More on Negotiating a Salary

March 4th, 2011

Following my previous post on  ”Negotiating Salary” (see below), I received the following email from a reader.

I have a salary negotiation coming up in a few weeks and could use your advice. Two months ago I was hired on a temporary contract to develop an international marketing plan for a new logistical service being offered by a local company.  They are now interested in hiring me permanently to sell the service.  I have been told the starting salary will be around $XX with sales incentives and benefits.  I would love to increase that number by 15%, but am not sure how to do it—especially in this economy. Getting a job now tough, so I have to be careful not to ask too much or be too stern about my needs.  How do you think I should approach the negotiation?

I’m sharing my reply here, in the hope that it will be useful for other readers.

Start by thinking about the employer’s goals. We often assume that the chief concern of an employer is to pay as little as possible. That’s rarely true. Hiring is not a zero-sum game: a good employee brings in far more that he or she costs. Therefore, an employer’s primary goal is to not to keep salaries at rock bottom, but to realize a sufficient return on the cost of hiring you.

This plays well for you in this case, as the company making the offer has already invested both time and money into having you create the marketing plan, so that you bring in far more knowledge of and passion for the product than an external salesperson would. You should emphasize this in your salary talks. The employer also knows you and knows that you work well within the company culture, so the performance risk is also eliminated. (Every new hire is a risk in terms of cultural fit.)

Since the job is for international sales, another concern the company will have is whether you have the ability to perform in the global arena. Just because you can sell a product in Dubuque doesn’t mean you’ll succeed in Dubai. You will decrease the employer’s anxiety and increase your value in his or her eyes by emphasizing your international  experience, knowledge and connections. If the choice is between hiring a salesperson who’s never been outside of the US or spending a bit more to attract someone with a proven international track record, who would you choose? To bring this point home, you might gather statistics (readily available) on the difficulties most Americans have doing business overseas if they aren’t experienced in cultural difference.

To make your case even stronger, use the next couple of weeks before the negotiation to ask around the company to find out what qualities are really paramount for them. You are in the enviable position of being able to uncover a lot of their goals in advance. It’s not sneaky. The more you demonstrate a keen desire to deliver what your employer  wants, the more he or she will feel comfortable with offering you the salary you want.

Finally, don’t worry about alienating your employer by negotiating your salary. A justified request won’t imperil your job prospects as long as you have valid arguments to support it, come across as pleasant and flexible in seeking to work things out, and show a desire to fulfill their goals. People only get mad when they feel you’re being unreasonable.

Post to Twitter Tweet This Post

Negotiating Salary

March 4th, 2011

One of the most difficult negotiations for anyone is the salary negotiation. It’s so personal  that we tend not to think of it in the same objective terms that we might apply to buying a car. In fact, many people don’t like to think of it at all, going in unprepared and hoping for the best. Rarely will they achieve it.

Salary negotiation doesn’t have to be awkward or arbitrary. Rather than grabbing a number out of the air—or passively accepting whatever the employer offers—here are ten tips on what to do and not do when faced with the question: “What salary are you looking for?”

Do’s

Do your homework. With information so readily available, there is no excuse for going into a negotiation blind. If possible, find out what the salary ranges are in the company you’re applying to. If you can’t find that, an internet search will give you an idea of the pay scales being offered by similar companies for similar positions—or those that require a similar skill set. One excellent site that gives a range of salaries by both job category and location is www.salary.com. If the job involves a move, a number of online sites will show you the cost of living difference in the area you are moving to.

Know your value. Take into account the skills/accomplishments you bring to the job. Then consider the value you bring to the company. This shouldn’t be an inventory of everything you can do or have done in life—but rather a list of qualifications from the company’s point of view. Salary isn’t a magical formula. An employer will pay more if you can show that you bring higher tangible benefit to the company.

Consider the whole compensation package. Salary is only one part of the package—and becomes a smaller percentage as you move up the career ladder. In a shaky economy, an employer will often be more open to bonuses than to high starting salaries as pay-for-performance poses less financial risk to the company. Items to consider in your negotiation include bonus, title, flexible working conditions, timing of promotions and/or raises, benchmarks, retirement, insurance, transportation, meals, and so on.

Be confident, but pleasant. It will rub off on the person hiring you. If you are confident (not cocky), you will give the person hiring you the confidence that they are making the right choice in paying a little more for a person who can deliver. That said, neither men nor women react well to women who are perceived as aggressive. Smile; show your sense of humor. Show an interest in them by asking questions—and listening to their answers. People are more generous when they like you.

Anticipate challenges and prepare answers. If this is a stretch position, a new field for you, or much higher compensation than your previous position, don’t just hope that the employer won’t notice it. The same holds true if you’ve been out of work for a while. Assume that you will be asked—or that you might be offered a lower salary as a result—and prepare a convincing and confident response that will give the employer assurance that you can handle the new position and are not a big financial risk. If the employer has genuine concerns, you might offer certain benchmarks or propose a higher bonus to salary ratio.

Don’ts

Put all your eggs in one basket. Negotiation strength really comes down to supply and demand—or who has the better substitute. If the company has many qualified applicants and you have only one possible job, you are in a weaker position than if you have a couple of opportunities. Having other options will also keep you from panicking and negotiating an agreement that doesn’t benefit you.

Lie. In this information age, lies are so easily caught and they will destroy your reputation. Instead, follow #5 under Do’s. If the employer asks you what your previous salary was, rather than lying, refusing to answer, or offering a range (which just makes the listener more curious to know what you are hiding), give the whole compensation package (not just salary) and, if necessary, an explanation. For example, “I was making X, but that was for a non-profit. Although I loved the work and the cause, I am switching to a profit-making company in order to increase my income to market range.”

Be passive . Don’t expect an employer to perceive your worth through osmosis. It is your job to show that you bring value to the company.

Undervalue yourself. If humility gets in the way of valuing yourself, think about the importance of those earnings to your family, to charities you would like to support, or to your lifestyle. When you have a specific aspiration it makes it easier to take the steps needed to achieve it.

Fear asking for more. The worst thing that will happen is that you won’t get what you want—which is exactly where you would be if you didn’t ask at all. More likely, you will get more than if you didn’t ask. Even if you don’t, the employer knows that you are hungry for more and will keep that in mind when raise time comes around. That said, you don’t want to come across as greedy or unrealistic. Just make your case, calmly, pleasantly, and with justification.

Post to Twitter Tweet This Post

Beyond Black and White

January 14th, 2011

A few weeks ago I got a call from a friend asking for advice. She had just been offered a job she very much wanted, but she had a conflict with the starting date. The employer had told her to report in on January 3. However, she was spending the holidays with her family on the other side of the ocean and had a non-refundable ticket to return to the US only the following weekend. Should she agree to start on the 3rd or not?  “I could come back earlier, “ she said, “but that would mean buying a new ticket, which I can barely afford, plus missing my Mom’s 60th birthday party, which is a major event for our whole family.” The other option was to tell the employer she couldn’t start until a week later, but she worried that that would give her employer a bad impression of her seriousness, starting off her new job on the wrong foot.

My friend had fallen into the common trap of binary thinking—that is, thinking the only responses to an offer are yes or no. Either she could start on the set date or she couldn’t. Or, as she played it out in her mind, either she could fly back early, missing her family event, or she could show up to work a week late, raising questions about her commitment to the new job.

In fact, there were other options, had she only broadened her viewpoint a bit. The trick is to move beyond yes/no to “yes, if” (a more positive take on “no, but”). For example, in this case, the “yes, if” could be “yes, I can start on the 3rd, if I can work remotely for the first week.” After explaining the travel conflict to the employer she would emphasize her desire to get started as soon as possible. Were there any documents she could begin reading now to familiarize herself with the organization and the issues she would be working on so she could hit the ground running when she arrived in person on the 10th? Could she do any projects by email or over the internet? Would they like to have an initial meeting by phone? Were there particular computer programs she should be learning? Even if none of these proved practical, by moving to “yes, if” she would at least demonstrate a much higher commitment to the job than by simply saying no.

I often ask people what color is between black and white. They invariably answer gray. No, I remind them; every color of the spectrum is between black and white. It just depends on the light you shine on it.

Post to Twitter Tweet This Post

My Y2K-XI Crash

January 10th, 2011

Like most people, I made it through Y2K with nary a scratch on my computer screen. But the arrival of the “teens” wasn’t so smooth: a technical glitch wiped out my blog. Aargh! Fortunately, the pain was short-lived. Thanks to my super-fast web technician, Paul Tichy of Appaloosa Business Systems (www.spottedhorse.com), I am now back up and running. The silver lining is that it motivated me to revisit all my past blog posts since the publication of Beyond Dealmaking to see what needed rescuing.

Rather than re-posting everything, I have selected the top 12 entries over the past year: i.e. those that have earned the most positive comments and (not coincidentally) offer the most practical advice. The following dozen pieces offer tips on how to improve your negotiating, communicating, influencing, and relationship-building skills and generally how to become an effective team-member and leader. I hope you will find these helpful as you face your next negotiation or difficult conversation.

Post to Twitter Tweet This Post

The Art of Persuasion

January 10th, 2011

The other day I received an email from someone who was repeatedly frustrated in his attempts to negotiate. “Do you think the actual winners in negotiation are those who have really good personalities or those who disguise their disadvantages and insist on their position?” he asked. Although I understood what he was getting at, he had set up a false dichotomy. The right answer is “None of the above.”

You don’t have to be charming to negotiate well, although I strongly believe that you benefit from being pleasant and showing respect and concern for the other party. At the same time, while you don’t want to reveal all of your disadvantages, you certainly should avoid coming across as secretive or deceptive. And while you should rightly stand by positions that are based on solid reasoning, evidence and fairness, the word “insist” implies unproductive closed-mindedness.  The mistake my correspondent made was to focus on techniques rather than on the fundamental purpose of negotiation: to reach a mutually satisfying agreement that all parties will carry out willingly.

We often forget that the goal of persuasion is not to win an argument, but to influence others. People are rarely influenced by being told that their ideas are wrong  or not as wise as your own. They react even worse if they feel that you aren’t giving them a fair hearing, but are merely marking time until you can get in your rebuttal.

Psychologist Robert Cialdini, who has spent a career studying the science of persuasion, has set forth a number of fundamental aspects of persuasiveness, none of which include a great personality, self-disguise, or insistence. They do include: 1) being liked; 2) reciprocity; 3) working toward common goals; 4) being positive; and 5) genuine expertise, not just strong opinions.

If you want others to take ownership of a decision, you also need to involve them in the decision-making process. You don’t always have to be in charge. You are seeking to achieve a joint agreement after all.  So instead of saying, “Let’s meet next week at 10:00,” try asking “When would be a good time for you to meet next week?” Instead of saying, “Here’s what I think we should do,” try asking, “What if we did this?” If they say it wouldn’t work, don’t insist it will. Ask them what their concerns are, then go through those concerns one by one seeing how you can allay them.

Sincerity, open-mindedness, empathy, and sharing ownership are far more powerful persuasion forces than are a dynamic personality or smooth negotiating style.

Post to Twitter Tweet This Post

Speak, Listen, Question

January 10th, 2011

I have worked with a number of companies to improve their internal collaboration through relationship-based negotiation. We usually end each session with the staff taking part in some demonstration role plays. These have been eye-opening experiences for everyone.  Naturally, we tend to feel we are communicating just fine–and that if there is a problem it’s the listener’s fault. From observing those role plays, however, it is clear that we may not be doing everything as well or as consistently as imagined, especially in three key areas:

1. Speaking. Some people have truly mastered the friendly phrase, such as “I understand” or “I want a solution you feel comfortable with.” But if, after saying you understand, you ignore the concern the speaker just raised and launch straight into what you want to say—or if you follow your expressed desire for your counterpart’s comfort with a forceful argument for your predetermined solution—he or she quickly detects insincerity.  In fact, the other party may actually become more resistant than if you had left out those nice sentiments altogether. So does that mean you should dispense with all empathetic language? Of course not. It simply means that words need to express meaning, not just make nice sounds.

2. Listening. Would it make sense to negotiate a maze with your eyes closed? Of course not. Yet time and again I observed people trying to negotiate a complex disagreement with their ears closed. One party would state her concern to be X, only to have her respondent assure her about Y.  Why? Because the respondent hadn’t heard her. Convinced going into the negotiation that he knew what her objections would be, he had put his minds entirely into making arguments to deflect those predetermined objections. This is a trap we all can fall into, as we naturally want to use the arguments we have developed or rack our brains to think up new ones while the other party is speaking. But all we accomplish by sticking to a predetermined argument  is  to carry on two separate conversations whose points never intersect–annoying our counterparts who feel we haven’t listened to a word they said.

3. Asking questions. The biggest problem overall is the tendency to launch into a sales pitch rather than inviting the other party into the discussion by asking questions.  If the respondent expressed qualms or disagreement, the first party simply argues more forcefully. It’s an astoundingly widespread approach given that it’s so ineffective. People are rarely talked into things they don’t want. The effective negotiator spends a lot more time asking question than pushing his or her own views. If the other party appears reluctant, follow up their objections by asking what their concerns are. Then you can start working together to reach a solution. You may even be surprised at the answer.

One final tip on questions: it’s also a good skill to invite questions from the other party by not overwhelming them with information at the start. Instead, start with a short statement or question, such as, “Is there any possibility that you could loan us a couple of your staff for this project?” This will grab the listener’s attention, leading him to ask for more information. Once he asks “Why?” he had invited your explanation, not been accosted with it, and it becomes more of a dialogue.

Post to Twitter Tweet This Post

The Influential Leader

January 10th, 2011

Most people see negotiation as an isolated pursuit involving buying and selling. In fact, negotiating relationships is an activity we all engage in every day—and is a particularly important skill for leaders. Indeed, I would argue it may be the key skill of a leader.

The job of the leader is to influence others to work together to accomplish an objective. As I have set out in Beyond Dealmaking, the job of the relationship-based negotiator is to resolve differences and find synergies so that all parties can work cooperatively to achieve mutual gain. Not very different, are they? The relationship-oriented negotiator focuses on achieving the best overall outcome, not on winning points, just as the good leader focuses on achieving the most sustainable profits for his or her organization, not short-term gains for a single division or satisfaction for a single customer.

Achieving this level of cohesion throughout the organization is no easy task. The leader must exercise influence in every direction: upward with higher management or the board of directors; laterally with clients or customers, on the one hand, and with colleagues and other division heads on the other; and, of course, downward with staff. To focus on only one of these primary relationships is to put the company at peril. Let’s look at a few examples:

Carly Fiorina was known to be a superb manager of people,  but her neglect of her relationship with HP’s Board of Directors ultimately cost her her job. Toyota showed a surprisingly poor awareness of the importance of customer relations in the recent recall debacle in which apologies came late, explanations even later, and every communication appeared forced and half-hearted. Lehman Brothers went under the first time in 1984 because of implacable hostilities between its traders and investment bankers which ultimately created a dysfunctional internal environment. And we all have stories of leaders who operate on the old command and control system, who sustain their positions only through every higher payoffs.

The answer is that we need to negotiate relationships all the time in every direction. In the words of Dwight D. Eisenhower, a leader whose influencing skills earned him the very highest ranks in both the military and the civilian government, “You do not lead by hitting people over the head. Any damn fool can do that, but it’s usually called ‘assault’ – not ‘leadership.’… I’ll tell you what leadership is. It’s persuasion – and conciliation – and patience. It’s long, slow, tough work. That’s the only sort of leadership I know or believe in – or will practice.

Post to Twitter Tweet This Post

Women Thrive in Relationship Negotiation

January 10th, 2011

The evidence is in! Women get higher value results when they break away from the old view of negotiation as a contest.

Experiments by UC Berkeley Professors Laura Kray and Professors Leigh Thompson and Adam Galinsky of Northwestern that show that women claim equal value from a negotiation as men when they saw it as a learning tool, but less when they were told it was a competition. According to the researchers, a competitive environment triggered fears in women that they would “lose,” turning it into a self-fulfilling prophecy.

According to the latest issue of the Harvard Negotiation Newsletter, “By looking at negotiation as a learning opportunity rather than as a performance, women can gain the confidence needed to overcome insidious stereotypes.” I would venture a more bold, and practical conclusion: if women approach negotiation as building a relationship to allow the parties to work profitably together rather than as ”winning a deal” they will gain the confidence to overcome both their own negative attitudes toward negotiation and greatly enhance their ability to succeed at it.

Post to Twitter Tweet This Post

Does Writing Make us Mean?

January 10th, 2011

As we ask ourselves why social discourse has become so antagonistic and vitriolic lately, one clear culprit seems to be our growing reliance on written as opposed to face-to-face communication. Some dramatic evidence of the effect of impersonal communication can be found in the research on electronic negotiating by Harvard Business Professor Kathleen Valley. Her findings are dramatic:

  • More than half of email negotiations end in impasse, as opposed to only 19% of face-to-face negotiations.
  • People are more prone to exaggerate, withhold information, attack, and escalate conflict when they negotiate by writing.
  • Electronic negotiation tends to be more inflexible than spoken, with far less of an effort made toward seekimg mutual benefit.

While these findings relate to negotiation by email, I believe they can be broadened out to any internet-based communication. Unfortunately, this is a disease that is more easy to diagnose than to cure.

Post to Twitter Tweet This Post

Leadership: Turning Criticisms into Agreements

January 10th, 2011

Recently I received an email from a manager asking me how to criticize his employees’ or colleagues’ without demoralizing them or creating a backlash. It’s a great question that managers have been struggling with for eons. The answer, I am convinced, is not to criticize, but to lead. By leading I mean guiding and motivating people into a more productive direction.

I have always liked the definition of good leadership given by former US President and Supreme Allied Commander, General Dwight Eisenhower (whose negotiation style I studied for my PhD thesis): “You do not lead by hitting people over the head. Any damn fool can do that, but it’s usually called ‘assault’ – not ‘leadership.’… I’ll tell you what leadership is. It’s persuasion – and conciliation – and patience. It’s long, slow, tough work. That’s the only sort of leadership I know or believe in –or will practice.

When I teach leadership negotiation, I suggest a 5-step approach for turning complaints and criticisms into productive communication:

  1. Describe the problem— calmly, neutrally, factually, and withholding judgment. For example, instead of “You’re not pulling your weight on this project!” (which will only get the other party to think about everything that he or she has done that you are unfairly discrediting), you might say objectively, “I am told that you have missed the past two team meetings. Is that correct?”
  2. Question the cause—sincerely, with an open mind. After all, you may not have all the information. It may be as simple a question as, “Why is that?” The essential point is to listen genuinely to the answer and to take the other’s viewpoint into consideration.
  3. Explain the impact—seeking to broaden the other’s perspective by using facts or examples. In the above case you might explain, “I understand that you are under a lot of deadline pressure, but when you miss meetings it actually slows things down and makes more work, not just for you but for everyone on the team. It also is disrespectful to your colleagues.”
  4. Make a positive agreement—with the key words here beingpositive and agreement. A negative command (“Don’t do it again!”) creates  resistance and escalates tension. A positive agreement, especially one that  incorporates the other’s perspective into a shared solution, creates a psychological commitment. (e.g. “So we’re agreed that, in the future, when you have a conflict that prevents your attending a meeting, you will send a substitute with decision-making authority and personally let your teammates know in advance?”)
  5. Follow up—by complimenting them for fulfilling the agreement (or reminding them, if they seem to be slipping back into old habits). This is both provides positive reinforcement for changed behavior and shows the other party that you took their commitment seriously.

In the words of Lawrence Bossidy, former CEO of both Honeywell and Allied Signal, “The day when you could yell and scream and beat people into good performance is over. Today you have to appeal to them by helping them see how they can get from here to there and giving them some reason and help to get there. Do those things, and they’ll knock down doors.

Post to Twitter Tweet This Post