Know Your Worth: Compensation Negotiation

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As I contemplated my next career move, I knew it was important to know my worth in the market. In a sense, the concept was foreign to me since I had worked 27 years in engineering for the public sector. In securing that job, the only thing that was negotiated was the time of employment.

My desire to have a second career outside of engineering into academia drove me to get meaningful experience as an adjunct professor. Of course, I felt my core competencies were strong as a professor. I had about ten years in academics working part-time. Yet, I also knew that obtaining a full-time tenure track would be highly competitive due to the limited amount of these treasured positions and the number of applicants. 

I personally knew of qualified business professors who could not obtain a full-time faculty position. To increase my marketability, I continued to secure new skill sets and to follow market trends. One of the biggest trends working for me was that many institutions were looking for new faculty who had demonstrated working experience.

Yet, in order to determine my worth, I had to actively apply for academic positions and go through the interview process. With every interview, each prospective employer provided me with a missing piece of my market worth. However, I got this insight by being assertive by asking meaningful questions like “what part of my application package attracted you to me as a candidate.”  

This transparency was contagious. One dean even told me my prospective rank (i.e. salary) in his organization. All of these pieces were critical in helping me negotiate my final position as a full-time faculty because I understood my worth in the marketplace.

In today’s competitive environment, working professionals need to know their worth so that they can be compensated appropriately and they can market themselves toward better jobs. In fact, professionals need to know how to market themselves and promote their personal brand in order to maintain their market worth. Downsizing and layoffs are a way of life for most U.S. businesses.

In the 1980s, downsizing was a watermark moment as the social contract between employer-employee was broken. Seniority and loyalty were not a hallmark of workers being able to keep their jobs. What started out as an isolated downsizing in the blue-collar ranks soon explored into white-collar jobs, including middle management, engineers, accountants, lawyers, and other professional workers.  Suddenly, no one was safe. During this timeframe, some of the biggest businesses participated in these layoffs, including General Motors, AT&T, IBM, Delta Airlines, and Eastman Kodak.[1]

In order to stay competitive in the global market, companies seek to cut costs and utilize advanced technologies for greater efficiencies. Downsizings, regardless of what it is called (rightsizing, restructuring, re-engineering), means a reduction in the workforce. Someone is going to lose his/her job. In fact, workers on the front lines see these hints of organizational changes as more layoffs ahead.

According to the 2016 report by outplacement firm Challenger, Gray & Christmas, domestic companies planned to let go of 65,141 workers. In the first four months of that year, employers planned to hand out 250,061 pink slips.[2] The energy sector was the biggest driver of downsizing among U.S.-based companies. This article examines how working professionals can determine their worth. Individuals can apply this concept to creating value for your current or future employer in order to obtain better employment and compensation.

Working professionals must create value for current and future employers if they want to maximize their worth. Value can be defined as ‘what the customer gets in exchange for what the customer gives.’ Paul Peter and James Donnelly, Jr., author of Marketing Management, argue, “A customer’s perception of the value associated with a product is generally based both on the degree to which the product meets his or her specifications and the price the customer will have to pay to acquire the product.

Negotiation Video

Furthermore, Paul Peter and James Donnelly, Jr., author of Marketing Management, suggested the critical need for understanding value creation. They argue, “A customer’s perception of the value associated with a product is generally based both on the degree to which the product meets his or her specifications and the price the customer will have to pay to acquire the product.”

In an employer-employee relationship, value can be equated with how much benefit an employee provides his/her employer. This value runs across a sliding compensation line. Workers who are perceived to contribute more obtain more compensation. Getting hired for a job means having the basic skill competencies to perform a job.

Varying workers have different and stronger core competencies than others. Over time, employers look to compensate workers who distinguish themselves from their co-workers. With that said, professionals who can solve employers’ problems that the employers care about can enjoy maximizing compensation. Thus, value creation must also be a strategic component of maximizing one’s worth. With the threat of getting laid off constantly before them, professionals need to understand the merits of creating value in the workplace. 

In employment negotiations, working professionals, who know their worth and can show value to their future employers, will obtain the biggest compensation. Your current employer has been working you to death. You don’t think it is fair. How do you know? Have you talked to others in your field?

Have you discussed with your employer? Do you even know how to ask for more money or to be compensated better? Most people don’t know how. According to PayScale’s study, 57% of respondents said that they would never negotiate salary in their current field. Yet, 75% of them who asked received an increase. Many individuals complain about their job situation, but many do not go beyond the complaints.

Some folks will approach an employer demanding more money and compensation without doing their homework or evaluating their own worth in the marketplace. Without knowing your worth, it’s impossible to effectively negotiate any compensation package. If you do not know your worth, you may be underselling your compensation.  Negotiations can include salary, bonuses, parking costs, stock options, benefits, perks, vacation time, and many other items.

Professionals need to do their research. Compensation negotiation is not about what you need. It is not about what you deserve. Compensation negotiation is really about showing your current or future employee the value that you bring to an organization. With that said, the best negotiation position for professionals is to know what the market will bear for their skills, education, and work experience. One excellent tool for calculating worth found using the PayScale Salary Survey where participants can obtain a free salary report based on employment marketability.

Additionally, Glassdoor.com has a free salary calculator called “Know Your Worth.” This salary calculator will determine how much you could earn in today’s job market.[3] Allison Doyle, author of the article “Salary Negotiation Tips (How to Get a Better Offer),” maintains it is important to know how much the job is worth before starting salary negotiations.

In taking this additional time, professionals can land a job offer that is realistic. Doyle notes, “The most productive salary negotiations occur between people who realize that they have a common goal: to get the employee paid appropriately for their skills and experience. Negotiations needn’t be adversarial, and no one has to get aggressive. If you’re a reluctant negotiator, it might help to keep in mind that you’re on the same side.” Below are some tips for compensation negotiations:

  1. Know your worth in the job market.
  2. Do your homework on this employer. How do you create value?
  3. Seek advice from others who have gone through negotiation with this employer.
  4. Determine your personal objectives for compensation negotiations.
  5. Set expectations high but realistic.
  6. Define your desired results.
  7. Anticipate the employer’s objections/opposition.
  8. Prepare alternatives/options for the employer.
  9. Pick the right time for negotiations.
  10. Practice your negotiation presentation.
  11. Learn from this negotiation experience. 

In today’s competitive environment, professionals evaluate their worth so that they can be compensated appropriately. Knowing how to market and promote their personal brand can ensure business professionals’ maximum worth in the marketplace.

Companies are looking for employees who can add value to their bottom-line. Those employees who are absorbed with the ‘me’ mindset might find themselves in an endless battle to keep their jobs with businesses shedding themselves of excess labor baggage.

Downsizing and layoffs are here to stay in the near future. No one is exempted from these personal threats on employment, regardless if you are a blue or white-collar worker.  This article demonstrated that today’s business professionals are at a competitive advantage when they understand their own market worth.

In fact, they make themselves indispensable by creating value for your current or future employer in order to obtain better employment and compensation. Employees who are dissatisfied with their compensation packages need to be assertive in their own career path. Individuals who research their own market value empower themselves toward being successful. With that said, effectively negotiating this worth to current and future employers is really what will matter in the long run. Pray that this action is not too late.

© 2018 by Dr. Daryl D. Green

Please share your insight on this specific subject.

[1]“Downsizing and Rightsizing” by Referenceforbusiness.com

[2]“US job cuts rise to 65,141 in April” by Tom DiChristopher

[3] “Know Your Worth” by Glassdoor.com

 

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