The Ten Commandments of Employment Negotiations

Here are 10 basic rules when negotiating compensation, the “Ten Commandments of Employment Negotiations,” to help you get the best possible deal when changing jobs, whether internally or with a new company excerpted from Get More Money On Your Next Job. They are:

1. Be prepared. The more you know about the job market and about your prospective employer, the better you will negotiate. Information is readily available on the Internet, at the library, from professional associations and through networking. Time spent learning how to negotiate is time well spent and will pay dividends throughout your career. Proper preparation enables you to know what is possible and to get what you want. This is the first commandment because it's the most important thing you do as a negotiator.

2. Recognize that employment negotiations are unique. While you want to negotiate the best possible deal, you need to do so in a way that doesn't damage your relationship with your future employer. At the same time, the employer's primary concern isn't negotiating the least expensive compensation package it can get away with. Keep in mind that your future employer wants you to accept the position and feel good about doing so. Remember that when the negotiations are over, you'll have to work with the person with whom you are negotiating.

3. Understand your needs and those of your prospective employer. Employment negotiations are about priorities- yours and the employer’s. What is important to you? Are you to accept a low salary in return for a large equity stake? Are you able to handle dramatic swings in income from year to year? Understanding your needs will also help you select the type of company you want to work for. While a family-owned business may be unwilling to offer equity or ownership to a non-family member, may be willing to offer a large bonus based on results. A start-up company, in contrast, may not be able to offer a market-rate salary, but will typically offer stock options. By recognizing what an employer is most willing to do, you'll be able to determine what trade offs are possible to maximize what you get.

4. Understand the dynamics of the particular negotiations. Sometimes you'll have skills that are in great demand. At other times, you may be one of many qualified candidates each of whom the company would be happy to hire. Sizing up the situation and understanding the relative bargaining position of each party will help you determine when to press your advantage and when to back off.

5. Never lie, but use the truth to your advantage. It is not only wrong to lie, but in employment negotiations, it's ineffective. If you lie during negotiations, sooner or later you are likely to get caught. Then, even if the employer doesn’t withdraw the offer, you'll be at a tremendous disadvantage, and your credibility will be forever damaged. On the other hand, total candor won't be rewarded. You're under no obligation to blurt out everything you know. You can determine what you want to say and how you want to say it, placing everything in its most favorable light. One key aspect of your preparation is recognizing potential problems so you can determine, ahead of time, how you will handle them when they inevitably come up.

6. Understand the role fairness plays in the process. Appeals to fairness can be an extremely powerful weapon. The guiding principle for most employers when they negotiate is fairness. Within the constraints of their budget and organizational structure, employers usually will agree to anything that's fair and reasonable. So be able to justify every request you make in terms of fairness. Understanding the role that fairness plays in employment negotiations can mean the difference between success and failure.

7. Use uncertainty to your advantage. The more information you convey to a potential employer about your bottom line, the more likely it will limit what you get. Employers typically ask what it will take for you to accept the position, before they make you an offer. With that information, a prospective employer can determine the minimum package it needs to offer. While an employer may not offer you as little as it can get away with, divulging too much information will likely result in a lower offer. By not disclosing your exact compensation or what it would take to get you to accept the position, you force a potential employer to make its best offer. When dealing with a recruiter, however, you may need to provide more detailed salary information. If you do, though, present that information in the most advantageous way.

8. Be creative. Consider the value of the total package. Look for different ways to achieve your goals. Be willing to make tradeoffs that increase the total value of the deal. By being creative, you can package what you want in ways that will be acceptable to the company. You'll also be able to find creative "trades" that allow you to withdraw requests that might be problematic to the company in return for improvements in areas where the company has more flexibility.

9. Focus on your goals, not on winning. Too often in negotiations, winning becomes more important than achieving your goals. It's important not to make your future boss feel as if he's lost in the negotiations. You'll have gained little by negotiating a good deal if you alienate your future boss in the process.

10. Know when to quit bargaining. The one sure way to lose everything you've gained through your negotiating efforts is to be greedy. There comes a point in every negotiation when you've achieved everything you could have reasonably expected to achieve. While most companies will want to treat you fairly and make you happy, few companies want to hire a prima donna. Being perceived as greedy or unreasonable may cause the deal to fall apart. Even if it doesn't, you'll have done immeasurable harm to your career.

This brings us to the Eleventh commandment:
11. Never forget that employment is an ongoing relationship. Job negotiations are the starting point for your career with a company. Get too little and you're disadvantaged throughout your career there; push too hard and you can sour the relationship before it begins.

Understanding these principles will allow you to effectively negotiate the terms of your new job in good times and in bad. Once you are hired, do a good job and continually seek out new challenges. As you take on added responsibilities and learn new skills, there will be opportunities to negotiate further improvements.