The scene is set. You landed the job. You played your cards right and your new employer has put an offer on the table first. Before you summon your inner Trump and step up to hammer out that killer deal, make sure you understand exactly what’s on offer.
Recently we shared our ultimate how to guide on negotiating the best salary. It’s an art form, and the further you progress in your career, the more there is at stake. Once you get the offer, here are five focus questions to ensure you’re well informed and ready to get the best deal.
Question 1: What are the Numbers?
Know your numbers. It’s stressful landing a new job and money is a delicate topic – it’s easy to misunderstand or make assumptions. When an employer says they’ll offer $100k are they really offering:
– $100k base salary plus superannuation (super).
– $91k base salary plus super.
– $76k base salary, plus a $15k bonus for meeting all targets, plus super.
In these three variations, there could be a massive $300 a week difference in fixed, take home pay.
The make-up of a total remuneration package consists of:
– Base salary.
– Super (minimum employer contribution is 9.5% of earnings).
– Variable pay such as bonuses and commissions, which also include a super component.
– Financial benefits, such as having a company supplied vehicle for personal use, which may attract Fringe Benefit Tax.
– Employee share schemes or stock options, which attract other taxes in the longer term.
Understanding fixed take home pay (use this calculator to work it out) is critical – especially for those with variable pay components.
Question 2: What are the Variable Components?
The degree to which you question variable remuneration will vary – your goal is to gain confidence that it will be paid. Companies can set unrealistic targets and employees are often offered bonuses against targets which they can do little to influence.
Questioning performance bonuses
– Is the bonus paid on personal or company performance (or a mix of both)?
– What are the targets and metrics?
– Is there a sliding scale or partial payment if the target is almost met?
– Who does the bonus apply to / who shares the same targets?
– How long has this approach been used and is the bonus typically paid?
Questioning commission structures
Commission structures should be easy to understand, with potential earnings that are realistic and achievable. Be wary of factors beyond your control such as the quality of the product or service you’re expected to sell and who else you may have to depend on to close deals. If plans are difficult to understand, or you have concerns, you need specialist advice. Negotiating bespoke agreements and dealing with small or new companies is not for the novices. Get help, or at least a second opinion, before you sign.
Some good questions for any arrangement are:
– Is this a standard arrangement for everyone in this role/team?
– What is the typical performance expected once someone is capable in the role?
– What are the products and services, and exactly how are the targets measured?
Question 3: Can I Get it in Writing?
People make mistakes and in most organisations, internal processes and approvals are required for formal offers. It’s not common but hiring managers can quote figures early in a process, only to be overruled before a formal offer. Numbers have been put forward as “excluding super” when in fact they don’t. Details about any variable components should always be recorded clearly.
Getting it in writing removes ambiguity, and shows they’re serious by qualifying all preceding discussions.
Question 4: Do You Offer Other Benefits?
There are amazing benefits on offer with some employers. Find out what’s available before you nail down your final package. From mobile phones, internet connections, discounted products and services, company vehicles, through to purchasing more annual leave – there is a range of perks to consider.
Salary packaging is a powerful tool to reduce the amount of tax you pay – great for high-income earners. Essential household expenses such as vehicles, car-parking, transport, or health insurance can effectively become tax-free – savings can be worth thousands.
After you assess all the benefits on offer, you may be willing to accept a lower base salary, giving you valuable flexibility when negotiating the final package.
Question 5: How Will Changes to Remuneration be Managed?
Your goal here is to understand how the company handles remuneration increases and gain confidence that you’ll be treated fairly – especially if you expect to progress quickly in your career.
If you think the company has a rigid and constrained approach to pay increases, you should negotiate harder for your starting salary.
If you’re lucky enough to be given a break in a new field or role with a chance to accelerate your professional development, it makes perfect sense to accept a lower salary. Unfortunately what can happen is eventually you find yourself being paid well below your peers and market rates. Companies lose many talented young employees due to a lack of flexibility in adjusting remuneration – an employee’s loyalty is played off against their desire to be paid fairly for their contribution. Try and talk to people who have worked at the company and get a sense for how you might be treated in the future. There is no generic advice for this situation, but there certainly are experts who can help – getting a career coach to help can pay big dividends.
Our post on how to negotiate the best salary will help you approach the conversation, but certainly, seek expert advice if you feel you might be at a disadvantage.
Good questions to ask are:
– When and how is pay reviewed? What factors are taken into account?
– If I was the top performer in your team/this group next year, what sort of pay increase could I expect?
– If I’m promoted internally, would my new package be based on my existing salary or the new role?
– Throughout your questioning always stay enthusiastic, positive and be data driven, not emotional.
– Don’t negotiate along the way – get the whole picture, including non-financial benefits, before you respond.
– Never forget to place value on your work/life balance – consider commute times, flexible working hours, remote working, leave etc.
– The astute job seeker is always to lower their asking price for roles with excellent potential, better work/life balance, or an outstanding company culture.
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