Can I negotiate severance?
Should I negotiate severance?
How do I negotiate severance?
Yes, you can actually negotiate severance. In most cases, yes you can, because you have nothing to lose. After all, you are in sales. Maybe you’re an SDR/BDR, Account Executive, or Vice President of Sales. It’s in your dna. And it’s ok.
It does not mean your company will, but you can and should try.
First, if you need the severance to pay bills, eat, and live, pay for your insurance. It’s ok to accept it as is. Also, please check with a lawyer in your state as some things may be different.
Here are some tips to keep in mind, especially around your mindset:
- The severance letter is written by their lawyers to protect them 100%, always. No matter what they tell you. Which is also to your advantage. Since they are not in sales, and come in with a selfish mentality, you can use that against them. Kinda like martial arts, use the opponent’s momentum against them.
- Severance letters are rarely rescinded like job offers. This is because of the “non-disparagement” clause. As a sales person, keep this in your back pocket.
- There will be a clause somewhere in the document stating that you are not to discuss, disclose, disparage the company, its officers, etc. It will be one sided, meaning they are saying they can say anything they want about you.
- They will use words and phrases like, “fair, flexibility, and sorry we have to do this” in order to make themselves the victim and get you to feel guilty. This is similar to the prospect attempitng to make the sales person feel guilty when closing a deal.
- No matter what they say, no matter what state, you are generally NOT legally obligated to sign anything. Please check with your state of course.
- If your severance is a crappy offer, check to see what your state unemployment laws are.
- Keep in mind, they are really attempting to manipulate you and pay you to remain silent. The worse the package, the more this is the reason.
- Claiming that unused vacation is part of your severance may not be true. Even if allowed, they are not “doing you a favor”, they are manipulating you. Check with your state laws/lawyer because some states require they pay you for unpaid vacation. Severance is often different.
- Insurance – Always ask for 90-180 days, even if they won’t pay you additional cash.
- When they hand you the offer/letter, say nothing for a very long time. Take deep breaths. After you read it, pause and look them in the eyes, and play the staring game. It makes them uncomfortable.
- Wait for them to speak first. Give them nothing when they ask a question other than, “I need to review this.”
- DO NOT say, “Thank you, I need to review this.” Are you really thankful?
- The deadline they request for you to sign is 100% arbitrary in most cases. Some states do require a minimum time to give someone before signing. Again, check with your state laws/lawyer, etc.
- They are giving you a deadline because they want to nip this in the bud. They want to “get it off their to-do list”, and if there are many people, they are trying to streamline.
- Yes, in some cases they are trying to “hug you out the door”. This is good. If the severance is a few months and it may include health insurance. In these moments, we think you should accept this. 90+ days is often pretty good.
- Always ask for an extra 48 hours. When they ask why, you simply say, “I need the time to process everything that is going on, it’s a bit emotional, you know?.” It is ok if they don’t give it.
Things to negotiate:
- Always ask for 6 months severance.
- Always ask for 6 months insurance.
- Always ask for a letter of recommendation (you write it, they sign it).
- Always ask that the non-disclosure/non-disparagement clause needs to be bi-directional.
Now, in most cases they will say no to everything. Your ace in the hole is the mutual non-disparagement agreement. Remember, they put it in there to protect their reputation. Well, now this reputation is worth a whole lot more than the package they are offering you.
As I stated above, if you need the money to live, then it is ok to accept it. And again, check the employment laws in your state.
Here’s one thing to know. Severance packages are rarely “rescinded” unlike job offers.
With all of this in mind, when you start to negotiate, here are the things to consider saying.
You – “I appreciate you taking the time to create this package and I’d like to share some some thoughts if that’s ok?”
Them – “Of course”
You – “Well, the severance package you are offering does not feel fair. Fair would be 6 months pay as well as 6 months insurance. Additionally, the non-disparage agreement must be mutual. And I feel a letter of recommendation and LinkedIn endorsement would be the most fair.” (Use the word must)
Them – “Well, we feel this is fair and it’s all we will offer. And the non-disparagement agreement is there so you understand how seriously and important it is for us to support you with this package.”
You – “Thank you, I am confused, the following deals are in the pipeline and set to close. I put them there, I qualified them, and they will close, because of my work specifically. That commission is worth ____. Which is more than your severance package. How would you call that fair?”
Them – “Well, this is what your comp plan says” or something similar. You will notice them starting to squirm, this is good for you.
You – “Ok, well, then back to the non-dispargement part. Essentially, what you are doing is attempting to bribe, manipulate, and buy-off my silence, right? I mean, you’re trying to protect the company reputation from potential negatives.” (Say potential negatives, this is not suggesting you are threatening them, It’s just vague enough.)
Them – “Uhhh, well, um…” They will now be really uncomfortable. NOBODY has ever said this to them, so they are 100% not even close to being prepared to answer with any sense of logic. Most likely, they will be fake angry with you. In a few instances, they may actually “threaten you”, which could become another thing for you to use.
You – “Uh, I am confused, you seem a bit frustrated. I am confused by this, I mean, you hired me to be a sales person, and to handle negotiations, surprised you’re so surprised by this conversation. I mean your lawyers wrote this, your executive team reviewed, and approved it, and it seems like nobody has role-played out the scenario.
Again, you hired me as a sales person, this is what you hired me to do.
I respect that you need to do what’s best for the company and its reputation. Well, I am my own company too, and I need to protect my reputation as well. How do you not see this as a fair ask?”
Them – “Uhh, umm… Well, this is blah blah blah.”
You – “Well I am a bit disappointed and shocked you seem to be angry with me for doing exactly what you are doing. Again, how is that fair?”
You – Pause, wait, take 3 deep breaths, yes 3 (you will need them). If they speak while you are breathing, continue breathing.
You – “Ok, well the way I see it, you have the following options:
- You increase the severance package and change the non-dispargement agreement and give me a letter of recommendation.
- You can keep the severance the same and still change the non-disparagement and provide a letter of recommendation and LinkedIn endorsement.
- Nobody signs anything.
What would you like to do?”
Yes, its ok to negotiate to 5, 4, 3 months. Yes, it’s ok to settle for just severance and no insurance. Yes, it’s ok say no to severance and take insurance. Which is actually cheaper for them. Yes, it’s ok to give up the letters of recommendation and LinkedIn endorsements, however that should be easy to get from your immediate supervisor for later.
Yes, I have done this, and yes it worked to a certain degree. I was able to get the non-disparagement agreement changed and an extra 30 days of insurance.
As stated, check yourself, do what is best for you and your family and your life. And again, always check your state employment laws before doing any of this.
If you decide to go down this path, it’s rare they would rescind the offer they are buying your silence and that’s what’s important to them.
If you are not the type of person to do this, or its not in your fortitude to go through this, or you simply want to close this chapter and move on I fully support this. You need to do what is best for you.
We support you.
About the Author
Teaching sales reps how to earn the right to ask questions, which questions to ask, and when is the primary driver for Richard. He brings 20+ years of experience, having done all the roles, including SDR, AE, Manager, Director, VP of Sales, and Director of Sales Ops to the table. His client list includes Fortune brands as well as start-ups, including Zoom, Salesforce, Human Interest, Dusty Robotics, Gainsight, and more. He’s also the co-founder of Surf and Sales as well as the host of the Surf and Sales Podcast and his newest podcast, Sales Rants with Richard. He lives in Northern California with his wife, Cathy, sons, Riley and Bodhi, and two Cavapoos, Lola and Luna