You’re on the right track — you’ve successfully edited your toolkit, targeted only the right jobs, engaged your network, and tailored your messaging. But before you start to think about accepting an offer, you need to step back and take stock of your compensation needs.
A New Way of Thinking About Compensation
The compensation you earn from your job is the single most important source of your overall wealth. In an era where meager 2 percent raises are common, changing jobs is the one time when you can super-size your earnings and — just as important — your skills. After you’re hired, you’ll have to make an impact and get promoted before you’ll see a nice bump in income again. So don’t waste the opportunity by being ill-prepared. Instead, steel yourself for the process and be ready to advocate for what you need. Do this by focusing on two key truths that will affect your career in both the short and long terms.
So don’t waste the opportunity by being ill-prepared. Instead, steel yourself for the process and be ready to advocate for what you need.
You Need to Get Better at Negotiation
If this series only teaches you one thing about managing your career, it should be this: the number one skill that will affect your success and career longevity is negotiation. Here’s why: if you were a college grad 20 years ago, you might expect to have 10 jobs between college graduation and retirement. Today, you can expect to have almost that many careers before you retire. What these stats don’t account for are all the new jobs you’re likely to negotiate for and land inside your company (aka “the big promotion”). Additionally, for today’s college graduate, in your career you can expect to get laid off with much greater frequency than your predecessors. That means you’ll be negotiating a boatload of severance packages.
That’s a whole lot of negotiation and if you’re not good at it, it will adversely affect your ability to maximize your earning potential over the duration of your career. There are tons of articles and books that can help your skills. But your first step is to admit that you need to improve your negotiation skills and that you’ll do what it takes to get better.
You Need to be Adding New Skills Constantly
Your skills bank, and keeping it relevant, is the only thing that will protect your earning potential. If you invest in stocks, think of skills as your great “hedge.” This means that you’re protecting against the downside. So even if your company has massive layoffs, if you make sure that your skills are relevant and forward-looking, you’ll still be attractive to other companies.
Important: don’t assume that your continued quest to acquire relevant skills is important to your current or new company. If you’re working in a company and are great at doing what you do, taking you “off the line” and training you on new stuff may adversely affect their productivity. And if you’re entering a new company, they’re hoping that you come already packing new skills.
In every case, knowing which skills may be atrophying and investing in keeping them robust is no longer your employer’s job. It’s yours. Negotiating to gain skills is just as important as knowing how to ask for monetary compensation, because your skills will turn into money later on. Simply put, new skills = more money. Get used to looking at compensation and skills in tandem as your career progresses. For instance, sometimes it might make sense to make a lateral move, because you’ll earn a valuable skill in an in-demand area that will pay dividends for the next decade. That’s a great trade because you’ll ultimately earn more down the line. Thinking in terms of this is paramount to success in the innovation economy that we’re living in now.
Compensation Is More Than Just Salary
Modern job hunting dictates that you will be asked early on about your compensation targets. Companies will want to know not only what you need in your next role, but what you were previously earning, and why you deserve more now. If you’re well-prepared, you’ll be able to defend and increase your compensation. If you’re not, you’ll probably choke.
Be ready for companies to ask for compensation targets up front. They do this not because they are trying to take advantage of you, but because they want to make certain before they get too far down the road that they can actually afford you. Their job description may read Maserati, but their budget might read Prius. Deciphering this early will keep you on track with realistic jobs that will keep your earning potential intact.
We’ve already bemoaned the effects that impulse shopping-style job hunting has had on recruiters and hiring managers, and one of the ways they’re dealing with the deluge of candidates is to use the salary question early. This helps them pare down the list to only those candidates they can afford. This is why you need to be forthcoming with the numbers you need and want from the outset. Otherwise, many companies will assume they can’t afford you and move on.
When asked for compensation information, you might be able to deflect once and only once. If that doesn’t work and you’re pressed further, then you need to share your realistic numbers. It’s important to offer this information up into 5 discrete buckets:
- Base
- Bonus
- Equity (if available)
- Benefits
- Additional Perks
Down the road, these will help you negotiate better, because each one is a lever in your overall package. When all five are effectively negotiated together, they’re likely to be more effective than when each is done on its own.
Your Task
In a spreadsheet, list these six categories in column A:
- Base
- Bonus
- Equity (if available)
- Benefits
- Additional Perks (education reimbursement, summer Fridays, etc.)
- Value to Skills Bank
In the adjacent columns, fill in the values for your previous company and your current company. As you gather offers from your target companies, input the offers for each so that you can weigh each opportunity in a realistic way.
The advantage of putting all of your deals into a handy spreadsheet is that it allows you to evaluate and price opportunities effectively. This will help you evaluate tradeoffs (better skills for lower base, lower bonus for more vacation, etc.). Doing this will allow you to be ready when the call comes in.
The Takeway
When thinking about compensation, take more than just base + bonus into consideration. Evaluate how each role will benefit your skills, because they’re your primary investment property in this economy. Waiting to see what a company will offer you is a dead-end strategy. You need to take some time, map out what you want and need and be ready to speak to it — and defend it — early in the hiring process.
What’s Next
You’re almost there! When the offers start rolling in, you need to be prepared. We’ll tell you what to expect and how to handle initial negotiations.
28 Days to a New Job is a month-long Hired Guns course designed to help you maximize your competitiveness in the current job market. Learn the secrets to getting a job from hiring managers, recruiters, negotiation experts and more. Read our our introductory post here. Or Subscribe Now to receive 28 Days to a New Job as a daily email.
