Compensation Negotiation with Startups

Learning to negotiate compensation is a critical skill to have but also challenging to develop. It’s crucial to strategically communicate your expertise and needs to get the best compensation package possible.

What is Compensation?

Compensation is a monetary payment given to individuals in exchange for their services. The monetary part commonly includes salary, benefits, equity, bonuses, and sweeteners like signing bonuses, and office set-up and remote work allowances. The non-monetary part usually includes perks, flexible hours, remote work options, employee discounts, or tech gear. In the startup ecosystem, both pieces of compensation vary based on a startup’s financial position and creativity.

How to Negotiate Compensation

Wouldn’t it be great to have a handy framework for these tough conversations? Luckily, the PIC Framework can help to polish your negotiation skills.

Let’s break down the meaning of PIC and dive deeper into each element.

Prepare

Preparing in advance of a negotiation is key, so you know what direction to take during the conversation. This involves four essential parts: COMP, EVP, MVP, and STATE.

COMP: Compensation

The main action item in COMP involves researching to demonstrate your knowledge. Some research tips include:

Cross-checking salary bands with sources like Glassdoor, PayScale, Reddit, LinkedIn or chatting with recruiters and your network.
Creating a list outlining your desired compensation expectations (i.e., flexible paid time off, flexible hours, remote work, equity etc.).
Taking a deeper look at the company website and the job description for information on compensation and available perks. Remember, if the job description changes, you can negotiate based on changes in the scope of work.

EVP: Employee Value Proposition

An EVP is an employer’s promise to employees in exchange for their commitments to the company. To best determine the EVP, you will need to find out about:

Risk
Assess the risk of the company by asking or researching about their performance, especially if it’s a private startup.

Funding
Crunchbase is your best friend to learn more about a company’s financial position.

Company Roadmap
It’s helpful to know the company’s mission to understand how your role fits into their roadmap and how you’ll create impact.

Company Culture
Learn about the company culture by reading their website, checking Glassdoor reviews, and connecting with current or past employees on LinkedIn. This will help you determine if the company culture aligns with your values.

Bonus Tip: Informational Interviewing
Interview people at a company that you find interesting. Try doing this once a quarter when the company has no jobs available to collect information and build your network. It could come in handy in the future!

MVP: My Value Proposition

MVP is knowing your value, so you don’t settle for less. To define your MVP, consider effectively communicating your skills, experience, gaps, and strengths while keeping the following recruiter tips in the back of your mind.

Skills
When asked to describe or rate your programming language or hard skill proficiency, it’s important to provide an honest yet fair answer that best demonstrates your knowledge and expertise.
- A possible answer could be: “I would give myself an 8 in this language based on the conversations I’ve had with other developers in my network.” To add more credibility to your answer, you can share a situation where your manager or senior team member(s) complimented your work.
- Here are a few questions to get you thinking:
  - What are your proudest moments?
    – How can you share this to demonstrate your ability to create impact in your role?
  - What was one of your most challenging moments?
    – How can you share this to demonstrate your ability to identify challenges, solve problems and make progress?
  - What are you most passionate about?
    – Are you working on a passion project? How can you share this to showcase your full potential?

Experience
Recruiters commonly think in categories like high growth environment experience, startup experience, customer-facing, service-oriented, product-oriented, etc. For instance, if you’re interviewing at a product-led SaaS company, the hiring manager or recruiter would want to know if you’ve worked in SaaS and product.

Gaps
When sharing gaps (i.e. not familiar with technology the company uses, working in remote environments is tough for me), make sure you can highlight these points during a negotiation. For instance, does the company promote a learning culture so you can learn different technologies or help you adapt to a remote environment?

Strengths
Communicating your strengths helps showcase your authentic and unique self. If you’re having difficulty pinpointing what fuels you, use Buckingham’s Like Loathe List to keep track of what you enjoy and loathe. According to author Buckingham’s definition of strengths, we may be good at something that doesn’t energize us and may be learning something new that we’re not completely good at that does energize us.

STATE

Your STATE is the most underrated part of a negotiation. When going into a negotiation, it’s important to be in a neutral mental state. Try power posing to build confidence and calm your psychological and physical state before going into a negotiation.

An effective pose to try is standing like a superhero and holding it for two minutes before the negotiation or even an interview. You can also try the victory pose, which mimics the superhero pose, except you would raise your hands above your head in a V-shape like you’re celebrating an achievement. Pairing these power poses with positive self-talk in front of the mirror can work wonders in how your body and mind feel.
If you’re curious and want to learn more about body language and power posing to boost your energy and confidence, check out social psychologist Amy Cuddy’s TED Talk.

Invite the Company to Dance

Alright, we’ve shared our best tactics to help you prepare, now let’s move on to the next part of the PIC Framework – Invite.

During a negotiation, you’ll be asked that very same question: “what salary are you looking to make?” We can approach this question in many ways, but presenting yourself in an inviting and friendly tone will likely make the hiring manager or recruiter consider what they can do to best meet your needs. Next time you’re asked this question, try using the following phrases:

Correct me if I’m wrong, but I’ve heard roles like this typically earn $130,000 to $140,000.
Do you have a salary range you are sharing for this position?

Remember, you’re an equal contributor in this conversation, so make sure you are taking the lead on discussing salary expectations if they don’t.

Collaborate

Last but not least, let’s discuss Collaboration. In a salary negotiation study, researchers found that individuals who used competitive and collaborative strategies in negotiation were able to increase their starting salary by an average of $5,000. However, collaborative negotiators were more satisfied than the competitive bargainers. In the startup realm, companies may not have skilled recruiters, and the process might be unstructured, so it’s best to give them the benefit of the doubt. Let’s explore two collaborative scenarios.

Scenario 1

The company hasn’t discussed compensation yet, and you’d like to have this conversation before proceeding with further interviews. What can you do?

Indicate your excitement about the opportunity.
Tell them you’d like to discuss compensation before further interviews to ensure it aligns with what you’re looking for.
Emphasize that this will help you focus on the opportunity and the people you will meet.

Scenario 2

You are currently interviewing with a company you’re interested in but also have another offer on the table. The issue here is timing. What can you do?

Indicate your excitement about the opportunity and let them know you have another offer with a deadline.
Ask when the interviews at this company will conclude and approximately when offer decisions are made.
Express that you don’t want to miss out on the opportunity and would like to work on the timing if it is a possibility.

Negotiating is Challenging

Compensation negotiation requires quite some research, preparation, and practice, but it will be time well spent to ensure you get the compensation package that best meets your needs. To learn more about this negotiation discussion led by our guest speaker, Talent Acquisition Consultant & Executive – Leadership Coach, Teresa Duke, check out our YouTube video.

Additional Learning Resources

If you’re still looking for some more helpful examples, we’ve done the research below. Dive in.

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