Tips on Negotiating In a Soft Job Market

In the best of times, negotiating the terms of a new job -- from salary to duties to perks -- is an awkward and thankless task.

And these aren't the best of times.

The salary pendulum has swung significantly in the past two years, as the economy soured, the stock market declined and companies took the opportunity to restore sanity to their compensation models.

In that climate, the number of executives willing to put up a good scrap for better job terms, low even during the boom economy, is now even lower, says Robin Pinkley, an associate professor at Southern Methodist University's Cox School of Business in Dallas and co-author, with Greg Northcraft, of "Getting What You're Worth" (St. Martin's Press, 2002).

"The first thing that goes away in hard times is the belief that you can negotiate, and companies are happy to perpetuate that myth," Ms. Pinkley says. Even when executives brave the negotiating waters, they often lowball themselves, assuming the company won't pay more. "That's counterproductive," she says. "Candidates are coming into these conversations feeling powerless, and that's simply not true."

So, how does one approach such delicate and critical talks in the midst of a soft economy? It would be disingenuous to suggest that nothing changes based on economic conditions. "In hard times, people don't just shove money across the table," says Jack Chapman, a compensation negotiation consultant in Wilmette, Ill., and author of "Negotiating Your Salary: How to Make $1,000 a Minute" (Ten Speed Press, 2001).

Sales executive Jon Magin learned that when he decided to make a career move last year. It took him a year to nail down the terms of the job he wanted. He negotiated seriously with companies about jobs ranging from vice president of sales for a large, mainstream technology company to chief operating officer of a start-up.

But solid offers from substantial companies evaporated as the economy and concerns about Sept. 11 tainted the negotiation process. A major technology company rescinded offers for two different jobs. A biotech company's recruiters told him they were still interested, but as its stock declined, it "couldn't offer as much as before," Mr. Magin recalls. He walked away from that lukewarm commitment.

Despite such strategic withdrawals by companies, the process of negotiating a pay package hasn't changed as much as you might think. In fact, it's even more important to play the game the same way you would during more favorable economic times. The following tips will help you secure a win-win deal in your next negotiation.

• Do a complete scouting report.

Don't go into a negotiation without a solid idea of what you're worth in the marketplace, as well as the compensation philosophy and strategy of the company. Mr. Magin did tons of research on the industries and companies in which he was interested.

As has become customary in job searches, Mr. Magin scanned the Internet for information. Salary surveys, company Web sites, as well as career and industry-related sites, all provided him with some knowledge about his market value and the inner workings of the companies he had targeted.

Even more powerful, he found, was the personal networking he did. He asked people he knew for contacts who worked or had previously worked at the company or in the industry. He was impressed by the number of people he reached. "It's amazing how small the world really is," he says.

This can provide critical information. Does the company like its new executives to negotiate hard on the terms of their employment, seeing that as a precursor for how they'll negotiate on the company's behalf? Or do they see that as a sign of greed and imminent disloyalty? "What are their values and culture?" Mr. Magin asks.

Mr. Magin also got a realistic view of the compensation scene. "The amounts of money that were being dangled in front of people during the boom times, with the signing bonuses and the stock options, those were the kinds of things that changed in the leaner times," he says. Anything that permanently increases the company's salary budget is more difficult to get right now, he adds.

• Devise a detailed game plan.

Know what you're realistically willing to take and what would prompt you to walk away. Know what kinds of alternative compensation strategies you might invoke to get you to where you and the company would both be comfortable.

Mr. Magin advises executives to put together a strategy not based on money, but what they want in the job, what they want career-wise, and to make sure those personal issues are addressed in the negotiations along with the meat-and-potato money issues.

Mr. Chapman has been advising clients to also negotiate their first raise as well. "You think the toughest time to get a raise is when there are layoffs and cutbacks," he explains. "It's really one of the best times, because the company now has extra salary in the budget to reward the people left." His advice: "You can say, 'I know the money isn't in the budget now, but let's set some realistic goals and if I reach those goals, we'll negotiate a performance bonus,'" he says. That will give you an incentive and won't inflate the company's salary budget, he adds.

The goal, Ms. Pinkley says, is to shrink the company's risk in hiring you. In six months, it will be paying you for your performance, not for your potential.

• Let the company put the ball in play.

The tendency during hard times is to lower your expectations. But you don't want to lowball yourself. That's why it's critical to let the company make the first offer.

"You don't have much control if you go first," Mr. Chapman says. "Letting them go first means you have a solid offer to react to."

That at least lets you know whether you're in the same ballpark before you counter. "You don't want to get lowballed based on your last salary," he says. "It's possible people are going to take some pay cuts in hard times, but you don't want to get screened out in advance."

• Don't abandon the overall game plan.

As Mr. Magin's job quest dragged on, he was sorely tempted to grab whatever offer was then pending in order to provide security for his family and to find safe harbor until the economic storms blew over.

But this was a critical move in his career, one where he was seeking a new challenge in a new industry. He knew if he took a job he really didn't want, he'd be unhappy. "Even though I could do the job and the pay was in the range, I knew I'd get into it and want to go somewhere else before long," he says. "Besides, I realized I was consistently finding things, so I was confident I would get something I wanted."

• But if an individual play breaks down, improvise.

If you're not getting all the money you want, maybe there are other things that are important to you. Mr. Magin suggests that perhaps you can negotiate for future career goals, such as being groomed to run a division you have your eye on, or having the company pay for your M.B.A. studies.

Mr. Chapman tells of a client who sought $35,000 more than the company was offering. He took the company's offer, but negotiated a three-day workweek.

Ms. Pinkley cites as an example her consulting fees, which, she says, are high in any market. In today's climate, she says, some clients balk at the fees. So she offers to waive her fee if, after a certain amount of time, the client determines the type of return on the investment was not what was expected. "Conviction is very important, and the willingness to take a risk on yourself shows your conviction," she says. The same philosophy can be applied to compensation negotiations, by negotiating a future performance bonus or offering to bypass a raise if certain goals aren't achieved.

• Don't sign off until you've studied the game films.

Always give yourself at least 24 hours before signing off on the deal. That's so you can reflect on the negotiations. Were any points left out? Are there other ways to skin the cat that might get you closer to where you want to be?

"Signing bonuses, options, comp time -- those are the things you need a little time to think about," Mr. Chapman says. "Especially in hard times, this is a way to make a better package.

Mr. Lancaster, a former Wall Street Journal bureau chief, writes the "Career Corner" column on CareerJournal.com. He's the author of "Promoting Yourself," published by Wall Street Journal Books (2002).