good salary negotiators? Schaffler says any exec worth their salt will have no doubts about their market worth. That means deciding before they go into an interview the salary and conditions they want, what they're willing to settle for and sticking to it no matter what.

"Remember individuals don't have a market value. They only have value in relation to what they're expected to do," says Schaffler. "The trick to successful salary negotiating is displaying confidence without displaying something that spells arrogance."

Telco recruiter Trisha McEwan suspects most employers would prefer negotiating with a hard-hitter than an exec who fumbles over salary talks. From her experience women execs are less likely to "game it" on salary negotiations than their male counterparts. "Women execs are more likely to believe that what employers put in front of them is the best deal," says McEwan, Telecom's group general manager (HR).

She says it is important execs listen to how employers want to play the negotiating game. "They should know the salary range pre-interview, but it's a mistake to talk money up front," says McEwan. "The narrower the range, the more likely they will talk money earlier on. If in doubt, ask them when they would prefer to talk salary."

But Taylor reminds execs if they are attracted to a new job for money alone, they are moving for the wrong reasons.

He says today's salary negotiations are taking longer - sometimes up to three months - because the component parts are more complex.

What closes a growing number of job offers is not just the money but cultural fit, and conditions around the edges, says Taylor. For example, working from home, flexible hours, training and development, and how performance is rewarded financially and non-financially.

While employers are paying top dollar for rare talent, greedy and overly aggressive execs can send the wrong signals.

It all comes down to doing your homework, adds Doyle. "Know your self-worth, understand as much as you can about a potential employer and negotiate in good faith. So work out what you want - and let the other guy blink."

Ten "no nos" when negotiating salary

* Don't allow a time-line to become a key factor.

* Don't take an offer on verbal promises.

* Don't resign your job until you have a written offer.

* Don't accept second best when it comes to documentation.

* Don't talk about salary during the interview.

* Don't "match cultures" first then find out the salary is wrong.

* Don't accept an offer without seeking legal advice.

* Don't trade salary expectations for warm fuzzies.

* Don't push base salary significantly beyond stated range.

* Don't enter negotiations without knowing what you're worth.

Source: Chamberlin Doyle & Associates