Everyone that breaks into the hedge fund industry asks themselves that question. The education, the experience, the network of contacts, the untold hours spent writing and re-writing resumes/CVs and cover letters, interviews – it ultimately ends with the negotiation of a compensation package. Prior to the finalization of this key hiring element all one has are possibilities. If the negotiation goes poorly, you may well be hitting the bricks once more. Yes, it is that important!
What Can Possibly Go Wrong?
A number of things have the potential to derail a prospective employee engaged in negotiating a compensation package. The first one must recognize is that a compensation package encompasses more than an annual wage, particularly in the hedge fund industry.
Compensation includes salary, of course, but also bonus structure, guaranteed bonus and upside sharing, not to mention the vanilla details surrounding vacation pay and benefits.
How deeply the negotiations delve into these multiple factors will depend on the position the applicant has been selected for and the applicant’s experience level. For the uninitiated, negotiating a compensation package can be as great a challenge as landing the opportunity that placed him at this crossroads in the first place.
A Few Tips
1) This may be your first rodeo, but that is not the case for your prospective employer. The employer will almost never begin the negotiation with his best offer. Job candidates who negotiate in a constructive and well thought through manner will fare better than candidates who do not negotiate. Negotiating is an opportunity for the employer to evaluate your strengths and your weaknesses. In effect, negotiation represents an opportunity for the candidate to demonstrate the skills the employer is seeking. Management needs to see that you value yourself. Bear in mind that your demeanor during these negotiations offers the employer insights into how you will handle coworkers and customers.
2) Before negotiating, learn what you can about the salary range and perks within the industry for your chosen position. Research the firm thoroughly. Then consider how your expectations, in terms of salary and benefits, coincide with what you have learned.
3) Keep in mind that the employer has already decided you are right for the position. The main concern of the employer at this stage is to make it happen.
4) Usually, it is not prudent to accept the first offer the employer makes, even if it exceeds your expectations. The employer does not (should not) know your expectations. Your research should reveal if the offer is reasonable and where it falls in the range for the position you seek. If it falls at the low end, negotiate accordingly.
5) When a compensation package is offered, ask that it be put in writing and request time to think it over. Employers will understand.
Your best ally in compensation negotiating is confidence. Confidence is achieved through knowledge. In the tight-lipped hedge fund industry, the Hedge Fund Compensation Report is an invaluable source for the information you need to realize the best possible outcome.