Evaluating your real compensation package: knowing what you're worth can help secure your family's financial future. (Career Management).
The sluggish economy has produced layoffs, downsizing, hiring freezes, and salary cuts. While there are exceptions, raises are paltry at best. Some companies are extending the time between annual pay increases to 18 months or more. According to the 2002/2003 U.S. Compensation Planning Survey by Mercer Human Resource Consulting, 17% of employers froze salaries for some or all employees in 2002, and 15% plan no pay increases for some or all employees in 2003.
"During a labor shortage, employers focus on what they have to pay to remain competitive with the market," says Steven E. Gross, U.S. compensation practice leader for Mercer. "With the softening of the economy, companies are looking at what they can afford to pay, not just what they have to pay. That's why we're seeing pay variations by industries," he explains.
To put it bluntly, all these factors have conspired to hit compensation packages hard. But that doesn't mean those seeking employment should settle for jobs that don't respect and challenge their talents and abilities, nor should they shy away from asking for a compensation package they truly deserve. Getting what you want is still doable. But you'll need to be savvier about navigating the job market.
KNOWLEDGE IS POWER
First, do your research and establish what's reasonable in terms of salary and benefits. The answers will vary by industry, company reputation, company size, and geography. For example, for 2003, the expected base pay increase by industry ranges from a low of 3.4% in education to a high of 4.5% in the consulting, legal, and accounting fields, according to the April 2002 Mercer study. In fact, it may be some time before there are significant across-the-board raises. "We could be in for a decade of salary stagnation," warns Brent Longnecker, a compensation consultant and president of Resources Consulting Group in Spring, Texas. "As long as inflation is in check, we may continue to see raises averaging 2% to 3%."
If you want the lowdown on salaries, there is an abundance of information from industry association surveys and polls, trade periodicals, and the Internet, at places such as www.salary.com and www.vault.com. When researching a company, examine its overall health. Assess its financial shape and its ability to pay what you have in mind. Talk to your mentors, and take those phone calls from recruiters. "We have great information," says Virginia A. Clarke, a consultant in the Chicago office of the executive recruiting firm Spencer Stuart. "We can tell you salary ranges. What you don't want to do is ask for a level of compensation your boss isn't getting."
When it comes to benefits, things have pulled back a bit as well. Although the Society for Human Resource Management 2002 Benefits Survey shows employers continue to provide generous healthcare benefits, there have been significant cutbacks in areas such as mental health insurance and retiree healthcare benefits. And while employers had absorbed many of the healthcare cost increases in recent years, that's likely to change. "Employers won't be able to shoulder the entire burden--many have already made adjustments in employee co-pays or will in the near future," says SHRM President and CEO Susan Meisinger.
The 2002 survey also shows a decline in benefits related to education and career development. The number of organizations offering educational assistance fell from 88% in 1998 to 79% in 2002. In addition, firms offering career counseling fell from 32% to 29% over the past year.
Sure, employers are still giving bonuses for individual or team performance--after all, the bonus is still a mighty incentive for hiring and retention. But the percentage of the bonus is smaller says Clarke. "Companies can't eliminate them, but they certainly are capping the upside," she notes. Also, in many cases, signing bonuses are reserved for senior-level job candidates who may be leaving money on the table at their old company. Says Clarke, "They aren't just to sweeten the pie; now, there has to be a good reason for giving one." However, she notes, because of the current economic climate, this is short-term.
When you think benefits, think bare-bones basics like a retirement plan, as well as health, dental, disability, and life insurance. Goodies like country club memberships and a company car may not be handed over as readily as in years past. "The perks have gone bye-bye to some degree. But sometimes they're offered later," says Tracy V. McMillan, president and CEO of The McMillan Group, diversity recruiting and retention consulting specialists in King of Prussia, Pennsylvania. "Particularly if you're a CEO or CFO, you may be given access to a cell phone or a fully-equipped home office."
One person who hopes to attract a top-notch compensation package is Randy Partee. Until last September, Partee, 48, was vice president and general manager for Ralston Purina's business in Europe, the Middle East, and Africa (EMEA), where he oversaw a thousand employees. He was essentially the company's CEO for Europe. However, the company merged with Nestle at the end of 2001, and while he stayed through the integration of the business, he decided to explore other career opportunities. Partee, who lives in Atlanta with his wife and four children, spent more than 20 years at Ralston in a variety of areas, including stints as a financial analyst, strategic planner, chief information officer, and director of marketing.
So what can someone like Partee ask for in terms of position and benefits? He's looking for a general manager-type of position with a major company, a CEO position at a small company, a position as a COO of a mid- to large-sized company, or to head a major division of a multinational corporation. He says someone with his experience could ask for benefits such as a company car; stock options; long-term, tax-deferred bonus; financial planning support; signing bonus; trailing spouse program; low-interest or no-interest loan; and more, particularly if the assignment was abroad.
What do the experts say? Partee is right on target. Says Scott Walker, an executive recruiter with Egon Zehnder International in the Atlanta office: "He's imminently qualified. His next job could be COO, CEO, or president of a division. With his skills and experience, specifically his international experience, and the demand for diversity, he would be highly sought after."
McMillan agrees, "African Americans with these credentials can write their own ticket." The salary could be handsome, with a base of $225,000 to $300,000. And there's good news on the perk front, too. In addition to those Partee mentioned, executive health and life insurance packages, five weeks vacation, and home office PC automation packages are within the realm of possibilities, says McMillan.
What will help him get where he wants to go? "Positions at the level he's looking for are often filled by a recruiter. He should seek out and get to know as many recruiters as possible, even several at the same firm," says Walker. He calls this active career management.
Though he's just beginning his job search, Partee has already adopted a multipronged approach. He's contacted recruiters and is using the Internet on sites like Chiefmonster.com, which is targeted to senior executives. He has also set up a database to track his networking. He can tell you whom he called, when and about what, as well as whom he needs to call or e-mail to say thanks for a contact, for example.
With his previous experience and salary, Partee realizes that he has the luxury of time because there's no economic pressure to find another job. "I'm realistic. I know it will take more time to find what I want. I have patience," he says.
Although everyone does not have Partee's resume, his advice about being realistic and patient speaks volumes when beginning the negotiation process for your real compensation package. While there's been a chipping away at some of the goodies, all the money and benefits haven't vanished. "Focus on the possibilities," says Andrea Kay, a career consultant and author in Cincinnati. "If a company wants you, they may do everything within their power to get you. Despite the economy, ask for what you want."
Whether you get the type of compensation you want will ultimately depend on your negotiating skills. Even if you think you've got it down, here's a quick refresher course:
DON'T TALK MONEY AND BENEFITS TOO SOON
If you're obsessing about how much the gig is going to pay and what kind of benefits you can walk away with, take a deep breath, and settle down. "You shouldn't talk about money and benefits until you get the offer, otherwise you weaken your negotiating power and lose some of your leverage," says Kay.
FIGURE OUT WHAT'S NEGOTIABLE
Research your potential employer. What you can ask for will depend on your experience level, the size of the company, its policies and procedures, and culture. How does the company portray itself on its Website and brochures? Are they touting themselves as family friendly? Do they make any of those "best company to work for" lists? "Specifically for mid-level professionals, you want to know how far they are willing to go to get you," says Bob Lanza, a litigation and employment partner with Sonnenschein, Nath & Rosenthal in New York City.
One area of benefits open to negotiation is work schedules. "Flextime and telecommuting are areas where employers can reward and accommodate employees without major costs," says Bill Coleman, senior vice president of compensation for Salary.com. "Flexibility is a big part of the mix these days."
KNOW WHAT YOU WANT AND WHAT YOU CAN OFFER
Be ready to tell your story--to convey your strengths, your experience--while explaining why you and only you are the right one for the position. If you're tempted, particularly in this economy, to take a job that doesn't require all of your talents, think twice.
"I find especially among African Americans who have been downsized, when trying to find a new job, they have a willingness to take a lesser job. Such a move can boomerang and derail your progress," asserts Walker. "You dilute your value. While you need to be flexible, don't sell yourself short."
If the company isn't offering all that you want in salary and benefits then upgrade the job. "Say, not only can you make sales calls but also you can train salespeople, or that you developed a sales training manual. If you extend what they originally had in mind, you may be able to upgrade the package," says Richard Bayer, COO of the Five O' Clock Club, a career-coaching, outplacement network for professionals, managers, and executives based in New York City.
Know what you want, financially and career wise. For some, flexibility is more important than money. "I had two children in two years, so flexibility was my priority," says Julie M. Robinson-Tingue, 34, the recently hired manager of community relations for Long Island Blood Services, a nonprofit provider of blood products in Westbury, New York.
"I took a 10% pay cut, but the trade-off is wonderful. If I need to come in early so that I can leave early, or if I need to telecommute on occasion, I can," she explains. "My employer is very family friendly, which was a priority for me. I was upfront about my need for flexibility. You don't want to just say anything to get the job and hope you can get what you want later; that's setting yourself up for problems down the road."
When you're just beginning what you hope will be a long, meaningful relationship with a new employer, it's also a time to protect yourself--just in case. "Negotiate for a strong severance package. If the company merges or is bought out, you want the absolute right to payment under your contract," advises Lanza. He says your severance package should be clearly explained within your employment contract, but stresses, "the employee should not make any concessions on other major employment issues until he wraps up the severance issue."
Also, be wary of signing noncompetition agreements that will prevent you from working for competing firms, and nonsolicitation agreements that prohibit you from soliciting the company's customers or employees. "If you do sign either of these, see what else you can get in exchange for them," says Lanza, noting that these restrictive covenants are so important to some industries that firms should pay a price to have you sign them. He suggests asking for additional salary, increased severance, or payment during the period of the restrictive covenant.
KEEP THINGS IN PERSPECTIVE
Though Robinson-Tingue took a cut in pay when she took her new job, she calls her benefits package phenomenal: full medical, dental, life insurance, disability, flexible spending account, 403(b) employer sponsored retirement plan to which the company contributes 7% of her salary, five to six weeks of vacation, and 20 days a year for sick time. The reality is, to get a compensation package similar to Robinson-Tingue, you'll have to search for a company that values you enough to make you happy.
"Truth is, if the company is cutting back benefits, you may not be able to do anything," says Bayer. "But the best thing is to keep yourself marketable, keep skills up-to-date, be active in professional organizations, take classes, and attend seminars. The whole idea is to keep yourself desirable, so you can leverage your position and have more power to negotiate for what you want."
RELATED ARTICLE: What should you ask for?
When negotiating your real compensation package, keep the big picture in mind. Compensation is much more than a paycheck. "Some people focused on salary, and once they lost that $100,000 job, they didn't have much else. Some didn't have much severance either," says Alexander B. Williams, a CFP with the Financial Network in Brookfield, Connecticut.
For your package, Williams says, "You want a foundation--major medical, disability, dental, and life insurance, plus long-term care. You need to protect what you have. Figure out what your employer can provide and what gaps exist and what you'll need to make up the difference."
Make certain that your severance package is clearly spelled out in your employment contract. It should guarantee you payment of salary (and anything else you can lobby for)in case your company is bought out or merges.
Second, you want to maximize wealth building. Profit sharing, 401(k), stock options, and company pensions are some vehicles to help get you there. However, if there's one lesson to learn from the Enron debacle, your portfolio should be diversified. "Don't load up on company stock," says Williams.
Third, look for ways to minimize taxes. A retirement plan like a 401(k) has its tax advantages, so do 529 College Savings Plans where you can save for your child's education.
Fourth, perk your package up with flexible benefits, like flextime or other low-cost concessions that will increase your productivity and job enjoyment.
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|Date:||Feb 1, 2003|
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