149. John Gates - Corporate Recruiting Executive | Pay Negotiation Coach | Best-Selling Author

Speaker A: My guest today is John Gates, author of act yout Wage and founder of Salary Coach. John helps senior leaders negotiate higher compensation packages without risking job offers or damaging important professional relationships. What makes John's perspective especially valuable is that he comes from both sides of the hiring table. After years in corporate recruiting, he saw firsthand how many talented professionals leave significant money on the table during the hiring process, often 10 to 20% or more. John's expertise was born from a personal experience. Following an unexpected job loss, he found himself struggling to support his young family while working in a low paying temporary position. A breakthrough salary negotiation change the trajectory of his career and inspired him to develop what he calls the salary coach method, a practical approach that helps professionals negotiate with confidence, build leverage and maximize total compensation. Today we'll discuss salary negotiation, avoiding common mistakes, creating leverage in any job market, and how to secure the compensation package you've earned. John, welcome to People in Transition.

Speaker B: Thanks so much, Bob. I'm, um, excited to be here. What a great topic. People in Transition. There are a lot of folks in transition right now and it's a pretty weird job market. So hope those that are listening today will learn something they can actually use right away.

Speaker A: Let's jump right in. John, you've worked with senior executives and leaders across many different industries. So this isn't just specific to healthcare, manufacturing or not for profit. Lots of different industries can utilize your knowledge and expertise. Before we get into that though, why do you see so many accomplished professionals still struggle to negotiate their compensation effectively?

Speaker B: I think there's two reasons, Baba like one is that most people negotiate their pay just a handful of times in their lifetime. It happens typically when you're between jobs, when you're moving from M1 job to another. Sometimes if you feel you're underpaid, you might march into your boss's office and ask for a raise. But most of the time people think about their pay when they're moving from one job to another. And most of us only do that a few times in our lifetime. So if you are really, really good at negotiating pay, it means you've done it a lot. Most people haven't. And so that's why most people, even senior level people, struggle to do this. It might be five years since the last time they looked for work or had an interview or had to face down someone like me asking them about their pay expectations. And the other reason I think people struggle is that the stakes are exceptionally high, way above most other kinds of negotiation. Some of my clients are people like me, folks from a Recruiting background who have seen it all on the other side of the table. But when it comes to their own salary, they're just flummoxed. The stakes are personal now. Salespeople too, sales leaders, heads of sales functions, people who, executives that negotiate multimillion dollar, sometimes hundred million dollar mergers, acquisitions, complex deals that they've negotiated. And they're very, very talented at doing that. But they're always playing with somebody else's money now they're playing with their own future. And it terrifies people sometimes to roll the dice when it's your family and your mortgage payment and your budget on the line.

Speaker A: John, you say in your book fear is costing you a fortune. What fears typically hold candidates back and how do those fears impact the final offer, do you think?

Speaker B: Oh, this is a great question, Bob. Thank you for asking that one. Mostly if I get specific about specific fears, like early on when a recruiter calls you and says, I found you on LinkedIn, or I'm responding to your resume or your application, you look great. But before we get started on this, tell me what your pay expectation is. There's an instant fear that you're going to be screened out if you answer this question wrong. And so people are afraid of losing the opportunity initially. You know, I'm afraid that if I answer this question wrong, I'm not going to advance. I'm not going to bypass the recruiter or the screener or that first person to call. I really want to talk to the hiring team and the hiring manager and really sell myself. So often when this question comes, people, they undershoot themselves so that they can just get past this. They're afraid of losing the opportunity to advance. And then when it comes down to a job offer, they get 1m, somebody like me will call and say, hey, congrats Bob, we really like you, we want to hire you. Here's our offer and negotiation. Feels like you might be putting that offer at risk. And so if you've gone through an extensive recruiting process, you've interviewed with, you know, 30 people, if that's true, you do interview with that many people, or you've been unemployed for several months and now you're facing down a, uh, drying up savings account, something like that, it's easy to understand why people would be really conservative too conservative in fact, about negotiating. Because they don't want to risk this hard won job offer over, you know, 10 or $20,000. Sounds like a lot of money for some people. It's not and it's just not worth it to some Folks, But I can tell you the average person's leaving a lot of money on the table and they don't have to. There are safe ways of approaching this.

Speaker A: You mentioned that stressful moment in the hiring process when you're asked, what are your salary expectations? What do you feel is the smartest and safest way to handle that question? During that initial, let's say, phone screening, and if I could ask a follow up question, let's say you give a number. Let's just pick an easy number and say it's 75,000. And as you have gone through the process, now it's time to get an offer. Can you change from that number, that $75,000?

Speaker B: Let's start there. The answer is yes, you can, but it's difficult. It's really difficult. If you answer that question with that number, $75,000. They ask you the question, what's it going to take to get you? What are you looking for in terms of pay? What's your salary expectation? These are always of asking the same question and you give a number like $75,000. What's going to happen is someone like me will put that number in a file, maybe even write it on your resume. They'll send it off to the hiring manager, the person who is looking to fill a position, and they'll say, I think I can get Bob for $75,000. And the hiring manager interviews you based on that information. And then more often than not, I'd say more than half the time the offer that you're going to get is exactly that. So giving a number early on and circling back here to your first question, which is what's the wisest thing to do? This is a really common question and it's the first step in the salary coach method. Don't give a number when they ask you what's your pay expectation? Because one of two things will happen. Like first off, the number could be too high. It could be above their range that they're thinking about. And if it's too high, you get screened out. They'll just say thanks for that number. You know, we've got to screen a bunch of other candidates and we'll get back to you if there's interest. They may not even tell you that it's too high. Some will, some might say that's significantly higher than our range. I'm sorry. Most of the time though, they'll avoid the touchy subject and they'll just say, thanks for the information. We'll call you if you're moving forward, and then you'll never hear from them again. The other outcome if you give a number, is that it's too low. If you say $75,000, thinking that that's an aggressive number for you, what if they could have offered you $85,000? Now they know they can offer you 75 and you'll take it. If you dicker at the end and say, well, you know, now I think that I'd like to ask for more, they can say, well, we invested all this time based on that answer you gave us. We thought we could get you at 75. Why the shift? Why the change? Like now, it can become adversarial at the end, and that creates risk for you. So you're kind of damned if you do and damned if you don't if you answer with a number. But this is what exactly what most people do because they don't know how to do it. So the wisest move is to answer with the range instead. And I'm going to get very specific here and reveal a part of the salary coach method on your program right now. This is something for folks who are listening. Use this, steal this. This will make a huge difference in how much money you get at the finish line. And this isn't the whole thing, but this is the step one, right? So when you get that question, what's your pay expectation? The very first thing you should say back is something like, I am so glad you asked that question because I want to have a really good, transparent conversation with you about pay, you know, and about the opportunity, and I want to learn everything there is. I'm glad you're asking this question. But first, can you tell me what your budget is for the position? And then the key here is you have to be very silent for about eight seconds. And if you look at your watch and you watch eight seconds go by, that's a long silence. But people will often fill the silence with their voice. When I'm training hiring managers to interview people for jobs and I'm teaching them how to ask tough interview questions, I teach them how to tolerate silence because they'll get the best answers if they don't just fill the vacuum with their own voice. So you ask them what the budget is, and then you wait for an answer, and they might tell you that they don't have a budget yet. They're just feeling out the market. Most of the time, though, they're going to say, well, our range is between A and B. Let's say they say our range, you know, playing with the 75,000 number again, our range is between 70 and 85. You might hear something like this, and then the next question you can ask is, you can say, is that salary only or are there incentives in addition to that? You want to shift the conversation into total pay language, total compensation language. Some companies pay everything in salary only. Other companies have a lot of incentives. When I worked for Capital One, a, uh, pay philosophy there was to pay at the 50th percentile for base salaries. Their salaries were going to be milquetoast average. But if you added in the value of their stock and the value of their annual cash incentive program, total package was in the 95th percentile because they had such aggressive incentives. So you want to understand what the incentives are, but let's just say they say it's 70 to 85 is their range and that includes incentives. And you can say then, well, that's really good because the range that I'm discussing with other companies is between 80 and 95. So we have a lot of overlap here. I think we should move forward. And one of the tricks I'm using here is I'm creating a range that overlaps theirs. And you'd see, you know, if you plotted these things out, you'd see kind of a Venn diagram, like the bottom of my range is in the middle of theirs, and the top number for me is above the top number of theirs. The reason for this is because almost always recruiters don't tell you what the real top number is. That's very rare. Sometimes they'll insist that 85 is the absolute max, can't do a penny more. And they'll tell you that in an early conversation before you've met the hiring manager, they say that because the hiring manager has told them 85 is the max, I can't do any more than that. But then almost like very, very often, like I've had thousands of these post interview debrief meetings with hiring managers because, uh, I was a recruiter and a recruiting leader on the other side of the table. Sometimes they'll meet a candidate who knocks their socks off and all of a sudden now the max that they can pay somehow goes up because that person can do something else, they can do something more, they're adding more value, or they just decide, I really want this person and I really don't want to go back and interview a bunch more people. So if we have to go from 85 to 92 to get this person, like I'm going to do that or I'm going to stretch as far as I possibly can just to get a yes so I don't have to go back to the beginning. So that's a long answer. That's a whole chapter in my book, by the way. That's a long answer to a great question. And I hope that the folks listening here can use that strategy to bypass this stressful first encounter with pay questions.

Speaker A: You know, I, um, think that many people that I have talked with hear the advice, know your worth, and demand it. Um, why do you think that approach can actually hurt job seekers during a negotiation?

Speaker B: Yeah, I hear this all the time. In fact, if you're hanging out on LinkedIn and you're talking about pay negotiation, you'll see this advice everywhere. And I think it's especially high risk. And it's because you're demanding and because you are saying I'm worth X. But you haven't yet proven that when you're interviewing, people don't really know how much you're worth until you've completed the interview process. When you're talking to a screener or a recruiter or somebody like me in a first conversation, we don't know each other yet. You don't know me and I don't know you. And you're coming at me aggressively saying, I've done my research. And according to my research, this job that you have is worth a hundred $thousand or $500,000 or my value in the market is worth $500,000. I hear that all the time as a recruiter. And I got very good at kind of unraveling that idea with people. Not to be mean about it or anything, but I could say stuff like, well, okay, tell me why you think that that's the market for you. And very often they'll fall back on salary survey data or something. They'll go to salary.com or payscale.com and they'll put in their information. They'll do some salary research, say, and people like me and you, we know how those, how the sausage is made. We know how those salary surveys are created, how the data is compiled and brought in. And somebody can say, well, look, here's my report on Payscale.com, it says that this, this is what I'm worth. And so that's what I want. And I can say, well, we've done our own research and we've benchmarked against the specific talent, competitors that we want to take people from and that we usually recruit out of. So we have a data set of our own that you can't see. And so, according to our research, this is what the position is worth. And so it's very difficult to start negotiating based on salary survey data and using that as the foundation you're standing on. It's really a house built on sand that's quite easy for me to pick apart. And then candidates who aren't used to negotiating, they feel a little lost in the conversation after that. They're not sure how to anchor their value going forward. And so demanding that you're worth a certain amount and introducing the foundation as something I can actually pick apart and argue with is dangerous. Instead of doing that, you could say something like, well, the numbers that I'm discussing with other companies are between A and B. That's what I'm currently discussing with other companies. And that does two things for you that are better than using salary data or research. First is it introduces some competition. They know that you're talking with other companies, and they don't know which companies you're talking to. Secondly, they can't argue with something that somebody else told you. They could argue with the salary survey. They could say, well, that's in the wrong geography, or that's in the wrong industry, or there are companies included in that industry that we don't compete for talent with. But if you just say, um, I'm, you know, I'm in conversations with other companies, and this is the range that we're, we're discussing that anchors your value in a way that is difficult to argue with. And competition always creates leverage for you. So you always want to bring competition into the conversation whenever you can.

Speaker A: John, I would like us to make certain that the listeners understand the salary negotiation process. You emphasize that that process is not a single conversation. I'd be curious, what does that mean? And how should a candidate think differently about that entire hiring cycle?

Speaker B: Very good. I'm, um, glad you asked that as well, Bob, because this is a misconception that a lot of people have. They think that negotiation starts when you get an offer. I even asked LinkedIn, I did a poll on this a few years ago. When does a negotiation begin? And most people believe it begins when you have numbers. Talk about that's when an offer is made. But I think if you're a listener here, you can already see that from the very first conversation about money, you are positioning in the negotiation. When you, when you respond with a range, you're protecting your negotiation range. Even when you apply, when you apply for a job, you know they're going to ask you in the application, what is your salary expectation or what is your pay expectation? And whatever you put in that box in the application is the first step in a negotiation process. So I see the salary coach method as a process that begins at the application in the phone screen. You're going to shift into a range like, uh, I discussed earlier. Then in the interview process, you are building your value. You're making the case that you're worth more in a very subtle, careful way. And I think most people think they're going to ace the interview if they just answer the questions well. But I think you need to answer questions in a way that shows that you are worth a lot, that you're going to be solving the painful problems that the hiring manager has that are maybe taking bonus money out of his or her pocket. That's an extremely valuable tactic to employ during the interview process. And then eventually you're going to get selected and you're going to negotiate during that offer process. So it's a long process. There are many touch points. And even during the interview process, you might be asked again about your pay expectations. Sometimes before companies even make an offer or tell you that they're selected, they'll reach out again to refine what that offer should be. And so there are many negotiation touch points throughout the process.

Speaker A: John, let's shift just a little bit here and talk about building your leverage, which is another concept that you talk about in your book. You teach people to identify, grow, and use leverage gently. What does leverage look like in the job search, and how can candidates develop it without becoming overly aggressive or confrontational?

Speaker B: Good question. I think that the best leverage is likely going to be competition. So a gentle way to introduce that is when you're answering that initial pay expectation question again, just by saying, well, here are the numbers that I'm discussing with other companies. It's a very gentle way to tell them, I'm not desperate, and in fact, I have options. And it's something interesting that happens in the minds of people when they see a candidate that has options. And if you have two candidates and one has no options and one has many options, there is something that goes into your mind that says, well, maybe the one that has many options is better, and maybe the one that has no options has some law that I haven't seen yet. I wonder what that is. And it damages your ability to negotiate and your value, and it even hurts your ability to get selected. So introducing competition along the way like that, and anytime they're asking you about the status of your search and so on. You can say, well, yeah, I'm continuing to look. I have people calling me but I'm very interested in what you've got here. Let's keep exploring that. I want to see what you've got. Sounds very interesting. Great talent always has options. And so you want to come across as somebody who has those options. There's something in my book that I call out called mimetic desire that is really interesting and it has to do with this idea of competition. Mimetic desire is a psychological thing that's really hardwired into humans and I could teach you how to take advantage of that using this competition thing. But the example I think I use in the book is if you have a room full of toys, there are a hundred toys in a room and you have two toddlers in that room and toddler A picks up one toy and there's 99 other toys. Which toy does toddler B want? Almost always.

Speaker A: Yeah. What the first toddler picked up.

Speaker B: Uh huh. We want, naturally we want and we value the things that other people have. We use somebody else's estimate of value to anchor our own in that way. And it doesn't matter which toy is being picked up by toddler A because toddler A grabbed it. Toddler B thinks there must be something great about that toy. So I wanted to now, and this is very gentle leverage that you can introduce into the conversation just along the way. Another thing that you can do is be listening throughout the process for pain. Pain that you know how to solve, pain that you know how to fix. People run away from pain a lot faster than they run toward pleasure. And so if that hiring manager has pain in her life because of this vacancy and uh, you can tell that hiring manager, if you hire me instead of somebody else, that pain is going to go away because I have the experience and the knowledge and the understanding for how to make that disappear for you. You're going to have a uh, sleep filled night. If I'm on your team M, you're not going to ever have to worry about that again. This is kind of an emotional hook to bring you onto the team. If you can try to understand what's painful. What are the personal stakes involved for the hiring manager and also anybody else that's interviewing you. People make hiring decisions and I've noticed this through thousands and thousands of these post interview debrief meetings where I'm um, behind the scenes guiding the manager on who to pick. People hire emotionally way more than they Hire. Logically, they hire the person who is going to make their pain go away. They'll hire the person that's going to help their bonus. Be assured, if they feel like their bonus is at risk right now, they, uh, will hire the person who is least likely to embarrass them. Instead of the best talent, they'll hire the lowest risk person. Because making a hiring mistake is like one of the worst things that any leader could ever do. If you hire the wrong person now, all of a sudden, your judgment about a lot of things comes into question from above. The customers start to doubt you. The team that you manage starts to doubt you. Actually, this is why a lot of hiring managers, you know, will pick a lower quality person, maybe even an internal person, over a better external person because the internal person is a known quantity with fewer risks.

Speaker A: John, if you were to coach someone and say, here's that single negotiation tactic that will deliver the greatest return but is often overlooked by job seekers, what would that single negotiation tactic be?

Speaker B: Well, I can't reveal too much of the secret sauce here, but, uh, I will say the big mistake that m most people make, and this is the vast majority of people, is they accept the offer immediately. So if you can avoid doing that, it opens the door actually to negotiation. And that is the single most underused item in all of this whole process. People are so worn out by a job search and they're so risk averse at the finish line, once the offer comes, they are herded, they hurt themselves and people like me will herd them into accepting immediately. And if you're a job seeker, all that uncertainty in your life can go away immediately if you just say yes. And so that's what most people do. And so a person like me, who's very, very good at this, would, uh, reach out to candidate and say, hey Bob, I'm so excited. Like, just had a meeting with the hiring manager. The whole team is aligned. We are very excited to offer you the position. Based on what you told me early on, um, we've carefully crafted a job offer just for you. It's gone to the highest levels in our company. We finally got it approved and here it is. When can I tell the hiring manager that you would like to start? Let's pick a start date. And folks like me call that a presumptive close, where we are presuming or assuming that the answer is yes. Because if you give me a start date, if you say, well, oh, okay, that's amazing news I think. How about we just start on July 7th if you give me a day, that means you just accepted the offer. And then I'll say, well, that's great. Okay, so I'm going to send you an offer letter. All you got to do then is sign the bottom and put in July 7, and then we can shift immediately into the onboarding conversation and get you started and get you enrolled in our benefits plan. And, you know, I'm so excited to be able to share this good news back with the hiring manager, and it just becomes this sort of emotional celebration. But really, that's me helping you to dismiss all the uncertainty in your life and heading off a negotiation. And so a better way to handle that is to say I am so excited that you gave me this offer. Like, I really do like the idea of working with Tina and her team. Uh, so I'm excited about the possibility of working, you know, for Tina and with that group. I know I'm going to make a massive impact if I decide to join, but it's a big decision for me. And, uh, you know, I have some stakeholders of my own, and I really think I need a couple of days to review the specifics with my stakeholders, and then I'll get back to you on Thursday with a list of questions that I might have about the offer. So if you could put that for me in writing so that I can m. You know, over the next couple of days, really think of all the questions I might have, then that would be amazing. And then I can turn around that list of questions for you on, on Thursday, and you just bought yourself a couple of days to think about it, also to look at the offer in depth, make sure there's nothing in there that's missing, and it allows you a chance to begin a, uh, negotiation, which will begin by asking questions about the offer as a very low risk way of engaging in a collaboration, not a confrontation, about the offer. And during those two days, uh, you should call me and I can help you to get through to the finish line with the best possible package without any risk.

Speaker A: John, I want to thank you for all your great thoughts and ideas and suggestions you made. And for our listeners, I hope today's conversation with John Gates fired you up and gave you the push to take the bold steps in your own career journey. John will put in the notes how to get a hold of you, but I know that you're going to have people reaching out since this is a subject that most people really haven't built up the muscles on. So thank you, John. I appreciate it.

Speaker B: Thank you, Bob. This is absolutely a life skill that will pay you every single day, so it's worth building.