Ask the Salary Coach

The right inside information can be worth your entire salary!

It may be against SEC rules to buy or sell stock based on “insider information” – Just ask Martha Stewart! but there’s nothing wrong with finding out how they’re calculating and defining value on the other side of the table in a negotiation.

Hell, it’s what the Richard Gere character in “Pretty Woman” did for a living!

As a matter of fact, I know a good sized Mergers & Acquisitions firm that spends a good part of the first day of a 2-day “Selling a Privately Held Business” seminar telling this story:

There was a small business owner that built a nice successful business and when it came time to sell, he was insulted by the low-ball offer he received from a very large well known brand that was not a competitor. He took his company off the market and spent the next two years researching and stuying everything he could learn about how top paid executives put together such deals but concentrated especially on what motivates them to pursue one company over another.

Well he must have been a very good student because not long after he got top dollar for his company from the very same Big Brand Company that not twenty four months earlier had insulted him. His secret? The difference was now he knew “why” that big brand was persuing him and wanted to buy him out. As it turned out, the worth of his company wasn’t to be found on his balance sheet or income statement at least according to his suitors.It was instead based on the precious shelf space his bulky product took on prime big box retailer’s shelves like True Value and Walgreen’s. The buyer it seems had a bulky product too but it was seasonal one and this company figured if it could just get its hands on this small company that each year took the place of their products on those shelves in thousands of stores across the country, well, it would be worth millions to them!

Of course, the same is true in most any negotiation. If you know what the other party values, it’s a whole lot easier to surmize what their top offer might be and what their walkin’ away number might be as well. MBAs get paid some pretty good money to do just this kind of math.

So imagine, then, if you knew for example, that your former employer was desperate to get you back as they were threatened from losing a number of prime accounts or the fact that a hiring decision maker at a company you’ve been dying to work for just had their prime candidate turn down their offer and now is desperate to fill this position – with you! How would you use this new-found leverage?

Naturally, Your negotiating power would go up immensely and that can add dollars to your compensation.

The best way to understand what’s possible here is to read through the real life example. I just love it when I can help a client lock in on one of these because they’re so valuable.

Here’s a real life example to prove the point. I call this one “Make ‘em Sweat!”

Acme Training, Inc., [ATI] sent trainers to client companies to train employees in standard software (Word, Excel…). A star trainer, Betty, quit to go out on her own. ATI’s customers rejected three trainers they sent to replace her. Betty talked with these former clients and found out how desperate ATI was to have her back.

When ATI approached Betty to ask if she’d reconsider, Betty said, “Maybe… but my current independent contracts preclude me from working at ATI for six months.” 6 months!! ATI could lose customers entirely in six months. Tens of thousands of dollars.

The result? Betty negotiated better pay, finder’s fees on new business she brought in, severance in case things didn’t work out, and limited the vague noncompete to a specific list of four clients.

SWEET!

There are some important situations in which salary and job negotiations need the assist of a lawyer. Usually these cases occur in higher paying executive and professional jobs. Some negotiations for research jobs may also require an attorney’s help. Usually the moment after the offer is made, especially executive jobs, it is an accepted practice to allow the job candidate some time to think over the offer. You have your offer and you may have been given documents to sign. It is in this time period, and even afterwards, that you may need to have an opportunity to share legal documents with an attorney.

Being prepared for job and salary negotiations is always necessary. It is true that the jobs that may need legal advice are also positions in which these candidates would benefit greatly from salary coaching. However, I offer these thoughts because it is wise to know where potential land mines are located. The following, my thoughts and opinions about legal matters are from my own experiences as a veteran career and salary coach.

Many V.P. positions, the so-called “C-Level” positions with complicated golden parachutes, performance clauses obviously need legal attention. Most lower and middle management positions don’t. Where do you draw the line?

The first strong indicator you need a lawyer is anytime you’re asked to sign anything other than a straightforward list itemizing compensation. Please, get legal review before you sign any unusual document, not afterwards.

If you’re given something that sounds like their lawyer wrote it, let your lawyer read it. There’s a strong probability you won’t fully know what it means. Sometimes, more important than telling you what’s in a document, a lawyer can tell you what’s not there. For example, there may be missing language about default provisions such as dispute resolution, attorneys’ fees and commission payments. So please read the document and of course, have an attorney tell you what it really means.

The most common compensation related documents that need special attention are the “nons.” Non-compete, non-disclosure and non-solicitation. Be careful. Job candidates sometimes say “I don’t worry; non-competes are not enforceable anyway.” Wrong!

Non-Compete, Non Disclosure, Non-Solicitation, Non anything, can all be enforceable. Even if it can’t be enforced, it can cost a considerable sum to fight it. Even if you “win,” by the time this dispute is cleared up by a Judge, you may have lost a job opportunity with that competitor and wasted a lot of time and money in the process.

Often a competitor won’t consider you for a job until your conflict is cleared up. New Employers obviously won’t wait out a lawsuit. Many employees don’t understand the full implications of legal provisions, but a lawyer usually can tell you quickly. For now, remember, if these documents show up at the very end of your employment discussions and they tuck a “non” into the documents when you’re signing things like your innocuous W-4 tax forms in personnel, don’t sign, wait. Have legal man look at it first.

Let’s look at non-compete agreements. Think about what they’re asking you to give up. Is it worth it? Can you live with its provisions?

The other side of the coin is what you can gain by signing a non-compete? To start with, a hiring company probably won’t think to offer you anything as a benefit other than your job. But if you’re giving up something, you should get something in return, no?

If you sign a non-compete, that could add 2-6 months to your job search. You deserve compensation for that. Try to limit a non-compete to voluntary termination; that is, it applies if you quit, but not if you’re fired. Even if it applies if you do quit, why not still negotiate for 6 months’ severance in consideration of the non-compete and its effect on your job search?

The following situations are examples of when to not only to have the agreement in writing, but to have it in writing in a way that’s enforceable-hence, let a lawyer help you in these situations:

o When you’ve negotiated a valuable bonus, severance, residual commissions, stock option vesting or other financial extra, that you will be paid upon even after you leave a company.
o When you’re leaving a good position going to a competitor (and your company will never take you back), or having to relocate, you’d be well advised to get legally accurate assurances of the security of your new position. I call it covering the “what if’s”. For example, what if the new position doesn’t work out.
o Equity or Partnership participation in the company, and participation in bonus pools or profit sharing can be confusing. If anything’s fuzzy now, ask your counsel to explain it.
o It is usually critical to get a written contract if you’re bringing something to the table that you want to walk out with when you and your new employer [inevitably] part ways.

A written contract to cover this last situation is important, and often over-looked. For example, experienced sales people with their list of established clients and contacts want to keep the rights to solicit them if they leave the company. Recruiters, accountants, lawyers, etc., all build up clients who are more loyal to them personally than to the company or firm they work in. If they leave the firm, it’s important to be clear up front whether it’s fair game to bring clients along to your new job situation.

Scientists and others might want to keep part of their inventions and other intellectual property. If you don’t have a written contract, anything you bring to the table or develop while an employee, may well end up the property of your employer. This may be true even if you’re doing it at home on your own time, money, and laboratory.

These kinds of situations can impact you, even if you’re not an inventor-type. Employers can lay claim to any practical methodology, improvement or innovations you create in your work. Beyond this ownership situation, you might also lose your option to continue to work on this project, or whatever it is that your employer wants to control, once you are gone. In some cases you may be prevented from writing on your contributions and your work experiences. That’s not a very good position to build a career from. Protecting your intellectual property needs to be spelled out by a lawyer.

The bottom line: if you want to be sure you walk out with something, get it in writing before you walk in. I have one final word about getting a lawyer. There are two kinds of lawyers in this domain: the ones who work for the companies and the ones who work for the individual (sometimes know as the plaintiff). The lawyer usually best suited for your needs is the one that works for individual.

In the beginning of your tenure with a company, you’re on a honeymoon phase. They like you. They hired you. You both expect great things and a bright future. When the end comes – and sometime it will – the parting is not amicable. In those situations, it’s nice to have the exit doors open and clearly marked. You, yourself, can make sure they’re open. Spend an hour or so with your lawyer to make sure everything is clearly spelled out and enforceable.