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Why Offer Negotiations Require Professional Guidance

Published by Ralph on

This is how a job hunt typically unfolds. You’ve been interviewing for two months. You get excited by an opportunity, then suffer rejection. Rinse and repeat.

You try not to take it personally, but it’s hard not to. You start to doubt yourself and your choices. Finally, after three months, you get an offer. If you’re lucky, your confidence boost leads to a second offer.

Now you’re desperate to be done with the process, but your friends say you should negotiate. You know they’re right, so you buck up your courage and rewrite an email 10 times asking for more money. You believe you deserve it and that the company can afford it, but a small voice inside you says it’s an amazing offer and you’re lucky to have it. You send the email.

After an anxious wait, the company responds that they can do half of what you ask. You happily accept the offer.

Why that approach isn’t optimal

In that scenario, you believe you negotiated a solid deal. But most likely the company set their initial offer low and actually hired you at just the salary they wanted. So here’s a key point: a negotiation only begins after one side says no.

Negotiating a job you want is a complex emotional process. You’ve been working to convince the company (and likely telling yourself) that this is your dream job, but your power comes from your willingness to walk away from the table. It’s a delicate balance.

Companies face the same conflict of interest. Many make use of recruiters so that hiring managers don’t have to deal with the internal struggle between hiring the candidate they want and saving the company money.

A better approach

A professional negotiation coach like Ralph helps you view your negotiation more objectively. You don’t have to handle your anxiety alone. The advisor helps you manage irrational fears — or imposter syndrome or arrogance. In all three situations, an expert can have a huge impact on the results of the negotiation.

Suppose you’re among the 1% of individuals who are born negotiators. You excel at hiding your interests, and you feel confident because you have read negotiation advice in books and online. Beyond managing your own emotions, you need a professional because (1) the compensation data you have is inadequate (2) negotiating is a skill that people make careers out of and (3) the norms of offer negotiations will negatively impact you.

Compensation Data

You are the candidate. Let’s say you have one offer. To state the obvious, it’s incredibly difficult to know your market value. Public resources for accessing compensation data are poor; knowing compensation data based on the background of individuals is non-existent.

Also, compensation is not just one number. There are many pieces: equity, performance bonuses, retention bonuses, benefits, and so on. Every company has a unique compensation structure, and every piece has different considerations and questions that need to be asked.Companies, on the other hand, participate in surveys in which they provide compensation data to third parties, who aggregate it and sell it back. One example of these businesses, that Ralph also uses to inform candidates, is OptionImpact.

Negotiating is a skill

In today’s competitive labor market, many candidates receive multiple offers and have solid leverage in negotiations. But companies are negotiating experts and without experience to match them, job-hunters fall prey to their tactics. We’re going to share a couple of tactics but there are many more.

Let’s say you have two offers. Company A’s policy is that they will not increase their offer until you show what Company B is offering. Company B has the same policy, so your best offer is simply the higher of the two.

Company A: “We’re already paying higher than Company B, so we’re not changing”

Company B: “Fine we’ll match what Company A is paying”

In this scenario candidates typically feel powerless to do anything. We call this the “Blocked Syndrome.” But ultimately you have two choices, right? You should be able to force the two options to compete. But that won’t work because companies implement another negotiation tactic, arbitrary offer deadlines.

Let’s say Company A and Company B are now equal. With time you can create competition between the two, but companies apply artificial deadlines to force you into a decision. After months on a job search, you can cave with the smallest bit of time pressure.

A final tactic used by companies: Forcing you to deal exclusively with a recruiter. With a recruiter between you and the actual decision makers, all the recruiter needs to say is “I’m here to help you but I can’t, it’s out of my control.”

Negotiations with a recruiter are typically “positional,” meaning that you both start at fixed points and try to reach a compromise. Negotiations with a hiring manager can be “integrative,” meaning you bring underlying interests to the table and try for a win-win agreement. Integrative negotiations are only possible with hiring managers because only they have interests beyond the lowest price. To learn about the difference between positional and integrative bargaining, see here.

We hope that understanding these tactics helps, but be aware that negotiating is a skill that can only be developed with experience and people make entire careers out of. It’s the equivalent of asking whose cake would you rather eat, one baked by someone who has spent 100 hours reading cookbooks and is trying it for the first time or by someone who has spent 10 hours actually baking cakes?

Norms of Offer Negotiations

When we advise candidates, we frequently hear these statements:

  • “I feel guilty asking for more”
  • “I feel guilty negotiating with a company I’m on the fence about”
  • “I feel guilty not sharing information with them.”

Companies say no such things. It’s more likely to be:

  • “It’s out of my discretion”
  • “We need a decision by today”
  • “I already told you there is nothing we can do.”

There is a fundamental disconnect in our culture between how candidates and companies view work. As a candidate, compensation is not my primary optimization, I’m supposed to choose my job based off of the mission, learning, etc. But on the other side of the negotiating table, the company is a business, that is hiring you to make profit.

I had a client not take an additional $5K signing bonus that had been originally promised because the CEO of the startup said “you can have the signing bonus, but know that it makes me feel uncomfortable giving it to you.” This startup had raised about $50 million; my client’s bonus was about 0.0001 of that. An employee shouldn’t feel guilty accepting money that is contingent on performing a job. Capitalism today allows you to have very little conscience.

This pervasive culture is what makes negotiating an offer so hard. You lose in an offer negotiation, but companies make you feel like you’ve won. The client who didn’t take the $5K signing bonus felt good about the decision, but a couple months into his job he said he should have taken it. The most common way candidates lose in a negotiation is when they’ve accepted an offer they are happy with, but they are unaware of the value being left on the negotiating table. An unknown that cannot be addressed without outside guidance.

Take the next step:

If you want to make sure you’re prepared for your next offer negotiation and you don’t leave value on the table, reach out to us today.

Negotiating later? Let us know when we should reach out here.

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