Negotiating Your VP Title When Changing Companies

How to Secure Your VP Title Upfront
Last week we scrutinized the practice of probationary promotions and focused on the importance of getting the higher title that’s commensurate with the level of responsibility. Negotiating your title when you are joining a new company can be equally as arduous. A friend of mine (we’ll call him Mark) was interviewing for his first VP of Marketing role at a startup after holding Director titles at much larger, public companies. The CEO wanted Mark to lead the Marketing organization (reporting directly to the CEO), but proposed that Mark come in initially as a Director, deliver results, and then be promoted to VP after 6-12 months on the job. Basically, the CEO wanted to “de-risk” himself so he could “test drive” Mark before spending the political capital to make him a VP.

Mark was faced with an important negotiation. Here’s the advice I gave him:

1. First impressions mean a lot - You only get one shot at a first impression so bringing you in at a Director level will set the wrong expectations when you join the company. You will be introduced at a lower level and everyone will think of you in that light.
2. Use your compensation leverage while you have it – Your greatest ability influence your compensation structure is before you join a new company. Remember, if you are in the Offer Phase then you are the person they want. The CEO has “chosen you” and doesn’t want to keep looking so he’s very motivated to bring you on ASAP. Once you join the company then you are part of the standard HR process and it’s more difficult to negotiate your terms. And in the executive ranks at startups, equity (i.e. stock grants, options and RSUs) is a much more significant component of your compensation package. There are some rules of thumb and expectations among investors about what amount of equity is appropriate for a VP, and it’s substantially more than what a Director would typically be offered. Theoretically, Mark could get the additional equity once he’s promoted to VP, but companies are much more willing to allocate equity to attract a new rock-star talent than to thank/reward talent that’s already on board and committed.
3. Expect and enjoy the negotiation – As I mentioned in last week’s blog post, how you handle your title and compensation negotiation provides your new employer with a preview of how you will conduct yourself in business. If you are unwavering in your terms, it could be a major turn off. On the other hand, if you cave in too easily, you will project weakness i.e. how you will handle negotiations with peers, vendors and customers. Focus on the business reasons that support why it’s better that you come in as a VP. And as anxious as you may get, don’t rush the process. I know one executive that took 2 months to agree to terms… now that may be stretching it.

How to Negotiate Your Future VP Title
While it’s usually best to secure your VP title upfront, there may be extenuating circumstances that call for you to switch to “Plan B” i.e. negotiating your future VP promotion into your offer letter. Before I joined one of my early startups, I came across a Director role in my job search that was reporting to the CEO. Given that I’d been at the VP level for several years, I didn’t want to take a “step back,” but with this opportunity I felt that as long as the role was reporting to the CEO then I was at the right level. Within 20 minutes of my first meeting with the CEO, I knew I was his top choice. At the end of our meeting, we started talking about title and compensation ranges. I then came to understand that he had set the expectation with the Board (and the rest of the company for that matter) that he was not going to hire a VP. The company had previously made “big bets” on VPs that didn’t work out (which is why he posted a Director job). This was important company history to understand and I leveraged this knowledge to create a win-win. Here’s the success strategy I used:

1. Make the boss look good – I knew if I forced the CEO to bring me in as a VP then there was a fair amount of political damage for him if he were to “change his tune.” I made sure that he understood that preserving his leadership credibility was of upmost importance to me and that I was ready to come on board to help him work through this challenging time in the business. However, I made it clear that I was not coming to the company to be a Director i.e. my pride made it hard for me to take a Director title
2. Secure the VP role commitment – I helped him understand that my career progression would be shot if I took a step down at this stage e.g. if he hired a VP above me. So I suggested that we have a 6-month review. If I was doing what was expected then I would be promoted immediately. And if not then I would leave the company, giving him an “out.” This made it really easy for him in either scenario i.e. back to point #1, “making him look good.”
3. Negotiate built-in promotion terms – We were very specific on the triggers for the promotion and also built in the VP compensation elements (i.e. salary, bonus, and stock) into the offer letter. This made the 6-month review a very simple cut and dry process. In fact, he seemed more comfortable with this part of the negotiation because from his perspective, it was a “safe bet” – he’d only have to provide that compensation if he was convinced after 6 months that I would be a great VP.
4. Put walls around the Director role – Here’s the part that’s easily overlooked. I made sure that the VP and the Director roles were clearly distinguished, for example, the VP role had direct reports and the Director role didn’t. This is counter-intuitive for people who think that taking as much responsibility as possible would create the fastest path to VP. We clearly outlined the focus, responsibilities, and tasks as a Director and the comprehensive responsibilities as a VP. If the roles were not markedly different then the VP title (and compensation) would be less significant. I was very careful to make certain that I didn’t creep into doing the VP job without the official promotion.

Within months of joining the company, things were going very well and the CEO was so pleased with the immediate impact and contribution I brought to the business that he wanted to start giving me more responsibility. With Point #4 above in mind, I told him “If you’d like to accelerate my promotion to VP, I’d be very happy to take on the full VP responsibilities."

There is another key lesson here. Coming in as a Director lowered the expectations and optics around my on-boarding period. Given the company’s history with prior VPs who didn’t work out, my near term focus on prioritized projects took the tremendous pressure out of the system that would have existed if I had come in with the VP title i.e. needing to “walk on water” and fix everything that was broken. The success criteria were certainly more realistic which is important for anyone starting a new job.

And what happened to Mark? Well, Mark successfully negotiated and helped the CEO to see that he, the CEO, and the company would all be more successful if he came in as a VP. And here’s the kicker: Mark found out later that the company’s Director of Product Management, who joined at the same time, came in with the “test drive” deal. More than a year later, that Director was still struggling to create a sense of urgency for the CEO to finally promote him to VP.

What promotion negotiation strategies have worked for you? Please share your thoughts.