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Tuesday, July 17, 2007

I am not good at negotiating

I am not good at negotiating salary when I'm making someone a job offer. I try to hide it, but the fact is that I fail at the most crucial part of negotiating -- I'm not willing to walk away. By the time I'm making someone a job offer, they're the candidate I want and I want to do what it takes to hire them. Weirdly, I've yet to have a candidate hold out for more money than I want to pay, but I know it's going to happen at some point and I am going to get robbed blind.

To make matters worse, my instinct is to pay people on the high side of what we can reasonably afford to pay, because I want them to be happy with the job.

Does anyone have tips on negotiating effectively from the employer's side? Most materials out there that I've seen are geared toward job-hunters. I need something that comes at it from the evil employer's side.

14 comments:

bruce said...

It's not necessarily a bad thing to pay employees a bit higher. I'm still a huge proponent of paying a bit more, especially when you've got a somewhat specialized position and you find someone you really want. It's hard to find those real gems, so keeping them happy is usually worth it.

Wally Bock said...

If you were my coaching client, here's what I'd explore with you. There aren't any right answers, but there are things to think about.

What is your job when you negotiate? Is it to close the deal? Or is it to make the deal that's best for your company and acceptable to the person on the other side of the desk? Or is it something else?

Have you tried some common methods of preparation, such as reviewing salaries for similar jobs and experience in your industry right before you go in?

Have you tried the common negotiating practice of getting a string of agreements from the person on the other side of the table before you get to the part that's hard for you?

Have you tried the tactic of describing your range for the position (perhaps compared with the industry if that's favorable), describing what sort of people are at the top, bottom and mid-range, and then asking your candidate where they think they fit? Most people will be both honest and realistic about answering if you've described the reference points. This is a reality check for some candidates.

Have you tried noting down the maximum you'll settle for?

These are starters. I'm sure you and people who are about you can come up with others. If you're significantly younger than my 61 or if you're new to negotiating, I have two observations.

First, most people, especially young people, new to negotiation do far better than they think they will.

Second, negotiation is a skill. You can get better at it, as you're attempting to do by seeking advice. But it's important to remember that you'll probably be better at this in a month or a year than you are now.

Ask a Manager said...

Wally, these are great, thank you! One of the problems I'm having is that we're a nonprofit -- a good-sized and well-funded nonprofit, but the nonprofit thing is still reflected in our salary structure: While we have more leeway with salaries than many nonprofits do, we generally aren't going to be paying what the same job could command in the corporate world.

I'm actually surprised this hasn't been more of an issue; we've generally been able to hire the people we want, even when it involves the person taking a pay cut, but the entire issue is an anxiety-producing one for me!

I really like your suggestion of describing the range for the position and describing what sorts of people are in different parts of that. It's honest and probably helps reassure people that we're not just trying to lowball them.

sean said...

the way i see it there are two types of candidates

1. the desparate ones
[most would be here even if they try to hide it.]

2. the blase ones
[these don't have to work if they don't want to....]

if my premise that most candidates fall into category #1 then it would follow that you are in the position of strength despite paying less than the corporate world.

keep in mind there are a lot of folks burned out with the corporate world and that makes it easier for you!


my humble .02

sean

http://adoptiongay.com

Marie-Anne said...

I'm trying... well I'm going to try to ask my boss for a pay raise. I once initiated this process and he gracefully turned me down... well he did gave me a pay raise but this was not to my expectations and he simply said "things comes step by step... be patient and you are still young, you have a lot of potential"

It seems that with all the praising, my disappointment was "erased" and I had accepted his offer without much argument and happy with the compliments, I had received on my work. It is only after 2 weeks, that I realized I have been "tricked"

Ask a Manager said...

Marie-Anne, how much of a raise had you requested, percentage-wise? And did you lay out an argument for why you deserved one (listing ways you'd gone above and beyond)? I ask that only because many people don't make a good case for themselves when they ask for a raise, and that can make the difference. It's also possible that your boss has done as much as he can do, budget-wise, and the compliments were sincere ... although of course it's also possible that he's just hoping you won't push for more. I'd be interested in more details.

The Career Encourager said...

"Does anyone have tips on negotiating effectively from the employer's side?"

Market price, market price, market price! Remember - you are not doing a candidate a favor if you pay them so well that you price them out of the market. You give them an unrealistic view of themselves and I've often seen it lead to career disaster. Check out what Compensation guru Ann Bares has to say at http://compforce.typepad.com I've worked with her on many client gigs and she is a true professional!
Regards -
The Career Encourager

adrian.lalexander said...

A few thoughts:
Don't think that you can't offer much because you're a non profit or because you don't have a huge budget for salaries. This puts you in a position of weakness and is not a good starting point for a negotiation.

The fact that many candidates accept a pay cut shows that your company has a lot to offer that other companies with more money can't (or maybe you always have candidates that can't find a job elsewhere, but I don't assume that's the case).

As long as employees receive a fair salary (I didn't say big), have a challenging job and don't have to deal too much with HR, the salary is usually a topic until the contract is signed and then once a year.

And another thing I'm observing more and more is that many people who request a raise during the year do so because they are unhappy and the real problem isn't the money. And of course, more money is usually a quick fix that only lasts for a short period of time.

kris said...

Here's a quick take - when negiotiating, the earlier you get your desired price (or a small range)out in the conversation, the better off you are. If you are phone screening candidates, use the end of the conversation to probe what they are looking for. When you end up dong the dance, just tell them what you think the market is, what you can pay, and ask them if they would accept that if they were the successful candidate in the search.

That approach doesn't always eliminate problems later, but it can cut through a lot of the clutter. Also, always say what you would pay at this point and seek confirmation they are good with that - never ask them what it would take. Talking first and then asking for the committment is key to closing later....

Kris

Ask a Manager said...

A follow-up to this discussion: Kris at the HR Capitalist has posted advice on this topic here.

Jeff Knooren said...

> I need something that comes at it from the evil employer's side.

How about threatening to outsource the job entirely if they don't take the job? :)

Chuck said...

Unfortunately, it comes down to being able to walk away. Just say, "I understand where you're coming from, and I'm not trying to get one by on you, this is really the number above which I will not be comfortable going." That may seem too forthright, but I would eat that up if I could tell they were being sincere and I was interested in the job. That becomes the first moment of "we" instead of negotiation. If they still won't take the job, don't hire them.

You didn't just make up your top salary number--that's what you decided you were willing to pay for that person. If you're tempted to break that rule, take some time later to decide why you're tempted to offer more and if it's worth it.

Great blog, by the way!

Anonymous said...

Good grief...the games...what's wrong with you people anyway? Just give the honest budgeted salary range right up front - in the job posting! Do you know that you lose many top qualified applicants for failure to do so? They know what they're worth and what they can get in the marketplace. You're not fooling the cream of the crop. By omitting this fundamental information in the job posting, the smartest of the bunch (the one you want to hire) will not even submit a resume. Why? Two reasons: 1) Omitting at least a salary range indicates that the company can't afford to pay much, and won't. 2) This company is already sending out a negative impression, i.e., they're deceitful, dishonest gameplayers that hope to find someone great that will work for peanuts - i.e., take advantage of you. News flash: that will never happen. The creme d' le creme will not respond to your posting to begin with.

You get what you pay for. Also, you will only retain top talent if you treat them fairly.

Bernardo M said...

I don't submit my resumé if the posting doesn't show a salary range or an amount. I would do it if the job sounded very, very cool. And I have written to posters that offer very, very low salaries, letting them know what we make in our field and that given my experience I wouldn't consider them (it makes me mad that some employers want to pay 2 cents for "top performers")
I am also not good at negotiating a salary from the employee side. I have tasted the bitter flavor of the three month review, but I have also used it as a reason to resign the very day I accepted another job. This second job wasn't thrilling in terms of my salary negotiations, but percentage wise you'd say I did great making 1.5 times what I had before. Eventually this job led me to my current job, which I am enjoying too much lately (I have told people that I haven't been working for a few months, because work itself is so cool!), and I will be coming back to post for advice to move on and improve performance.