Wage negotiation: money v total package

Tuesday, December 8th, 2009 - career coaching, economics, Employment, Professional CV, salary, salary negotiation


Wage negotiation: money v total package

Stack Of 50 EUR Bills

As it is coming up to Christmas – first mention of that word on this blog this year – I thought it would be a good idea to have a few “seasonal” blog entries. Some will be socially observational, some will be new years planning – but all will have an action in mind to help you improve your career in 2010.

Today blog entry is about wage negotiation, in the form of getting what you may have thought you could not achieve, let alone tough.

Wage negotiation: new employees

One of the advantages of being a successful job applicant who has not yet signed their contract, is that you know:

  • They want you
  • And they will be more flexible than you in negotiation of sorting out the details!

Companies are run on hard budgets: wages mainly. But most managers will ignore the small stuff until admin, HR or finance reminds them they have a budget allocation for something, eg training, and they have not spent it. Then all hell breaks lose, and there are often staff shortages in the last quarter as managers try to use up bitsa-budgets.

This should tell you much. You will only be able to negotiate so far on hard issues: there is a definitive limit, and thought shalt not pass it. Yes, there are ways of passing it, and applying via a recruiter is one of the easiest, but unless the expectation is already set beyond the nominal HR limit, then not much you can do about it.

But, the bitsa-budget items are there for negotiation for everyone. You always fancied a course in Hawaii – might not be possible, but full payment of an MBA is. You want a better car? Depends on the company, but extra allowance is possible. You need extra time to move home, or 5days extra holiday because your in laws live in Australia: all possible, and negotiated. You just have to know what is important to you, and soft for them.

Wage negotiation: existing employees

If you are an existing employee, wage negotiation gets tough. I always encourage new employees when in negotiation to think and talk about total package over total wage.  Total wage focus’s the employer on money, which is hard budget; total package focuses on soft items and new projects.

Part of the key in annualised wage negotiation for existing employees is to negotiate new responsibilities, while adding people below you. The simple reason for this is that responsibility means power, power means risk, and greater risk owned by a manager means more remuneration!

Secondly, HR undertake out of cycle pay reviews for those who have more responsibility.  Out of cycle pay reviews come with virtually unlimited budgets, as there is not a huge step increase in the wage budget like there would be as a result of the annualised pay review.

Hence, successful existing employee wage negotiation is associated more with delivered plans=, over actual hard nose negotiation. If you want an idea over how you could expand your role, then look at your managers existing job, and ask what you could take away from them that they currently don’t like doing?

Good Luck!

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One Response to “Wage negotiation: money v total package”

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