Negotiating Compensation Packages.Bargaining to get the best offer MOST PHYSICIAN executives will negotiate a compensation package at some point in their careers. Understanding what is customary and the outer limits of what is possible will help you negotiate an attractive package. A few ground rules will help you strike the best long-term deal: * Be candid can·did adj. 1. Free from prejudice; impartial. 2. Characterized by openness and sincerity of expression; unreservedly straightforward: In private, I gave them my candid opinion. about what your compensation is now and how it is computed. Many candidates feel they are undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. in their current positions. It's fair to point this out, but inflating your compensation ranks right up with placing false statements on your resume. It's one of the deadly sins (R. C. Ch.) willful and deliberate transgressions, which take away divine grace; - in distinction from vental sins. The seven deadly sins are pride, covetousness, lust, wrath, gluttony, envy, and sloth. See also: Sin of recruiting. * Negotiate for the long term. You will work with these people for years (hopefully). If you attempt to squeeze every last penny from the deal you may jeopardize jeop·ard·ize tr.v. jeop·ard·ized, jeop·ard·iz·ing, jeop·ard·izes To expose to loss or injury; imperil. See Synonyms at endanger. your long-term relationship. On the other hand, there is no reason to accept a position for less than your true value. * To arrive at a win-win situation you may need to be creative. Most candidates think of compensation as salary. In reality, it takes many forms. Look at all aspects of a package in order to understand your true economic benefit. If the prospective organization has rigid guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. , you may need to help them allocate compensation into different buckets to meet your needs and theirs. Factors at work Compensation packages vary with three factors: 1. Type of position 2. Type of organization 3. Your own qualifications Type of position If you are just embarking on your career in medical management you will have much less flexibility than physician executives with three to five years of experience. This is true no matter how much clinical experience you bring. These early positions tend to have narrow compensation ranges. As you gain experience, the compensation not only grows but the range widens. In general, compensation varies with position and location. The more desirable the location or the position, the lower the compensation. A tough job or a small candidate pool will lead to higher compensation. An executive with well-developed turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. skills will often command a higher salary than one with equally well-developed quality skills. That's because turnaround is a less desirable job and fewer candidates possess these skills. Type of organization Large organizations have less flexibility in compensation than small organizations. Large organizations often have salary bands, or ranges. These are linked to title and experience. Compensation is fixed within these bands. While cash compensation is less flexible, benefits are usually better in a large organization. Your qualifications This is probably the single most important factor for compensation. If you possess a unique area of expertise you will command a higher salary. A physician with extensive financial, operations or marketing experience will usually be able to negotiate a better compensation package. Your clinical specialty will not matter. Whether your background is in cardiology cardiology Medical specialty dealing with heart diseases and disorders. It began with the 1749 publication by Jean Baptiste de Sénac of contemporary knowledge of the heart. Diagnostic methods improved in the 19th century, and in 1905 the electrocardiograph was invented. or pediatrics pediatrics (pēdēă`trĭks), branch of medicine dedicated to the attainment of the best physical, emotional, and social health for infants, children, and young people generally. , it will not impact your compensation. It's your skills as a medical executive that matter most. Salary and bonuses Cash is the most important part of the compensation package. Standard cash compensation packages are usually comprised of a base salary and bonus. Generally, as you progress to more senior the positions you will have more compensation in the bonus. Bonus compensation is linked to performance. And you have the ability to increase compensation dramatically by meeting your goals. If you are recruited into the position, you can usually expect an increase of 20 percent in total cash compensation. If you seek out the position--either because you're terminated or want a career change--you will probably make a lateral move. The standard compensation package for medical director positions looks something like the chart above: Aggressive organizations are asking physician leaders to risk significantly more. This is common in senior level positions. Generally, the higher you are in the organization, the higher the percentage of compensation that is a performance-based bonus. While the risk is higher, so is the upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside . Bonuses are based on the results for areas under your control. In the case of a CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , performance of the entire organization will determine the bonus. Financial goals usually carry the most weight followed by quality and service. Signing bonus A signing bonus or sign-on bonus is a sum of money paid to a new employee by a company as an incentive to join that company. These are often given as a way of making a compensation package more attractive to the employee e.g. if the annual salary is lower than they desire. Organizations will often offer a signing bonus to make up for inadequacies in a compensation package. In an organization with tight salary ranges, the signing bonus may be used to fill out an offer when the range has no flexibility. One-time signing bonuses are also used to adjust for cost of living or housing differentials. Candidates moving into expensive markets often can't afford housing. The signing bonus can get them extra cash to move into the market. As an alternative to a signing bonus, an organization may guarantee a portion of the first year's bonus. For example, if a candidate has a $40,000 bonus target, $20,000 might be guaranteed for one year. This guarantee is usually used when there is uncertainty in the market or other outside factors that may cause a candidate to fail to meet their goals. Stay bonus In the climate of mergers, downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing and uncertainty, many organizations fear losing key executives in a time of crisis. A stay bonus is used to bind the executive to the organization to get through a crisis. It is offered when the organization is going through massive upheaval, such as a sale or merger, and there are a few key executives who must stay in order to carry out the transition. The stay bonus is paid at successful completion of the project. Usually when a stay bonus is offered, it is likely that your job will be eliminated at the end of that time. A stay bonus equal to one year's bonus is not unusual. This bonus is paid on top of the normal bonus and is tied to separate performance objectives relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the merger or sale. Relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. packages Relocation packages range from a U-haul and hamburger with a startup company The creator of this article, or someone who has substantially contributed to it, may have a conflict of interest regarding its subject matter. It may require cleanup to comply with Wikipedia's content policies, particularly neutral point of view. , to comprehensive guarantees against any moving losses if you take a job with a major corporation. Most health care organizations have modest relocation packages. Usually the amount is capped and limited to out-of-pocket expenses out-of-pocket expenses n. moneys paid directly for necessary items by a contractor, trustee, executor, administrator or any person responsible to cover expenses not detailed by agreement. . If you relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. , housing is a major issue. Selling your house is a hassle Hassle () is a location in Närke, Sweden, where a Celtic treasure was found in 1936. It comprises a large bronze cauldron which contained two Bronze Age swords of the Hallstatt type, a pommel of bronze, two bronze buckets with and it can be expensive. If you must move before your house has sold, most organizations do not help with housing costs. A few major organizations do. Stock Because of recent poor market performance, stock options have a bad name. Yet, if you join a large consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a or public company this will be your major way of creating wealth. Stock options give you the ability to purchase shares at a fixed price. If the stock of your company goes up, these can be very meaningful. If it doesn't, they are worthless. If you join a startup, you may take a meager mea·ger also mea·gre adj. 1. Deficient in quantity, fullness, or extent; scanty. 2. Deficient in richness, fertility, or vigor; feeble: the meager soil of an eroded plain. 3. salary with few benefits because they don't have any cash. But you'll likely receive a huge number of stock options, betting on the future success of your company. If the company soars, you're rich. If it fails, you are poor and unemployed. Large public companies may give you stock grants, which are awards of real stock. In a public company, these have value today and should be considered in your cash compensation calculation. Both stock options and grants are a form of golden handcuffs Golden Handcuffs An incentive given to existing employees in hopes that they will decide to stay with the company. Notes: Employee stock options are an example of golden handcuffs. . Normally, both vest over time--usually five years. If you leave for a competitor, you lose them. Other benefits The days of exotic benefits are pretty much over no matter who you are or where you're employed. In addition to health, life, disability, and pension/profit sharing, standard benefits include: * Two continuing medical education continuing medical education See CME. courses per year including the cost of taking your spouse * Country club membership (if there is a business purpose) * Car allowance * Cell phone Termination Sometime in your career you will likely be terminated. This can be over politics, your performance (or the organization's), or for no reason at all. You should negotiate your termination at the time you negotiate your employment. As with all benefits, most organizations have a standard package. It is best to obtain an agreement that clearly specifies the circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or for which you can be terminated. A contract that specifies the reasons you can be terminated "for cause" will give you a measure of protection -- the narrower the definition the better. However, most contracts are "at will," meaning you can be terminated for any reason at all. Assuming your organization and boss meet the test of sanity Reasonable understanding; sound mind; possessing mental faculties that are capable of distinguishing right from wrong so as to bear legal responsibility for one's actions. SANITY, med. jur. The state of a person who has a sound understanding; the reverse of insanity. , you should not fear unreasonable termination. A severance package A severance package is pay and benefits an employee receives when they leave employment at a company. In addition to the employee's remaining regular pay, it may include some of the following:
agreement, understanding - the statement (oral or written) of an exchange of promises; "they had an agreement that they would not interfere in each other's business"; "there was include salary continuation but not bonus. Usually, you can also negotiate the continuation of health benefits. Nevertheless, few organizations offer severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when in their contracts. A small organization doesn't offer it because of the cost, and large organizations often have policies against written severance agreements. Organizations that refuse to put them in writing often give them in practice. Find out what the common practice is. Although it's not a guarantee, it will give you some comfort. Restrictive covenant restrictive covenant In property law, an agreement acknowledged in a deed or lease that restricts the free use or occupancy of property, such as by forbidding commercial use or certain types of structures. It is customary to have a restrictive covenant forbidding former employees from working within a certain radius of their former employer for a specific amount of time. The enforceability varies by state. In general, they may be upheld as long as they are reasonable with respect to time (1-2 years) and geography (your job span). If you are a national medical director, the entire country may be considered to be in your span of control. Usually, the restrictive covenant is non-negotiable. Summary The bulk of a compensation package is set by policy, but there is always flexibility. Understanding all the components of compensation will help you guide your new organization toward a package that works for both of you. You probably won't get everything you want, but with a little creativity you should be able to strike a deal that works for both of you. Finally, there is no law saying you must negotiate. If you are presented with a package that exceeds your hopes--and it does happen--say, "Thank you I accept!" Sue Cejka is a physician executive consultant. She is founder of Cejka & Company, a national health care consulting and search firm headquartered in St. Louis.
STANDARD COMPENSATION PACKAGE
% ENTRY RANGE MID RANGE
Salary 80% $120-144,000 $144-180,000
Bonus 20% $30-36,000 $36-45,000
Total Compensation 100% $150-180,000 $180-225,000
% Increase 20%
AGGRESSIVE COMPENSATION PACKAGE
% SENIOR RANGE TOP LEVEL
Salary 50% $140-200,000 $250-300,000
Bonus $140-200,000 $250-300,000
Total Compensation 100% $280-400,000 $500-600,000
% Increase 50%
SIGNING BONUS
STANDARD EXOTIC
$10-20,000 $100-200,000
STAY BONUS
Salary $150,000
Bonus $50,000
Total S&B $200,000
Stay Bonus $50,000
Total cash $ 250,000
RELOCATION PACKAGE
STANDARD EXOTIC
Moving expenses $10-15,000 $50,000
Capped Purchase old house
Loan assistance
House hunting 1 trip 1-2 trips
Cost of Living 0 One time COL adjustment
Bridge loans
3-4 years of housing
stipends
STOCK
STANDARD EXOTIC
Stock options/grants 1-200 10,000
Value $10-20,000 $1,000,000
Vesting 5 years immediate
TERMINATION
STANDARD EXOTIC
Terms Will For cause
Salary continuation
for term of contract
Severance None 12 months
Benefit continuance None 1-2 years
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