Sometimes I am asked the obvious question: Why not lie about your present salary make it much higher than it actually is and negotiate from there? I do not recommend this. Aside from any ethical considerations, it is easy for a PE to find out your actual salary if he wants to. A surprisingly large number of companies will release this information to anyone who claims to have a need to know. Some "friends" from former companies will gleefully give a formal denial when asked to confirm the figure you have stated to your PE. Or the PE could ask you to produce a W 2 withholding form or even your federal income tax return. Then, of course, there are agencies that specialize in background checks. Ergo, lying is not recommended.
If for some reason you are forced into revealing your current salary, there are acceptable tactics you can use to enhance the picture. You can give a figure that includes an expected salary increase. For example, if your annual raises have been averaging 10 percent over the last few years, you can add that expected 10 percent. Or you can include the dollar value of fringe benefits such as bonus, car, and stock options.
Why you shouldn't give a single figure during negotiations
Negotiations require a good deal of "indirection" and patience. After the strain of a vigorous job campaign and the stress of the interview, many job hunters feel great relief and goodwill knowing that they are about to get an offer. As a result, they want to be direct and have done with it. "Look," they would like to tell the PE, "I know you want me, and you know I would like to come to work for you. I need $X per year in order to do this."
Such directness is generally a mistake. Even if you really have only one salary figure in mind, do not say so. If you do, you surrender all psychological advantages to the PE. Any additional negotiating for example, moving expenses and other conditions of employment will rest in the PE's favor, not yours, even if he agrees to your salary figure. Many PEs enjoy negotiating and may not be as eager as you to conclude the deal. If you cite a single salary figure, the PE will start to negotiate from there and I promise you that the bargaining process is always downward, never upward.
More than likely, your salary goal consists of two figures: the top a figure you feel you can achieve, the bottom a minimum you would accept. It is always best to give the range in negotiations. If you state only the high figure, the PE may feel he cannot get you at a lesser figure. If he can meet your demand, that's fine. If he cannot, or has a lower figure in mind, you may find it difficult to reestablish negotiations. If you state the lower figure, you may lose money because the PE was ready to pay more, or the PE may have second thoughts about hiring you because you have asked for less than he felt the job was worth. By citing a range of compensation and giving it some credibility by mentioning a respected source for your information you protect yourself, enhance your negotiating position, and allow negotiations to continue regardless of what the PE has in mind.
What to Do when the PE Counters Your Salary Range
Let's review where we are. During pre negotiations you gave some broad hints about salary without giving an exact figure or mentioning salary directly. During the interview, when you realized that you had made a sale, you stated a specific salary range to negotiate from. Several things can happen at this point:
- The PE may name a salary figure within your range that you find acceptable.
- The PE may counter with a salary at the lower end of your range (or below it) that you find unacceptable.
- The PE may state his own salary range, which may or may not overlap yours.
- Finally, the PE may defer a decision, stating that he must discuss the matter with his staff and asking you to return for a second interview.
If the PE counters with a range, your target is of course the upper part of that range. Chances are you will not be able to get more than the top figure. However, if your minimum acceptable salary is above this, now is the time to say so. Tell the PE that the job appears very challenging and you feel you would enjoy working for the company; however, you already have an offer for $X (a figure 10 to 20 percent higher than your minimum acceptable figure) and feel the minimum acceptable salary taking all factors into consideration is $Y (a figure X percent above your minimum). You will leave room for further negotiations without going below your minimum acceptable figure, and you may still get more than your minimum amount.
If the PE refuses to move into your acceptable range, thank him for his offer and tell him you are unable to accept. Let him know that you are still very interested in the job, and ask him to contact you in the next week or so if there is any way that the salary level can be increased. If the PE says that it is impossible to go higher, try to make up the difference by negotiating for fringe benefits above the standard package offered.
In addition to salary, you can try negotiating for a company automobile, an expense account, club memberships, a bonus, or stock options. You might also consider more frequent salary reviews or an initial review after three to six months. Sometimes even though the PE cannot increase the basic salary for the job, he can increase the fringe benefits, so this approach is more than worthwhile.
If an impasse occurs, tell the PE that you'd like a few days to think the situation over. Using the techniques described earlier in the book, make an appointment for an additional interview on the spot. Before you return for the second round, think up several additional arguments to support your minimum acceptable figure. If the PE appears uninterested at this point, or if you sense that he will not change his stated (unacceptable) offer and will not or cannot negotiate fringe benefits, it is best to thank him, break off negotiations, and not waste any more of your time.
What if the top figure of the PE's range is within your range? The situation is similar to that of the single figure offer, except that you now have a top figure to which the PE may be willing to go. Obviously this top figure is your target, even if it exceeds your salary goal. One way of going after the top figure is to cite your mythical offer. Tell the PE that you already have an offer at $X (the PE's top figure). In response, the PE may meet or even better the mythical offer. At worst, he will probably continue negotiating.
