Negotiating with Entrepreneurial Firm
Hello,
I've enjoyed reading many of the questions & responses on this site! I'm in the midst of negotiating a position with a firm that does Enterprise Resource Planning (ERP) evaluations, implementations, and support. In this role I would eventually be a soup-to-nuts person, involved with the client from the time they are a prospect to when the ERP project is completed, with some support thereafter.
This company has been in business for almost 30 years, but ownership change occurred 2 years ago. This is a small, entrepreneurial firm (<25 employees).
This could be a wonderful role/opportunity for me, as I would work directly with the owners and clients in an area in which I excel. And, so far, I like the owners' style.
This role is basically to replace a partner who has retired. I would not be a partner in the firm, and *would* be performing many of the same functions that he did.
My questions relate to both what is included in the offer letter AND what has been excluded.
Included: A comp figure that, if I received full bonus percentages, would only match my current income. The variable (bonus) percentage is about 20% of the total compensation.
I DO wonder if the firm can currently afford to pay me the 10-15% increase that its recommended that I go for. 'Would love to have some advice on this point.
Included: A certification requirement, which I expected. However, there is a completion timeframe requirement (60 days), and I don't know the details of what it takes to get certified. What's a good way to ask for this, including an understanding of how this timeframe was derived?
Excluded: I've done alot of research on what should/could be included in a comp package. The types of things omitted from the letter include termination conditions/severance, details on the health insurance program (there is a very general explanation), travel expense policy. Should I ask for an explanation of each point?
Also, because it is is a small company, I want to have some written assurance that it is financially sound. So far, the owners have been reticent to provide documentation. What's a good way to firmly and politely indicate that I need this assurance?
Thanks so much for the help and advice!
See my response to your questions below:
Included: A comp figure that, if I received full bonus percentages, would only match my current income. The variable (bonus) percentage is about 20% of the total compensation. Generally, it doesn't make sense to change jobs for less than a 10-15% increase (bonus is extra, I wouldn't count that at all). With that said, however it sounds like this job offers a lot of intangibles that you really want so you might want to be a little more flexible on this point.
I DO wonder if the firm can currently afford to pay me the 10-15% increase that its recommended that I go for. 'Would love to have some advice on this point. They might or they might not. You could start with (politely) asking if the salary is negotiable or not and see where it goes from there. Remember the options are: They meet the new salary, they meet in the middle, they hold firm, they dump you and move on.
Included: A certification requirement, which I expected. However, there is a completion timeframe requirement (60 days), and I don't know the details of what it takes to get certified. What's a good way to ask for this, including an understanding of how this timeframe was derived? Do some surfing and find out what this certification is and what the normal timeframes are. You should be able to find this out yourself. If this is something related to your field and you expected this requirement, it is on YOU to find out what's involved in it, not pester your soon to be employer about it. Asking them makes it sound like you don't know what you're talking about.
Excluded: I've done alot of research on what should/could be included in a comp package. The types of things omitted from the letter include termination conditions/severance, Not at all likely, especially since you are not a partner. If you're terminated, you're terminated. That's the risk in most jobs. details on the health insurance program (there is a very general explanation), details are not usually listed in the offer letter. Many companies offer a choice of plans, etc. If the answer on the health insurance makes or breaks the deal for you then ask. Otherwise, you'll find out when you fill out your hire package. Since they DO offer a health plan, you're in the game. You can expect that you'll have to pay at least something towards it every month. travel expense policy. Why would you want that in an offer letter? You can assume that if you travel for business there will be some reimbursement. You can also assume that there will be guidelines and limitations. You should follow those when the time comes and then you'll have no issues. Unless you expect to be traveling every day in your own vehicle or something, this is not a critical point to accepting the job.
Also, because it is is a small company, I want to have some written assurance that it is financially sound. So far, the owners have been reticent to provide documentation. What's a good way to firmly and politely indicate that I need this assurance? I doubt you can get this without blowing the offer. You're not a partner and they have no obligation to share their finances with you. What the partners take home, their overhead, billing hours, etc. is really as private as what your salary is. There are no guarantees in life. Even a huge company like IBM or Chase can go under unexpectedly. Arthur Anderson went down in just a few months time. It happens. You're either reasonably comfortable stepping in with them or you're not. If you NEED written assurance, you need a goverment job. They've been around 30 years, even with a change in ownership recently, they're not exactly a start up fly by night.
Tess
OK. Starting from the top and moving down, here are my responses to your questions: It ordinarily makes no sense to switch jobs for less than an increase of at least 10% to 15% more than you're earning now - all other things being relatively equal. About all you can do is politely ask if their initial offer is negotiable and see what they say. If it's not, switching jobs doesn't make a lot of financial sense to me - unless there's a real opportunity down the road for this business to grow significantly and for you to grow along with it. Regarding the certification requirement, I think it's OK to ask about what's required to be certified, but I think it would be improper, verily impolite, to ask HOW they came up with that timeframe. The timeframe is what it is. Moving on: Asking about termination conditions seems like an inappropriate question to me. But I do think it's proper to ask about what's covered in the health insurance package and the travel expense policy. Finally, I think it's totally inappropriate to ask these people to prove that they're in a financially sound condition. As the owner of a "small" company myself, I would not share my company's financial information with a candidate for employment. If they've been in business for 30 years, (we're in our 27th year), they clearly wouldn't be offering you a job they couldn't afford to fill. My guess is that this is a privately held company, which means they don't have to disclose their financials to anybody, least of all to somebody they're only considering for employment. And asking for some sort of written assurance of their financial soundness would be totally insulting. I think you should let that particular subject drop like a hot rock. How they manage their finances, which can't have been all that poorly done if they've been in business nearly 30 years, is really none of your business - no disrespect intended. Anyway, if you can't improve your earnings by at least 10% to 15% what's the point in switching jobs?
Paul W. Barada
The Negotiation Expert
Hello,
Thanks very much for the prompt response!
This feedback is really helpful, as I've (obviously) been struggling with how to address these issues. It's great to get the perspective of a small business owner like yourself about the propriety of asking certain questions. I do apologize if any of my queries seemed insulting.
Regarding the pay: There are several non-compensatory benefits to my accepting the position: (1)It's much closer to home and (2)I just relocated and this job would allow me to meet/work with people in my new community. People/Relationships are very important to me.
As far as negotiating the base & variable portions of the compensation package, would it be reasonable to ask for an increase in base pay (in the $XX-$XX) range and ask for an anticipated total compensation package of $XX-$XX that incorporates the variable portion? I've been verbally given the bonus ranges and, based on your reply, 'expect that the owners won't be comfortable in putting those percentages in writing.
Thanks for your advice!
I wasn't insulted, I'm merely suggesting that to ask the prospective employer to prove they're financially sound would be insulting to them. I think you can ask if their initial salary offer is negotiable and see what they say. If it is, and you're asked what salary you have in mind, I think you can counter with a range that's approximately 10% to 15% more than you're earning now - and see what sort of response you get. But I also think you have to be prepared to state why the job will be worth that much more to the employer based on things like your previous job performance, experience, training, skills, and/or education. What really matters here, aside from the location and the interaction with the people - which I agree have definite value - is the base salary. Asking for anything more definitive about bonuses strikes me as the wrong thing to do. Being given a bonus is something employers choose to do because employees have helped make the company profitable, but bonuses are not a "right" to which employees are entitled. Bonuses, after all, are a function of profitability. No profits in any given year, no bonuses. If I were an owner, I would not sign anything that even hinted that a bonus was an entitlement, nor do I think you should insist on anybody doing so. If you do your job and help the company stay profitable, you can reasonably expect to receive a bonus - that's about all any employer who offers bonuses based on profits can do. If the building burns down or an outbreak of some loathsome disease decimates the workforce and, as a result, the company loses money in a given year, I wouldn't expect a bonus -regardless of how hard I had worked. Expecting an employer to "promise" more, given the unknowns of day-to-day business, would be unreasonable. Think about it from their standpoint for a minute: How can any employer tell employers in March what their year-end bonus will be next December?
Paul W. Barada
The Negotiation Expert
Hello Again,
Yes, one of the things I am trying to do is to see things from the firm's perspective, and since I don't have the experience, 'am struggling with it. Although I've worked in high-tech, the companies were quite large.
You are right about how any employer could tell employees (with full assurance) about what the year-end bonus would be at year-end. Perhaps if they were psychics?
This opportunity would be a *big* change for me, moving to the entrepreneurial world, and I must admit that I am being somewhat(?) risk-averse.
Thanks for the reality-check.
Without editorializing too much, I must admit that I am frequently surprised at how many people seem to assume that the only career path to follow is with a huge corporation. We know, for example, that most new jobs are created by small, (or at least "smaller"), companies. I have an admitted bias in favor of small business and entrepreneurship. Working in a small company means, at least to me, being able to have more of an impact on what happens to that business. It means being able to take part in a broader array of functions, tasks, and responsibilities. It means being able to share in the rewards that come with success. It also means taking more of a risk, but if you believe in yourself and your ability to help a small company turn a profit, that risk shouldn't keep you awake at night. Most of all, however, it means more control over your own destiny and the quality of life you want for yourself and your family. In a few words, being part of a small company can mean more personal freedom, but it can also mean more personal responsibility to create an environment of success that brings about and nurtures that personal freedom. Then, of course, there's the choice of working for Mega Corporation where the climb up the corporate ladder is a lifetime exercise under somebody else's supervision and control... But, hey, that's just my bias showing through.
Paul W. Barada
The Negotiation Expert
Hello,
I do agree that many people think that bigger=better in all respects, including employment. The thing I liked best about the high-tech company I worked for (when times were pretty good), was the flexibility of moving around to other parts of the company and learning, learning, learning. The people were energetic, smart, capable, and many of them were quite creative and humorous. I had the opportunity to travel to parts of the world I might never have visited otherwise. I made many friends there, with whom I am still in contact and see every once-in-awhile. And, the 'corporation' had the resources to provide many amenities.
AND, I worked like a dog (woof!). LOTS of hours, lots of deadlines, and pressure. As the dot.com became the dot.bust, the corporation began squeezing, without the flexibility to easily reduce requirements. It was expected to (somehow, nearly instantaneously), do more with less. When I got my walking papers (4th round of layoffs), I was very pleased. It was time to go.
I do know that I have become more of an 'entrepreneurial' type in the past few years. I want the benefits that you have mentioned and I am (sometimes too much) highly personally accountable for whatever I'm involved in.
I am concerned about making a major mistake in the negotiations for this new opportunity. 'Have done a lot of research. I've received a lot of input, including yours, which I am grateful for. I want to do the right thing(s) for myself and not jinx the negotiations by stepping way out of line and asking for what just doesn't make sense in the small business/entrepreneurial environment.
Besides what I've already queried about, are there any other risky areas that I should avoid putting in writing....or even discussing?
Many Thanks.
Allow me to respond to your question the other way 'round. As a general rule, I think it's best to confine your discussion with these folks to two areas. 1) The requirements of the job itself and how well your qualifications line up with those requirements, and, 2) General questions about the company - such as their short-term and long-term goals, where they see the company going over both the near term and over the long term. Other areas to discuss include a general idea about their corporate culture, what their general beliefs are about their workforce, their views about individual career advancement, flexibility, creativity, and individual initiative. I'd ask broad sweeping question of the sort I just mentioned - they will not only demonstrate your interest in them, but also give them the chance to tell you what sort of organization they believe they are and a sense of where they're going and that they want to become. Make sense?
Paul W. Barada
The Negotiation Expert
Happy Friday,
Yes, your reply does make sense. The risk-averse-me is still uncomfortable, and I won't get anywhere by waiting to have the bulk of what I want to know in writing. The more adventuresome-me says "just get on with it and see what happens!" Thank You.