Management Audit with Stanton Chase's Executive Assess ...

STANTON CHASE INTERNATIONAL
This depends upon how
successful you are in your
negotiations. This article sets
forth several techniques that can
be employed to obtain the best
deal possible:
www.stantonchase.com
How do you ensure that your executive employment
contract contains all the necessary provisions?
First, you cannot begin your negotiation sessions
until you fully understand what your, and your
potential employer’s, goals are. You should set
down on paper, in order of importance, what you
want out of the new position, both from a
compensation perspective and from a career
standpoint. For example, do you plan to be at the
new company for the long haul or are you using
it merely as a stepping stone to bigger and better
things? If the former, you may want to stress longterm
compensation, such as equity participation
in the employer, as well as current salary and
bonus. Conversely, if you only expect to be with
the company for a short period of time, then
current compensation (including annual bonus)
may be more important.
At the same time that you are analyzing your goals,
do your best to determine the goals and interests
of the potential employer. In doing so, you may
find that there are situations where imaginative
bargaining could lead to mutually beneficial
solutions. For example, through subtle questioning
you may find that the potential employer currently
is short of cash, but has significant potential for
growth. Thus, you can steer the negotiations to
provide you with substantial equity participation,
more than you would have known to ask for had
you not known of the company’s financial
condition and prospects.
Second, you must evaluate your leverage against
that of the potential employer. How badly does
each party want to do the deal? For example, how
much do you need the job? Are you reasonably
secure or insecure in your current position?
Similarly, what is the potential employer’s fall-back
position? Do they have anyone waiting in the
wings who is as qualified as you? How badly do
they need to fill this position and how quickly
must this be done? Deriving answers to all of these
questions will give you a fair idea of the relative
leverage between the parties and, accordingly,
will tell you how “tough” you can be in your
negotiations.
Third, when you make your compensation desires
known to the other side, you must be able to
thread the needle between selling yourself short
on the one hand and making exorbitant demands
on the other, which could cast a pall over, if not
outright kill, ongoing negotiations. To do this
effectively, you must do your homework. What
are your comparables (i.e., what are your
colleagues in similar positions in similarly sized
companies earning in terms of salary, incentives
and benefits, etc.)? This information can be derived
through careful research, often using
compensation tools found on the internet, by
hiring a compensation expert or by relying on
experienced counsel.
Fourth, and most important, is the strategy you
employ in the actual negotiation process. You do
not want to appear too eager by making quick
offers and concessions. Although it sometimes
can be useful to make the first offer (as it would
be setting expectations on your playing field) in
most cases dealing with employment contracts it
is the potential employer who makes the first
move, at least with respect to salary issues. This
would allow you to “bracket” your eventual
compensation through your counter offer. For
example, if at some point you are offered “x” per
year in salary, and you would like to settle
somewhere in the “y” range (assuming that this
desire is backed up by useful comparables), you
would then counter in the “z” range, with the
expectations that you and the other party would
meet somewhere in the middle, your classic “split
the difference” approach which often will work in
end-stage negotiations. However, it is very
important that you not make any concessions to
quickly. Early concessions are usually larger than
those made at the end of the negotiation process.
Regardless of whether you are experienced in the
negotiation techniques described above, it is very
important that you consider utilizing an attorney
to handle the process for you. First, use of an
experienced attorney will give you a degree of
credibility in your negotiations that you otherwise
may not have. Second, the attorney can be your
“bad cop,” making demands on your behalf while
you stay above the fray and whom you can
disavow if negotiations take a turn for the worse.
Third, your attorney will have knowledge of many
important legal issues of which you simply may
not be aware. Lastly, as mentioned above, your
attorney (again, if experienced) will be aware of
the standards of the industry, which will prevent
you from making unreasonable demands on one
hand and from underselling yourself on the other.
Published on: https://www.bluesteps.com/newsletter/Contract-Negotiation.aspx
Author: Robert M. Fields represents executives on a national and international basis and can be reached at his New York
City office at (212) 672-1672 or his Westchester County, New York office at (914) 763-3788. You can also contact him by
e-mail at rmfields@rmfieldslaw.com
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