Monday, April 6, 2015

5 Tips For Salary Negotiations

I've been noticing a lot more talk about salaries and compensation packages on social media as of late. After getting involved in a small conversation myself, it inspired me to write up a blog post on exactly this topic. Note, some of this perspective may be off by just a few years since my days as a rehab director. Nevertheless, the concepts and business constructs remain valid.

I hope you enjoy yet another student and career oriented post...!!!

5 Tips For Salary Negotiations

1. Start with a strong point of reference.
This may seem almost silly to advise; but, you'd be surprised how many times I was approached (unsolicited, mind you), with someone looking for a job saying "Oh yeah... here I am and I'll work for THIS amount." That amount, being something like 20-25% above my highest paid staff (not to mention even more than that, my own).

Doing your own market research on what competitive compensation packages are for your region is the first action of respect when you're approaching the table for negotiations. While you can certainly use websites like Glassdoor (which is actually fairly accurate), asking around for primary sources is the best. Nevertheless, anything is helpful -- just get an idea where the median compensation is per dollar and then extrapolate the totality of possible compensation packages. Check out this Cyber PT guest post for more info, and, this post on related interview tips in the same vein.

All this to say, be very mindful about the range your dollar signs can go. Most hiring managers, regardless of their titles, are typically paid only 5% above the average pay grade. There's a lot of red tape, unwanted overtime, and headaches that come with that 5%; RESPECT THAT FACT as you approach the table.

2. Know the business structure.
Knowing the business structure is an exercise in deciphering a department and/or firm's supply chain. This is really important to understand because while Tip #1 lets you know a good base of reference for negotiating a number, Tip #2 tells you the actual wiggle room you have while negotiating. While some places can't give you anything above what they initially offer (via company policy), some places just won't. It's not always up to the hiring manager.

Therefore, there exists several key factors to consider; the area, the location, and WHY they need to hire. Also, if and when (because you should) tour the facility to which you are a prospective candidate, take a peek and ask around as to what the turnover has been like. This will give you a huge clue as to why they are hiring and what the wiggle room per dollar actually is.

A department filled with senior staff; veterans of the department for 10+ years are very expensive to retain. They've received 10 years worths of merits and successive raises; it is likely they will want to hire you to lower their cost per minute. If the department is basically all new staff, what you are likely looking at is a shuffling period for the department or company; there is definitely wiggle room in this case.

Also, take a look at what the temp staffing is like. They need to fill a position, that's why you are there; however, they also need to have that position in the supply chain currently manned otherwise they are losing out on precious revenue and botching their customer service. So, take a look at how expensive the local registry (outside agency staffing) is, how much per diem they may be using, and whatever travel staff might be present. These are huge hints as to what they are spending to keep the department floating.

The middle point between how high you can ask for versus how much money they are wasting on temp staff represent the wiggle room between what they can offer and what you can ask for.

3. Consider the entire compensation package.
Some hiring managers may look at you like you're crazy when you want more money. These managers typically represent organizations that just don't find compensation in cash as the "big" part of pay; they compensate you on benefits. Now, don't take that kind of reaction personally. THEY know that their company gives them amazing benefits. To them, the benefits far outweighs the pay cut in cash. But, you don't know that about their company... not yet, at least.

This is where I tell you to fully evaluate any compensation package before you negotiate. This is also where I tell you that typically, unless you have mad connections or hackabilities, it is unlikely you'll have full access to the details of any given compensation package to where you can make counter offers right off the bat.

Take the offer home. Ask for a day or two to consider it, nothing more. You don't want to be wasting their time, nor yours. Examine the compensation package carefully. ALWAYS consider the entire compensation package; retirement accounts, pensions, matched contributions, health benefits, PTO, con ed dollars, mentoring, fringe benefits, work-life-balance, opportunity for upward mobility, etc.

I've mentioned in the past that some packages take from your direct dollars so they can have some present value of their own to grow the company. In exchange, their contribution matching towards retirement accounts is something truly insane. I've seen companies basically help you accrue upwards of $10k plus a year in retirement funds for the pay cut. So, just make sure you understand the details.

If this is your first job out of school, it's no time to be picky. Most of you already know my stance on what to do as a new grad. However, if this is your 2nd job or otherwise, it's time to get a little bit choosy and hustle depending on the situation.

4. Value Added, Cost Alleviated.
You're probably thinking, "Alright already! I get it. When do we get to the negotiation part?" Well, any smart negotiation needs to map out all the tools and pathways they have. That is why the first three tips are so important. Without those, you can't possibly utilize Tip #4.

The soul behind negotiating salaries is most basely this:
They are trying to rip you off, and, you are trying to get more of what you're worth.

Sorry, that's the truth of the matter. Where the middle ground is found is when the marginal cost of adding you to the department does not exceed the alleviating any temporary staffing costs and/or lost revenue because of your absence. The more value you add and the more cost you can convince them you'll alleviate, the more wiggle room you have to push the upper bound. Sometimes you can demonstrate how you've already proven your productivity is far greater than par. I've mentioned this in my post about writing resumes. You could also use any formal exposure to whatever additional training to your advantage. Example: Home health companies are always clawing for PTs already trained in OASIS. Competency in various EHR interfaces is also a welcome plus.

Just remember, Value = Benefit / Cost. How much benefit can you bring to this department, company, and/or organization for the cost of compensating you for your time, work, and presence? This is a key element in leveraging and justifying whatever upper bounds you wish to press for.

5. The Counter Offer (aka "Who's turns is it, again?")
Whenever negotiating, it is crucially important to know who's turn it is. Meaning, who has the control of the conversation. Now while in most situations, it is more common that the employer has the locus of control and they'll pass the control to you once they make their offer. Nevertheless, there are plenty of situations (to which I've been a part of) where the prospective candidate is actually in control! Just make sure when you make your move that it is actually your turn to speak. 

Now, you're probably wondering when a prospective candidate actually has the upper hand. Well, it happens when the costs of holding a position unfilled has been deemed unsustainable; basically, when the position has been opened for a long time and the market is just really shallow. Trust, me it has happened many times before and will continue to. You just have to have the right timing to strike that iron while it is hot.

So then, when "they" have the control and it becomes your turn, this is what you do:
  • Asking respectfully with words like: perhaps, consider, possibly, etc... Offer what they want , for what they are willing to give.
    • Typically, this means productivity.
    • However, it can also mean work schedule flexibility (ie weekends, 4x 10 hour days... even a 12 on a weekend to help with supply chain challenges)
    • It can also be managerial support; with operations being ever so tight in healthcare, it could very well be that the manager is struggling to contain the angst of their own department. Support from YOU could be a welcome thing. Caution, this could put you at odds with the staff at large. But, it is a negotiation strategy if you really want something.
  • IN RETURN, you then have some room to ask for things they are willing to give you. Surely, this could be another dollar an hour (maybe even 2 or 3). Make sure you quantify this; every $1/hr is $2000/year. Convince them you are both worth this and why they would want you to benefit from this.
    • Example: If feel this would better reflect the value I can contribute (aka what they want); and, would help financially in my circumstances (as a new grad) to which I can fully dedicate myself to this department and to you (the manager).
    • Good managers know that it can cost upwards of $20k in 2-3 months to fully train a new employee. They do NOT want to waste such resources on turnover. The bad managers... well, you wouldn't want to work under them anyway.
    • What this does is it locks in their need with their willingness to give. You're able to give them what they want. And, they don't want to lose that. Since you asked so respectfully, they like your attitude. Liking you is the most important part of any hiring process. Therefore, since they like you, they will want to find ways to help you. They rather not that you hire in, find all sorts of random other places to work per diem for better dollars, and then eventually get offered a full time position there.
    • So just remember, with the most likeable and respectful approach, offer them what they want for what you've gathered they are willing to give you whether in dollars, in benefits, in scheduling (4x 10s, weekend rotations in/out, whatever), sign on bonuses, extra CEU dollars, etc.
However! If the stars are aligned and it is YOUR turn as it is, this is what you do:
  • Asking with even more respect and grace than you would the first situation (as to demonstrate goodwill)...  Offer what they need, for what they are able to give you.
    • Now, I underlined need & able because I've had counter offers from people I genuinely liked; but, the offers were so unrealistic and borderline disrespectful that when I bumped the request up to the powers at be, they got shot down with brutality.
    • So, as stated in Tip #4, most of the time any hiring department wants value added and costs alleviated. Offer them this. Again, many times this is productivity. Other times, its the cost of poor scheduling conflicts due to seniority. Yet, other times, its unwillingness to see certain types of patients for reasons of familiarity, comfortability, competency, whatever it may be.
    • In such a situation, a hiring manager is so pressured to fill both the need of your presence in a position AND the additional value added need being filled, that they are going to do everything they can to convince their own bosses to give you the extra dime and reel you in. I've been there, personally, in such a situation. It's an interesting dynamic and the negotiations can be quite nerve wracking all the way up and down the chain of command. But, the way the hiring manager hustles on your behalf can really make for a wonderful working relationship going forward - it's actually quite touching!
  • IN RETURN, you can now ask for more specific increases in the compensation package that you are desiring.
    • Make sure that you are very clear and REASONABLE about what you're asking for. Avoid insulting the manager and the other staff by asking for a dollar amount far beyond what is actually fair, be it the pay grade or a sign on bonus.
    • Also, be sure that what you ask for is specifically communicated in relation to the need you are willing to offer to fill.
    • Example: If a department is wasting all sorts of dollars for weekend per diem staff, offer to work a relatively robust rotation of the weekend (if they don't already have that in play, or, if their rotations are out of control). In such a case, this is cost containment therefore you can ask for a bit of the cost being contained as part of your pay. You could probably seed in something like: "I'm sure you know that as a new grad, finances can be quite challenging. I like this place. I want to work here and I want to work for you. Could we perhaps, consider a rebuffed weekend rotation for me. For this, perhaps the powers at be would be willing to consider giving me 10 hour days so that I can be more of a work horse on the weekend while increasing my compensation by $X/hr. Just remember that "X" amount must be a reasonable recovery of the marginal value added per marginal cost alleviated.
Some Closing Thoughts
Negotiating your salary is always a game. Sometimes you make it; other times you break it. Sometimes what you ask for is a deal breaker. Other times, it a reluctance. Whatever the case, it is always a gamble. Just remember, the job market is still an element of business. It's JUST business -- it is nothing personal so treat it as such. Therefore, make sure you approach it this way. Surely, be likeable and charming, but also be sure to understand that these days, hiring managers are attracted to humble, thankful, and gracious applicants. Whatever you negotiate, it must benefit them as much as it benefits you. If you can convince them of this, they will surely do whatever they can to make the situation mutually profitable.


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  3. Thanks for sharing. Being persistent in salary negotiations definitely helps. I have also found several other tips that might be helpful.