You are on page 1of 15

Distributive

VS Integrative Negotiation
Zero-sum
Simply dividing
the pie
Competitive
Claiming value

Distributive Negotiation

Win-win
Interest based
Cooperative
Creating value

Integrative Negotiation
BATNA: Your Source of Power
Best Alternative To a Negotiated Agreement
Your greatest source of power
Do everything you can to improve BATNA before you negotiate
Do not fall in love with one alternative
Counterparts perceptions of your BATNA are also very
important

Reservation Price
Your bottom line, the point at which you are indifferent to
whether you achieve a negotiated agreement or walk away
Reservation price = BATNA +/- transaction costs to enact
BATNA
The Impact of Anchors
People make estimates by starting from an initial anchor value and
adjusting from there to yield a final answer
In negotiations, final agreements are more strongly influenced by initial
offers than by subsequent concessionary behavior
BUT If you make the first offer, you run the risk of undercutting the
bargaining zone, potentially leaving yourself with little room to make
concessions
To Make the First Offer or Not?
Information about Other's RP/BATNA
Yes No
Make aggressive
Maybe
Care about Yes first offer
relationship Make aggressive Consider very
No first offer aggressive offer

In general, do your research and make an aggressive first offer


Goals predict first offers which predict outcomes
Make your first offer as extreme as you can possibly justify or explain
based on your BATNA and goals
Consider timing and other sides alternatives
Talk about your offer as long as possible
The more complex the negotiation, the greater the anchoring advantage
What about the Second Offer?

If the other party provides an unacceptable anchor, the


negotiator must re-anchor the process even if it means
threatening to walk away from the table rather than
acknowledge an unacceptable starting point for the
negotiation
From Neale and Bazerman (1991)
Multiple Equivalent Simultaneous Offers
Pitfall of multiple issue negotiation is to talk one issue at a
time
Use packages
MESO is a great tool to help you negotiate
Anchor and re-anchor the negotiation
Gather information from the other side about relative priorities
Help unskilled negotiators
Be aggressive and persistent while signaling cooperation
Test what the other side is telling you
Make concessions that are cheap for you
Highlight your own value added
Control the process of the negotiation
How to Prepare for Negotiating your Employment
Package
Know about the company
What is its current strategy, expansion, merger, etc. and what does
that strategy imply for your career (use the Web, library, career
services)
Know about the company s current labor market situation
How many are they planning to hire
What has their yield been in prior years
What is the strength of their internal labor market for jobs
How tight is the managerial labor market in their industry
Market
What are other grads in your area being offered?
What is the typical deal for people in your position in this industry?
What skills can you contribute?
Learn about job negotiations from others
Talk to people who have been through negotiations like yours. Ask
them what issues came up, about initial offers, tactics that they used
and the prospective employer seemed to be using.
Talk to people working similar jobs to the one you are applying for.
Ask them whats important and whats worth bargaining over.
Imperatives
Never negotiate until you have a written offer
As a result wait for them to make the first offer
Do not negotiate right when you get the offer-give yourself time to
consider how the offer does or does not meet your needs
Do not negotiate until you are prepared to say yes if they meet your
target price
You are more powerful before you have said yes
Never say yes at the moment you receive the offer
Give yourself time to think about it without the pressure of the offer setting.
This looks great. I need to review everything before we make this official. Ill
call you tomorrow (in an hour, at 3:00).
Emphasize how each of the elements of your counteroffer display your
commitment to the firm
Do not negotiate over email
Negotiating Your Employment Package
Prepare a planning document and develop a scoring system:
Carefully think about your priorities (Financial, stability, location,
independence, mental stimulation, personal growth, low stress)
Identify the least acceptable deal to cover your interests!
Identify missing issues
Identify issues that are compatible
Identify trade-off possibilities
Review your sources of power to build confidence.
Remind yourself of the reasons you deserve your target offer!
Negotiating Your Employment Package
Be creative in considering all the forms of compensation that you could get (remember that some of these
forms may be of high value to you but low cost to them!)
Base Salary
Signing Bonus
Annual bonus (individual and group)
Relocation expenses
Stock Options
Tuition reimbursement
Housing assistance
Low interest loans, forgivable loans, etc.
Dont forget non-compensation factors that you can negotiate
Paid Leave
Vacation, Sick and Personal Days
Training Time
Holidays and Special Travel Considerations
Protection
Insurances (life, disability, health, other)
Care Plans (child, elder)
Wellness Programs
Job characteristics (the work, the position, the group you will join), location, promotion schedule
Why base salary today is so important

$90,000
$85,000
$82,700
$80,000
$75,000
$70,000
$65,000
$60,000 $61,600
$55,000
$50,000 $50,000
$45,000
$40,000 $40,000
$35,000

1985 1989
What to do when employer/recruiter
What to do if they ask for your previous salary?
If an extremely high anchor okay to reveal
If below your target price politely explain that your old salary is
irrelevant because you have a new skill set and better credentials
Ask the employer or recruiter to make you their offer
Be prepared to tell the employer what salary you are looking for to change
jobs (Set the anchor with your target priceaggressive but realistic). Dont
give ranges and dont signal willingness to concede
You can avoid letting their offer anchor the negotiation through
preparationfocus on your target price!

Remember that you should avoid giving this information to a prospective employer.
They may ask what salary range you are expecting. Most people ask for too little. Its
better to avoid answering the question.

See http://www.nmt.edu/~shipman/org/noel.html for useful suggestions on how to


handle this sticky situation, like saying, I am much more interested in doing (type of
work) here at (name of company) than I am in the size of the initial offer.
What to do when employer/recruiter
What to do if the employer wants to negotiate one issue at a time?
Suggest that there are a number of elements to your decision and you would like
to know what they are offering on all
Counter offer with a package deal

What to do if your BATNA is poor?


Invest time in generating other alternatives
Use objective standards in lieu of a BATNA
Examples of objective standards
What other graduates of your school are being offered
What other companies in the industry are offering
What other companies in the region are offering

What to do if an employer says something is not negotiable


Never ask Is this issue negotiable? Instead, say, I have some questions about the moving
allowance, can we talk about this?
If insist something is non-negotiable, find out why
Ask if something can be traded for the non-negotiable item

What to do if an employer says he/she doesn t have the authority to give


something
Ask who does, can this person help you get to the person with authority
What to do when employer/recruiter
Employer says giving you the salary, bonus you are asking will
disrupt the internal wage structure
Focus on your unique qualities, especially the value of your
education
Ask why hiring from outside then, instead of promoting from within
for this job

Employer says cannot justify wage package now


Negotiate a review in 6 months instead of a year
Negotiate a bonus contingent on your performance
Propose to trade for another issue
Tuition reimbursement, mortgage loans
Final thoughts on Employment Negotiations
Ask for what you want! (If you dont ask, you cant get it)
Help them solve your problem
Be prepared for different responses
Get things in writing
Nothing is settled until everything is settled
Know when to stop negotiating and accept the offer
Keep the relationship in mind
Be comfortable with your negotiation style. You need to
appear committed and sincere

You might also like