NEGOTIATING EMPLOYMENT

When you are negotiating employment with a new city there are at least three different areas that should be discussed and mutually agreed upon:

  • Whether or not to have a written contract
  • The starting salary
  • The mix of fringe benefits

Written Contract. A written contract for local government chief executives is not quite the "rule" but is becoming less of an "exception". Some councils seem hesitant to use written employment agreements and often resort to "letters of understanding" which may do little more than commit the governing body to a month's severance pay. Contracts should be designed to benefit both the City and the manager by clearly outlining the terms, benefits and expectations of employment. You can be assured that the City attorney will be examining the employment agreement on the city's behalf and to protect yourself you should consider having your own attorney look at any documents before you sign them.

Contracts eliminate confusion and keep difficult situations more manageable when separation appears necessary or likely. Sample contract language and more extensive tips for drawing up a contract can be found in Section 1--Sample Contract Language in this publication.

Salary. There are two principal reasons why you should settle for a salary which is less then you are currently receiving:

1) Your fringe benefits will compensate for a lesser salary

2) You have personal reasons such as the desire for a better quality of life, to be close to family, or to locate near a particular educational institution.

Negotiate salary before signing a contract with a city. Unlike private sector employees, public sector employees rarely have the opportunity to bargain strongly for salary increases because of performance after an initial contract is signed. There will always be public pressure on the council to keep a lid on salary increases. Frequently, the manager will earn more money than councilmembers individually, which makes it more difficult for the council member to pay an executive salary to someone who makes so much more than the council member. This concern is compounded when the council member's city salary or stipend is nominal or non-compensated. In addition, a good salary now will aid in salary negotiations in your next position. Almost every employer looks at the candidates's current salary and few expect him or her to come to work for them at less money than he or she currently makes. Consequently, one cannot emphasize the necessity of negotiating a good salary prior to formally accepting and starting the job.

Negotiate salary after you've received a job offer. When you have actually been offered the job you are in a better bargaining position because they have decided that they want you. It will be hard for them to walk away from you once they have decided that you are their first choice. In some cases, they may have already made a public announcement or notified other candidates of a selection. In many cases the manager's position will have been empty for awhile and the council will be tired of trying to cope with staff problems and would probably like to avoid extending the recruitment process any further. If the council inquires about salary requirements before offering the job, let them know that you must consider all aspects of the job before outlining salary needs. You may accept a position in principle, but let it be clear that an acceptable total compensation package is requisite to formal acceptance.

Give yourself a few days to consider a job offer. Always consider a job offer, or salary proposal for a day or two. This will send a message to the council that you are a professional who is selective about his/her employment. It also gives you a chance to reevaluate whether you really want the job (and maybe to formulate a counter offer) and if your family really wants to move to a new location. Hopefully, you will have already done your homework about the community and organization. If you haven't, you better hurry and find out what you will be walking into, before you say yes.

Fringe Benefit Considerations.

Bargain for as many fringe benefits as possible before being hired. Fringe benefits are an important consideration in any Local government manager's total compensation package. They often represent 25-45% of a manager's salary. Sometimes, situations like your closeness to being vested in a retirement program in your current job may outweigh a salary increase provided by the job you are considering. Fringe benefits not only provide you with additional security, but they also serve to offset expenditures that would otherwise come out of your disposable income. Sometimes fringe benefits are better than the equivalent salary increase because the fringe benefits may frequently be treated as non-taxable income, and often more politically negotiable.

In addition, governing bodies may not be amenable to salary increases because of political considerations but might be willing to make it up in an increase in fringe benefits.

There are several different categories of fringe benefits often available to local government managers:

  • Deferred Income and Private Pension Programs. Get employer to invest in a portable deferred income plan and/or local plan -- be sure and see how long you have to remain employed there to become vested.


  • Automobile. Most cities give a car for professional use -- negotiate for limited exclusive unrestricted (personal use) also. If driving around a late model city car is a political problem, negotiate for a car allowance. Calculate the full cost of depreciating and maintaining a city vehicle, and negotiate for at least that much, which will usually amount to well over $300 per month.

  • Insurance (major-medical, dental, life, disability). You don't necessarily have to settle for what all the other employees get. Your position is unique and may be treated that way. You are not just another employee. Assure that the insurance will cover you from the first day of employment, and try to see that there is no lapse of coverage from your old to new policy.


  • Vacations, sick leave and compensatory time. Try to get the new city to give you some vacation and sick leave up front -- use this vacation leave to move your family. Long hours are a reality get an agreement with the city as to what is a "reasonable" use of comp. time.


  • Business Expenses. These include job-related lunch/dinner meetings, civic organization membership, magazine subscriptions, etc.


  • Conference Attendance, Training and Education. Negotiate attendance at specific conventions, including some spouse travel, academic programs and other training seminars or conferences.


  • Moving Expenses. Include the costs of move include packing/unpacking, transportation of household goods/family, realtor fees, temporary accommodations, house hunting trips, meals and lodging while traveling, flat relocation fee, etc.


These fringe benefits should be included in any written employment agreement that is mutually agreed to.

As mentioned earlier, there are several issues to consider when you are looking at salary needs. Sometimes a raise in salary can actually result in less disposable income because of differences in cost of living and benefits a total compensation package. One way to determine whether you should accept an offer would be to conduct a simple cost-benefit analysis. Shown below is a worksheet that you can printout and use to compare the position that you know have with the one you are considering.

Salary, Benefit and Cost-of-Living Comparison

 

Monthly Equivalents

Salary or Benefit Current Job New job Variance
Base Salary
Retirement(6.16% city contribution)
Medical Insurance (Family Plan)
Dental Insurance (Family Plan)
Life Insurance (.27 per $1000)
Disability insurance (.68 per $100)
Vision/hearing care
Vacation (120 hrs. yr.)
Holidays
Sick Leave
Administrative Leave
Vehicle (Office Use Only)
Professional Assoc. Membership
Professional Assoc. Conference
State Chapter Membership
State Chapter Conferences
Other Conferences
Subtotal
Monthly housing cost differential

(sq. feet)

State Income Tax
Sales Tax (8.1%; Ave 2.9% Gross Income)
Water and Sewer Bill Ave.
Power and Light Bill Ave.
Gas Bill Ave.
Property tax (1900 Sq. Ft. 13,500 lot)
Relocation Cost
R.E. Sales Costs (Amortized over 8 yrs.)
Subtotal
Benefits-Costs x 12 months

 


RETURN TO CAREER GUIDANCE CENTER

 

Copyright 2010 Local Government Institute. All rights reserved. govtjob.net is a registered Service Mark of the Local Government Institute.  Phone: 253-565-6253  8a.m.-5p.m., M-F Pacific Time. Fax: 253-565-2575. Disclaimer Policy.