Extra Fringe Benefit Negotiation

Dec 16, 1994

First from the readers of this column, who I am leaving anonymous to protect the "greedies" :-))))

People are known to get their new companies to pay for their Cobra insurance in between jobs. For me, all I asked for was another grand or two over the company's standard tuition re-imbursement limit and did not even get that. Oh well, gotta work on my negotiation skills

TT: for those who do not know, COBRA is the law that requires your employer to offer you their standard health insurance policy for a certain period of time after you leave their employ, whether voluntarily or involuntarily. You must pay for it, but you do not have to requalify for the policy, as you would with a new policy. DL: COBRA is not a universal requirement. It specifically exempts companies with fewer than 50 employees for example. As an aside, when you plan to go to work for a small company, you might want to ask whether they provide COBRA (although the law exempts small companies, the company can "volunteerily" join the program). This is especially important in case the company goes belly up ;-(

... I usually defer all compensation issues until both sides think that they would make a good match. Most companies now give you a 10% raise from the previous salary. A friend told me that if I want more than 10%, then I must exagerate my current salary an additional 10% so that it will come out closer to 20%. I should have tried it on my last interview because the offer came in at exactly 10% and I could not get more from them. I ended turning down the offer. I now consider that experience as a failure in benefits negotiation.

TT: I do not endorse dishonesty. Better be up front why you want more. See below. Remember the application form that you fill when you join the company? If anything that you put down on it turned out to be untrue, you can be fired WITH cause!

Some of the fringe benefits that I've seen were:
1. sign-on bonus
2. extension of current health plan (in case you are not comfortable with the new plan yet)
3. borrow vacation for planned trip
4. flexible hours
5. company HW that you can take home to do telecommuting
6. stock option negotiation (this is a toughie!)

In general, small start-up companies are more flexible in any of the above items. Also w/ small companies, they are more flexible with stock option than cash items such as sign-on bonus or annual salary.

These are the inputs I got from readers of this column over the past 2 months. I wished there were more. Now, for what I have heard, seen over the past xx years (don't want to date myself here! I have already done enough with 2 "x"'s!). The list is not necessarily in any order, but reflect my rambling recollection.

1. Salary negotiation. This is the one everybody wants to know immediately even though it is not a "fringe" benefit. So, let me take a crack at it... And don't any of you try these with me :-)))))
DL: Engineer in earlier stage of their career (2-5 years of experience) can expect a bigger jump than 10%, especially if they have very specific skills that are in demand. Older technical folks will likely have to settle for 5-10%. Technical managers are all over the map. 25% raise is not unheard of,but pay cut of 15% is also common ;-)

The 10% rule is about right. However you can ask for more. But you need to have a reason. Greed does not necessarily qualify as a valid reason. Some reasons I have heard are

I have an outstanding offer for x% more from company XYZ, one of your competitor - This is probably the easiest one. Come-back from the company could be, "go for the other job" or "OK, we'll match it" or "OK we will raise it by $$$". Sounds like poker, eh! It is salary negotation poker! :-))))

The cost of living/commuting will be more by x% - You definitely need to do some homework here. If you have done your homework well, this is an easy one to get through.

The offer did not take into account my bonus for the last year - This is OK most of the time.

I qualified for a company car, so since you are not providing me one, I would like another x%

My spouse/significant other (no plural here unless you work in West and South Asia!-))) ) was working. To take this job, we have to move and my s/so may not be able to work here - This one is a toughie for the company to swallow, they may offer a package deal or job assistance for your s/so or part-time job.

2. Sign-on bonus, pay advance. The pay advance will be deducted from your paycheck over a period of a number of paychecks. Normally you can get these if you can make a hardship case. For example in a relocation case, you need cash for the down payment on a new house. The sign-on bonus and pay advance, are not typical and will usually require some general manager/VP sign-off. So, ask if you have to, but unless you are a senior person, don't expect to always get it. Another form of pay advance that is a little bit easier to get is to ask for an advance against your work. For example for biweekly paid engineers, this will give you half your check a week earlier. Again this requires a similar signature, but if you are hard up against some deadline like downpayment, it is easier to get. Smaller companies are more flexible than larger companies in this area.

3. Early review with salary adjustment. You essentially are willing to give the company a try at a lower than expected salary, but only for a short period. This implies that you are willing to quit if the expected raise does not come through.

4. Relocation: transportation of car, closing cost of house at both locations, loan for down payment on new house, relocation service to buy your house if not sold within a certain period of time (insist on an independent appraiser of your choosing as one of the appraisers), house hunting trip, extended apartment/house rental at the new location (normally 2 weeks, but could negotiate up to 2 months for overseas move), rental car at the new location while the car and furniture is being moved. In a lot of these things, ask what the standard relocation policy is. You may be able to trade one thing for another one. For example, you do not want to take the house hunting trip, you can ask for a longer apartment rental, or a longer storage of your stuff to allow you greater house hunting freedom when you get to the new location. As long as the $$ work out, there is considerable flexibility here. Large companies have relocation policy. One thing I learned about relocation is that everything is negotiable. The key is how important you are with respect to the company and how reasonable/ justifiable your requests are. Anyway, get a hold of their policy.

5. Vacation. This is an easy one to get. If you qualify for a longer vacation at your old company than at the new, they will typically adjust your vacation rate. It may get truncated down by a few days, but ask and you will get something more than the standard starting vacation rate! Also if the company has a probation period when you cannot use vacation and there is an event that you must attend, then ask for an exception from their probation period.
DL: It will be good though to emphasize that you are flexible in taking your vacation. You just don't want to go back to the end of the line again. The idea is not to convey the image that you just want losts of vacation!

6. Cash-in your stock option, expected bonus. If you can show (in writing) that you have not yet mature stock option, i.e. options awarded but not yet exercisable, you typically can make a hardship case of losing money switching job. You may get cash or equivalent current street value options. If you make the case that if you have stayed with your current project till the end, and the probability of hitting the deadline is good, and you will be awarded so much bonus at the end, then the new company will pay you now - risk free to you! In all cases, you need to show the supporting documents.

7. 401K plan match (for non US folks: 401K is a retirement plan where you typically will contribute, subject to an annual maximum determined by the government, and the company will match part of your payment). A lot of companies allow enrollment only at certain time of the year. If you do not qualify at the time of the start of employment, you may be able to make the case that your current/old company would have matched your contribution with $xx, so can the new employer give you this in cash when you sign on?

8. Special health benefit package. If you or a member of your family has a special health problem, you need to negotiate up-front coverage. Do not assume that the new policy will carry what the old one will, and be careful about the probationary period before full coverage.
DL: Again ask for a copy of the Health Benefit package.

9. Package deal. With the 2 income family, a package deal nowadays is fairly common. The new company will have to get your significant other (SO) (I need to be careful and not be lambasted here for being sexist or traditional) either an equivalent job, or if acceptable a part-time job, or provide your SO with a placement service (the company pays for them to assist your SO to market him/herself).
DL: This may be a consideration, but traditionally is not done except for relatively high level executive or senior technical folks. One benefit to ask for (which I've seen approved) is air fare and temporary housing allowance if your SO has a job and home and could not just drop everything and join you at your new location right away. Company tends not to resist this as it projects a pro-family image that everybody can relate to. "You'd understand that I'd like to see my kids at least once every two weeks while we're still moving, wouldn't you ?"

10. Education. For engineering, agreement to pay for a Master degree or a PhD at a local university. Other degrees that they will support are MBA, executive MBA, law degree. The MS, MBA, PhD are really commitment from the company to let you take time off from work to go to class. Not every class can be taken after working hours! The executive MBA is a different story, because that one is mucho $$$$! Schools loooove these executive MBA programs and you can hear the money suction from the schools!

11. Stock option. If this is a start-up, go for it because they are more willing to give you a piece of the future than cash at the present time. For established corporation, ask what their award policy is and make a pitch.
DL: Beware of vesting clause. Also dilution clause in the startup case. This is probably the topic for a whole issue by itself

12. Company car for management and sales folk - this is the status symbol in the US, a company's car! If you can talk them into getting you one, then you need to get into the gory details of what kind of car! Should it be a Mercedes sedan or a Porsche convertible .. :-)))

13. Employment contract and golden parachute. This is for the executive suite. So let me skip it because you need a lawyer for this.

14. The private office, the direct telephone line in (for the spouse and/or SO(s) and kids to bypass the secretary and the switchboard - just trying to avoid being the topic of office gossip here :-)))) ), the personal fax and THE PERSONAL secretary, the personal parking space. Ah, all these status symbols :-))))
The preferred office is the large corner office, preferrably on the top floor, with a window with a good view, facing north (for coolness- definitely not a Southern exposure, Eastern exposure OK) or with a view of the sunset (thus facing NW, you don't want the West facing office because it is too hot during the summer) over a mountain range or overlooking the ocean with a nice surf, and real mahogany (not those cheapo laminate) desk with leather chair and piped in musak. In the US I have come across this with the aerospace companies only. I understand it is standard fringe benefits for the entertainment, banking and advertisement industries :-)
And of course the Picasso and Rembrandt (do they go together? At a few tens of megabucks each, everything go together! That's crass art!) on the wall, the key to the executive bathroom and the executive dining room (not cafetaria!), membership in the country club, the exercise gym where you only go to have your vitamin-loaded juice drink, the prep school for the kids, the chauffeur driven limousine, ..... Dreaming on, I am getting out of hand here:-)))). Back to reality man! Down to earth man!:-((

15. Commuting expenses. For big city workers, the cost of public transportation or the cost of parking or participation in carpool. This typically requires that the company local policy has a provision for it in their standard policy. Carpooling is becoming a requirement for employers in big city due to federal/state/local pollution control requirements. Certain companies will even provide the van for the carpool. Ask! You got nothing to lose in this case, and in the carpool case you are being a responsible Green (as in environmentalist movement) citizen!

16. Cellular phone, pager. Not for me, I want to be able to hide. But others like these gadgets. If nobody in the company has these gadgets, I would not ask for them, but check their policy before asking.

17. Voice mail account linked to your phone. Ah, the indispensable answering service! See comment above.

18. Trips to visit family. For people relocating, you may want to negotiate up front, how many trips the company is willing to pay for your going back to visit your family in the other city, while the house there is waiting to be sold.

19. Time off from work over the next year for your prior commitments, either to a company or a non-profit organization. This is typically WOP (without pay) unless you can use your vacation.

20. Clerical and travel support for your professional activities. You may need to have a secretary to help you coordinate your activities. And you may need to make trips to attend meetings and conferences. Don't forget support for VACETS!!

21. Membership in professional organization. Fee to pay for your membership in local and national organization. Typically, this will be for the first year, then it reverts to the standard company policy for such support. We should send a VACETS dues notice just to the people who change jobs. Will teach you how to negotiate this item!

Any way, there are many items that you can negotiate. The key is that they have to be reasonable and you need to explain why they are needed. Don't just say "gimme, gimme" and expect people to give you what you ask.

DL: My message is that there are certain benefits that are *standard* and others that are not. There are also certain benefit that are *one- time-only* at the beginning of the employment and others that are not. One should know the difference. I would shy away from asking for "non- standard" benefit that are not "one-time-only". For example, if the company typically does not provide cellular phone, they may give in and give you the phone. But over time, that will be looked at as a *special* and may be an irritant. You're better off in this case to ask for a bigger bonus up front and use it to pay for the phone. Once the bonus is paid for, no body cares anymore and it's your phone, you can do with it what you want.

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