Secure the best salary deal

By Derek Parker

There is room for salary negotiation in the professional jobs market but those seeking to move up should be careful not to overreach, says David Young, national sales manager for executive search firm Australian Recruiting Group.

”I would characterise the existing market conditions as fair rather than strong,” Young says.

”There are certain fields, such as engineering and health care, where it is a very good time to be in the market for a new job, but there are others, such as human resources and sales, where there is an overabundance of people.

At the same time, bonuses linked to performance are generally down, due to the broad economic conditions. It adds up to a picture of restraint in salary growth.”

While the overall economy has become more buoyant in the past six months, many companies are still wary of the possibility of a double dip downturn, and are determined to remain lean and mean in containing their personnel costs.

On the other side of the equation, many employees who put their career development plans on hold last year and early this year in favour of stability are now seeking ways to get back on track.

Employers are looking for people who can clearly add value and job candidates have to demonstrate how they can contribute when they are applying for a position and are discussing remuneration terms.

Because there is a surplus of candidates in many areas, employers are often recruiting people directly rather than using placement firms.

However, placement firms are still being engaged for very senior jobs, specialist jobs, overseas recruitment or recruitment projects that involve confidentiality.

Where placement firms are used, the firm usually acts as an intermediary in salary negotiations, starting from a band put forward by the employer.

Aware of the costs of recruitment, some employers are going to considerable lengths to keep talented people. This can open the possibility for employees to improve their remuneration, and also their non-salary benefits, when their contract is up for review.

But Young believes that, over time, remuneration is maximised when a employee moves between companies.

”Staying at one company too long, even in different positions, can make you seem overspecialised, which can count against you in negotiations,” he says.
”Four years is about right. Two years is a bit too short, in my view. It can make you look as if you have no sense of loyalty.”

But he points to cases of generation-Y employees who are quite willing to move between firms very quickly, if better money or opportunities are available. They are also willing to seek a better counter-offer from their existing employer if they receive an offer from another company.

”This younger generation have a different way of looking at work,” he notes. ”They don’t have much loyalty, but neither do they expect loyalty from their employer. Whether that attitude will change as they get older is an unknown question, but for the moment they can be quite ruthless in playing one offer against another. An employer who finds themselves in this position has to realise that it is nothing personal, just a different perspective of the world.”

In most cases of professional recruitment, remuneration is not the first issue to be discussed. Instead, it is raised in the short list round of interviews. For this type of negotiation, employees should have a reasonable sense of the prevailing rates for their level and for comparable jobs.

Discussion with peers and an analysis of job boards is a good way to gather information, although an important point is to look beyond the bottom-line salary and consider other benefits, including flexibility of work arrangements, long-term career development possibilities, and even the desirability of the company brand. An employee should also have a clear idea about what they want.

”When you are in a negotiation, it’s a good idea to make sure that everyone has the same understanding of what is being said, especially where the offer is a package with a range of components,” Young says.

”One common issue is superannuation. The employee needs to make it clear as to whether superannuation is on top of the salary package quoted or if its included in the total.

 The impact of the fringe benefits tax must also be established. These are significant dollar items that can affect the net pay an employee receives.

”A further point of attraction for candidates is the offering of flexible salary packaging for employees where cars can be novated or other benefits can be exchanged in lieu of cash.

”Ensuring that these things are understood by both sides can save a lot of aggravation later on.”

While salary negotiations can often be fairly robust, Young advises that an aggressive attitude gives a very negative impression to employers.

”If an employer makes a reasonable offer and the employee counters that they can get $10,000 more from the company across the road, then the employer is likely to suggest that they go across the road,” he says.

”That sort of arrogant attitude often makes an employer think that this person is going to be more trouble in the company than they can possibly be worth.
”In the end, like all market transactions, salary negotiations are about finding the right balance.

”The employer wants to feel they are getting value for their money, and the employee wants to feel that they are being properly compensated for their efforts.

”If either side feels they have been deceived or exploited at the start, then the ongoing relationship is probably not going to be a good one.”

Article from The Weekend Australian, August 7, 2010.