Successfully negotiating executive compensation

[2 minute read]

One of the trickiest areas to maneuver in the executive recruitment process is the compensation negotiation process. Of the entire process we continue to find this step the one fraught with the most pitfalls.

Some lessons we have learned :

1. Always be a clear upfront with what the current compensation of a candidate is

It is important that all current compensation details of the candidate are clarified as early as possible in the process and all the decision makers are aware of these details before they move the process forward.

Should a candidate’s current compensation be outside of what is possible for a client, it is best for all parties to be aware as soon as possible and for the process to be stopped, or for the candidates expectations to be managed.

2. It is very difficult for a candidate to give compensation expectations unless they fully understand the role

The expected compensation of a candidate will typically increase and decrease in relation to their perceived value of the role.

Their expectations are going to depend on :

- how much the opportunity aligns with their career ambitions

- what the perceived risk (orgnisational and role) of the opportunity is

- their satisfaction with their current role and organisation. (i.e. the push for them to make a move)

3. It is always worth positioning a number verbally to a candidate (via a 3rd party/Search Firm) to explore their expectations

When a number is finally approved, rather than put forward a written offer with that number, we have found it prudent to position a potential number to a candidate verbally (clearly qualifying it as not being a formal offer) to understand their appetite. This allows a candidate to give their honest feedback on how that number aligns with their expectations vs their understanding of the role.

It is much easier to give honest feedback on a verbal number via an independent 3rd party than to give feedback directly to a potential employer once a formal offer has been made.

4. Never make the first offer below what the candidate is currently earning unless you have managed their expectations down earlier in the processes

This may seem very obvious at first, but we do find clients who take a candidate through the entire process and then offer a candidate less than what they are currently earning. It is not impossible for a candidate to move for less but if the client is not able to afford a candidate's current package, it is critical to manage these expectations as soon as possible in the process.