Here’s how to negotiate with your new employer for the highest possible salary
This may be the chapter in my book “The Corporate Sales Winners Guide” that I have been most looking forward to writing! It is one of the most beautiful topics and facets of sales: Negotiation!
I used to think negotiating was a really complicated subject! I was totally uncomfortable with always negotiating everything. That wasn’t neat and customary, was it? On the contrary!
After taking a negotiation training course, I suddenly became aware that all of life is one big negotiation. Negotiating with people about your salary is just a small part of everything.
- You negotiate daily with yourself about how you are going to spend your day.
- You negotiate with your partner about how you will spend the weekend together.
- You negotiate with your colleagues and manager about the division of tasks.
- Actually from childhood: You negotiate with your parents about your pocket money and bedtime.
These are just a few examples, but if you just start with them you can make the list much longer!
What I am trying to say is that obtaining and learning good negotiation skills is extremely important. Once you know how to do it, read a book about it and learn some techniques, you will be amazed. You will be amazed at how much extra margin there is to negotiate. Not only in the electronics store, but also in clothing stores, travel agencies, mortgage lenders and contractors.
Discounts are possible everywhere and additional benefits can be gained everywhere! Provided you are aware of what the negotiation means to the other person and how valuable it is that you are negotiating for that other person.
For example, how valuable is it to make a deal within a certain amount of time? Is there a critical deadline? What is the value of the extra discount to the other person in exchange for a longer-term deal? If you are aware of this and use the right techniques at the right time, you can create tremendous additional value for yourself and for your negotiating partner, on the other side of the table.
Negotiate official offer and contract for your new job from your employer
Now that you have successfully completed two or more interviews, you will receive an offer from the company. Usually by e-mail or letter. First of all: congratulations! It is always admirable and incredibly handsome when you leave a whole series of competitors behind!
The most important thing you need to do now is to accept that this is only an initial offer.
So this initial offer is never final and the bottom line. There can still be considerable negotiation, both in terms of salary and fringe benefits. There is always an extra margin to negotiate. It is also expected and often factored in. So don’t be afraid not to accept that first offer right away.
Indeed, consider the following! You are a sales professional who will soon have to negotiate big deals and contracts with clients. Therefore, your employer will be more surprised, if you immediately accept the first offer and do not try to negotiate like a professional with valid arguments.
By not negotiating, you immediately show weakness and fear of failure. It is not uncommon, that this scares off a company and they go on to negotiate with their favorite and a backup. By not negotiating, you run a real risk that the contract and that great new job will still go to your competitor. Trust me, this happens on a regular basis!
Negotiate fixed and variable salary at new job
First of all, never be tempted to accept a lower-than-market fixed salary. Many employers try to convince you with much pride and fanfare, that with them you can earn a lot of variable bonus if you perform well and therefore the fixed salary is a bit lower.
Don’t fall for this negotiation technique!
Remember that the fixed salary is a reflection of your experience and market value. Why should you put yourself on sale, when the employer wants you very much? You have just clearly proven, that you are the most suitable candidate and an investment for the company for years to come? The money you will make for your new employer is also so much more than the fixed and variable salary they will pay you!
So don’t sacrifice your regular salary and negotiate hard on this!
Why is the fixed salary so incredibly important and why should you always separate it from the discussion of your variable salary and bonus? Here are some key reasons why a good fixed salary is so important:
- This is the amount that is always guaranteed, paid into your bank account every month.
- This is the amount at which you should negotiate future salary increases. So it should never be too low.
- This is the amount, based on which social benefits such as unemployment and sick pay are calculated.
- The higher the fixed salary, the higher your monthly pension benefit will be.
- It determines how much mortgage you can get to buy your own home.
To improve a fixed salary, you only get a few really good opportunities in your career. One important moment is the renewal of your temporary employment contract.
Once it’s converted to a permanent contract, you only have a negotiation opportunity once a year. Only, if you got a good review, you can grow a small percentage with your permanent salary. Usually this is just enough for inflation in your country, but a really substantial salary increase is certainly not!
Ask yourself this question: If you are performing well and selling and meeting your targets…. So why should they give you a higher base salary when you already earn so many bonuses?
Exactly!
With that argument from your employer, you’ll be stuck at that low entry-level salary forever. That’s why it’s so important to negotiate your fixed salary well!
Calculating and comparing market value
How do you do that without pricing yourself out of the market or appearing implausible? First, you do that by calculating your market value through various sources. For example, consider useful sources such as linkedin.com and glassdoor.com. Such sites have a very extensive database of salary indications for similar positions. Sometimes even your new employer is already listed with salary indications!
The best sources of information are external headhunters or employment agencies. After all, they want nothing more than to negotiate the highest possible fixed salary for you, because their bonus is based on your future base salary! However, you should ask what the minimum salary is immediately in the first meeting with such a recruiter. Also ask him what the maximum fixed salary is that the employer is willing to pay for the ideal candidate. Then you will know what is the maximum achievable in the negotiation!
Negotiation techniques for highest fixed and variable salary
Once a company has decided they want to hire you, they are really not going to let you walk away for a few percent extra salary, provided you can back it up and come up with good arguments.
So not of: “I want 10% extra now,” but instead: “I would have expected at least 10% extra, given my experience and specific knowledge I bring to the field…. In fact, an amount of xxxx is common in this market for my experience.”
As a rule, 5% additional base salary is always easily possible. This is factored in. In some cases 10% extra or more, provided you come up with good arguments why you are worth it. If you want to negotiate an even higher base salary, but are told by the HR department that it is not possible, you can use another technique:
- Verify the amount of bonus you can earn based on 100% on-target performance.
- Then reduce this variable bonus amount, in exchange for a higher fixed base salary.
- Suggest a ceiling on the variable bonus: say 200%, in exchange for a higher base salary.
- On the one hand, your new employer sees that you plan to significantly overperform above target.
- On the other hand, the company knows the maximum bonus they have to pay and, as a result, there may be some additional room for a higher fixed base salary!
I assure you, these techniques all work! The deciding factor is always timing. Don’t be too quick, don’t be too hasty, but subtly explain at the right time each time why you are doing this. Emphasize why you are worth it. This creates a mutual understanding and respect. Everyone feels comfortable and negotiations can be relaxed. With a good result in the end, with which both parties can be very satisfied.
Pension and vacation pay negotiations
I recommend that you separate things like pension and vacation pay from the initial negotiation of your fixed salary. These are fringe benefits. It is money that you do not have immediate access to. That’s why you need to disconnect it.
Retirement is something you have to wait years for. Until age 67 or maybe even longer. Then it remains to be seen, whether you can fully dispose of it and whether it has grown in value. Pensions are always negative in the news. Pensions are becoming worth less and less and there are even frequent cuts. It is therefore much better to take your own responsibility to grow your assets yourself, so that you decide later, when and how much you want to pay yourself.
Therefore, if possible: Ask for retirement benefits in the form of extra money on top of your regular salary. Tell them you want to invest this yourself in your own retirement provision you already had. This generally works well with international companies that employ many expats. Those expats are not waiting for a pension plan and prefer to take care of their own affairs.
If you can, arrange for retirement pay to be in the form of additional fixed salary and also have vacation pay automatically included in base salary. Then you get 8% extra salary every month instead of that hopelessly old-fashioned vacation pay in the month of May.
Maximize the money at your independent disposal now and every month.
Variable bonus salary negotiation at commission plan
As for the variable salary, there is really no limit to negotiate. Your main argument should be:
That you don’t want to be restricted or penalized with a cap on your variable salary if you perform much better than the rest!
So a target with a mandatory cap on your bonus actually sends the wrong message. Then again, if a company stubbornly sticks to this, use my previous arguments and try to negotiate a higher fixed salary.
Company shares negotiate with your salary and contract
Try to negotiate a higher salary if your bonus is capped. If this is also not an option, ask about the possibility of participating in a share scheme of your employer. You will then earn extra bonus in the form of shares in your company.
These can be incredibly valuable and become even more valuable!
Not only is it an excellent way to grow your wealth. They also pay dividends and you have an unparalleled view of the growth of the stock. This does immediately tie you to a variety of regulations, but that outweighs the great benefit that participating in a stock arrangement can offer you. It can also be a good option to introduce the possibility of a share scheme if you get stuck negotiating your fixed salary. In fact, many companies have never considered such an employee share scheme before. They will welcome this creative proposal and at least want to explore it.
By the way, this fits perfectly with another important rule of thumb in negotiation. Here’s how to do it:
- Negotiate by giving away something that is inexpensive for one party, but which in turn is incredibly valuable to the other party.
- In this case, “giving away” the company stock options, instead of your higher salary, is relatively “cheap” for your employer.
- These options, on the other hand, are actually incredibly valuable to you!
Sell it to the company by substantiating, that this will increase the engagement of all employees much further. As a result, they will work much harder and better. Their extra effort will be directly visible to them in the share price and dividend!
Sales committee plan and bonus
A good sales commission plan or bonus plan should be able to make sense to you after just one read! It should be able to motivate you immediately as a reader to get started. In a later chapter of this book I’m going to show you, how to find hidden opportunities in any commission plan and maximize your income.
Make sure you know in advance what the sales targets will be approximately. Check how many of your future colleagues actually meet their targets; how long it took for new employees to reach their targets. This will prevent a lot of unpleasant misunderstandings and surprises afterwards!
Check in advance how many appointments, leads and opportunities for new projects are expected of you by your future manager.
- What are other Key Performance Indicators (KPIs) that show you are doing your job well?
- On what basis can you negotiate your fixed salary increase each year?
Therefore, really don’t leave anything to chance! Substantiate your questions by saying that you want to be as prepared as possible and become as successful as possible. Therefore, ask your future manager these questions so that you can prepare yourself excellently.
Permanent contract and temporary contract: don’t be fooled by an immediate permanent contract offer!
Finally, I want to explain to you why it’s better to sign a temporary (annual) contract instead of an indefinite contract… right after your one or two-month probationary period expires. Many employers proudly and bravely offer you an indefinite contract right away, but did you know that these days it is not at all complicated to terminate an indefinite contract?
If they want to get rid of you, they always succeed!
They will suddenly say you are no longer doing your job well, raise your targets or create an unpleasant work atmosphere. They will try to rearrange your position, or make your job redundant. Hoping that you will then leave on your own.
It sounds hugely negative and pessimistic, I know. But I have experienced and seen it up close often enough during my career and that at different companies. So this is why you choose an annual contract. After all, then you still have several opportunities to renegotiate your contract and base salary!
Your employer is perfectly willing to renegotiate if you do your job well. They are really not going to let a talent walk away that they just invested a lot in. They are not going to let someone leave who has brought in new sales and customers.
So if you choose an open-ended contract from your first day of work, you will have far fewer chances to renegotiate it! If you don’t like it and they still want to get rid of you, with an annual contract you are entitled to the remaining months of salary. With an indefinite permanent contract, things can move very quickly. Then you are generally entitled to three months and maybe some more. So tell me … which option sounds best?
Never sell yourself out and don’t be afraid to ask for a higher salary!
Ultimately, you are a professional with unique skills and knowledge. Skills, which are very valuable to the market and your employer. So don’t bet too low and never sell yourself out. That damages your image and is at the expense of your own potential and wallet!
Book Source
The corporate sales winners guide: Transform your life and become a top sales performer – by Gerrit Jan de Vries. Available on Amazon, Google Play Books and Bol.com.