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Negotiating Compensation During Performance Reviews

By Jennifer Silvester

Most people believe negotiating compensation is about as enjoyable as a root canal. After helping hundreds of clients and candidates navigate these conversations, I am here to tell you it does not have to be that way! What if instead you looked at the performance and compensation conversations the same way you do at any other business negotiation you might conduct on behalf of your company? Or, even the way you managed a big buying decision you recently made? Let’s take the struggle and mysticism out of compensation discussions and see them as opportunities for collaboration and mutual problem solving? Regardless of which side of the table you are sitting on, consider these four tips when negotiating compensation:


1. Presume positive intent and focus on mutual success.

Just like in a negotiation you might conduct with a potential supplier on behalf of your company or the price of a remodel on your house, all parties have something to gain from coming out of the conversation feeling like they have achieved their goals. Do not walk into a compensation discussion, whether it be with a current or potential employer, assuming their goal is to pay you the very least amount possible. Likewise, if you are a manager, do not assume your employee wants the most you will give them without any concern for the ROI or your limitations. Instead, consider you both just want to achieve your goals. When you approach the conversation this way, you immediately create an environment of trust and a mutual desire to see one another succeed.


2. Know your goals, expectations and alternatives.A black background with a white circle in the middle.

It’s hard to get what you want if you don’t know what that is. What are your needs, specifically? Note, these conversations are not always about salary or cash benefits. What levers do you have that you would be willing to consider in the negotiation? For example, would you be willing to lighten your salary expectations for the flexibility of working from home? Or, maybe you would value additional education or training over an additional 2% increase. Perhaps long-term equity is more important to you than salary. Consider that your company has various “buckets†of resources that can make up your total compensation and employee experience package. Some of these buckets are more flexible than others. Know the things that are most important to you and where you are willing to concede or make trade-offs. Be creative in your thinking, consider the long-game and differentiate between your must-haves and nice-to-haves. The clearer you are and the more you understand the company, the better the experience will be for everyone.


3. Think about your negotiation and your value through the lens of the business/company.

Consider your negotiation as if you were the CEO of the company. The business has many demands and needs for resources across various areas. Who gets those resources always comes down to a conversation around ROI and balancing the short and long-term needs of the business. As you approach your next compensation negotiation, ask yourself whether you truly understand the business dynamics and your value proposition.

What is your unique value proposition? As an employee, you should be tracking and celebrating your contributions all year against your agreed goals/objectives. If you wait for a performance review at the end of the year, it is too late! Many of us do not remember what we had for breakfast this morning, let alone what we achieved in February. Write them down and celebrate with your team and leadership all year long. With your list in hand, can you answer these questions:

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  • Did you achieve all of the goals you set out to accomplish?
  • What did you achieve beyond the goals you set?
  • Have your contributions been measured?
  • What was the tangible impact you made on the business?
  • How did you add to the business in intangible ways, enriching the culture and community?


If you are a candidate advocating from the outside, you must understand the skills and experience you bring that will be a difference-maker for the company. What is the competitive advantage you bring that no one else does? If you are at the offer stage, the company has already bought into the ROI opportunity, so now it is a problem-solving exercise to come to a mutually beneficial package that allows you to both succeed.

Remember, each party in a negotiation will come to the table with different strengths, issues and options. It is important to know your audience and see the negotiation from their perspective. Think about it as a business owner who anticipate questions, concerns, and opportunities. Present alternatives and solutions that can solve both of your challenges/needs


4. You won’t get what you don’t ask for. 

We were recently negotiating with a candidate for a new role and were discussing compensation targets for base, bonus and equity. This candidate was excited about the role and the target compensation package. Together with our client, we built an offer that was a little better than we had originally envisioned, in part because we were so excited about this candidate. When we make offers, we always tell our candidates to please call us with questions, curiosities and concerns. Our aim is always to make the most competitive offer we can on the first attempt, but we always want to know if there is something that is preventing a candidate from saying “yesâ€.  Our goal is to create a win-win for clients, candidates and their families.

The candidate previously mentioned sent an email explaining that the offer was just not as compelling as they felt it needed to be to accept. They declined the offer. In an email. No phone call. No counter. Just a decline. Of course, we reached out to the candidate and explored the issues that were preventing them from accepting. All of which were quite solvable. Instead of asking, this candidate just assumed we could not solve the issues and was ready to walk away.

Please do not let a great career opportunity pass by without asking for what you need. And a bonus piece of counsel, never, ever, ever turn down an offer over email. Remember, the world is small and you want to keep all doors open to your future. Make the uncomfortable call, you’ll be amazed at what can happen.

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5. Create a trusted relationship with a couple of great executive search consultants in your industry/field. 

Executive search consultants are retained by their client companies to find leadership talent, but great consultants work hard to develop strong, trusted relationships with candidates across their industry. I have had the great privilege of following several executives throughout their careers. We call on each other for mentorship, advice and expertise. When you invest in these discussions and focus on creating a mutually beneficial relationship, search consultants can be resources for advice and data on a myriad of topics–including compensation negotiations. We generally know what the market rate is for the roles and industries we support. We also are negotiators. Next time a search consultant reaches out, make some time for a 10-minute conversation.