Whether you follow McKinsey or Deloitte, the number of executives who are considering switching jobs or developing other career paths is still startling at 40-45%.
Hiring has exceeded pre-pandemic levels in many markets and the shortage of skilled executives has put pressure in the increasing competition for top talents.
If you have specialized and high-demand skills, for example on ESG, sustainability or bio-research, and a solid record of experience, you are well positioned to negotiate your salary.
If you have reached the last stage in the hiring process for the job you’re interviewing for –congratulations – so what’s next?
Negotiating your executive compensation package
At Borderless Executive Search, prior to your interview, we schedule several conversations with our advisors about their current salary and the expectations they have for the role in question. Surely the simplest thing for us to do would be tell our candidates what our client expects to pay and leave them to negotiate by themselves.
And while we know that every employer has an idea what the job is worth, it is certainly not the same as knowing what a talent is worth in that job until people get to know and understand them well.
Bringing in skills and relevant industry experience the client has never considered before gives advisors a better chance at getting paid above what the client’s initial numbers are. However, that it not to say that this can also go the other way, if you lack the preparation and sound negotiation skills. Remember, even though you may not have all the requirements of the role, you could still be a great asset and be successful.
Before delving deeper into tactics, recognize that negotiations are sensitive. As my colleague Rosalie Harrison says that people sometimes get weird when it comes talking about money and reveal a different “money personality.” Use your pre-interview briefings upfront to get to know yourself better and what your emotional response tends to be around the subject of money.
Studies show that most people shy away from the conversation because they do not want to be taken advantage of, while others simple are unable to value themselves.
It’s also true to say that companies differ when it comes to the whole process. Some expect candidates to negotiate while others make their best effort from the get-go. Understanding where your emotional position is situated, and the direction the company will likely take, is critical. It’s not just about the monetary impact on your way of life and your family.
Don’t play games – it’s just not smart.
How you handle yourself and the integrity you display when negotiating your package will be an important indicator to your future employer of who you really are and how you behave under pressure.
There is no better way to see your offer withdrawn, than by having a hiring manager find out you invented a competing job offer, inflated your current salary and thus, risk a counteroffer from your current employer. These tactics simple do not work but one thing is for sure – if you play games or come across as being less than candid, it will degrade confidence in you and impact your credibility as a professional.
I am not saying you should be weak or allow yourself to be intimidated. Anything less than a balanced professional approach, will do you a dis-service.
We too have a vested interest in ensuring that this professional ‘marriage’ will be based on trust so that ultimately both your career and our client’s business prosper. That is why at Borderless Executive Search, if we sense that during the negotiation process, a candidate’s behaviour shows a fundamental character flaw that may be in conflict with the values and integrity of our client – we immediately recommend withdrawing the offer.
After all we are not recruiters – we do not depend on someone being hired so we get paid – our long-term relationship with our clients is based on helping our clients find and attract the right executives who will be successful. Some say we are only as good as our last successful hire, although I think that exaggerates the point.
As advisors to you and to our client – here is our number one tip – do not play games – it’s just not smart.
Understanding the market
As an executive you develop a fair understanding of how much people are getting paid over the years. You learn what people working for you earn, and any public company report will reveal how much executives are paid.
In the USA, several states are making it mandatory to post pay scales with job ads – although I doubt that they will be especially helpful for senior executives.
At the very least, an hour of decent research upfront can provide you with some context of a company’s remuneration policy. As Els De Cremer, our founder always tell our advisors ‘Be clear and precise about your expectations.’ That way, we can align and help you prepare the way for your successful conversations.
Understand your current package
Before you can negotiate any new package, it’s a good idea to understand the details of your current package. It never ceases to amaze me how some of the smartest and most experienced executives do not fully understand the details of what they earn and how they are paid.
If you do not understand the details of your current package, how can you negotiate the next one? Will you be able to make a fair and reasonable comparison? The same occasionally applies to some hiring managers. That is why these discussions tend to be fronted by experienced HR people.
Most people know their salary but may not grasp how it is paid, what it includes, how much taxes are involved, etc. In France, for example we refer to a net pay – that is after social security deductions but before tax. Perhaps it’s an annual salary may be paid in 13 instalments, as in Holland it’s 13.92.
Where and in how many countries are you paid – in which country are you paying social security, what is your net salary? What are your short-term incentives? How about your bonus? What did you actually receive in the last two years? What is it based on? Is it based on your personal or company results, or both? What about long term incentives? Do you receive stocks, grants, options, purchase, after a certain number of years working for a company? What are the terms? What can you take with you – what will you leave behind and do you expect your future employer to compensate you in some way? Does the company pay for your children’s education? Will you be provided with a car or a driver? And what does your healthcare cover and pension plan look like?
Not to sound like a compensation and benefits officer, but these are questions we will be asking you before you go to that important final conversation so be fully prepared.
And yes, we do need to know upfront, because nothing will destroy your credibility more than springing a surprise at the final stages of negotiation.
Nothing would be worse than to undersell yourself, and a package is part of that, but don’t exaggerate either. At this stage, your future employer is ready to take you on and has a pretty good feel for your value and will compensate you fairly.
The worst thing you can do is to spring a surprise by coming up with an important detail you should have mentioned in an earlier phase of the negotiation process. For example, if you are planning to become a citizen of the country where you are currently residing and need to remain resident there for another year, or any major life decisions that might impact your employability. Discuss it early on so that your future employer can take this into account and make appropriate arrangements (if they value you to the extent that they are ready to employ you, because a responsible company certainly will).
A straight answer to our usual question: Are there any considerations -personal and professional – that could impact your ability to undertake a role which you are being considered? If it’s only personal, if it doesn’t impact the company and you don’t expect the company to take action or compensate you, then it’s often irrelevant to the negotiations but good for us to know.
Inexperienced executives assume that a company always want to pay you as little as they can get away with. This is a naïve and outdated belief. In truth, companies who want to attract great people are always willing to pay.
Smart executives know what they are worth. They understand the market and peer-level compensation in all its elements. Companies are wrong to assume that people will want to join only because they have a great business reputation, have super creative teams, and are a diverse industry leader, with flexible working. While all of these matter, it’s simply not enough to draw the best talent to the company. An employer who values great talent by providing a fair and attractive compensation attracts the best talent.
Some executives believe that they are smart by refusing to reveal their current package before an interview. Indeed, in some jurisdictions, the USA for example, it is illegal to ask someone to reveal their compensation package.
However, nothing could be more embarrassing than a company finding out they cannot afford to pay you after you and they have invested in several time-consuming rounds of interviews.
That is why executive search firms do everything possible to understand packages and terms before putting you in front of a client – if you do not have the trust and confidence in the search professionals you are facing, you are unlikely to make it to the front door of a client.
Again, it is in everyone’s interest for you to be competitively and fairly compensated.
Will you need to take garden leave? Can you work for a competitor? What is a competitor actually? What does your non-compete say? Do make sure that your current contract does not preclude you from working for your company, country, or profession of choice?
Non-competes need to be clear. In the EU, for example, companies cannot prohibit you for working in your line of profession without compensating you for lost income. This is not incidental detail. Your future employer values you and may well be prepared to wait or employ you in another role that does not infringe on your non-compete, at least for a while.
How much notice must you give? You will certainly want to discharge your professional responsibilities and make sure you leave on good terms. In some countries, notice periods are standard or negotiable. In others like Germany, they are a distinct barrier to employment mobility – 9 months from the end of the quarter, really?
To wrap it up, prepare well and understand the detail. Your search consultant can be a guide. If you need to negotiate, remember this is just another phase in the interview process. It’s not done a done deal; don’t be a pushover but be tactful and honest and like in any negotiation. And don’t burn your bridges even if it doesn’t go to plan. You never know when the next opportunity arises and where it will come from.
By Andrew Kris, Borderless Executive Search
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