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How To Negotiate Your Salary #4 More Than Money

Value For Valuables

Work contracts usually can include a multitude of negotiables that are subject to mutual agreement. In Germany, as well as in most of the developed countries, the freedom of contract is guaranteed by law. This means that you are pretty much free to negotiate any contract without limitations. Namely, you can negotiate your salary, the amount of vacation days, your benefits and so on. Oftentimes there will be certain boundaries and corridors for salary. These can be determined either by market mechanisms (price mechanisms) or by governance (e.g. corporate guidelines, processes, financial limitations, and so on).

The important thing to keep in mind here is that contract partners are free in the creation of a contract, hence any negotiation can start on a blank sheet of paper. In order to have the right amount of bargaining chips, you have to be aware of your options, of which salary in terms of regular payment for work is only one. Here's a list of compensations that are typically subject to work contract negotiations and can be used to make concessions during negotiations:

Amount of vacation days 

Though in theory this is free for negotiations chances are your company will make an offer within the benchmark corridor. In Germany anything between 25 and 30 days of vacation is usual.

Total yearly bonus payment

Ask for the absolute amount of variable compensation (bonus) in currency as 100% target. This will be the usual amount of payment you can almost be sure to recieve. Also inquire for the minimum (worst case) and maximum (best case) values, as these will determine the incentive to outperform your goals.

Corporate pension plan

In addition to mandatory pension plans companies sometimes offer payment to a savings account or to a specific pension plan. It is best practice that the pension plan is owned by a third party and not by the company that makes the contributions. Also it is worth having a look at the specific conditions and costs of the pension plan itself.

Company car

Usually company cars can be used for private purposes as well. As a compensation you will pay a part of your salary. In Germany 1% of the total purchase price of the new car will be taxed separately. Example: Your company car has a list price of 80.000€; 1% = 800€, which is going to be subject to tax. Let's say your tax for every additional Euro earned is 40%; accordingly you would 'pay' 800x0.4 = 320€ for your company car on a monthly basis.

Flexible work time (hours, days)

Most companies offer some flexibility in work time. The idea is to create a maximum of flexibility for employees so they can arrange and organize their productive times. Depending on the schedules of others you will find that this formal flexibility does not always leave you with only that kind of flexibility that benefits your preferences.

Flexible work venue and ability to work remotely

Remote work was a big incentive back before 2020. Luckily Covid_19 has done more to foster digitalization and the ability to work from home or any other remote venue than most CIOs and CEOs combined during the pre Corona era. After over one year into the pandemic, the interesting question might be: How can the demand for different types of work -remote and present- be met and what kind of frame conditions and infrastructure are necessary? So the more interesting question supposedly is: what's the company's vision towards the future of work and how do you fit in?

Average rate of time spent on business travel 

The time you spend on business travel will not always count as work time, let alone as productive work time. Nevertheless, it is your time hence you better attach a price tag to it. As a benchmark for this 'price tag', think of the costs of opportunity. Every hour you spend sitting in your fancy company car or you spend in business or even first class transcontinental flight, you are not working on your YouTube channel or on your next summer's beach body. Just as a short explanation of the metric of the average rate of time spent on business trips:  

20% = 1 day/week on average 
100% = 5 days per week on average

Training and literature budget

This is probably one of the most underrated forms of compensations. At one company I negotiated a yearly budget of 1200€ for training or literature. I ended up spending almost the entire budget on books that would improve my subject matter expertise. Eventually I shared some books with my teams on projects and assignments to maximize our customers' benefit. The return on investment for the company here is huge, which usually makes it easy to negotiate for.

Business travel bonus programme

This is not a real compensation and is therefore usually not on the table during negotiations. However you should consider this as well a potential part of your compensation. Some bonus programmes offer benefits that you can use privately as well, for example bonus programmes of airlines or hotels.

Valuables without negotiating value

Companies can also offer non compensation benefits, like free food and beverages, company owned canteens, free giveaways (cases, trolleys, pens, note blocks), perks and standards for business travel and so on. These should not be used as bargaining chips for the sole reasons that they are offered by the company not out of altruism, but because corporate bosses know that highly motivated employees are more productive and less likely to run off to competitors.

So far so good

In the previous posts I have proposed that you make yourself clear, what it is that you want. Also you need to be clear on what your negotiating partner (your potential employer) wants. In this post, you have seen the most common and most important subjects that can be negotiated in a work contract and learned that negotiations are -in principle- free from boundaries by law (freedom of contract).

In the next post I will share my experience on some negotiating strategies and tactics. You will learn about methods and approaches I have tested successfully and also the ones that did not work for me as well as I had originally assumed.

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