Don’t Undervalue Your Worth
Jack thought he was looking for a job during the worst of times. It was 2009, and he had been fired from his job as President of a $1.5B consulting business with a Fortune 100 company. His confidence was badly shaken, when he came to us after six months of searching. We checked his references and verified what his track record implied; he was a 37 year old superstar who had been arrogant and naïve. He had been fired for angering the wrong person.
After three months, Jack had two viable and simultaneous offers. He analyzed the pros and cons, and one opportunity came out on top-but barely. He wanted to negotiate carefully with his preferred choice (Company #1). Because he desperately wanted to get back to work, he was extremely nervous about every step of the negotiations. I deferred to his cautiousness while encouraging him to negotiate some improvements to Company #1’s offer. His counter was fairly conservative, considering his other opportunity.
When preparing his counter for his second choice (Company #2), I asked him to define an offer he couldn’t refuse from Company #2. He took his time and spelled it out for me. Their original offer was $500k base, 50% target bonus, .5% equity, and relocate headquarters after 12 months to Jack’s hometown. Jack decided he would accept the Company #2 offer if it consisted of the following changes: broader responsibility as the COO, 1.5 % of the company, a base of $800k, 100% target bonus, and a $500K sign on bonus (for family disruption during the first 12 months).
I pushed Jack to counter Company #2’s offer with the package he had just defined. He resisted, because he thought Company #2 would immediately turn him down. With much discussion and support, Jack agreed to follow my advice. Company #2 was a viable option for Jack, but unless they were willing to give him the package he defined, he would turn them down. He owed Company #2 a shot-as it was a very viable second choice for Jack. And if Jack negotiated in a transparent way, Company #2 would have an opportunity to give it their best shot. He presented his counter to Company #2 with an upbeat and honest approach, explaining that the other position was his first choice due to its location. The family would need to be apart for a long period of time, until their house sold in a terrible real estate market, so Company #1 came out on top.
Why would any senior executive undervalue themselves?
Since the economic downturn in 2008, many executives are far less willing to push for what they are worth for three main reasons:
1) They undervalue the compensation package for their role within their industry. They are out of touch with rapid and frequent changes in the marketplace. Their compensation intelligence is based on what has happened within their own company since the crash and from their most vocal although not necessarily representative, friends, family or colleagues.
2) They have lost confidence in their ability to negotiate top terms for themselves due to a loss in net worth, perhaps smaller or no bonuses, or maybe a period of job loss.
3) They fear that during spotty economic conditions even C-level offers get rescinded-either due to a change in business plans or the perceived abundance of senior executive talent waiting in line. They rush to sign an offer prematurely.
How do I made sure it doesn’t happen to me?
1) Get good data. Research compensation packages in like companies with like roles. The data is available for C-level and senior executive jobs. Find it.
2) Work hard and smart to get at least two offers, especially if you are miserable in your current role or in between jobs. Don’t accept a lesser position or lesser compensation. If you are out of work, accept consulting projects and positions. Keep your objectives and your value at the forefront of your mind.
3) Let the negotiation process play out to its natural conclusion. Companies are used to competing for anything of value – especially talent. This will allow you to evaluate the best opportunity for you. Keep in mind that very few offers get rescinded. During 27 years of making and facilitating offers at the C-level, I have seen only two offers rescinded: 1) when I was a COO with Human Resources responsibility, we offered a job to an heir apparent EVP of Sales and he missed the CEO’s written deadline to accept his offer by 8 hours and 2) at Waterman Hurst, a C-level client ignored my advice and suspended negotiations during his three-week honeymoon. Those two mistakes seem almost ridiculous, but they are real. Consider that companies are made up of people with egos with boundaries.
4) Keep your emotions and stress level in check. Aggressive negotiations tend to be shorter and do not result in the best offer. While offers very rarely get rescinded, relationships can start on the wrong footing, due to emotional behavior, a lack of transparency or gamesmanship. Respect that the other party has a lot at stake too. And if the negotiations are considerate and transparent, in the long run, you will retain positive relationships with the directors and/or executives within the companies that you turn down.
So what happened to Jack?
Company #2 met all but one of Jack’s demands. They doubled their equity offer – rather than triple it. They gave him everything else – including more responsibility as the COO which required 50-75% travel overseas, as the company was European owned. Jack decided to accept the offer from Company #1, because this option was highly valued by his family (no relocation and limited travel). Because he had two offers, he had been able to significantly improve his offer from Company #1. The improvements included the following: 15% more cash compensation, a better defined bonus scheme with the first year guaranteed, as well as a $400K sign on bonus. He chose to take them at their word with regard to equity-as they told him their initial offer was final.
Jack’s confidence level was rebuilt during the rebooted job search, particularly during the negotiation process. When Company #2 came back with their blow away offer, Jack finally relaxed and joked on the phone with me-the first time in a long time. His confidence was restored after a damaging departure from his last company and a year looking for work. He also knew what he was worth.