When I first became a commercial lender, one of my jobs was to negotiate loan documents. Thinking back, what were they thinking? I had no idea what I was doing. Attorneys only advise, I quickly learned, they don’t make decisions for you. Over the years, I finally received some training, plus had to negotiate many salaries as well as documents. Here’s what I learned:
1. You haven’t won if someone else loses. Winning at all costs is a fool’s game. When clients would beat us down too much, we quickly learned that they were either no longer profitable or fell in the life’s too short category. Ultimately, they would still end up leaving or we would fire them as clients. The same was true for employees that pushed too hard for a raise or threatened to quit. Once they starting getting paid way over market, their goals would increase significantly and the likelihood of failure increased. So ultimately, they often ended up leaving. Every negotiation should begin with the premise that if it’s not a win- win, it’s a failure.
2. Put all your issues on the table at once. One of my frequent rookie mistakes was to get back to the customer right away with my answer. Of course, they always had several other comments and I would cave way too often. The same is true for an employee. They may come in asking for a raise, but you need to find out what else they want. It might be more training, more projects, a management role. If you give on the raise and then find out they want all this other stuff too, you’ve already lost. So make sure you vet all the issues at once. Don’t respond until everything is on the table.
3. Prioritize. Try to get a sense up front of what you’re willing to give on. Digging you heels in and saying no to everything is not negotiating. It’s being a jerk. So determine what your “must haves” are before you enter the negotiating cycle. The counter party quickly senses what you can’t or won’t concede and adjusts his or her strategy accordingly. It makes the whole process go much smoother.
4. Don’t let emotions get in your way. It’s easy to get riled up during a negotiation. In fact, that's often a strategy of the other party. The more you let emotions drive decisions, the more often you‘ll make bad ones. This is especially true when your employee is at the other end of the negotiations. It’s easy to take it a little personally if they threaten to quit or demand a raise. You really have to stay rational and determine if this person is worth the increase or you’re caving because it will make your life easier. It won’t. Treat employee negotiations the way you would with a customer or third party. The decisions will then be based on sound rationale, not emotion.
Negotiations aren’t often the most enjoyable tasks you do on your job, but they can be the most rewarding. I bonded with both clients and employees over some of the toughest negotiations because we followed these 4 rules.