Cast a critical eye in package negotiations

When negotiating a move home, don’t allow yourself to be derailed by an attractive salary alone. Be rational and consider all the parts of the package – including your next move, writes Edwin O’Hora.

Moving role, whether within a country or from one country to another, can be a challenging process and one that is sometimes easy to misjudge. Some areas of the employment market are now looking to bring specific skillsets and experience either into Ireland or back to Ireland. On a macro level, this is generally an indicator of recovery and growth which is something we are all delighted to see.

For individual businesses, however, it can pose problems around talent availability. During the downturn, strong staff were less inclined to move given the uncertainty in the market. Now it looks like we have turned a corner, talent is beginning to move again. That movement, coupled with renewed economic growth, may mean you have an opportunity to return home to work.

If you are considering moving back to Ireland, the biggest and most obvious pitfall to avoid is the emotional pull of returning home. It’s not unknown for people to allow the romantic notion of returning home to overrule their otherwise strong instincts about a role or a company.

Negotiating a move back to Ireland should be looked at in the same rational and logical way as you would evaluate a move within the jurisdiction you currently work in, or any other professional move. The fact that you are moving back to your Ireland may be a ‘nice to have’ but do yourself the service of evaluating the move, the entire package, and the potential for career advancement coldly so that you can be sure you’ve made the correct decision.

Salary and all monetary rewards are generally understood to be the extrinsic motivators in a package. Often called ‘hygiene factors’, they may stop you being demotivated but they probably won’t motivate you strongly enough to excel or help you enjoy your role any better. We are all aware of somebody who accepted the offer of a better salary (and not much else) to either stay in a role or move to another one.

Most of the time, this does not turn out well. Generally speaking, salary alone does not motivate. And it certainly won’t provide the meaningful interaction most senior people require to underpin the commitment and engagement that is needed to drive high performance.

In most high-performing organisations, there are a number of compelling non-monetary reasons why people go ‘above and beyond’. Daniel Pink’s notion that the opportunity for mastery, autonomy and purpose is a prime motivator is one that has gained a lot of traction recently. All other things being relatively equal, having those three elements present could make a role outstandingly attractive.

Some other intrinsic factors include: real emotional connection with the task, role, team or manager and organization; an appreciation of the amount of exposure to task variety and task specialism, enabling you to enhance your skillset and make you more attractive from an employment perspective; and clear and fairly-assigned career development both through promotion potential and supported external development, be that formal education or other supports such as coaching.

When considering a possible move, and weighing up the benefits, ask yourself the following questions:

 

Many staff – even quite senior ones – have a ruthless focus on their base salary and will almost forego other, more valuable elements of a package for a couple of extra thousand euro in salary. One reason for this approach could be that, for most financial institutions, your borrowing power is normally a product of your salary only. At a senior level, however, you may often be foregoing more valuable elements of a reward package for salary, particularly in an organisation with a reasonably enlightened approach to reward, development and engagement.

You will need to evaluate the various elements of the package and how important they are to you. Some organisations operate ‘flexible benefits’ type arrangements, which may allow you to customise your package. This could allow you to interchange and blend areas like holidays, healthcare cover, car allowance and other non-bonus and non-salary elements on an annual basis.

Salary: this needs to be in your area of expectation, but never assess an offer on salary alone. More salary is normally good, but it won’t provide you with superb motivation or that sustained satisfied feeling that comes with real job engagement and all of the psychological upsides that this type of engagement provides.

Bonus: this is a hugely variable element of any package. Start by asking the following questions as clarity on these points will give you a very good idea of the likely benefit. First, how is the bonus constructed? What proportion of the proposed bonus is based on organisational, divisional, team and individual performance? And what proportion of the potential payout is within your direct control and what is outside of this? Are there elements which you cannot influence directly? Secondly, what is the realistic potential payout per cycle (typically annually, but possibly more often)?  You might be offered a 30% bonus but if the highest paid-out value in the last five years is 15%, you need to take this into account. It’s important that you can distinguish between bonus potential (which may be pitched very highly) and actual payout (which may not be as generous).

Company car: can often be somewhat of poisoned chalice in light of the BIK implications - ensure you assess what these are. Very often employers opt for a car allowance option which may be a better net proposition in a lot of circumstances

Pension: advice from a pensions expert can be hugely valuable here. Organisations may have this expertise in-house, but will often make an external expert available to you to discuss your options. This is particularly important if you are potentially looking to maximise the value of a number of separate pension vehicles from previous employments in other jurisdictions.

Health insurance: for executive positions, this is normally covered completely or there is a reasonably generous allowance to cover such costs. Organisations are increasingly paying an allowance rather than covering the premium themselves. If this is the case, expertise in the interpretation of what is available is necessary and if this is not offered, you should enquire. Even if you’ve had previous experience in the market, it’s changing fast and it’s advisable to get up-to-date expert insight. This can be particularly pertinent if you are relocating from the US, where the healthcare support landscape for executives is extremely different to Ireland.

Long-term incentive plan: in the case of long-term incentive plans (LTIPs), whether cash-based or equity-based, always look at the vesting criteria and assess whether they are realistic. There can be real variation in the range and stringency of vesting criteria and you will need to be clear on how likely payout actually is.

Relocation: When moving countries to take up another role (particularly if you are not moving within an organisation), it’s vitally important to consider how long and how complex the relocation will be. Moving a family to a new country is a complex and often difficult process. A number of factors need to be considered here:

 

You need to focus on your net earnings when considering relocation rather than your gross earnings. You will need to compare net to net and cost of living in each jurisdiction to get a good insight on the real value of your offer. I have encountered senior people who have what they believe to be an excellent offer on the table, only to be confronted with an altogether different situation when they compare net to net and take the cost of living into account.

More sophisticated organisations will generally be accustomed to these types of enquiries and will deal with them as a matter of course. Even if this is not the case, it may be a good idea to ask your new payroll department to work up a net monthly figure based on some standard tax parameters.

Moving home is a big step and one you need to give yourself the time and objectivity to consider thoroughly. In your assessment, a number of elements need to be present:

 

There may be other priorities on your list but in considering moving, make sure that all your considerations are addressed rationally and logically. And if there’s an emotional element to the decision, make sure your logical brain can live with it in 12 months’ time.

Edwin O’Hora is founder of O’Hora Consulting and a Diploma Programme Director at the IMI.