Negotiating a Job (MBA Student) I took your class a year and a half ago and recently completed my MBA.

I am in the process of evaluating a job offer from a consulting company and negotiating the terms with them. I was wondering if I could ask you for some assistance and feedback, as the Salary Negotiation Exercise we did was my first and least successful one. So, while I thought Negotiations was one of the most relevant and exciting classes I took and I feel I learned a great deal in your class, I am somewhat unsure about my approach in this particular process. First, since I just graduated and am not employed for over four months now I don't feel I have a whole lot of leverage in the process. Second, and this makes things a little more tricky, is that the job opportunity is in London and the negotiation is via phone/e-mail. However, instead of being hired from the NY office and transferred overseas on assignment to work with a client there, I am being recruited and hired by the local London office. I would be on the UK payroll and paid in GBP. Three months ago, I was presented with a verbal offer for a position and salary by this firm for an assignment in NY but due to circumstances at the time it did not work out. We've continued to communicate since that time until the London opportunity has recently become available. Last week, I spoke on the phone with the person in London who yesterday presented me with my initial offer. During that conversation I told him about the verbal salary offer I received in NY in January and that I would anticipate a FX conversion of that amount based on current rates. He countered that salaries in the UK are 20-25% less than in NY but "[I] don't have a problem with that amount." At least that is what I thought he said. When I received the initial offer letter, the NY offer was reduced by 16% and then converted to GBP. Airfare to London is included, but no sign-on bonus was offered nor a guaranteed minimum year-end bonus, and relocation costs for shipment of personal goods are in question. A one-month living arrangement is included until I find my own place, as is a one-month salary advance, which isn't anything extra for the company to provide since it is my money. Per my research, which was difficult to undertake, it appears that London has a 35% higher cost of living than Hoboken, NJ and is about equal to NYC. I was there twice last year and feel comfortable with this figure, within about 5%. The individual I spoke with in London claims London is cheaper than NYC. If I could find a reliable source to justify my claim, that would be very helpful (I used two web sites, ExpatAccess.com and homefair.com). With this information at hand, I have calculated the adjusted salary to live in London in order to have "equal" buying power as I would have here, developed three alternative scenarios to present for consideration, and a

detailed account of my main interests in this process and concerns around the initial offer. The first scenario I developed keeps the initial low salary offer as is, requests a sign-on bonus of 20% OR 10% and a second month living arrangement, guaranteed minimum bonus of about 12%, all relocation expenses covered, and a month and a half pay advance. The second scenario asks for a 55% increase in salary, which is justified by the FX conversion from my NY offer, 35% higher cost of living index that I calculated, and also accounts for differences in vacation time and holidays. That's it. Nothing else. The third scenario asks for a 27% increase in salary, which is about equal to the FX conversion and presumes London = NYC = Hoboken. In addition, all relocation expenses are to be covered and an additional half-month's salary is to be advanced. The letter I am working on provides the estimated relocation costs that they requested, the 3 scenarios that I described, and my back-up information and methodologies in deriving the COLA index, concerns around living for the first two month's based on the low initial offer w/o any other remuneration, as well as potential for a low yearend bonus and raise due to only working about 7 months during the first year. I tried to present everything from the perspective that "my main interests in accepting an overseas offer are... and my main concerns with the initial offer are..." "The analysis in section 3 underlies these concerns." Given my lack of leverage and the circumstances I presented to you, would you advise the approach I described or some other means? Do I have a chance at any of the alternatives I developed and what is my best shot? Of course, my BATNA is to keep job hunting with ZERO income. So, in that sense anything, even the low initial offer, is better than that! But, I don't want to lose money on the arrangement and I am sifting for something, anything extra I can possibly get.

Three days later on a Saturday... Thank you for following up with me. [Prof. Levin had sent some advice, although too late to have much impact on the outcomes. DL] I sent my letter out via e-mail on Thursday night hoping I might get a reply on Friday but I didn't expect it. I imagine a reply might be forthcoming on Monday. I attached the letter I sent.

The hardest part was framing the letter so it didn't sound as if I was demanding and expecting what I was requesting. My main interests are to be able to cover all my relocation costs that I would not have if I worked in NY and being able to handle the higher housing/living costs in London to enjoy the city. London is the 3rd most expensive city in the world whereas NY is ranked 19th. Being offered 95k in NY and then 55k in London is equal to only 60k in NY. That's a huge difference and would have a huge impact. I think salaries on the whole may be lower in London, and this offer may be in line with recent MBA grads, but it is really a case-by-case situation, isn't it? I'm sure this firm has individuals on payroll that are making more and less than they offered but there isn't any way of knowing exactly who and based on what criteria. I thought about using my hourly rate and showing how low it is compared to the rate they probably charge the client for my services. Their interest is making a profit on the deal, I think. By virtue of hiring me, or anyone, they make more money, because they can put an additional staff person on a client site and that's what generates revenue for a consulting company. The longer a consultant stays with a client, the better job the consultant does in terms of prolonging an engagement and generating additional projects and business the more money the consulting firm receives. Based on my assumptions, the firm's profit margin on my services is around 70%. I don't know what the standard is for an employee or the low/high end of the range is, though. I created a spreadsheet that calculates the net present value (NPV) of each offer. The only problem is knowing what is a reasonable NPV that is acceptable to the company. What is its threshold? Whereas the options I created are very similar in value to me (I have another spreadsheet that calculates this), the NPV ranges are much broader. I may try to create a linear programming model to derive the highest salary/package while keeping the company's NPV equal to its initial offer. That seems like a big undertaking, though. I think the letter came out ok, although there are a few items that could haunt me (using i.e. vs. e.g. when I referred to my concerns in section 2). Could be interpreted as those being the only ones I have. Also, it ended a little abruptly. I did, in fact, switch option #'s 1 and 3, thanks to the advice of my mother. Actually, she suggested only presenting two options so I chose to hold the third one back (the one that keeps the original salary but with other add-on up front incentives). In essence I set my bargaining zone between the two higher scenarios and left a large band between my lowest alternate package and the company's initial offer hoping to fall within that area as it could better suit both of us.

I found your "Tips for Negotiating a Job Offer" document. Thanks for reminding me. I will keep you posted on the events as they unfold. This is my first REAL negotiation and given the circumstances (not being employed, the current job environment, and an overseas opportunity), it makes it a little gut wrenching.

Another week later... Last time I spoke to you I had submitted my counteroffers for consideration. Since then, I received an e-mail reply from the company saying that their original offer stood as was and wanted to know if I was still interested in joining them based on that initial offer. They did not budge on the salary offer so I thought about my alternate plan, which I held onto and included add-ons. I thought the key word in their reply was "initial" offer. After I received this e-mail follow-up correspondence, I contacted London on the phone and spoke to Bill. Since I thought it might be counterproductive to negotiate over the salary amount, I focused on add-on benefits such as a signing bonus, relocation costs, extended paid living accommodation, eligible for full-year performance-based bonus, contract renegotiation at year-end, and a greater salary advance. I was mainly concerned about these anyway. This time they were willing to offer all of these items to me. A friend of mine who lives in London told me about an "In London Expense" that employees receive in addition to their salary to help out with the cost of living. This is when he agreed to the sign-on bonus. Previously, he said they don't pay such bonuses to new hires. At the end of our conversation, I suggested that I summarize these terms in a letter. This way, I could word the terms as I would prefer them and they could review my understanding of the offer. I added one item that I meant to discuss (agent/broker fee and security deposit to be paid) but neglected to, hoping they would consider including it in the offer. They did not. By the way, I did some research on line and found that their salary offer was quite competitive and consistent with what recent MBA hires are paid in London (whether they have as much experience or not). I subsequently received an updated offer letter via e-mail and it included all the monetary items that we openly agreed to on the phone and that I included in my letter. However, it did not include the bullets relating to eligibility for a full-year performance-based bonus, raise, and contract renegotiation at year-end. I thought about the importance of these at this point in time and the inherent risk I could create by pushing for these to be included, especially since my BATNA is so low. In doing so, I've decided to forego insisting these items be included in the offer letter and accept the offer as it stands. It's not the perfect offer I was hoping for but under the

current market conditions of today here in NY, it represents a great opportunity that I would not want to let get away for a few extra dollars/pounds. The Frank Lorenzo incident with Eastern Airlines came to mind quite vividly! In the end, I don't think I could have even negotiated the amount I did if it wasn't for the experience I gained from you and your class. That exercise we did was a great learning experience, as was this real-life one. I know with continued practice I will improve. Thank you for your assistance and input in this important process.

Postscript: One year later... Thought you might be interested in this, as you may recall about one year ago I wrote to you about a job offer I had with a consulting company in London and how I thought the offer was too low given the higher standard of living there than in New York (and also since I had received an offer from the NY office that was 20% greater in terms of salary). I wavered back and forth about accepting the offer given the terms and the fact I never heard of the company before this time. Well, I could never have imagined what ensued after we agreed to terms and accepted the offer. My BATNA was to hope the NY office would have an assignment for me soon or keep looking for a job. Here's what happened: Although the company did not budge on its salary amount, the representative did provide me with relocation costs, a round trip ticket between New York and London, a signing bonus, 6 week salary advance, and 6 week accommodation until I could find a flat of my own. However, that last benefit never came to because of what happened shortly after signing my contract. As I was preparing to pack and make arrangements for my personal effects to be shipped to London, I received a call from the representative saying that one of the managers would be in NY and he would like me to meet with him about a possible assignment in Tokyo. We met and he ascertained my interest in going there to work on a project, which I was open to. I heard back from the company about one week later saying that the client had agreed to take me, and as such I headed to London for one week and then was on my way out to Tokyo for six months. While I was working on the project in Tokyo the client took me to Hong Kong in mid-July to scope out another project that was in the pipeline. After coming back from Hong Kong I headed to London for a week of training and then returned to Tokyo. Upon returning at the beginning of August, I was told that I would be moving to Hong Kong to work more on this other project than the one I was currently doing in Tokyo.

However, I didn't get to Hong Kong until the beginning of October. I was only scheduled to be there until November 30. My two month stint in Hong Kong turned into almost seven months, as I got my contract extended after I gave a presentation on what the project structure was lacking and how it could be better managed. I was doing this as something for the client to consider after I left, but the participants at the meeting voted on giving me the role, to which I agreed to take on, and successfully finished the project at the end of March. While I was in Tokyo and Hong Kong, I visited Kyoto, Bangkok, Phuket, Macau, Bali, Shenzhen, Manila, and Boracay and made many friends in the process of working in both locations. I am presently back in London, but maybe only for a short time. I just met with the same client here and they have a need for a person to be in Asia for another project that is happening. Since I have contacts there, they may consider taking me back and assigning me in Hong Kong again. This time, I may have the opportunity to also do some work in Singapore and Sydney. In addition to being employed in London and working abroad in Asia, which I could not have anticipated, I also received an ex-pat package ever since last June. While in Tokyo, I was on a $110 per diem with free housing and in HK, the per diem was $67 also with free housing. In Hong Kong, I lived at Hong Kong Parkviewan amazing place. I met a Japanese girl in Hong Kong when I first got there and we've been dating since. I'm not sure which negotiation skills I used in particular, but I do know that your class did prepare me to have a certain mindset that can be applied to many different scenarios, especially when focusing on interests vs. positions. I haven't had to prepare for any formal negotiations since, but I'm sure at some point I will. The preparation of the Planning Document was pivotal as was knowing my BATNA. Perhaps my negotiating during the offer and acceptance period had some impact on the perceptions of the managementprompting them to offer the Asia assignments to me. Who knows, but in the end things have worked out better than I could have ever imagined and to think that I almost did not accept the offer because of several thousand dollars. I would probably still be in NY and living in Hoboken with only my dreams of doing what I am doing nowactually living them. Turned out a little better than my BATNA.