Money Talks... You Know The Rest.

Everyone is familiar with the saying... Cash is king, and whoever has the gold makes the rules! I believe this is a rightful place to start the conversation on compensation or... the negotiation thereof.

Through the years I've had many professionals inquire about my thoughts regarding the fairness/robustness of compensation plans being extended to them. This encompasses the full spectrum, from a high-level individual contributor ($150k+) to Global CEO’s / Partners (7 figure incomes). Now, you may want to sit down for this, because there's a good chance that you'll be a bit surprised on my POV.  

For those who know me, you know that I'm a strong advocate for finding balance - to explore and understand both sides of an equation in order to discover the common high-ground where both sides can - and ultimately will win. What I do know, is at it's core, lies the mutual consensus for action from both sides.

Let me begin by stating that I am a BIG FAN for paying people their value - period! The elephant in the room however is how does one arrive at this conclusion? To be honest, there are NO easy answers to this question and there's a good chance that there never will be, which “should” make sense to all parties concerned. The first step, and I can't stress this enough, is being better educated on knowing your own worth. I can honestly say that I'm not a fan of looking at what everyone else is/isn’t being paid - they're simply not you, and they haven't traveled the same path that has led you to where you are today. 

Your worth is also defined by understanding your lines of demarcation... at what point will you walk? And what value do you place on contribution and the intangibles that will get you up in the morning with the passion for a new day as you consider this new role? After all, companies want to know you will be excited to join them, and the ingredients to that intricate recipe ultimately lies with you.

The fact is, you’re doing companies and yourself a disservice if you do not approach it this way, and yes it takes confidence, but you will find that confidence is gained in the process of considering compensation from every angle. 

For a moment, let's discuss those compensation angles and intangibles by posing a few multiple-choice questions. Is it wrong for companies to negotiate lower salaries and offer countless “nice to have” amenities and programs in a way that doesn't truly recognize the value of the talent pool before them? If so, who is to blame for the assessed value of that which is being offered? And more importantly, how does this speak to the initial framework for account-ability and a mutual commitment to success moving forward? For the company, these intangibles such as nap pods, ping-pong and foosball tables, free snacks, video games, on-site spas, gyms, salons etc, just to name a few, are more or less fixed expenses divided by X number of employees equaling minimal financial impact to the bottom line. Needless to say that these "perks" apply to all employees immersed in an abundant corporate culture, and not necessarily reserved for the renegades among us. It's also important to note that these "benefits," with a few exceptions, never seem to ultimately benefit your bank account. Therefore, their "compensation value" is equal to that of what exactly? Are they more of an added bonus or, are they in fact a reflection of a reduced base in pay? Obviously value is based on your individual point-of-view. For some, company perks fulfill a need, for others it comes down to the basic principles of - show me the money! 

I asked a colleague recently how this became "the thing." In his view it's been fostered by a "keeping up with the Jone's mentality." Company A offers it so Company B follows suit and the self-feeding frenzy expands like a industry virus. Yes these perks are designed to attract and foster a desired environment, but at the same time, many of these so called benefits silently speak to the mental framework of the company and the talent pool that they may or may not be targeting. To a Millennial, perhaps video game entertainment, nap pods and foosball tables may be enticing - but not so much to the Gen-X population. It's fair to say that companies need to be conscious of what their actions are communicating or what they are saying without actually saying it. They are in fact sending a message - but to who, and... what is it?

The objective ultimately is to understand how to create a real win-win scenario, which is not only subjective in nature, but an extremely loaded proposition. Of course neither side wants to be taken advantage of and prefers that the other be the first show their value and commitment to success. The real question in my mind however, is to what degree, if at all, are both sides equally coming to the table respectful of each other’s position? Who is going to be the first one on the dance floor and put themselves at risk? We argue that it needs to come from both sides as reflected in the Nash equilibrium, named after Nobel Prize Winner and mathematician John Forbes Nash Jr. The Theory (among many applications) has been used to study to what extent people with different preferences and agendas can cooperate, and whether they will take risks to achieve a cooperative outcome. 

That said, this is a very logical and conceptual approach to the problem for everyone. I personally believe that most approach compensation from a perspective of ensuring they do not get "screwed" (buyers remorse once again), and that’s a problem. In essence we need to RETHINK everything and adhere to Einstein's insightful perspective "You can’t solve a problem at the same level you created it." Instead, you need to think about what it will take to come in and do things “optimally” for the company, and that requires more meaningful and deeper conversations throughout, before you can even discuss money.

Take a step back for a moment and consider how that thinking changes the conversational tone. After all, how can you negotiate a good deal for all parties involved until you know what is expected to perform at an optimal level? That’s the way to get around discussing compensation to begin with. You want to do the company justice, but first, you need to determine what that will take. Now, on the other hand, if the company doesn't want to approach it that way and pushes you for numbers without getting in deep enough, then you have to ask yourself if you truly want to go work for such a company? In my opinion, at this juncture it's not about being prepared to walk, it's about being prepared to turn tail and run. Why? Because you are likely being setup to begin with and faced with a no win situation, due to the fact that they are showing in their actions that they will likely not respect your efforts. Understand that this needs to be a two way street, as much as they have conducted their homework on you, it is equally your responsibility to conduct your homework on them in turn. 

The Company Perspective: I'm not naive enough to think that companies don't want to optimize their profits and that Wall Street in its heart of hearts is perfectly okay with minimal returns, (sarcasm here) but I truly believe that EVERY corporation wants the best talent. In fact, it’s been my first-hand experience that most companies (within reason) are willing to pay commensurate (and often higher) “compensation” than initially planned, as long as the ideal candidate has demonstrated that they can and will make a true and meaningful impact. On the other hand, I have also witnessed a PENNY-WISE and POUND-FOOLISH mentality, and seen it prevail from the corporate side. Just to be clear, the definition of penny-wise and pound-foolish is: 1. Being very careful about unimportant matters and careless about important ones. 2. Someone goes to great lengths to save more money now, but ends up losing more later on. Should it be any surprise that when company mandates choose to take this approach to talent, that higher expectations are rarely ever met, and more often than not the company is far from positioned as a market leader? I would have to say unequivocally no. That said, for some companies, this type of status-quo thinking is fine, but it begs the question... what spawns this type of thinking? To what degree is this a product of the company line or, is it simply a byproduct of professionals not recognizing their value and aiding the company to see the possibilities?

I should probably mention that I’m not one to put a band-aid on this topic and fall in-line with addressing the symptoms and not the cause. To me compensation goes far beyond broad amenity brush strokes designed to appease the masses. While these programs are nice “have’s,” I do not see them truly addressing the compensation issues appropriately, and honestly believe that if candidates really looked at the tangible value of these programs, they would recognize that they do not address the respect that they are looking for in an overall package.

As a final thought, let me just say that it's a good idea to be respectful not only of your own time, but that of the company as well, and it would serve you to gain a better understanding as to the tendencies of companies throughout the process, thus preparing yourself to anticipate what's next. The bottom line is that you need to understand why you are going to a company and the associated trade-offs. Having represented the global interests of 9 of the most valuable brands in the world as well as some of the most renowned start-ups like Akamai and Motive, we’ve seen a diversity of thinking, however the consistent application of the principals outlined here have broad application and will surely serve you well as you take that next step toward securing your future. 

About Steve Diedrick...

Steve is the founder of Redmond, a global executive search firm whose clients include world renowned brands and start-ups that are shaping tomorrow's world. As a highly respected authority and pioneer in the field of human capital with close to three decades in the space, his progressive ideas on search-excellence reflect a profound understanding/passion for the global economy and the ever-evolving mindset of the unique talent that propels companies forward. He has personally reached out to more than 100,000 professionals and interviewed over 35,000 potential candidates throughout his career. His personal drive, perspective, discipline and focus is a culmination of his life experience living abroad and the 27 years spent mastering the Martial Art of Qi Gong. His Mantra: There is nothing like direct experience that takes you from knowledge - to knowing.

Email me at: [email protected] or Text me at: 947.222.9200 and let's discuss how Redmond can help you.

? Redmond Research, Inc. 2019