Professor Michael Wheeler teaches at the Harvard Business School. His HBX course Negotiation Mastery: Unlocking Value in the Real World launches in 2017.
When my MBA students ask my advice about negotiating for their next job, I’m glad to oblige. I urge them to consider all the different forms that compensation can take, not just salary alone.
Sure, your paycheck matters. You have to pay the proverbial rent. But how about a signing bonus? What about benefits? Would you be willing to accept a somewhat lower salary in return for some equity in the company you’re joining?
All of those things--and more--may be important to you. To be well prepared, you should know in advance how much you’d be willing to compromise on one issue in order to do better on another. That requires weighing your short-term and long-term interests, plus your willingness to take some risk. (How much will that equity be worth in the future; will you stay with the company long enough for those shares to vest?)
Those aren’t easy questions, but thinking about your trade-offs ahead of time is a whole lot better than making hasty decisions in the heat of the negotiation.
Non-monetary considerations (your title, where you’ll be working, when you’ll be reviewed for promotion) are harder to quantify, but are often just as important as financial terms. The scope of your responsibilities and the resources you’ll have to carry them out may be up for discussion, as well.
I recommend that you start your preparation by envisioning a baseline deal, a take-it-or-leave-it offer that is barely acceptable. Spell out all its important elements. Call it “Package A.” Now, here’s the key part. Imagine two other Packages, “B” and “C,” that are different bundles of the same elements, but overall are no better or worse than Package A.
This exercise compels you to think hard about your tradeoffs and priorities. Research shows that it also sparks your creativity, so that when you’re at the bargaining table, you’ll be more likely to generate constructive proposals.
You should aim higher--maybe a lot higher--than your baseline, of course. So your preparation should also include setting a stretch goal, an outcome that is unlikely but not completely unrealistic. Do your market research, of course, and then identify the reasons why you rightly should be paid at the top of the scale.
But here’s a caveat. Negotiating a job offer isn’t just about money and perks. It’s about building relationships for the long-term.
You’ve got to advocate for yourself, of course, but in a way that doesn’t sound greedy or arrogant. My HBS colleague Deepak Malhotra says, “This sounds basic, but it’s crucial.” And it requires walking a tightrope. You need to make a compelling case for yourself, while being mindful of how your counterpart hears what you say. He or she may have to justify your compensation package to others in the organization. “People are going to fight for you,” Deepak says,” only if they like you.”
So think twice about how much you ask for. You want to be well paid, but if word gets out that you’re getting much more than your peers, things could get tense in the office.
Likewise, playing hard to get is a risky game. You may feel cornered if you’re asked, “So, if we agree--reluctantly--to your request to work from home once a week, will that close the deal?” But that’s a legitimate question so you better have an answer ready. If you respond, “I have to think about it,” the prospective employer has to wonder what else you're going to demand.Playing hard to get is a risky game.[/pullquote]
Intel Chairman Andy Bryant says that when he hires he says, “I want to make sure you really want to be here.” He bases his assessment on the job interview and ensuing negotiation, starting with how a person’s priorities and temperament fits with his company’s culture and needs. Be prepared, therefore, for probing questions about your own goals and values.
But don’t contort yourself. This shouldn’t be an exercise in telling others what you think they want to hear. If spinning some story gets you the job, it could be a lose-lose outcome. As Bryant says, “The bottom line is that if you don’t want to be here, you won’t be successful.” Deepak echoes that sentiment. “Ultimately, your satisfaction hinges less on getting the negotiation right,” he says, “and more on getting the job right.”
Deepak recommends doing practice negotiations beforehand with friends. I concur. Preparation is important. So is anticipating the concerns of the people you’ll be talking with and the constraints they may be operating under.
Context matters, of course. Someone early in their career may not have a lot of room to bargain. But it’s still important to clarify job responsibilities and performance metrics, in order to set the table for negotiation later when it’s time to talk about promotion and a pay raise.
Likewise, it’s different if you work for a large company or a start-up. With big organizations, the senior manager who wants to hire you may have different incentives than the HR person who sets compensation--or at least has a say in it. In a smaller firm, “company policy” is less likely to be an issue, but then again, job descriptions may be harder to pin down, especially in fast-changing markets.
In spite of situational differences, a broad perspective, solid relationships, preparation, and being ready for tough questions are essential across the board.
If you’re about to engage in a job negotiation--whether it’s a promotion in your own company or a position with a new company--I encourage you to check a video of a presentation on this important topic that Deepak gave at the Harvard Business School.
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