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The Raise Negotiation: 9 Possible Responses for Managers

November 20, 2012 By Leave a Comment

Empty Conference RoomIn the last few weeks, I’ve heard two great stories regarding employees asking for a raise that boggle my mind.

The first story is from a manager who told me that an employee who was on a corrective action plan came into his office and stated, “Since I’m handling two additional assignments, I feel I deserve a raise.” This manager correctly handled the request by responding, “We do not consider requests for raises from employees who are currently on corrective action plans.”

The second story comes from a CEO who told us that one of her employees came to her and announced, “I’m not happy working here and I’m thinking about leaving. The only way I would consider staying is if you were to give me a 30 percent raise.” In this case, the CEO felt that she couldn’t live without the employee and gave in, giving up 30 percent more salary to ensure the employee stayed with the company.

Asking your manager for a raise is a high risk maneuver. Although people tell employees that, “It never hurts to ask,” the reality can be harsh. If the answer is no, the manager could harbor resentment about being asked for a raise by an ungrateful employee and the employee could be disheartened because the manager doesn’t see the value in their contributions. When this happens, the negotiation has a high potential to end up in lose-lose.

At some point in their career, every manager has had an employee come to them and ask for a raise. It’s usually requested at a time when the manager hasn’t had time to think through an appropriate response to the request. So what should they do?

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Should You Turn that Job Offer into a Raise?

August 21, 2012 By 2 Comments

Man and woman sitting at desk and passing an envelope between themThis sounds like every employee’s dream. You have accepted an offer of employment with a new company. You like the company, you like their benefits, and best of all, you like your new salary. It’s all good—until you go in and tell your boss you have accepted another job and you are leaving in two weeks.

Your boss asks you, “How much more are they paying you?” On average, people leave their current company for approximately a five percent increase. But, as long as your boss is asking, you decide to tell him it is significantly more pay. Your boss says, “What is significant? 10 percent? 15 percent?” You respond by saying that it’s in that range. Your boss then responds, “Don’t tell anyone you’re resigning just yet, I think I can get the gods in power to match that offer.” Later that afternoon, your boss comes to you and says, “I have great news. We can match their offer by increasing your salary by 15 percent. So you’ll stay, right?”

So, now what do you do?

Although every situation is different, generally, we recommend that employees don’t accept or counter an offer for continued employment for the following reasons:

It’s not really about the money: Statistically, most people do not leave organizations just for more money. In our surveys, we find that people leave organizations far more often because they have a bad boss, they are bored with their job, they have little autonomy or empowerment, their department lacks teamwork, they don’t feel valued, they have no work-life balance, and/or the company’s values are not in alignment with the individual’s personal values. Even with more money, the reason you were leaving will still be there if you accept the counter offer. How much money would make it worthwhile to work for an ass?

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Negotiating a Raise

July 26, 2010 By 1 Comment

Part 2: Meeting with your Boss

Meeting with the bossLast week we started this two-part blog reviewing the steps to take before your negotiation. As we mentioned, preparing for a raise negotiation starts long before you have the talk with your boss. It starts on your first day of employment with the company. Ensure that you have a good reputation for producing results and working hard to add value to your position, department and organization. If you do not, your preparations will be in vain and you are likely to be unsatisfafied with the outcome of the negotiaiton.

We wish you the best of luck!

  1. Prepare for Your Meeting. Before you meet with your boss, you must feel confident you have earned the right to ask for a raise. It is helpful to have a prepared list that highlights certain information, such as your three most significant accomplishments in the past year, or things you will do in the next year to add significant value to the company. Don’t highlight things that are expected of you, such as showing up to work on time each day. Focus rather on significant accomplishments, such as how you have exceeded your sales quota by 50 percent or more each quarter. Knowing your boss’s needs and goals is critical, since this knowledge enables you to demonstrate how your future accomplishments will help your boss be more successful.

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Negotiation Tactic #91 – Jumping on the Bandwagon

November 8, 2013 By Leave a Comment

Summary: Convincing a counterpart that everyone is doing it.

One of the most powerful ways to sell a customer on the merit of your product is to convince the customer that everyone is using that product. In fact, sales are going so fast you can’t keep it on the shelf. The insinuation is that if your counterpart doesn’t buy in, he will lose out.

Example
If the offer of a free dinner, a weekend’s lodging, or a gift certificate has ever succeeded in luring you to a sales presentation for a timeshare, you know how persuasive the sales team can be. Once you have been captured by your “personal vacation consultant,” you are told how very reasonable this offer is, that you typically spend more on a week’s family vacation than you would on a timeshare, that you can trade the share for another property—and on and on. To raise the excitement level and encourage you to commit, the salesperson tells you that the opportunity for you to buy is very limited. Typically, you are in a room where other couples are also meeting with their “vacation consultants.” Public announcements are made periodically, stating that various properties are no longer available. The pressure builds and it takes extreme courage not to sign on the dotted line.

Counter
The most effective counter is These Boots Are Made for Walking. Depending on your tolerance for pain, you can either walk out and forgo the “freebie” or tough it out to the bitter end and collect your free gift. If, on the other hand, you are really interested in the timeshare, you could counter with the tactic of Good Guy/Bad Guy (with your partner playing the bad guy who wants to nix the deal) to gain some leverage, or use Sweetening the Deal to try to get something extra thrown in the final package. Another effective tactic is I’ll Think About It and Get Back to You Later.

Filed Under: Blog, Negotiating Tactics

Negotiation Tactic #90 – The Field Trip

October 24, 2013 By Leave a Comment

Summary: Arranging for a counterpart to visit one’s site or the site of another customer.

Any time you can get your counterpart to leave her office and visit your site or the operation/installation of one of your customers, you obtain leverage. One reason this approach works so beautifully is that it also employs the tactic of Investing Time by getting your counterpart to spend time and energy on the negotiation, which raises her level of commitment. A second reason this tactic is effective is that it gives you the opportunity to show your counterpart how well the item you’re selling works in real life. This enables your counterpart to envision herself using your product or service.

Example

A contractor invites a potential customer out to an office he recently renovated. The customer is happy with what she sees and can picture the changes she wants done in her building.

Counter

To protect herself, the buyer needs to make sure she has the ability to walk away from the other office without feeling obligated to make a decision on the spot. This ability to walk away will help maintain balance in the negotiation. To make sure she has all the facts, the buyer could plan her own Field Trip (possibly to another office renovated by a competitor). The more knowledge she gains about the competition and the contractor’s work, the better off she will be. She might even seek out customers who are dissatisfied with their work. Any information she acquires will help her gain leverage if she decides to continue negotiating with the first contractor.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Filed Under: Blog, Negotiating Tactics

Negotiation Tactic #86 – Flattery or Sweet Talk

September 26, 2013 By Leave a Comment

Summary: Appealing to a counterpart’s ego.

One effective way to gain leverage in a negotiation is to use Flattery or Sweet Talk. When used effectively, flattery has the impact of motivating the counterpart to respond.

Example

The president of a nonprofit corporation asks a speaker to give the opening address at the organization’s fundraising dinner. The president begins his request with the statement, “Although I don’t have the budget to pay you, I need a great speaker and you are the best I know.” This type of flattery, combined with the opportunity to do something for a worthy cause, makes the request hard for the speaker to turn down.

Counter

If the flattery seems sincere, the speaker should express her appreciation. But, it’s important for her to be able to set the flattery aside when making a decision. If she wants to counter the offer, she can emphasize the importance or value of her speaking skills. A second option would be to ask for some compensation other than money such as a free advertisement in the program for the fundraiser.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Filed Under: Blog, Negotiating Tactics

Negotiation Tactic #61 – Appealing to Mother Teresa

March 28, 2013 By Leave a Comment

Summary: Asking a counterpart for help.

Mother Teresa was world-renowned for recruiting the help of others to achieve her mission. People found it difficult to refuse Mother Teresa. Why? One reason was that she had an unwavering passion for the causes to which she devoted her time. A second reason was the way she set up a request. She would look a person in the eye with genuine sincerity and state, “I have a problem, and I need your help.”

Looking your counterpart in the eye and saying, “I have a problem, and I need your help,” can be very effective because this tactic touches the part of human nature that wants to be strong and help others. You are asking your counterpart to be as noble and giving as Mother Teresa. Only a very cold person finds it easy to respond, “I can’t help you.”

Example

An employee walks into his boss’s office and admits, “I have some problems and I need your help. I have recently gone through a divorce, my rent has just increased, and my oldest child is now going to college. I really like working for you and this company. Is there anything you can do to help me earn a higher income here so I don’t need to go looking for a higher-paying job?”

Counter

Of course, the manager could simply say “no.” Another option would be to issue the tactic of the Conditional No, stating, “I cannot give you a raise today, but I will consider it in three months when we start the next fiscal year.” Third, utilizing the tactic of There is More Than One Way to Skin a Cat, the manager might suggest, “Although I cannot give you a raise in your current position, we could talk about other positions in the company that pay more money.” Fourth, the manager may want to employ the tactic of, I’ll Think About It and Get Back to You Later to buy some time. No matter which counter the manager chooses, he should empathize with the employee, who is in a difficult situation.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Filed Under: Blog, Negotiating Tactics

Negotiation Tactic #56 – The Puppy Dog

February 21, 2013 By Leave a Comment

Summary: Offering a “trial” of a product or service to get the counterpart emotionally committed to the deal.

The power behind The Puppy Dog tactic lies in letting your counterpart use the object she is negotiating for before the deal is finalized. The name is derived from the tactic pet store owners use when they tell you to go ahead and hold the puppies and play with them while you consider buying one. I once ended up with a $400 Old English Sheepdog because of this very tactic. With Sir Bentley licking me on the face, $400 seemed quite reasonable!

Example

Michael wants to buy a used boat, but he and the owner are stuck on the price. The owner suggests that Michael take the boat to a nearby island for the weekend. The owner is convinced that at the end of the weekend, Michael will feel the boat is worth the full asking price. When Michael returns from a great weekend, he continues to try to get the owner to sell the boat for a lower price. But the owner says he is confident he can find another buyer who will pay the full price. The owner is a smart man. He knows that after a great weekend, Michael has already bought the boat in his mind. In fact, he would probably be willing to pay even more money if the owner raised the price.

Counter

The tactic of The Puppy Dog is so powerful that the only effective counter is These Boots Are Made for Walking. If Michael wants to continue negotiating the price, he should remove himself from the picture and let a third party negotiate for him. Once his emotions have been committed and the boat owner knows it, Michael is in a very vulnerable position.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Filed Under: Blog, Negotiating Tactics

Negotiating When You Hold Little Power

January 16, 2013 By Leave a Comment

Tall man looking down at small man in desertOne of our teammates is in the market to buy a condominium. It wasn’t that long ago that it was darn near impossible to even give away a piece of real estate. On the street where I live, there’s a house that’s in foreclosure that has been on the market for close to three years. But, in some sections of the real estate market, like condominiums, the market has done a 180 and sellers are now receiving multiple offers at prices significantly higher than their asking price.

Let’s switch examples. You’re applying for an internal promotion in your company. The job has been posted both externally and internally in the company. Someone in HR has let you know they have received over 200 resumes and two other internal candidates besides yourself have applied for the job.

In both of these examples, the odds looked stacked against you. Let’s take a look at the options that may help bring you closer to a win-win outcome, or at least not leave you as the loser in a lose-win outcome.

Gain inside information: In the promotion example, if you really want the job, then you need to set a meeting up with the person who’s actually hiring for the position. Tell the manager that you aren’t even sure if the job is a fit but if he/she could meet with you for a brief 15 minutes, you could both decide if you should put in an application. In the real estate example, if the home is tenant occupied, you could stop by the house the evening before making an offer and ask if you could take a 5 minute tour to confirm that you want to move forward. Real estate agents hate this recommendation but, after buying multiple homes in my life, I’ve always been successful when I’ve been able to figure out the owner’s needs first-hand. Many times, the information the seller has shared with me has been the exact opposite of what my own agent had shared. While you think that your needs are identical with your agent, unless you have a long-term relationship with your agent, this may not be the case.

Determine your counterpart’s true implicit needs: Although we tend to look at most negotiations as being focused on price and money, there are many other types of needs that may be driving the behaviors of your counterpart. Is the buyer qualified to buy this home at the price they’re proposing? Is the buyer’s qualification verified? How quickly can the sale be completed? Will the new buyer make a good neighbor to the seller’s friends? Does the seller have the need to close the deal and then rent the home back until he can find another place to live? In a short sale or a deal where there is little equity, at what point will the seller have to add cash into the deal to make it work? If they want out of the home bad enough, how much are they willing to drop the price? In the employer example, does the boss already have someone in mind they want to offer the job to? Do they feel a need to hire someone from inside the company or are they committed to finding the best qualified candidate?

Do your own research: For whatever reason, people who feel they lack power and clout tend to do less research to validate what’s known and what’s shared by their counterparts. In the promotion example, talk to others in the department to find out what type of boss you’ll be working for. You can also talk directly to the boss to find out what type of work will be done and what the expectations are for the job. In the real estate example, besides generating comps to support the price you are thinking about offering, talk to owners and renters in the complex or people living in the neighborhood. Knock on a few doors and you may even find an owner willing to sell their unit without a real estate agent and split the savings with you.

Walk away: In the above real estate example, one thing that we learned in the last real estate bubble is the people who bought last in the cycle, and participated in a multiple offer/bidding situation, had the most to lose when the market turned. Although the same may not be as applicable today because we’re at the beginning of a new real estate cycle, you don’t want to be negotiating against yourself. That’s exactly what will happen if you agree when your agent tells you that the seller has multiple offers and that you better increase your offer significantly if you want the house. Only when you are willing to walk away do you regain or maintain your power. Why is walking away in your best interests? Because there’s a good chance you’ll find another house to purchase, most likely, without multiple bids. In the world of negotiation, some of your very best deals in life will be the ones you decided to pass on.

When you’re in the middle of a negotiation in which you hold little clout or power, you tend to give up deal points you wouldn’t normally in an effort to make the deal work. When the counterpart senses that you lack power, the natural tendency is for the counterpart to raise their goals and ask for more. They know that if you really want the prize, you’ll be willing to cave in and give them what they’re asking for.

So what do you do? You accomplish your goals. If your need to gain something is strong enough, and you’re willing to do whatever it takes to accomplish your goal, you will be successful. Don’t sweat the small stuff in small negotiations. When the size of the negotiation could have a significant impact on your financial well-being in the future, I recommend following the above four points. I believe that patience, most often, will help you to drive a better win-win negotiation. A great line to remember is, “I want this, but under these conditions or terms, I don’t want it that much.” And, after you’ve applied the recommendations of gaining inside information, determining your counterpart’s implicit needs, validating the facts and determining your willingness to walk away… if the deal is still so good you have to have it… GO FOR IT!

Filed Under: Blog, The Master Negotiator

Who Has the Power in a Negotiation?

September 19, 2012 By

One big piggy bank and one small piggy bankIn almost 30 years of working with clients to help them prepare for significant negotiations, I have frequently found that most negotiators buy into the false assumption that their counterpart has more power than they do.

I disagree. I have found that almost always, the power in a negotiation is equally balanced. However, there is one exception to this finding: if the other party truly has no need for you and would prefer to move forward without you, then you may be right, they hold all the power. When clients tell us they have no power in a negotiation, we always ask the same questions. Do they return your emails and phone calls? If you did want to meet with them, would they agree to a meeting? If the answer is yes, then your counterpart needs you, and you have more power than you think you do.

Whether you believe that your counterpart holds all the power or that you hold all the power, you are right. Ask yourself this: if you believe you hold no power, why does your counterpart agree to continue the relationship?

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