Contract Negotiations: Maximize your Compensation

Six-figures over 3 years. My contract increase via negotiation. Because there is likely some clause in my contract about sharing specifics, I’ll keep it vague for this blog post.

Negotiation is not thievery, but rather the agreement reached by two parties through discussion. I don’t know about anyone else, but I didn’t learn anything about contract negotiations in all of my years of schooling. While an SRNA, we touched on what one may find in a contract such as salary, sign-on, commitment, and noncompete clauses, but never more than that.

My work history includes construction -- $10 per hour, take it or leave it. And Nursing, again -- $22.45 per hour, take it or leave it. Not much negotiating to be done.

Knowing what I didn’t know, I began informally educating myself. My first bit of insight came from the gent mentioned in my battle buddy blog post. My sister used to babysit for them. She was graduating college and asked him to review her job contract.

His business-oriented mind as an executive for a local company made quick work of the contract. The takeaway was every number is negotiable. They may not accept, but every number is talking point. So, I knew that much.

I took to audiobooks, podcasts, and online MBA lectures to learn more about negotiations. My Must-Read List has the two most noteworthy books, one by Chriss Voss, FBI negotiator, and the other by Jordan Belfort, the wolf of Wall Street who lacks a moral compass. Voss was the heavy lifter for my negotiating.

What is negotiable?

In reality, it depends. As a company grows and adds more employees, they implement a structured benefits package. Start at X. stairstep to Y in 3 years. Top out a Z in 7 years. Start at 5 weeks PTO, then move to 7 in year 3. Retention is incentivized. Experience may allow you to skip a few rungs in the pay ladder, but it’s rigid. This simplifies the process for the employer, maintains “fairness”, and presents a “take it or leave it” option to the potential employee.

If your job search falls in a market sector where demand outweighs supply, the dynamics change. Negotiable points include all aspects of monetary compensation, call responsibility, PTO, and benefits. The more value you bring and the more desperate the employer, the more leverage you have to negotiate these points.

Focus your negation on your priorities, monetary and/or nonmonetary. Lifestyle factors, call, overnights, caseload, ACT vs independent, compensation, PTO, retirement benefits, paid healthcare…

Our Silver Bullet

The biggest aspect of negotiation working in my favor was that my wife and I were like Snoop Dogg and Wiz Khalifa – Young, Wild, and Free, but without the THC. Rhyming not intended, just wanted to clarify the comparison. We were not tied down. The ability to say “No” was our biggest negotiating cannon.

We could go anywhere, work for anyone. No house to sell. No kids or school system to worry about. If you don’t have the ability to say “no,” then your ability to negotiate is negligible. If you want to be in a particular location for family, entertainment, or whatever else, your negotiating power is greatly decreased because you need a job in that area.

My two job search filters were and independent, full scope of practice and compensation. Tough on our extended family dynamics – you bet. Despite available positions at the local trauma center, family could not grasp that in order to meet our career objectives, we would need to work elsewhere.

The Process Begins

I began with a job inquiry followed up by a phone interview. Standard. Great. The four positions I was seriously considering were transparent with the day-to-day operations, case load, call responsibilities, and patient acuity. Swell. 3 of the 4 gave the bulk of the benefits package early in the talks. A method to weed out candidates early on I suppose. One waited for an in-person tour to disclose the salary details. Fine.

Chris Voss’s Teachings – So good

DON’T OFFER FIRST. The other side is to “anchor” the price point. This is even more important if you are not familiar with market value -- perspective many SRNAs lack.

The next step is to withstand the anchor. An anchor creates a setpoint making subsequent offers appear even more delightful. You know they aren’t going to anchor high, especially to a new grad. So, take the emotional blow of the low offer. Don’t freak out here.

Example: An offer of $185K for CRNA work may not sound too exciting.

Same job offered you $150K as an anchor. Then they “budged” and said, ok, $165K. We can do $175K with an extended contract. You think, “Nice, I’m winning this. Way more than where we started.” You feel good and they will fill a job for $185K OR LESS.

Perspective

Next, see the world through your employer’s eyes. Low supply plus tough positions to fill. As you likely guessed from my job filters, all four of my candidate positions required 10-17 weeks of independent call. Usually, no PTO or sick leave, just callback days off. And full scope of practice including lines, spinals, epidurals, blocks, and OB. Lots of required skills.

High compensation comes from being in remote areas that are undesirable. Stuck living in town because you take so much call -- it’s not worth commuting. Remarkably high turnover. Call me crazy (and I would agree), but I love the sound of these positions.

If you live in a desirable city with warm Summers, mild winters and plenty to do year-round, expect the sunshine tax. Cost of living will be high because it is a desirable place to be. Employers recognize desirable areas that attract employees – Sorry Hawaii CRNAs.

Important Chriss Voss Note

Do not create an enemy at any point during negotiations. Do not ignite any bridges for the world is too small. Up to this point in the job search, I have only been actively listening. When speaking for the first time, I was mindful not to violate this principle. I must have done well enough because I am set to locum at one of the facilities I negotiated with.

Contend with the Anchor

Research the market. If you want to remain in your current location, find out what local jobs are offering. If you want to work with a specific population like CV, peds or OB, make some calls to uncover the details of those contracts. Toss some inquiries in the wind. I wanted independence, so noted what critical access hospitals were paying. I used a spreadsheet similar to this one to remain organized.

A position didn’t make my spreadsheet if it wasn’t independent, encouraged peripheral nerve blocks, and included OB. Now onto finding comps.

Comparing Offers

I started with base wage, sign-on, relocation bonus, and expected hours per week to calculate a rough hourly wage. I added in call pay plus expected callback hours. Then I moved onto callback time. I kept 5 weeks off for myself and calculated $6,000 per week of locum work for the remainder of the weeks off.

10 weeks off = 5 weeks of locums at $6,000 = $30,000 in additional compensation

17 weeks off = 12 weeks of locums at $6,000 = $72,000 in additional compensation

Now that I’m getting into the locum game, I can better refine the compensation. FYI, I undershot the estimate for the locum work I am looking at.

Figure in the benefits such as retirement match and malpractice coverage among others.

Next comes taxation. What fills the pockets at the end of the month. W2 vs 1099. A rough estimate is 1099 positions need to pay 20-30% more than a W2 job to break even. Yes, business expenses, but more on that later.

I assumed maximized retirement accounts for all. I also calculated federal and state income taxes where applicable. There are great free calculators for this online. This spit out an adjusted take home pay, plus what I would have in retirement accounts. There is probably a fancy word for “adjusted take home pay”, but I’m not fancy, so it doesn’t apply to me. Anyway, that’s my number. That’s what a given contract is worth.

What did my spreadsheet show?

4 jobs, 4 employers, 4 directions for anonymity

“North” was a progressive practice with an awesome crew. Compensation – on par. Taxation – high. Take home pay – moderate. Desirable town with higher cost of living. Needed pay increases to offset taxation.

“East” was 2 on 1 off with 17 weeks of callback time off. Chronic staffing issues. Compensation – Moderate. Taxation – high. Locum availability – high at 17 weeks. Take home pay – low. Needed a higher base rate or beeper pay.

“South” was a 1099 job. Compensation – solid. Benefits – good. Locum availability – lowest at 10 weeks. Best call and lifestyle balance. Moderate staff turnover with a fun crew. This job was the front runner for compensation.

“West” was the most acute population. Would demand the highest skillset. Compensation – solid. Benefits – weak. Location – undesirable. Salary heavy, but lack of benefits held this contract back.

Reject Respectfully

You are offered $250,000 for a 1099 position. That is a generous offer, but that just doesn’t work for me – My personal favorite that I use regularly. I’m sorry, but I’m afraid I just can’t do that. Great lines to put in your pocket.

“South” gave me my number setting the bar for compensation. Who could match or exceed it? My plan was to anchor above where I needed the numbers to fall. Using the “late night DJ” voice described by Chriss Voss, a slow, downward inflection implying you have everything under control, I began negotiations. With numbers calculated, I could now confidently say “at other places, they are paying XYZ.” Information paired with the ability to say, “no thank you” is a dangerous combination.

Set YOUR anchor, courtesy of Voss

Share your analysis of the market via a range proving their $250,000 offer is low. “1099 positions in this area typically pay between $260,000 and $290,000.” Simple approximation. Job posting should support this claim. Don’t BS here.

Remind the potential employer there is something to lose if they don’t come to play. You have other offers demanding your consideration. And you should have multiple offers in hand to best negotiate. The current CRNA job market is plentiful. It won’t be like that forever, so use the advantage while available.

An anchor should not end in “0” as it feels negotiable or quickly thrown together. Use this in combination with selling yourself to make the offer substancial.

Now release your anchor. You have offers on your desk and need an annual salary of $297,363 for you to consider this position. This anchor sounds exact and calculated. Like you did your homework. In your mind, anything over $280,000 would be a win.

Sell yourself by including, “I am offering your facility *** skills and *** expertise for *** years which will help your staffing shortage and improve patient care. My references support these statements.” Be truthful and share your best self.

Expect them to counter, especially if you are above the range quoted earlier. They look to call your bluff, wondering why your offer is $50,000 greater than theirs. Be prepared with how you arrived at such a number. A difference in PTO or benefits. Maybe more call.

Their $250,000 anchor has been met with your $297,363 anchor. Now they begin feeling anything less than $297,363 is a win. Expect their next offer to be around the low end of your range -- $260,000 in this example.

“We have given you a fair offer.”

Ahh, the good ol’ “fair offer” reply. Dangerous. This is a technique to guilt the other party into accepting a number. Request additional information that proves the offer is “fair.” Impossible if you have properly studied the market. The only reasonable time to use “fair” is if they match your offer giving you an advantage.

I reached a conclusion with “East” when they said all initial numbers were final. I thanked them for their consideration, time, and facility tour. The ability to walk away avoided an undercompensated position.

“North” was open to negotiations as they were expanding, thus requiring multiple new hires. Both anchors deployed. From the initial offer, they increased compensation $10,000. Relocation increase. This sparked interest from a couple candidates. My offer dipped below my initial anchor to compromise. Negotiations stalled. Weeks later, they offered an additional $10,000. They were one bump away from the number I needed. Not met, we went on hold while negotiations continued with the others.

“West” was interesting because the posted compensation was not reflected in the contract. They rescinded their initial “offer” replaced by a lower amount. Sure, this was still above market value, but the job post tipped their hand telling me what they were willing to compensate a CRNA. What did I have to lose?

I gave “West” my anchor, which was a bold number. I giggled like a little schoolgirl each time I set the anchor with a potential employer because it was way more than I thought I would make when I began this anesthesia journey. My anchor wasn’t far off from their original number, but there was quite a spread from the contract they sent over.

The sign-on was modest for CRNA contracts at the time. I noted the personal sacrifice and dedication to the job by relocating across the country, and they kindly included a relocation-bonus. Not much room for negotiating the benefits. The 401(k) match was set. It was down to salary.

This will rub experienced providers the wrong way:

Potential employer said less experience, less pay. Reduced hourly rate during orientation. I said same cases, same reimbursement, same call, same pay. I was agreeable to a lower rate while I had CRNA backup but negotiated full pay thereafter.

I came down from my anchor point and asked them to meet me at the original base salary. They agreed. Win-win for everyone. The employer filled an undesirable position near their original anchor point. And I had a very respectable new grad contract at a facility where I would learn a great deal.

Disclaimer, I was still the lowest paid member of the group because everyone negotiated their contract with some degree of success (not all monetary).

My current employer was/is great to work with. And the negotiation process was quite enjoyable. Stressful, but everyone was open to conversation. Not having read, Never Split the Difference: Negotiating as if your Life Depended on It, would have been a six-figure difference.

And best of all, the employer is likely relieved to have one of the positions filled for almost what was advertised. Negotiation with bridges intact.