Exercise 245 Job Offer Negotiation JANE TECH AND ROBUST ROUNTERS com HE BOTTOM WICE BANE LAUNDERS Confidential Role Information for Jane Tech You are a college senior, soon to graduate, negotiating an employment offer package with Leigh Bultema of Robust Routers (RR). RR is the high-tech firm where you interned last summer Leigh was your manager during that internship. Your summer experience at RR was personally and professionally satisfying and RR is a company you would like to work for after graduation. The company seemed pleased with your performance, and Leigh told you before you returned to school that you are one of the top candidates for a permanent job out of numerous summer interns. Leigh also mentioned at the time that RR would probably make permanent offers to no more than 25% of the summer interns. In late August, shortly after returning to school, you received a letter with the terms of a job offer (this letter is included as an appendix to the Background Information provided in the Reader). Unfortunately, the package they sent does not fully satisfy your needs. With RR willing to wait for a decision until March 1. you sat on the offer while pursuing other possible job opportunities during the university recruiting season. Now it is February, and you have contacted Bultema to discuss the terms of the RR offer. The recruiting process has been turned out well for you. In addition to the RR offer, you currently have offers from another firm in the router business (Four Com) and from a start-up Internet company. Your primary interest is in finding a business development position, preferably for an established Internet backbone company. You seckan opportunity that will provide a mix of progressive responsibility, training and security. Both RR and FourCom look like good fits. RR, in particular, leads the market in technology and sales, and analysts see this continuing for the foreseeable future. RR was also recently named one of the top 50 U.S.companies to work for in a major business magazine survey. The future prospects for FourCom are perhaps less bright given that FourCom has been losing market share to RR in the last two years. A disappointing aspect of the RR offer is that it makes you an assistant product manager in the terabit router product group: it is not an offer to join the business development group as you had hoped. Informally, you have been assured that you should be able to move to the business development group within a year or two. Your friends at RR say that management typically is able to follow through on these kinds of assurances if you perform up to expectations. In contrast, the offer from FourCom is for an associate product manager position in business development right from the start. The starting salary at FourCom is $66,000 ($9,000 higher than at RR) and the signing bonus is $5,000 ($1,500 higher than at RR). The options package and benefits offered by FourCom are comparable to those offered by RR, although FourCom is offering a more generous relocation arrangement Your other alternative the start-up company has also offered you a position in business development, with a salary that is comparable to the RR offer, and stock options are a possibility at the start-up soon after you join. However, recent market trends have clearly indicated that investors are much less willing to invest in start-up Internet firms compared to the past; accordingly, the prospects for hitting it big with stock options in a start-up are somewhere between dim and remote (but not nil). An alternative route to a handsome options payoff in a start-up is ir the company is bought out. However, this particular start-up firm is not presently an acquisition target because its technology is regarded as too underdeveloped to bet on at this time. Considering all these factors, your interest in the opportunity at the start-up is low because of the risks involved. You are wondering, however, if you should use the start-up offer as leverage to improve the package offered by RR or Four Com. As you prepare for your conversation (negotiation) with Leigh Bultema, you are pondering the issues involved and planning your strategy. Here is your current thinking Salary/Title: Important to understanding RR's offer is the fact that management levels and job titles are directly linked to the size of year-end bonuses and options. The salary range for assistant product manager (the position you have been offered) is $48,000 to $66,000. The salary range for associate product manager (the next step up) is presumably higher. With bonuses and options tied to levels. It is advantageous to seek the highest possible management level, even if it means taking a few thousand dollars less in salary. With the RR offer on the table at $57,000 for an assistant product manager, you are potentially willing to trade off $3K-S4K in salary if you could arrange an initial appointment to the position of associate product manager. If you cannot obtain the improved title, then some additional salary that brings the offer closer to that of FourCom would be nice. Alternatively, you could explore the possibility of a guaranteed year-end bonus. Your understanding is that year-end performance bonuses typically vary from 5-20% of annual base salary (pro-rated for the first-year employee who starts in the middle of the year). Assignment: Your disappointment over the fact that the offer from RR came in product management rather than business development leads you to wonder if you should raise this in your conversation with Leigh. If the offer could be switched to business development, you would be willing to take it virtually as is. But on the other hand, you realize that Leigh knows full well about your interest here, and perhaps there are legitimate reasons why you didn't get an offer in business development. Would raising this issue merely serve to allenate Leigh, and therefore make it harder to negotiate other issues? Or is it worth using the fact that the FourCom offer is in business development to try to push RR into a change in their offer? Signing Bonus: You learned from your school's placement office that the average bonus being offered to graduating students this year is around $6,000. However, this broad average includes investment banks and consulting firms, which pay substantially higher bonuses than technology companies. You would feel better taking this job if RR would match the $5,000 bonus offered by Four Com, especially given the high costs of setting up a household in the very expensive Silicon Valley area where RR is located. Relocation: The relocation sum offered by RR is less than it could be. FourCom's more generous offer includes moving expenses of up to $4000. Try to obtain a relocation package that covers all moving costs, broker costs, potential storage while you are searching for a residence, and a flat sum to cover other extraneous costs such as registering your car. A lesser option (but still better than what RR has offered) is for the company to agree to just pay for the move, which could be worth up to $5,000 Start Date: Start date is not a major concern for you, but apparently it is for RR because Leigh told you that she is desperate to expand the product group as soon as possible. You did mention to Leigh some time ago that you and your fiancee were planning on traveling around Europe for a few months after graduation in May, but plans for the trip are tentative at best right now. You could use this issue to leverage some movement elsewhere In summary, RR is your first choice as a place to work among the set of offers that you have received. Four Com is a fairly dose second choice, and certainly an acceptable alternative. But the prospects for growth and advancement seem brighter at RR. Still, you feel you need to see some non-trivial improvements in the terms of the offer before you are willing to choose Rover FourCom. Ahead lies the conversation with RR's Leigh Bultema