Negotiating Job Offers with Tech Clients
Empower Your Clients Through Effective Compensation Negotiation
In the dynamic world of startups the decision to join a new company is not just a career move—it's an investment in one's future.
One of the most impactful ways you can serve clients is by guiding them through the process of negotiating their compensation package. Doing so can significantly impact their long-term financial health and career satisfaction. It can also strengthen your relationship and prove your value as a trusted advisor.
This guide aims to give you the insights and strategies needed.
The Importance of Negotiating Compensation
A client’s initial compensation package sets the trajectory for their earnings while at the company and influences future negotiations when they move on to new roles. A well-negotiated package can result in millions of dollars in additional lifetime earnings for your client.
As an advisor, you are uniquely positioned to provide context for what is worth negotiating within the context of their overall financial picture. Without this guidance, clients may miss opportunities that support their long-term goals. By helping them negotiate well, you can ensure they receive enough cash compensation to meet their target lifestyle expenses and savings rates, while also increasing their upside exposure via equity comp strategy.
Understanding the Employer's Perspective
To help your client negotiate effectively, it's a good practice to understand the employer's perspective.
Employers are primarily concerned with hiring the best person for the role while minimizing hiring costs. However, the negative impact of a bad hire often outweighs the cost of making the right hire happy and financially supported. Here are some things to consider while negotiating an offer:
- Recruiters and hiring managers are motivated to attract top talent. They are often judged by the quality of their hires, not the money they save the company on a hire’s pay.
- Compensation bands are intended for internal structure and fairness, but may not be as rigid as they appear. There are often many ways to arrive at a mutually beneficial comp package across a range of benefits.
- An employer’s full cost is much higher than salary alone, often exceeding base salary by 150% to 200%. For example, the difference between an $18k and $20k monthly salary may be less noticeable for the employer than for the client. However, employers are more sensitive to some aspects of compensation than others.
To negotiate in good faith, you must understand how the pay request impacts the company. Your client's comp package affects the company's pay standards and ability to reach its next milestone.
Negotiating at Different Company Stages
The right negotiation strategy depends on the stage of the company.
Most employers, especially larger corporations, have set pay bands. Also, several U.S. states have enacted laws that require employers to provide salary ranges in job postings. Some of these states include California, Colorado, NYC, and Washington State. Tools like Glassdoor, Payscale, and LinkedIn Salary have made it easier to access pay data. This means that candidates are now better able to understand and bargain for their worth.
In addition to negotiating salary, candidates can also use other parts of the compensation package to optimize their offer. Perks such as flexible working hours, remote work options, additional vacation days, and professional development funds can provide significant value. Negotiating for bonuses, stock options, and health benefits can improve compensation. Consider and prioritize these elements with your client. They can often be easier to negotiate and greatly help job satisfaction and work-life balance.
Here are some of the potential levers to consider:
- Title / Level
- Salary (including sign-on or performance bonuses)
- Benefits (perks, vacation days, remote days, professional dev funds, health benefits etc.)
- Equity (vesting schedules, equity type, accelerated vesting, shares granted)
How to Coach Your Clients Through Negotiation
Negotiation starts with research. You need to understand the market rate for a role and consider the full compensation package. This includes salary, bonuses, stock options, health benefits, and retirement contributions.
Here are some more things to consider. They can help your client express their value with confidence. They can also help your client aim for a win-win agreement.
- Encourage your client to let the recruiter and hiring manager make the first offer. It will likely be at the lower end of the client's band.
- Advise your client to start negotiations at a "yes, if" point of the process. Yes, an offer will be extended if the terms are mutually beneficial.
- Reassure them that negotiating won't make a good offer worse. The company has already put a lot into the hiring process.
- Suggest negotiating over email. It allows for thoughtful responses and eases pressure for those less comfortable with negotiating.
- Remind them that negotiating well shows skill and care. Not standing up for themselves may lead to being undervalued until their work speaks for itself.
- Encourage them to focus on mutual fit and alignment with the company's vision rather than providing a specific number when asked.
The Non-Traditional Hiring Path
In addition to negotiation guidance, you can help your clients stand out in the job market by encouraging them to build relationships with decision-makers at companies they're interested in.
"Opportunistic hiring" may not be common at all companies. But, it’s often used by smaller companies or niche industries. By building relationships with decision makers, learning their needs, and showing how their skills and experience can help, your client may be able to fast-track hiring barriers and increase their chances of getting a job that aligns with their goals.
Examples of Job Offer Negotiations
From SVP of Engineering at a public company to VP of Engineering at a Series A startup
- Person A was earning $350k base plus $750k+ per year in RSUs, but was getting fatigued with the bureaucracy and slow pace of innovation.
- After running a cash flow and cash needs analysis to determine how long the family could go on Series A Startup Salary, the focus shifted to finding the right company fit and negotiating an offer that provided the right exposure to cash and equity.
- Because of equity left on the table at the prior role and Person A’s clear ability to add value, the offer increased to a 2.5% equity stake. They had excess cash and confidence. So, they negotiated for the full grant to be NSOs with an early exercise provision instead of ISOs. They early exercised and 83(b)’ed the entire tranche at no tax cost with QSBS potential. If the company doubles in value before exit, Person A will be better off than if they stayed at the prior company, not to mention the resume bump.
From Head of Ops at private unicorn to sabbatical to VP of Ops at a Series B AI Startup
- Person B took some time off after a liquidity event to consider their next career move. They had experience at public companies, as a founder, head of ops at a late stage unicorn, and felt the next step to build their professional reputation was ops leadership in a fast growing startup.
- Their main reason for the next role was belief in the company. They also wanted to own strategy for the entire ops org and have enough equity to never work again if the startup succeeded.
- “I want this to be my last startup and am passionate about building enduring businesses” was compelling positioning during negotiations. To double down on their long-term commitment, Person B offered a 5 year vesting schedule that was also back-weighted. They were able to secure considerably more equity with an accelerated vesting clause in case the company got acquired early. More than half were negotiated to be NSOs to early exercise and make the 83(b) election. QSBS wasn’t on the table but the long-term gains benefits were worth the investment risk to Person B.
From Head of Design at a Series C startup to IC Design role at a public Company
- Person C was at a startup for 8 years and was getting burnt out, they wanted better work-life balance for their family. They didn’t want to manage anymore and were more interested in being an individual contributor (IC).
- After a cash flow analysis, Person C assessed the value of equity left on the table after termination, including the Post-Termination Exercise Windows. This built intuition for what their new comp package needed to be. Fortunately, moving from private to public company stock provided more liquidity each year.
- With offers from multiple public tech companies, they settled on a role that made the most sense for them. They negotiated for more vacation days and fully paid healthcare. They gave these up for slightly less equity. The expected annual cash and equity after negotiation more than covered their yearly savings target. Positioning them to wait for their prior company's event to happen.
When negotiating an offer letter, professionalism and clarity are key. Encourage your client to research industry and company standards, prioritize their requests (e.g., salary, equity terms, benefits), and justify them with data or qualifications. They should also seek clarity on critical details, such as the equity grant’s terms, the company’s latest 409a valuation, or liquidation preferences, to ensure informed decisions. Approach the conversation with gratitude, positivity, and flexibility, emphasizing a mutually beneficial outcome. A well-crafted email with clear requests and constructive reasoning can set the tone for a successful negotiation.
Sample Email
Subject: Follow-Up on Offer Letter
Hey [Hiring Manager's Name],
Thank you very much for extending the offer for the [Position] role at [Company]. I am genuinely excited about the opportunity to join your team and contribute to [specific project or company goal].
After reviewing the offer, I would like to discuss the [Insert specific request or the “following questions”].
Based on my research and industry standards, [some rationale or expectations] would be more aligned with my experience and the value I bring to the position. I am confident that we can reach an agreement that works for both of us.
I look forward to discussing this further and am happy to provide any additional information you may need.
Thank you again for this opportunity.
Best regards,
[Your Name]
