Evaluating Your Worth: What to Consider When Negotiating Total Comp

Picture this: The company of your dreams just called to let you know that they’d like to extend you an offer. The job is perfect and this is the sort of opportunity that could really see your career flourish. You only have one question: Can they move on comp?

Rachel Orston, (CCO at Instructure, fmr CCO at Smart Recruiters) and Hudson Lofchie, (Co-Founder at Grey Space) left to right

The answer is almost certainly yes, but you have to know what to ask for and whether you’re willing to compromise. That’s why, we partnered with our Sponsors at Gainsight to bring two experts on negotiating compensation, Rachel Orston, CCO at Instructure, fmr CCO at Smart Recruiters and Hudson Lofchie, Co-Founder at Grey Space, to share their tips on what you should be thinking (and asking) about when negotiating compensation. If you are a visual or auditory learner, scroll down for the full session on YouTube.

1. Pay Transparency

Pay transparency is currently a hot topic and is becoming law in an increasing number of states, but it might diminish your negotiating power when it comes to salary. Hudson tells us why, “[lack of] pay transparency, gives the individual the power to negotiate for themselves, whereas, having the transparency might box you in, and you can negotiate within a band.”

2. Cash + Bonus

When you’re in management, a lot of your total compensation can be tied to performance and company metrics, which can be a blessing or a curse. You‘ll want to consider just how much compensation you’re comfortable tying to metrics that aren’t totally within your control. Hudson emphasizes that you have to ask yourself, “how much of your compensation are you comfortable having tied to bonus and performance?” Whether you can make a lower base salary with a high bonus work for you financially or whether you’d be more comfortable with a higher base and less variable is something you absolutely must consider when negotiating.

3. Equity

Equity is arguably the toughest part of negotiating an offer because of the risk involved and how many variables there are at play. Not only is there no guarantee that equity will ever amount to anything, but there’s also considerations like the current valuation, the total number of shares outstanding, and dilution. Rachel emphasizes, “you should ask for the cap table [at the offer stage], and it's a big red flag for me if they actually don't share it…[you want to] look at the actual cap table to see what the preference is of the different shares.” At early stage startups, C-level employees can expect about a 2.5% equity share, VPs about a 1.5% share, directors anywhere from .25% to .75%, while ICs can mostly expect fractions of a percent. As Hudson put it, equity is “having a lot of your compensation be locked away to the future.”

4. Perks and Other Variables

And there’s always other perks to take into account, especially around healthcare, remote work, and parental leave. Depending on your phase in life - for example, if you are planning to start a family soon - or how much you value travel, these other perks can be a deal breaker. “I work for a completely remote first company and [that] was super important to me,” Rachel emphasizes. But, for an increasing number of companies, hybrid or even in office work is a high priority. Is less total comp in return for a fully remote job a worthwhile tradeoff for you? When weighing other perks vs. cash and equity, Rachel says it’s import to “understand what matters to you, but do assign a weighting in some financial measurement to [these other perks] because, at the end of the day, it's either going to cost you or it's going to cost the business.” 

Hudson recommends taking a few other things into account, like whether there are travel and relocation perks, a continuing education stipend, or even if the company will pay for you to maintain or renew certifications that increase your value. While these perks are often the last thing people consider, they’re crucial to understanding whether your values and lifestyle align with your potential new employer.

Check out the full session on YouTube.

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