Going From Contract to Full Time Employee

By TODDI GUTNER

Q: I have been under contract with a company for two months. This past week, I received a strong indication I was going to be offered a full time position very soon. How much, if any, leverage do I have in negotiating the best offer possible?

A: So far, so good. You’re one step ahead of all the other unemployed workers because you are already in the door, have completed some assignments and have proven yourself valuable. “They know your work and they like you,” says Jo Bennett, an executive recruiter with Battalia-Winston. That’s the good news.

But, there’s a downside. There are thousands of professionals “right behind you to jump at the opportunity to take your full time position if you were to decline or make it too expensive for your employer to hire you,” says Paul Gavejian, managing director at Total Compensation Solutions, LLC.

As an incoming employee, you can negotiate a few elements of the offer including the salary, bonus, time off, and other benefits. Let’s start with the base salary. “Their base salary offer is dependent on two things: your current pay and what they’re willing to pay for the job,” says Mr. Gavejian. “It would seem that they should offer your contract rate adjusted for benefits, federal and state withholdings.” But keep in mind that, in many cases, companies are limited by the description of the job or salary band the position falls under.

Try to find out what the typical salary range is before going into the negotiation. You should also ask about the market rate for this position—what’s the the typical salary range for the composite of responsibilities for the job itself, not just the title. Ask professionals in similar positions or hiring managers who are familiar with the same sort of job. “They will know the value of this job in the external market and they should at least tell you what that is within a range,” says Mr. Gavejian.

Once you arm yourself with this information, you will be better able to negotiate a fair rate for your position. Say you find out your position is worth $90,000 a year but are $75,000. In that case, you’ll be able to discuss what you know. If they can’t meet the salary now, you can discuss a six month review or other benefits to bring you up to market rate.

Bonuses can be another way to make up a gap in your expectations and the company’s offer. Bonuses are usually expressed as a percent of base salary (e.g., 10% for professional positions up to 100% for some managerial positions). You might want to request a guaranteed bonus or even a higher bonus percent in lieu of a higher salary offer. For example, the company might want to give you lower salary but a higher bonus so they reduce the fixed costs of your overall pay package, says Mr. Gavejian. To that end, a higher bonus gives you a chance to control your total cash compensation and allows the company to control other costs.

If the company is inflexible on salary and bonus, try to negotiate other perks, like extra vacation time, a commuting allowance, flextime or the ability to work remotely some days.

And remember, in any negotiation, try to be reasonable and make sure that your needs and interests don’t conflict with the potential employer’s. In other words, don’t ask for a work day at home if face time and team meetings are important for your job.

Write to Career Q&A at cjeditor@dowjones.com. Be sure to put Career Q&A in the subject line of your email.


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