The Risk That Comes With Premature Salary Negotiation

Yes, salary negotiation is very important and if the final offer you receive is the company's best offer then you negotiation efforts are successful and it's a "win" for you. That said, negotiation is a skill and it must be done properly and that includes the proper timing. If not, it can kill a deal and that's what this post is about. I recently worked with a software engineer where the interview process moved forward nicely but the salary negotiation came a bit early in my opinion, was a bit aggressive and lacked transparency. The end result was a deal that fell apart at the very last stage of the process, catching the candidate by surprise.

Let's call her Madeline. Sharp and a very nice personality too. She had a good run at an established Fortune 100 firm, took some time off and I connected with her just as she was starting her job search. Backend Java developer and I had a client looking for such an engineer. Upon submitting her resume, the VP of Engineering replied saying he'd like to speak with her. High level technical conversation and this went well. From here, she did a code test and that also went well. A few hiccups on the solution but nothing to be alarmed about. The virtual onsite was next and was going to be 4 hours long. And here is when salary negotiation started to enter the picture and looking back, it could have been handled better. If anything, I take some responsibility for this because I should have not been so deferential with Madeline on the topic.

Just when does salary negotiation enter the picture? You can say it starts with the first phone call that a candidate might have with the internal recruiter or HR Manager. The candidate might disclose what he/she is currently earning but in terms of negotiation, there isn't much back and forth at the beginning. Often, the recruiter might tell the candidate the salary range for the position and if it's in range then the process moves forward. For the most part, salary is not negotiated much in the beginning.

Getting back to Madeline's situation, a couple of small issues regarding salary came up in my talk with her. We arranged a call and I mentioned that my client was curious to know what kind of salary she'd be looking for and I asked her to share with me what kind of package she had at previous company. After all, she was at a corporation and now she was talking to a startup so I did let her know that there might be some compromises in terms of the overall package. Here is what Madeline told me,

Well Mark, to begin, I'd like to keep my salary confidential from them so when I tell you this number, can you not disclose it to them? Here is my overall package. By the way, their VP of Engineering asked me about money on the first call but I said I wasn't ready to discuss that yet.  

1. Here are my numbers:
2. Base Salary: 117,500
3. Bonus - 10%
4. RSU's - 1500 shares vested 25% which amounted to 3300 dollars in 2019
5. Matching 401k - 3k
6. One-time special equity payout for an acquisition 2019 - 12k 

My 2019 annual compensation was right around 150k. What I would like in my next job is a base salary covering this total compensation or better. So in other words, I would like 150k base at a minimum and my target number is 160k. 

I had no choice but to push back on this and I told Madeline that it would not be fair to take a total compensation package from a Fortune 100 firm and ask a startup to match that with a salary. Not only is that very aggressive but it also is a complete lack of recognition of all the intangibles that startups offer to engineers. Smaller teams, more direct impact in a company and very close proximity to the engineering leadership team. Items like that are special with startups and it's a reason why people forsake the bonuses and corporate benefits to work at them. And to Madeline's credit, she did agree with me. However, she told me that she was not going to disclose her salary to the company, only the total compensation. I told her I would synch with my client on this and get back to her.

So, I communicate this package to the client and they are naturally a bit concerned. The lack of transparency was the concern. My client met internally on this matter and they came back and said they would like to have another phone call with Madeline once she has completed the onsite. The internal recruiter said that she needed to get some progress with Madeline on her salary requirements and target a number she felt Madeline would accept. I'm trying to think of the right way to phrase this and to me, as the onsite interview was approaching, the salary/total compensation issue flared up. It was in the back of my client's mind for most of the process and then, as the onsite was starting, it's was their biggest concern.

The onsite was completed and the call with the recruiter was 2 hours later. That evening, around 6pm, the internal recruiter called me with this closure,

Mark, I wish we had better news but we're not going to move forward with Madeline. She's been a pleasure to get to know but one red flag really started popping up with her and it came to a head today. We asked you to get her numbers and like you mentioned earlier, she has not wanted to disclose her salary. And in my call with her now, once again, she referenced the 150k total package and she refused to tell me what her base salary was.  

Well, this is where it gets disappointing. The team has come back to me with the results from the onsite. Similar to her code test, it was good but not great. They liked a lot of things about Madeline but they were on the fence with her onsite today and what closed this out was my call with her. The combination of the "pretty good" onsite with the difficulty in her salary requirements has led us to pass on her. What's disappointing on our end is that if circumstances were just a little bit different, I think we would be moving forward on this...

All I can say is that it hurt to hear this. Immediately, I looked at myself and asked what I could have done differently with Madeline when it came to our discussions about salary requirements. Should I have had an earnest heart to heart talk with her earlier in the process and stressed more transparency with my client? Looking back on this, the answer is "yes", I should have. I communicated the update to Madeline and she was disappointed but asked me to thank everyone for their time and I told her if I had any new opportunities come available, I would let her know immediately.

I hope I get to work with Madeline again in the future but the lesson learned here is that there is a proper way to negotiate salaries as well as proper timing on when to do so. Aggressive salary requirements combined with a lack of transparency can hurt you as you move forward in the process. There are many ways to approach salary negotiation and if you have an approach that you like, you are welcome to stick with it. But please make sure it rewards you in the end with the company's best offer possible rather than seeing them move forward with someone else.

Thanks,

Mark Cunningham