By now, almost everyone has probably read of the huge bonuses that AIG recently paid to more than seventy of its executives with money that AIG received from the US government as part of its bailout. If you have not read about it, take a few moments to do so. Although there is tremendous outrage being voiced in the media and on the floor of the US congress, I fully support the payment of the bonuses even though the money ultimately came from US taxpayers. Indeed, it would be extreme for AIG to refuse to pay the bonuses because they were contractually guaranteed.
I don’t believe that the congressmen who are calling for AIG to repudiate or renegotiate its agreements with the AIG executives can possibly mean what they are saying. I heard one congressman on the radio a few moments ago going so far as to call for an amendment to the US tax code to claw back the bonuses from the various executives who received them. Such positions fly in the face of the US Constitution which protects the right of Americans to contract. Indeed, the call for a tax code revision would be unmerited governmental intrusion into the private lives of far too many specific individuals and a far greater concern than our current economic hardship.
Fortunately, at least for now, the plight of AIG’s executives is little more than front page scandal that can garner the attention of voters and sell newspapers. I can only hope that calmer minds will prevail. While we wait for that to happen, however, we can still learn from the AIG executives who received the bonuses.
Negotiate Up Front: When you are taking a job, take the time to think about everything that you want to get out of it and try to negotiate up front for the benefits that you hope to receive. While you may not receive a huge guaranteed bonus, you may be able to get a better wage or salary, extra vacation, preferable hours, or some other perk that your employer might not otherwise offer.
Consider Your Full Benefit Package: Don’t just consider the salary you are going to receive when you assess a job opportunity. Consider the cash value and the intangible value of every benefit. Know whether you will participate in a bonus plan, whether your company contributes to a 401(k) plan, whether you will be eligible to participate in an Employee Stock Ownership Plan, and all understand all of the other perks to which you will be entitled.
Look for Security: After receiving their bonuses, several of the AIG executives left their employment. After receiving $1,000,000+, I would feel comfortable leaving my job too! When I took my last job, I was far more focused on negotiating a severance package than in increasing my salary. My friends thought I was foolish, until I was laid off and started receiving the year of severance pay that I had negotiated prior to starting the job. Admittedly, not everyone can negotiate for a lot, but you should at least understand what severance benefits you will receive if you are part of a layoff. Indeed, one fellow who reported to me received 6 months of severance because he had twenty years of service with our company – and he stayed with the company until the bitter end in order to enjoy his severance package!
Try to Determine What Similarly Situated Employees Have Negotiated: When I took my last job, my employer asked me what I thought I should be paid. I asked him to give me the range of salaries for all employees at my level and the number of years of service that the highest paid and lowest paid received. I then chose a number that I thought was reasonable. My employer agreed and our salary negotiation lasted about three minutes. If I had not known the salary range of my peers, I would have spent the next seven years wondering whether I had short changed myself!
Remember that Money is Not Everything: No amount of money can turn a bad job into a good job. Consider the quality of your life at a new employer and even if the money is great – unless, perhaps, it is AIG great – ask yourself whether the job is going to make you happy. If you will not be happy, keep looking.
What do you think? What should we all try to negotiate when walking into a new job opportunity? What are the tricks that you have learned when trying to get a new job? Put yourselves into the shoes of AIG’s executives. Should they return their bonuses? Would you, if you were them?