Salary Isn’t the Only Compensation
Money isn’t everything. At least during salary negotiations, it’s not.
Sure, nothing beats a whopping raise. Problem is, as companies get tougher and tougher on spending, many are holding back the cash in both job offers and annual performance reviews.
“There’s a lot of big corporations that have certain salary levels they can work with and sometimes their hands are tied,” said Alec Schwartz, an executive search consultant at Raines International Inc. in New York.
Take Aetna Life & Casualty Co. The nation’s largest publicly traded life insurer now negotiates less on the basis of salaries and bonuses. Instead, it ties compensation to the company’s and individual’s performance with stock options and other incentives.
“We need to be creative about how we can woo a person without putting a lot of money up front,” said Jim Gould, head of compensation at the Hartford, Connecticut-based insurance company, which employs about 45,000 people. “The perks, guaranteed bonus, even the base salary, are out of vogue. The incentives and stock options are in.”
Besides stock options, which give holders the right to buy a number of the company’s shares within a particular period of time at a specific price, prospective employees can push for a signing bonus, as well as bonuses after the first and second years. A review after six months, instead of the traditional year, can keep an employer attuned to performance.
“People shouldn’t be piggish about salary,” said Bill Heyman, president of Heyman Associates Inc., an executive search firm in New York. “It is the bonus and stock options where they can make considerably more than what they were making,” to the tune of 30% to 70% of their base salary.
As rule of thumb, an existing employee can expect a raise of as little as 5%, while a job-changer can expect an increase of as large as 25%. Some jobs may come with no increase or even a lower salary, but offer more time off or more generous medical and pension benefits.
Being too cash-hungry can send a wrong message, anyway. So, executive search firms, or “headhunters,” recommend employees and future employees pursue salary less aggressively than other parts of a compensation package. Those can include more vacation time; a company car; commuting expenses, relocation reimbursement or increased medical benefits.
“There are other things that can make it more lucrative for you--and that are a lot of times easier to negotiate--than salary,” said Schwartz at Raines International.
In an era of rampant mergers, acquisitions and layoffs, considering a severance package for life after the company isn’t a bad idea either. And companies frequently cited as merger or takeover candidates may be more willing to make considerations regarding future pay, Heyman said.
To be sure, asking for such fringe benefits as a country club membership or luxury car also can be a problem. “What that demonstrates is that your priorities are a little bit off,” Heyman said. “More importantly, it demonstrates a lack of confidence in the ability [companies] were looking for that could result in bonuses.”
Still, even extravagant demands aren’t out of the question if they’re commensurate with worker’s value. That means finding out what the company wants and making sure you’ve been--or could be soon--delivering it. “Make sure you’re selling yourself as the best candidate for the job,” even before negotiations begin, Heyman said.
Existing employees should “stress that your value to the organization is greater than your compensation level,” said Richard Lannamann, managing director of Russell Reynolds Associates Inc., one of the nation’s largest executive recruiters. “Stress loyalty too. Stress accomplishments.”
In salary negotiations for a new job, knowledge is power. Know the salaries of other professionals in similar jobs, companies and industries. If the company is public, proxy statements will indicate its health, along with the salaries of the top executives.
Other place to look for your profession’s going rates include recruiters and want ads in industry publications, which also may run periodic salary surveys.
To turn up the heat in annual salary negotiations, “make your employer aware that you have other opportunities in a nonthreatening way,” said Lannamann at Russell Reynolds. At the least, it could speed up the company’s decision.
That’s not poker advice. Bluffing isn’t worth it. “If you’ve got a specific offer, name the suitor, because you will be asked soon enough for the identity,” Lannamann said.
And, of course, honesty in all matters is critical. “There are detailed reference checks on business and education backgrounds,” said Raines International’s Schwartz.
Take Marion Miller. Last week, the stockbroker was barred for life from the New York Stock Exchange and its member firms amid charges by the NYSE that he lied about his productivity and salary to First Albany Corp., a regional brokerage in Albany, N.Y.
Miller, who couldn’t be reached for comment, told First Albany in a March 1994 job interview that he brought in $350,000 worth of business at another firm in 1993 and netted $197,000 in earnings, the bank said.
Impressed by those numbers, First Albany hired Miller and paid him a $40,000 signing bonus. First Albany said it fired Miller when the NYSE showed his 1993 numbers were $19,000 and $7,800.
