Salary Negotiation for C-Suite Executives
Negotiating pay becomes complicated even for seasoned senior executives because of what is at stake. If you fail to be assertive enough, you are leaving money on the table and if pushed too hard, the offer could slip away.
The ability to strike the right tone to reach a win-win situation requires meticulous planning, preparation, and decision-making skills to get the right compensation package. Since this process is exercised only 3-5 times in their career it becomes challenging and critical for their success.
A potential employer would be still evaluating a candidate during the salary negotiation stage – on the behavioral aspects, ethics, passion for the job vs greed for money, etc. True, they would lose valuable time if they were to rescind an offer, but they can still do it if the preferred candidate behaves unprofessionally and erratically.
It is important not to negotiate until you have a firm offer. Once the negotiation process has begun, it’s important to conclude the negotiation quickly to avoid negotiation fatigue. A firm, confident approach than a friendly, warm way would yield better results according to multiple studies.
Always look at the big picture and go in for the long term beyond money - position, access, expansion of the network, and future opportunities. A multi-dimensional approach must be taken while deciding on an offer.
Here are key things to keep in mind during the three stages of an offer negotiation:
- The run-up to negotiation starts way in advance – during the interview stage, imprint their minds with facts, figures, and confidence that you are worth the money.
- Know where you stand – how important is this job for you and how important are you to them? They like you and you are their preferred choice but if things go south, they can always look for another option.
- Get an understanding of how much the incumbent got paid or gets paid. This is especially easy if it’s a public company.
- If you are evaluating with a private company, and if you are at liberty to ask for financial data, ask so. It will give you a sense of what you must ask for and what they must be willing to offer a CEO. The average S&P 500 company’s CEO-to-worker pay ratio was 299-to-1 in 2020 according to AFL -CIO. Do your math to reach an acceptable number.
- Get an industry benchmark but don’t rely solely on this. No two companies are the same. You can ask the search consultant, other executive search contacts, or even trusted compensation consultants. Don’t rely on online estimates. It is less likely that the previous CEO or C-suite executive posted his or her salary online.
- Think objectively – what do you need vs what do you want vs greed. It’s always ideal to strike something in between what you need and what you want.
- Think of how some executives you hired got something from you in the negotiation process. Run through their approaches and adopt good tactics.
- If the opportunity is with a public company, think about what the shareholders and market reaction would be.
- Approach with an open mind. See what the offer is. If you are happy, accept with no qualms. There is no hard and fast rule that you must negotiate for the sake of it.
- If you are to further negotiate, manage your tone, attitude, and response – don’t show a very different person than you portrayed during the interview. Don’t be stubborn. Always leave room for further discussions.
- Get an understanding of what is important for the company – lower cash component and higher stock or performance-based increase? Or even start for less but with guaranteed increase approach?
- Be prepared to give them wins even as you win elsewhere.
- Think what else and where else can be added or adjusted – be creative with solutions.
- Manage ego and emotions. Keep everything professional.
- Be clear and upfront about what you need to relocate.
- Have a “we both need each other” than a “they need me” attitude.
- Stop unproductive comparison – with your current salary or your financial goals in the next 3 or 5 years.
- Keep away unrealistic expectations. Just because they can pay doesn’t mean they want to pay you.
- For a moment, stand in their shoes. Try and understand their rationale.
- Have a single point of contact or maximum two for negotiations.
- Last-minute surprises or additional requests after a negotiation is concluded are never a good idea.
- Never re-open negotiation discussion once you have accepted the offer.