Many of our friends in the valley feel completely unempowered to negotiate compensation plans since COVID began making waves in the US in March. The common stories we hear from top talent are either:
While that fear may have some validity it does not outweigh the potential lost opportunity of a better career advancement. Many in the country are hurting, and plenty of people are without jobs. However, many software companies are seeing phenomenal growth, and the career options and opportunities for those in tech career paths become better with almost every passing day.
With the current climate of uncertainty, even high performers seem to be more risk averse while negotiating their value in roles. But companies are more worried than ever about losing top talent in this uncertain time, and so right now might be the best time for you to renegotiate.
This is the time to align your value with your company’s goals and your own.
A few of our friends have recently tested this theory, and one even got a raise of $45K from a base pay under $200K.
In March of 2020, recruiting and hiring in many companies froze, or was delayed due to COVID uncertainty. It felt like every other day there was a new article talking about layoffs around the country.
And while the job market in the tech industry has bounced back, the rhetoric of nationwide unemployment is still rampant. In fact, by May that tide had turned and many companies gained ability to forecast their core business, as well as forecast hiring needs. Two examples include:
If you sit in a competitive and growing part of the software and tech world, the poor job market is a myth. This is no time to feel disempowered.
Instead, the first half of 2021 is both an important time to consider your career path and a key time to negotiate for compensation plans either internally or externally. As a high-performer, now may be the best time of your career to renegotiate and create long-term alignment with your company, or seek a new company that is better aligned with either your own values or the massive economic shifts underway. Know what you are worth and push for the right plan for your current contributions to the business.
We have seen a few trends in how to negotiate compensation / recruit during COVID.
The following are the most common mistakes to avoid and tips to reframe your thinking.
All negotiations come down to leverage in some form or the other. By only focusing on the past you significantly weaken your position. Ultimately a founder's goal is to strategically spend capital in a way that maximizes future return on investment. No company in their right mind would offer an outside hire more money because they felt their compensation was too low at their old job.
A common response when an employee uses this tactic is that your past performance is covered by your previous contract with the company, and that is a valid point.
Some companies simply lack the ability to make material changes to title without mountains of political buy-in and support. For other companies, they may be able to change the title to your preference, but leave the rest of your compensation the same. Fighting for title, if you choose that path, may win a small battle but lose the war in terms of achieving your overall goals around compensation.
Your negotiation has nothing to do with your self worth or how much your managers respect you. Particularly in this climate, company needs may have changed with scale and markets - what it needed a year ago may no longer be relevant.
Preface the conversation by telling your manager this is not personal and you want to find long term alignment with the company. By mentioning this in the beginning you have a framework to reference as negotiations become more intense.
Know your market value and that there are always options out there, and back to earlier points, negotiations come down to leverage. When you make it clear you are staying no matter what happens in the negotiation, your leverage is decreased, perhaps down to zero.
All too often employees simply state they want a higher base pay or bonus. The complete lack of research, lack of preparation, and lack of real-time comparables harms the negotiating process before it has even truly begun. Leverage your internal network, mentors, or even outside advisors on how to prepare for this negotiation including who you should talk to within the company first.
Instead of falling into the above quagmire of mistakes, we recommend these solutions to ensure you are putting your best foot forward, and giving yourself the maximum chance of success in your endeavor to obtain a better or more fair compensation package.
Focus on what the business needs in the future and why you are a key part of that solution
Make clear in words, and ideally in quantitative details why you are the best person who can help the company reach the next stage in their growth trajectory. Clearly communicate how you are a proven asset and team player. Any new hire is risky and expensive,, not to mention the opportunity cost of ramping them up.
What is most important to you and what is most important to the company, both now and in the future? Are you willing to sacrifice cash now for equity later, and if so what is your preference, and what is your preference versus your understanding of company preference. For example, Amazon is widely known to have high equity compensation, and yet rarely if ever pays more than around $170K in cash base pay. Knowing your company’s preferences can save you a great deal of time and effort.
If you have the time and interest, another offer is often powerful leverage in these sort of conversations. It can take significant time and energy to get this outside offer. However, if you know your company matches outside offers, and rarely works on a negotiation without it, then this may be the right path for you. Patty McCord, ex Chief People Officer at Netflix, is famous for encouraging employees to interview at other companies.
Research, and predict what levers your boss/company cares about
This research should help inform you on both who to talk with first ( likely your first line manager), and will also probably help shed light on how other negotiations have occurred for either existing employees or current recruits. If you have any relationship with HR or recruiting that can prove helpful to understanding where the market is currently for other hires, and how to think about positioning yourself.
We rarely hear of anyone who emails these sorts of issues to managers with great success. Even if you are a star player, not using the video or phone call to convey important information like a compensation concern can put a bad taste in the mouth of leadership and harm your overall potential for the ideal outcome.
Additionally, you should be ready to adapt your strategy based on the response and verbal/visual clues your boss gives you during the negotiation. You would never call an all-in bet in poker without first trying to read your opponent.
Every negotiation is different, and your own compensation makes it difficult, if not impossible, to be fully objective. However, if you follow these steps, our experience is that you create the possibility of a very healthy engagement with your leadership, and probably showcase that you can and will stand up for yourself at the least. In a best case scenario there is an open attitude and mindset, your ask is logical and makes sense, and your leadership grants all or most of what you ask for enabling you to be an even more productive employee.
These conversations are almost never easy, and rarely is there a “perfect time” during COVID to surface these issues. However, if you avoid solving an underlying point of friction for you as an employee, it will likely surface eventually as a point of conflict in either your departure to another job, or decreased performance. Neither of these outcomes are ideal for either party, so get out there and see what is possible.
Hopefully, after you follow these best practices, you achieve your goal in compensation, promotion, and other career advancements.
The next step is to clearly define goals and objectives required to succeed in the new role / position / etc. Once you succeed in these new goals, it may be time to reach for your next promotion.
Ben is a serial entrepreneur, an alumni of UBS (I Banking), Tesla, HBS, LinkedIn, and a Co Founder of BestReviews (Sold to Tribune Publishing for over $100M, and sold again to Nexstar for $160M in November of 2020).
Jeff was the first non-cofounder hire at Truework (where Ben was an early advisor), and has built two multi-million dollar sales playbooks. On top of leading the company in sales every quarter, Jeff also closed the largest deal in Truework’s history.
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