REINVENTION – Everything Is Negotiable in a Private Industry Career
Reinventing yourself from a public service to private industry career involves knowing that “everything is negotiable” regarding salary and your total compensation package. If you have been following this series of blogs to prepare you for your next career – we are at the stage where you have identified a position, targeted a company, networked with past and current professionals, completed the application, prepared for the interview, suffered through the long wait of others being interviewed and you just received the call – they want to hire you and are sending you an offer letter of employment to review, sign and begin your next career. You’re excited, anxious and so ready, but not so fast – are you prepared to negotiate before you sign that letter. If you are not ready to negotiate, you will be fine until you realize there were other compensation benefits on the table that you left behind.
If you have been following this series of blogs to prepare you for your next career – we are at the stage where you have identified a position, targeted a company, networked with past and current professionals, completed the application, prepared for the interview, suffered through the long wait of others being interviewed and you just received the call – they want to hire you and are sending you an offer letter of employment to review, sign and begin your next career. You’re excited, anxious and so ready, but not so fast – are you prepared to negotiate before you sign that letter. If you are not ready to negotiate, you will be fine until you realize there were other compensation benefits on the table that you left behind.
Consider the receipt of their offer letter of employment as the first, not final offer. There are a multitude of items which can be negotiated; below are examples of what can and should be discussed. Know that your future employer will almost always try to bring you in at a low base salary – to help them meet their numbers, improve their margin, save money to increase net operating profit – and the base salary is only the beginning of the items to negotiate in a collaborative not confrontational setting. As former public servants you know the value of a positive demeanor when talking with others – that experience will pay off nicely as you enter into conversational negotiations with your future employer. Remember they have decided to hire you, there was something about you, your experience, and your capabilities that they liked; and, they are not ready to start the process all over again – they will meet, listen and negotiate with you – it’s in their best interest too. As for you – there is never any harm in asking and probably improving your compensation package. There is one caveat – if during an interview for the position, or during the negotiation phase of a compensation package – your future employer mentions that you are already financially comfortable because of your retirement monies from your public service career – be prepared to walk –in fact run – as your retirement salary and benefits should always be off the table in any discussion.
Value and Interest
Always understand your value – your retirement salary is NOT part of the value you bring to a company. Always understand that companies will NOT pay a penny more – it’s in their interest, not yours!
Now, let’s look at some of the negotiation categories bearing in mind the following: Axiom # 1 – Everything is Negotiable, and Axiom # 2 – Know What is Negotiable is Continually Changing. A former consultant instructor I know always used the phrase “It’s not the Money, It’s the MONEY”, it’s always the money and compensation packages that equate to money.
Employer / Employee Negotiations
Employers expect to negotiate base salary and other compensation benefits. They are happy to, however, they must abide by factors which will influence how much leeway they have to negotiate, e.g., salary bands; internal parity with other employees with the same title in the same group; market conditions; your previous compensation history (post government positions). Companies will pay you a fair value and usually not beyond unless you are the only candidate in the marketplace that meets their needs.
Not Sure of Your Negotiation Skills? For those unsure of their negotiating skills an internet search will yield several cites to self-educate yourself and Do your homework – research salaries and compensation schedules based on position, title, experience and location in your industry by using job boards and other internet sites and tools. Citations are provided below. Rely on facts: Know your KSAs and testimonies of former clients, peers and superiors as “a case based on facts is difficult to refute”.
- Have a dress rehearsal: Practicing with a mentor can help you find holes in your argument and ensure you present a strong case
- Understand the Title Pyramid and how it relates to salary/compensation:
- Each company is different;
- Is title more important than salary/comp? Or vice versa?
- Do you want a corporate or a business unit position?
- Corporate – You are overhead and an expense
- Business Unit – You support a client that generates revenue for your company
Compensation Comes in Many Forms Beyond Base Salary
Base Salary is the only compensation component that is consistent from company to company. Other compensation components that can be negotiated depending on the company, the level, the role, the scarcity of talent for the position etc. include the following:
- Sign-On Bonus: the amount can vary dependent on whether you will be corporate or business operations and are sometimes tied to the level of the government security clearance you possess and/or other professional certifications beneficial to the position for which you are being hired.
- Performance Bonus: is typically tied to an individual’s performance against stated metrics, development and execution of a business plan, meeting expected financials, etc. and can be paid at a specific interval of time from date of hire, e.g., 6 months, or quarterly or annually based on company policy.
- Company Bonus: some companies pay annual bonuses to employees based on the company performance and can be a % of your base salary or the amount could be a % of company allotment regarding bonuses distributed proportionately or by title or amount of revenue your position generated for the company within a specified time period. Usually, it is related to your title and your base salary – hopefully you already are seeing how beneficial that starting $$ amount is when you sign with a company.
- Stock Shares: these are shares of stock that a company can provide to you as a sign-on or performance bonus and can be future CASH – depends on the performance of the stock in the financial markets.
- Stock Options: Publically traded companies can also provide stock options to employees, usually Directors and above. Even the number of stock options provided to an employee is dependent on the hierarchical title you negotiate. As an example, a company may provide you with 1,000 shares of common stock valued on the date of hire at $25.00 a share. You now own stock valued at $25,000 but not the actual $25,000.00. Normally, you can decide to cash out 1/3 each anniversary date from the date they were given to you. To cash out all 1,000 shares will take 3 years. If the stock is doing well, that is great, e.g. at year # 1 each share is worth $30.00 – you can cash out 333 shares at increased value of $5 for total over $1,600.00. If the stock value has decreased to $10.00 a share, don’t worry, you just wait for anniversary years 2 then 3. Stock options are usually part of each yearly performance evaluation, just as the cash bonus.
- Employee Stock Option Plans (ESOP): the company buys stock on your behalf, if it makes money, you make money; normally can’t exercise options until retire/leave the company.
- Employee Stock Purchase Program (ESPP): some publicly traded companies provide this benefit to employees allowing them to use part of their salary to purchase stock at a discount to market price.
- HR Benefits:
- Insurance: if you have health/dental/vision insurance from retirement, some companies will negotiate the amount or a % of that amount it would have cost them if you enrolled in their programs. These monies could be negotiated in the form of a sign-on bonus or an increase in the first base salary offer.
- Life insurance: if a leadership title, usually 3 x salary base only.
- LTD and STD: is usually paid by the company.
- 401K: max out your pre-tax portion as the % saved in not paying taxes is a good strategy and the more you can save now, the better for when you retire-retire. Know what the company match policy is on 401K.
- Vacation / Paid Time Off (PTO): companies will either provide Vacation + Sick Leave or combine the two into a benefit referred to as Paid Time Off (PTO). These are usually set by company policy, however, the higher the title, normally the more PTO – when you negotiate your title and level within the company, you are affecting your PTO.
- Business travel: dependent on your position business travel may be required; however, if business travel occurs on a weekend, compensation time can be negotiated.
- Understand the value of your government CLEARANCE: You know when it expires. Insure the background investigation is complete and it is renewed prior to leaving your public service career. Without your clearance, you may NOT be as valuable.
There are many other items open for negotiation and although space is limited here, consider a compensation consultant beyond your own current and future knowledge. Good Luck and Stay Focused – Your Next Position is Within Reach and Remember what Milton Berle said “If Opportunity doesn’t knock, build a door.” Then knock!