The Art of Negotiating Compensation: Getting Paid What You Are Worth

Laurel Bellows is the Managing Partner of her namesake, boutique firm, The Bellows Law Group, P.C. whose practice areas include Executive Compensation, Business Consultation, Business Litigation, Employment Law & Human Resources, and Personal Legal Services.

Bellows focused on tips and topics for negotiating compensation packages, yet frequently widened the scope by noting these strategies are applicable in any type of negotiation.

dsc_3183A key takeaway was preparation is power. Bellows suggested writing out your own, ideal or dream deal to have as goal which you can test to ensure your expectations are realistic. Likewise, one must also take into account whether or not the company’s goal to determine your performance/bonus is also an achievable goal. To assist in this process, Bellows had a novel approach. In addition to using resources such as trade associations, public data (if one is lucky), and informational dsc_3159interviews, she suggested a brainstorming session. Inviting friends over for a candid discussion and feedback over drinks could enhance your preparations.

The key to negotiation is determining what you are worth, regardless of previous earnings. Determine your level of responsibility, skills, and efforts beyond simply whether you are generating a cost or revenue. Ideally monetizing your value will create leverage. More importantly, it will establish a connection to the employer’s perspective with your understanding of the position and potential role in the greater organization. Nevertheless, employers’ key challenges remain; identifying, motivating and retaining talent.

dsc_3162During the initial negotiations, if the employer asks for your compensation target, then assure them that they can come to an agreement. Emphasize you are really interested in joining the team and would prefer an offer before discussing specifics. With an offer in hand, force the employer to specify the numbers of the compensation package first. With a significant pause and a flinch or “hmm…,” counter with a nearly “blush-level” offer. From this dsc_3167point on, your research and preparation becomes your support to confidently negotiate with informed certainty. You have anticipated their counter argument and able to support your case. You may concede a lower initial package if you can have a six-month performance review to have the opportunity to earn a package closer to your initial offer.

Finally, always have a best alternative at any moment. If you are fortunate, it may be taking an offer from different employer or realizing the negotiation will not end in an agreement and walking away.

Check out Laurel’s 10 pointers below:

Bullets by Bellow: 10 Pointers for Successful Negotiations

  • Prepare, prepare, prepare
  • Determine the extent of your counterpart’s authority
  • Set a precise goal. Be able to justify your goal and quantify your demands
  • Put your dream agreement in writing
  • Keep your best alternative in mind
  • Identify other party’s principal goal and best alternative
  • Role Play: Practice your questions. Anticipate answers to questions you will be asked
  • Strategize Timing
  • Your name and your reputation are inseparable
  • Remember: Not every negotiation ends in agreement

Next-Level LinkedIn Strategies

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Is the resume becoming extinct?  JD Gershbein thinks it’s possible.  Every professional knows that it’s a good idea to have a LinkedIn profile, but how best to build it and find new opportunities?  Gershbein encourages professionals to continuously improve their LinkedIn profiles, which have emerged as the most versatile business document around.  In his talk, Gershbein focused his presentation around what he would do on LinkedIn if he needed a job.  “You’re competing on LinkedIn for three things: time, visibility and attention,” he told us. Gershbein stated that it is important to convert action on LinkedIn to a strategy.  Working with LinkedIn for job leads or new business is a lot like panning for gold in that there is a lot of junk, but worth it if you are methodical and consistent in your approach.  In terms of developing LinkedIn profiles, Gershbein said that there are three sub-movements within the social media revolution currently taking place that we should consider:

Brand Storytelling – where you embrace uniqueness in contributory form or aspirational form

Content Marketing – how you sell yourself

Community Management – living the story you tell in front of the real world

One way that a LinkedIn profile can be better than a resume is that it allows you to show potential employers what you accomplished, along with what you learned as a result of what you accomplished.  Gershbein says that the latter explanation is a very important way to show employers your self-awareness and personal development.  Using LinkedIn publishing, a platform for blog posts and original content from LinkedIn users, is also a good way to achieve your content marketing goals. Writing is a valuable skill in almost every business field and any piece of communication you produce should be considered as part of your strategy.  It’s also important to be accessible.  You can develop an e-signature for your personal email, and you should always include your email address and telephone number in your LinkedIn profile.  When making contact on LinkedIn, Gershbein says it is good to quickly move the conversation offline and schedule what he calls a “brief discovery call”.  Most people are much more likely to agree to a call if it’s described as brief, Gershbein has found.  Another important tip is don’t make the LinkedIn profile a redundant document that provides the same information as your resume.

The most important area on your LinkedIn profile is the summary section.  According to Gershbein, this is the “make or break section” and should be written in third person narrative format.  The summary needs to answer three questions:

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Why should I hire you?

What contributions will you make?

What were the results from what you did?

 

Everything on the LinkedIn profile should help answer these three questions.  Contributions should center on two main areas: contributions to company culture and contributions with clients.  It’s important to answer the question of “Why would you recommend yourself to others?” also.  Keywords are an important consideration because this is how recruiters will find you and connect with you.  Anything shown in bold on your LinkedIn profile appears higher in search results.  The main keywords you want to focus on include your industry, market, job title and specific skills.  It’s a good idea to sprinkle in relevant keywords throughout your profile to rank higher in recruiters’ search results which tend to favor profiles with many connections and profiles with more sections completed.

LinkedIn is an extremely popular website with nearly 350 million users yet remains underutilized by many.  With a more strategic approach and a carefully crafted profile, LinkedIn can provide job seekers with a strong platform for branding, networking and finding new employment opportunities.

 

JD Gershbein is the CEO of Owlish Communications and a specialist in LinkedIn strategy. For more information, visit http://www.owlishcommunications.com

8th Annual Industry Roundtables for Investment Professional

By Calvin Chung, CFA, Bob Cohen, CFA, Peter Vinzani, CFA and Don Duncan, CFA

On Feb 10th, the Career Management Advisory Group organized the 8th Annual Industry Roundtables for Investment Professionals event.   This event is an opportunity to hear about different careers in investment management and to ask CFA Chicago members about their career paths and the challenges of working in their respective fields.

 

Business Valuations – Paul Clark, CFA; Houlihan Capital.

Paul Clark focuses on business valuations. His undergraduate degree in engineering taught him to focus on problem solving.  90% of what he values does not have a public market price, so the values they come up with are based on financial fundamentals. The end users of his services are not the public, but rather boards of directors, the SEC, hedge funds and the IRS.  The keys to success in his field are organization, preparation and being analytical. Their deliverable is a valuation with a tight range typically + or – 10%.

 

Consultant Relations – Rebecca Smith, CFA; SouthernSun Asset Management

A testament to the power of the Industry Roundtables event and membership in the CFA Society Chicago is that one participant made a connection at last year’s event that resulted in landing a job in the individual’s field of choice. Rebecca Smith led an engaging discussion around the consultant relations position within an investment management firm. Within a smaller firm the consultant relations position expands beyond strictly sales and distribution and has evolved over the past 10 years. Whereas at one time the role was all about relationships, now it is a distinct advantage to have the breadth of knowledge and analytical skills that go along with the CFA curriculum. It is also helpful to have had a diversified experience on the other side of the table working in manager research, due diligence and having exposure to asset management. It was recognized that especially in small firms there are a few people who are really making an impact. A consultant relations representative who has a well-rounded background in other areas of the investment management business might have an advantage when it comes to placement in the databases, communicating regarding style box fit, articulating how the fund invests, identifying areas of differentiation and making suggestions to the investment managers about what works and does not work. Analytic and other experiential skills can especially be helpful in areas of institutional sales, customer relations and retail sales.

 

Emerging Markets – Casey Preyss, CFA; William Blair

Casey Preyss outlined his career as having started at William Blair right after college as a trading assistant before moving to quantitative research and then becoming the global industrial analyst within the fundamental equity research group.  In addition to covering industrial companies globally, Preyss manages the William Blair China A Shares Fund ($300m AUM), and is a member of the emerging markets portfolio management group. Preyss described the China A Share market as the second most liquid equity market in the world, after the U.S., with over 1000 companies having a market cap larger than $1b.   Although the China market is dominated by large cap bank, real estate, and industrial companies, sell-side research is still in its infancy with only 4-5 U.S. investment banks publishing research on Chinese companies. William Blair has a deep international research team with 15 international analysts. William Blair’s investment strategy is quality growth, looking for companies with accelerating earnings revisions.  The investment process starts with a top down view by sectors, looking for industries in countries with a favorable regulatory environment. Questions from attendees included the challenges of language when conducting research on emerging markets companies, the quality of data and financial statements, and trading costs affecting returns.  Preyss remarked that most international companies will present in English either with a translator or with an English speaking investor relations representative. William Blair does have 2 local analysts in Shanghai to facilitate local research.  China A share companies must report to IFRS standards, which is a major difference from listings on other Chinese exchanges. Trading costs are a factor in every country, with the transaction costs for China A shares being very transparent while exchanges in Russia would be an example of some of the most uncertain and opaque.

 

Equity Analysis – Brian Langenberg, CFA; Langenberg & Company

Brian Langenberg has had a 25-year career in equity research, starting as a sell-side analyst and eventually landing at Credit Suisse First Boston, from 1995-2001 where he made the Institutional Investor All-America research team covering conglomerates.  Langenberg was also a research analyst on the buy-side at Ohio Public Employee Retirement System before starting Langenberg & Company, an independent provider of equity research. Langenberg entertained Roundtable attendees with several anecdotes throughout his career working on different aspects of equity research and highlighting the differences between sell-side and buy-side research.  He outlined Chicago area asset management firms with fundamental research groups and also gave examples in the mutual fund industry where research has fallen short of expectations. One of the challenges for equity research is that financial information has become widely available and that the gap in data between professional analysts and the investing public has become narrower. However, there will always be a role for fundamental research focusing on the non-quantifiable intangibles of company strategy and evaluation of management teams. For people early in their careers, Langenberg advised that the path to the sell-side begins with networking with people who already work at brokerage firms. Often, entry level positions are obtained via a personal referral from someone who knows the hiring manager.

 

Equity Portfolio Management – John Jostrand, CFA; William Blair

John Jostrand is a Partner at William Blair where he is Portfolio Manager for the William Blair Funds All-Cap Growth team. Jostrand began his career in 1978 as a research analyst for a regional bank.  He has been with William Blair since 1993. Jostrand strongly believes that portfolio managers need to be able to express themselves clearly. This expression needs to be through writing and speaking. Clients must know what the deliverable is and know why the portfolio is behaving as it is. The message to the client needs to be interpreted in the right way, and their questions need to be answered in a direct manner that is easily understood. He believes a successful portfolio manager must be able to have a “good conversation” and be able to collaborate with other professionals on many facets of the job.

 

Family Office – Stephanie Szymanski, CFA; Sawdust Investment Management.

Their family office staff is heavy on accounting and less on investments because of their utilization of funds.  They focus on asset allocation. They use products they can understand and do their own due diligence on.  For this reason they do not invest in quantitative hedge funds. The skill set to be successful in this setting is a wiliness to learn and attention to detail.

 

Fixed Income/Bank Loan Trading – Bill O’Connor, CFA; Neuberger Berman      

Bill O’Connor is a Senior Vice President with Neuberger Berman Fixed Income. Specifically, he is responsible for the firm’s bank loan capital markets activities. According to O’Connor, as an asset class, bank loans are highly inefficient requiring additional due diligence and monitoring not required in more liquid and standardized markets. Additionally, each bank loan can subject to a myriad of structuring idiosyncrasies which requires a thorough reading of loan documents. This additional oversight often requires O’Connor to being his work-day around 6:30am and work a full twelve hours in order to properly monitor the portfolio. He spends much of his day on the phone negotiating with various stakeholders and counterparties. On new issuances, he is often negotiating with the bankers that are working to structure the loan offerings for clients. On the secondary market, O’Connor negotiates with other investors to agree on terms to acquire or liquidate positions, in line with the strategy of the portfolio. Neuberger Berman has a variety of investment vehicles that hold bank loans, including retail funds, collateralized loan obligations and separately managed accounts. The Chicago finance community has a strong reputation for bank loan expertise, given the breadth of lending experience established in the Loop. Over the years, some of this talent has migrated to other parts of the country, further expanding the appetite for bank loans. For a role in bank loan capital markets, a solid understanding of credit analysis is essential. Ultimately, the value of the loan is determined by an issuer’s ability to make interest payments and return the borrowed principal at maturity. An understanding of credit risks provides insight into the future value of the loan.

 

Fixed-Income/High Yield Research – Jared Feeney, CFA; Neuberger Berman

Jared Feeney’s career as a high yield analyst started at JP Morgan working in the leveraged finance group in New York.   After a short stint in sales, Feeney became a credit research associate working with a senior JP Morgan High Yield analyst. Feeney moved to Chicago and the buy-side, joining Neuberger Berman’s high yield team. Neuberger Berman has one of the largest high yield research platforms with over 20 high-yield credit analysts, organized by industry and asset class. Publicly traded high yield bonds make up the majority of the investment universe but the leveraged loan market has grown to become a substantial asset class for most high yield investors.  Unlike bonds, leveraged loans are issued by private companies and are not technically securities, although loans are widely traded on the OTC market. Due to limited information flows from private companies and lower liquidity, credit research is critical for investing in this asset class. High yield research can be a cross between traditional credit research and equity analysis. Knowledge of a company’s capital structure and an ability to carefully read through loan documents are important aspects of the high yield analyst. Feeney covers about 50 companies and must have a strong knowledge of the credit risks and opportunities associated with his coverage universe. An analyst can expect to spend weeks putting together an investment direction, only to be dismissed by portfolio managers, which can be frustrating. The investment recommendation presentation is given to a panel of decision makers that ultimately decide on whether to invest capital, or pass on a recommended opportunity. The ability to prioritize is a key skill for a research analyst, as several companies may be releasing public information nearly simultaneously, or issuing debt during a similar timeframe, requiring model updates and new recommendations. High yield research can be a cross between traditional credit research and equity analysis.  Knowledge of a company’s capital structure and an ability to carefully read through loan documents are important aspects of the high yield analyst.

 

Fixed Income/Portfolio Management – Eric Bergson, CFA; J.P. Morgan

Eric Bergson is the Midwest and Southeast Director of Fixed Income at J.P. Morgan Securities. In his current role, he spends much of his time advising the bank’s high-net worth and family office clients on appropriate fixed income investing strategies and communicating portfolio performance. He also spends time working with internal teams to implement client strategies and glean market information from traders, analysts and portfolio managers, which informs his conversations with clients. His work day often starts very early, as it is not uncommon to receive client inquiries via e-mail overnight from his U.S.-based clients. Responding to his clients with immediacy is a top priority for Bergson and should be for anyone with client-facing responsibilities. His firm hosts a 7am conference call for employees in the bank’s securities unit. The conference call covers nearly all asset classes, but is followed by discussions specifically focused on the team’s respective focus. It is important that the teams communicate with one voice and have an aligned market outlook. After the conference calls, he reaches out to clients to discuss current investment positions and potential portfolio impacts based upon economic factors. Bergson offered his advice on staying market-informed by continually reading and absorbing information from a variety of resources that include both print media, as well as the multitude of on-line offerings. He also encouraged the table participants to develop both formal and informal mentor/mentee relationships with senior leaders in professional roles of interest. Senior leaders are often interested in developing a deeper bench and can make hiring recommendations for open positions. Bergson is originally a native of Cleveland, but moved to Chicago to attend the University of Chicago.

 

Hedge Funds – Krista McLeod, CFA; Silverpath Capital Management

Krista McLeod facilitated the discussion on hedge funds with a focus on starting a hedge fund, key trends affecting the industry and challenges in running a hedge fund. As a founding partner of a recent startup, she has firsthand knowledge of the challenges and opportunities of running a hedge fund business. It is imperative that you have good business partners. This includes choice of software for key functions such as operations, finance, accounting and marketing, hiring a good broker, compliance consultants, and other service provider partners. Questions that need to be decided include how to initially seed the fund, raising funds prior to launch, or seeding the hedge fund yourself. Working through the client due diligence process was discussed. This can often be a drawn out affair looking into operations, compliance and investment process. Choice of clients to target can matter as philanthropies or family foundations can have a quicker timeframe than other institutions. It was pointed out that SEC registration is not necessary on Day 1, and only required after $100M AUM. Required documentation can take a long time so it is advised to be very prescriptive and organized. Separately managed accounts are a trend that must be addressed. Other trends or best practices discussed included technology that is more algorithm driven, and having a well performing and cohesive research team.

 

Private Equity – Gary Stark, CFA; Iron Range Capital Partners

Gary Stark presided over a discussion of the private equity industry. Iron Range is a small independent that raises capital for each deal executed as opposed to establishing a ready fund from which to make investments. It is currently a very competitive marketplace with many players and a large supply of funds all looking to source deals. In order to gain access to the potential deal flow it is very important to stay on the radar screens of the investment bankers, brokers, etc. Financing a deal as an independent can vary. The typical Private Equity fund has an expectation of liquidating the fund within 4-6 years. One advantage of being an independent is that there does not need to be a fixed exit plan and you can maintain an investment for a longer period, especially as your knowledge continues to grow of the business, its market, the management team, etc. In looking at multiple deals, the cream rises to the top. With limited deal flow and an overabundance of capital on the sidelines while the cost of debt cheap, it is possible that many good deals will not make it to the letter of intent stage. You never know when a deal will fall apart. So hustle and perseverance are very important.

 

Real Estate – John Lindell; Heitman

John Lindell is Vice President at Heitman overseeing debt and structured finance portfolios.  He is experienced in multiple sectors of the commercial real estate market and has been responsible for over $2 billion of transaction volume.  Lindell is a former attorney who used an opportunity at Heitman to make a career change into commercial real estate finance. Lindell structures real estate deals for both internal funds which he manages and external funds.  The market dictates the difficulty of raising capital from investors and finding deals to fit that capital.  In the current market, raising capital is relatively easy however finding deals have become increasingly difficult.  For those seeking careers in real estate, Lindell stressed that resilience and the ability to tackle uncertainty is extremely important.  Deals can encounter unexpected roadblocks and markets can change rapidly, the professional who can thrive under those conditions will succeed.

Chairman’s Message

I hope you enjoyed a great holiday season, and 2014 was a fulfilling year for your career.  It is the halfway point of CFA Chicago’s fiscal period, which makes a good time for us to review the strategic themes we established in July; and also to tell you about changes underway and upcoming events.

From the staff direction viewpoint, Shannon Curley, CFA, joined us in mid-December as Executive Director of CFA Chicago.  He brings a wealth of financial services knowledge to our organization.  In addition, he has had a distinguished career in the investment management profession.  I encourage you to introduce yourself to him at an upcoming event.

With respect to creating original content for our members, I want to highlight the Career Management Advisory Group’s work.  In particular, Co-Chairs Joan Rockey, CFA, and John Mirante, CFA, and their talented group, have undertaken a long-term project called “Career Map.”  This is an ambitious idea with multiple stages.  Importantly, it is designed to outline the industry jobs and career opportunities in our Chicago market.  Given the mature nature of domestic asset management, creating a taxonomy of companies, industries/asset classes and newly evolving job assignments will have multiple uses, including assisting you in navigating and maximizing your investment career.  More information will be shared as the project develops.  We welcome CFA Chicago members that are interested in participating in this project with the Career Management Group Advisory Group. Sign up today.

Another team pursuing a big agenda is our Education Advisory Group.  Under the direction of Marie Winters, CFA, and Larry Cook, CFA, we will host a Latin American Investment conference this May.  As you know the global nature of our profession warrants our continual search to learn, grow and seek evolving investment opportunities.  I hope you are able to attend this unique, mid-west opportunity to expand your acumen of countries, industries and companies in South America.  I view this single event in the context of a longer term portfolio of seminars which CFA Chicago will pursue over the next decade.

I would be remiss if I didn’t mention CFA Institute’s upcoming first Annual Women in Investment Management Conference in San Antonio, June 2015.  Our society has been at the vanguard of advancing women in finance and has made demonstrable progress in this effort. CFA Chicago Vice Chair, Kerry Jordan, CFA, has been instrumental in this endeavor. Among those speaking at the conference will be CFA Chicago Past Chairman Heather Brilliant, CFA, and CFA Chicago Secretary/Treasurer Carmen Heredia-Lopez, CFA.

Lastly, let me acknowledge our Immediate past Chair Gautam Dhingra, CFA, and his wisdom in leading our Governance & Nominating committee.  The work of our Governance & Nominating group is vitally important, and in great hands as we build a future team of leaders.  If you know someone that would make a great leader – or if you’re interested in serving, please review the nomination process and selection criteria and complete the nomination form. To be considered for the 2014-2015 Board of Directors, complete the nomination form before 5:00 p.m. Wed., Jan. 14, 2014.

A Balancing Act: Career Management and Searching for a New Role

On Dec. 9 the University Club in downtown Chicago was the venue for this event geared toward job DSC_1478seekers in the investment profession hosted by CFA Chicago and the Career Management Advisory Group.

The panel members and moderator consisted of:

Panelists:
Katie Banks – Senior Vice President & Director of Human Resources, Institutional Capital LLC
Danielle Dutcher – Vice President, Global Talent Acquisition, Northern Trust
Laura Pollock – Founding Partner, Third Street Partners
Jim Schroeder – Executive Vice President, DHR International

Moderator:
Jacqueline Benitez – HR Director; Segall, Bryant & Hamill

Jacqueline Benitez served as moderator.  She made it clear that the panel would focus on four key issues when searching for a new role.

  1. Resumes
  2. Networking
  3. Interviewing
  4. Compensation

Resumes

The consensus of the panel was that the resume should be brief and preferably bullet point. The recruiter should be able to evaluate the resume in less than 15 seconds.  Several of the panelists did not think a “summary” section was necessary, as that information should be found in the cover letter.  All panelists preferred information on resumes that were more quantitative than qualitative. Panelists stressed that for those candidates who have spent many years at the same firm, career progression in the form of responsibilities or job title changes should always be included.

Networking

The panelists viewed networking as a practice that should take place throughout a career because you never know when you need your network. One of the most optimal ways to find a position is to network with someone at a firm you would like to work for. Linked-In can also be an essential tool in your network.  It is important to do your homework concerning your target company when networking.  Do not be shy about the using the phone once you find who the key people might be, and if available use a land line.

Interviewing

When answering questions, it is important for the candidate to think not only about the question but also about the audience.  The panelists advised candidates not to be afraid to pause to collect their thoughts prior to answering.  It is a good idea to ask “was that helpful?” at the end of your answer.  The candidate should always have some questions prepared for the interviewer and rehearse answers to questions that the candidate should expect from the interviewer.

The recruiters stressed that conservative dress is very important.  The panelists suggested that women not use a lot of makeup, always wear a jacket, and that heals not be over two inches.  Men are encouraged to wear a white shirt, red tie and dark suit.   It is always a good idea to ask the recruiter about dress prior to the interview.

Compensation

Most positions will have price range bands that vary with geographical region. Panelists advised that to get the most out of this negotiation it is best to be transparent and confident. If your compensation requirements do not fit into the band, it is important to know that upfront.  Compensation may also feature a significant amount of deferred compensation which is also critical for the candidate to evaluate.

Once you obtain an offer it is important to express your excitement about starting in your new position.  You then should have an “ask” concerning compensation with a reason why you need it.  When negotiating salary, it is important that you be concise and have a number in mind.  Some recruiters will ask for a pay stub from your current job to verify salary.