Learning a new skill: Salary and benefits negotiation part 2

A couple of posts ago we started talking about the final step in the job search: negotiating your salary and benefits.  The company has already offered you a job, and in that sweet and exciting period of time between receiving the offer and accepting it comes the negotiation to determine your compensation package with the company.

We have already looked at many of the differences between military and civilian employment benefits, so we won’t go too deeply down that rabbit hole other than to point out that many of the benefits on the military side of the fence are not freely offered by civilian companies.  Take, for example, the military subsistence (meal) and housing subsidies.  You get them while in uniform, but they don’t come freely in the corporate sector.  All of those special pays and allowances that fattened up your military paycheck helped mitigate the comparatively low pay that comes with wearing the uniform.  An added benefit is that those pays are tax-free, which in the corporate sector is almost unheard of.

As a military man or woman you are also free to shop in the commissary, gas station, and PX, all of which provide subsidized food and goods that are free of state and local sales taxes.  While retirees can still enjoy shopping on base, for those who do not stay in for 20+ years or move home and have no base nearby it is no longer possible.  The subsidies, coupled with tax free shopping, are not offered by the corporate sector.  Once you get out you get to pay full price for your groceries and consumer goods, and you get to pay sales tax, too.

My point is that many of the monetary and non-monetary benefits that you receive whilst in uniform went a looooong way towards stretching your paycheck.  When you get out all you have to pay your bills, buy food, and fill your tank with gas is the salary that you are paid by your employer.  Since that is how the “real” world works, you need to make sure to get the best benefit package you can from your employer, and to get such a package you need to be able to negotiate.

Negotiation is a skill, just like any other.  You can get better at if you work at it, and the best way to improve is to practice and rehearse, just like you should for a job interview.

Before you start rehearsing, though, you need to do your research (as discussed in the previous post about negotiation) and then you need to craft a plan of action to prepare yourself.  Just like you would do in the military.

Unlike military plans, though, yours does not have to be intricate or complicated.

Your plan should contain those elements of compensation that you feel are important to you.  It should also contain those elements of compensation that are not important to you.

Why should the unimportant bits be included you ask?

Because they are all part of the plan.  The art of negotiation is based on meeting mutual agreement, and getting to a point where both you and the Human Resources manager agree on your pay and benefits is based on the give and take that you both engage in during the negotiation process.  If you only have those things that are important to you on the list then you are at a disadvantage because negotiation invariably requires you to give a little to get a little.  You can give a little by sacrificing those things that are unimportant to you and, in turn, get a little something back that you truly want.

Here is an easy example.

You feel that flexible work hours are very important to you.

You also feel that health insurance is not important to you because you are single and already covered by the VA and TRICARE.

In the world of civilian employment the cost of health insurance is high and by all accounts only going to get higher.  The fact that you are willing to give up employer-provided healthcare is a significant savings to the employer.  Even though you never planned to use the company’s insurance you can “offer” to keep your current insurance plan (and save the company a lot of money) if you can have a flexible work schedule.

If you don’t have a plan to give up those things that you don’t really want or need then you are giving up a significant amount of leverage.  Be smart and plan your negotiation out!

Here are some basic planning considerations that I recommend you think about as you plan for your pay and benefits negotiation:

1.  What do you want from the company?  (Sure, you want a job, but what do you want in return for your time and dedication?)

2.  What does the company want from you? (Sure, they want an employee but generally want to pay as little as possible for one —  you will need to show the company that you are worth whatever you identify in the first question)

3.  What is the absolute minimum that you are willing to accept from the company?  (This is very important.  The Human Resources person has a lot more experience negotiating than you do, and if you are not careful they may well negotiate you out of the things that you think are very important).

4.  What is your alternative?  In official negotiating terms this is known as the “BATNA”, or Best Alternative To a Negotiated Agreement.  In other words, what are you going to do if the company is unwilling to meet your absolute minimum?  (This is also important because you want to leave the negotiation with a job and not burn any bridges.  The best BATNA is to leave the negotiation on good terms that can be leveraged into another negotiation with the company that is ultimately successful for you both).

After you put together your simple plan you need to do a little rehearsing just like you did for your job interviews.  Find someone to conduct a mock negotiation with, and then listen to their feedback.  It will pay huge dividends.  I guarantee that you will be surprised at just how difficult negotiating can be!  By rehearsing you will learn if you are too brusque or direct or overbearing, all of which are very common traits that come with military service.  You want to be convivial and professional because it is what the company expects, and by rehearsing with another person you can fine tune your style of engagement.

Here are a few things that military people tend to do while they negotiate that end up working against them:

– Being too rigid and organized.  Just because you have a plan doesn’t mean that you need to unyieldingly stick to it.  Do not treat your plan as a checklist and start at the top and work your way to the bottom.  The negotiation is a conversation that will go in many directions before it is completed, and if you are too mechanical and inflexible it will hurt you.

– Being unwilling to engage in a dialog.  Often, military folks are used to just accepting “no” a bit too easily.  Remember, the Human Resources manager wants to hire you as cheaply as possible, and if you just roll over every time he or she says no then you are making his or her job pretty easy.

– Being ignorant of what benefits are available for discussion.  This goes back to the previous post about interview preparation: make sure to do your research!  If you do not ask for something I guarantee you will not get it.  At this stage of the game nobody is looking out for you except you!

– Being ignorant of how much money they really need to make.  A good rule of thumb is that you need to nearly double your base military pay to obtain the same level of compensation in the civilian world.  Taxes go up and tax-free benefits go away.   In the civilian world you get to pay bills that you may not have thought about: for example, if you lived in the barracks or in base housing you did not have to pay for electricity, water, natural gas, or trash removal.  Guess what- in the civilian world you get to pay for all of those things and more!

__________

Lessons Learned:

– Do some research on your own finances and see just how much money that you are going to need in the civilian world.  Remember- taxes take a big bite!  If you were in the civilian world you could count on 30-40% of your BAH and Subsistance Allowance to go to the IRS because it would be counted as income.  Find out how much money you really need.

– List out those benefits that are important to you and also those that are not.  You will use both lists during your negotiation.  Make sure that those benefits you want are offered by the company!

-Rehearse with someone — you need the practice.  Remember, the Human Resources manager does this a lot more than you do.

– Find out what your BATNA is and stick to it- it is OK to walk away from the negotiation if the result would be below your absolute minimum level of acceptability.

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