Compensation is a sensitive topic. We think about it often but don’t discuss it openly. This informaton asymmetry creates silos where a few people are in “the know”, and many others are seemingly left out. Often because they’re not asking the right questions, don’t know who to ask, or simply - are not sure how to start the conversation.

I had one of these conversations recently, and I offered some advice to a friend. This post summarizes some of my thoughts.

  • Do your homework. Understand comparables and what is fair for your industry and level, and set your own expectations accordingly. Make sure you are equipped with this prior.

  • Own the conversation, don’t wait for it or let it happen to you. Compensation conversations often happen too late so it’s best to bring up your expectations earlier in your job search.

  • There are no “deals”. I’ve found the best compensation conversations end with a feeling that this is the beginning of a strong partnership, versus one side feeling they got the better or worse end of a deal.

  • Use an intermediary if it makes you more comfortable. Using a recruiter has the advantage of avoiding direct confrontation. I’ve found this to be useful, but also see a lot of value in directness.

  • Undertstand that there’s so much more than base. Negotiate along multiple lines - base, upside and downside. You want a base with a good savings rate buffer, to maximize your upside, and to minimize any downside risks.

  • Make sure your base covers living comfortably, with a good buffer for savings. My target was 60-70% of my base should cover my living expenses - including mortgages / nannies etc. The rest would go into savings. I think in a world where pensions are not the norm, a 30-40% savings rate should be considered “normal”. Life circumstances become a good negotiation lever - it’s hard to push back on. New houses, kids, parents to support, all that helps.

  • Maximize your upside (equity, bonuses etc) - make sure you’re able to participate in the long term success of the company. In startupworld, equity is the name of the game but I think we’ll soon see different forms of long term equity compensation. Long term bonus and equity are more difficult than any other category to negotiate when you’re in the job, so doing this upfront is important. You can negotiate the “option to reevaluate” any part of this if the company doesn’t have formal performance planning and associated compensation adjustments.

  • Minimuze your downside - Make sure you have severance included. This is your only time to negotiate your severance package. It can be an uncomfortable discussion but they expect it to happen but never bring it up. You have to do this yourself, and it’s a good signal. It’s standard to ask for at least 9-12 months.

I’ll be adding to this as more thoughts arise on this topic.