Salary Negotiations Avoid Executive Compensation Time Bombs
Would you like to make sure that you don't miss out on thousands of dollars in salary and compensation bonuses?
Do you need a few negotiating tips to ensure that salary and benefits are set up in your favor?
Innocent-looking boilerplate documents when you're hired may contain compensation time bombs. They lie imbedded in your personnel file ticking away – then months later when you want to collect your bonus, or take a new job, they explode!
But, if you negotiate correctly at the start of your job, you can ensure that you get the maximum benefit at the end of it. Neglecting to understand these details or get them tightened up at the start can cost you tens of thousands of dollars in the end.
Here are four "time bombs" and suggestions for defusing them.
1) Loosey-Goosey bonuses.
Companies will tell you that "based on past performance, you can expect performance bonuses in the X to Y range". Company-wide bonuses are hard to change, but bonuses directly tied to your or your department's performance can be significant. The key to cashing in on these bonuses is to define the parameters well. Ideally that will be done before your start date, but sometimes not. Sometimes you'll need to establish some baselines first. In that case, you can negotiate for a bonus with a ballpark value and fill in the details in the first 2-3 months on the job. The clearer the parameters, the better the chance you'll collect.
2) Vague Non-compete.
Companies fail because they can't get the right person in the right job. Non-compete agreements hinder that free enterprise and, more to the point, inhibit your ability to take a new job. If the fit is good, and you're compensated well, there's no reason to jump ship. It's to your advantage to be in the "Better Keep Me Happy" compensation game. See if you can avoid or diminish the applicability of a non-compete. Certainly do not agree to allow a non-compete to apply in the case of involuntary termination. If they are going to fire you, you should be able to work anywhere.
3) "Employment at Will"
Most states have employment at will [vs. right to work] legislation. It means they can fire you any time, and you can quit any time. As mentioned above, this job mobility is a critical element for an economy trying to stay competitive. Frequently you'll sign something letting you know this is the case. There's no harm in that, but it's a good thing to negotiate some severance compensation. If you can't get severance, sometimes you can negotiate notice! Ask that they give you several weeks notice; you'll continue working, but that will help you get a new job faster.
4) Forgivable Draws.
A draw is an "advance payment." Usually draws are advance payments debited against future commissions. That way if there's a long sales cycle, you get paid enough to live on while you're starting up. The time bomb here can be the repayment. Draws should be "forgivable." Create a statement clarifying that any advances paid are not considered personal debt. Sure, they can subtract them from future commissions, but if the job doesn't work out, you don't want to owe your soul to the company store.
