Negotiating for NerdsCopyright: Dennis Faust, May 20, 2000 - All rights reserved.
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RATING THE INDUSTRY
Is the industry the stock market's darling or whipping boy?
Will it be around in a couple of years?
Is it known to treat its people well?
Do you have friends in the industry you can check with?
Often a high salary blinds people to the number of hours expected and high burnout rates. Ask about both!
Are you likely to be asked to move, travel or work with out of date technology?
RATING THE COMPANY
Check out the management team.
Have they been successful in this industry before?
Do they 'get' the technology?
What happened to their previous companies?
Would you enjoy working with these people?
Do you trust them?
Would you give them your money?
If not, why would you invest your time?
THE BEST OFFER
Ask questions like
"How much flexibility do you have?"
"What is the range for this position and where does this offer fall?"
Ask these questions for stock as well as salary.
RATING THE OFFER
The main idea is to come to a valuation for the entire package. Here are some quick guidelines. For options ask what investor's paid in the last round of financing. That's a good proxy for the share valuation. The closer the company is to a liquidity event such as going public or getting acquired the higher value you should place on these shares. Keep in mind that very, very few companies actually do well enough for average employees to do well. This just means you need to negotiate well to increase your chances.
The younger and riskier a company is the more shares you should get. Ask how many shares there are outstanding and divide it by the number you've been offered to see just how little they think of you - just kidding! If there is any question about what outstanding means I always ask "If the company was sold today and everyone who could, exercised every possible option, how many shares would that be?" Seriously, run the numbers and see if you are being invited in to share in the business or are they just giving you a few token shares. Expect to be offered in the range of one to four year's salary worth of stock.
If a company does not have an excellent medical, dental, vision and 401k plan then keep looking. Even if the company is a raw start up these are not negotiable. Entreprenuers are often willing to forego insurance and other things to get the company off the ground. You shouldn't. Last but not least, take a moment to think about how this position will look on your resume a year or two from now. Will it add or detract value? Only diamonds are forever.
GETTING WHAT YOU WANT
Almost any aspect of the job is negotiable these days. Even companies who are very tight with compensation will often deal when it comes to time off before starting, vacation, working conditions, hours, working from home etc. Decide what is important to you and ask for it. Do this AFTER the company has given you an offer. At that point they have decided they want you. They will think you are negotiating. If you do it too early in the process they will think it shows bad attitude and you won't get an offer. Make sure your requests are commensurate with your experience. I've had a rookie ask to work at home, three days a week so he could play in a band. This person didn't get an offer!
ITERATE
Our industry is changing rapidly. If the company doesn't have a six month review policy then you should pay attention to the market and approach them if you feel you are not keeping pace. Also, any time you significantly improve your skill level or increase your responsibilities you should sit down with your supervisor and review your compensation package. Keep in mind that you are in business. Your business is trading mental acuity and the ability to create new technology for salary and a piece of the action. Do your homework and make sure you get your fair share.
SUMMARY
1. Educate yourself about the specific industry and the company.
2. Talk to the business people.
3. Ask hard nosed business questions.
4. Make the other side blink first - let them name specific numbers.
5. When presented with an offer: ask a leading question then SHUT UP, listen and wait, wait, wait!
6. Iterate #4 and #5 until you get what you want.