Negotiations 101
Negotiations can take many forms - from buying a new car to a job offer to a compromise in a personal relationship - but one thing holds true across all of them, if you try to “win” the negotiation you will probably wind up losing.
I remember my first job offer negotiation after college. I didn’t know anything about negotiations. I knew that I wanted a job and a salary that didn’t align to the company’s expectations for the job I was interviewing for. I didn’t know what to ask for to make up for the difference because I didn’t know what my options were. I didn’t know that I was inherently coming into it from a losing position. In my book, Earning What You Deserve: The Guide for Building Long-term Success Starting From Graduation Day (Amazon), we dig into evaluating what these possible options are as well as what questions you can be asking during the interview process to help set you up for that win-win situation.
Let’s talk a bit about receiving a job offer - you’ve interviewed and put your best foot forward for your potential future employer, and they really want you to work there so they make you an offer. Congrats!
Now, how do you maximize your negotiating power? There are four really important starter points to a job negotiation.
Remember that this is the start of your relationship with your manager and future employer. You can’t approach an offer like a win-lose situation, you have to try to achieve a win-win. Be willing to concede on something to get something else. Know what’s possible, but also know what would make you happiest if you had to choose one thing over another.
You’re a known unknown - you need to take advantage of this. There’s a lot of opportunity cost in walking away from a good candidate. By this point, you’ve demonstrated enough of your skills that your negotiating power will actually never be higher with this employer because of the unknown aspect here. You might be the single best employee that this manager has ever hired. You might change how this company does business. You might also be the worst decision they’ve ever made…but you have to lean into the positive here.
Don’t accept the first offer. Ever. Someone that’s making you a job offer is likely making a fair but conservative offer at first pass, so it’s likely not their best offer. The one exception to this is if you’ve already discussed high-level numbers and they either match or exceed what you told them would make you happy. Going back on this would make you seem untrustworthy, but otherwise you should always ask if there’s wiggle room on that offer.
It’s okay to test the waters with how much you can get in an offer, but be realistic. Going back to the second point, you can absolutely ask for way more than your previous job (how would they know what you made?) or you can ask for way more than your co-graduates are getting. You might be able to pull it off. What you shouldn’t do is ask for something entirely unrealistic for the job you’re going out for. First job out of college technical support (my first job) does not align with $100,000/year. If you ask for something completely off-base you discredit yourself and wipe some of that negotiating power away.
There’s much more to a job offer negotiation, but these four pieces will get you pretty far when considering a job offer. Each hold their own weight, but you have to remember that it’s the start of your relationship and being a ruthless negotiator with your future boss might or might not be the best move depending on your job.
Since there’s much more to negotiating than getting a job offer, there are two other main topics that I think are important in a “Negotiations 101” context:
Emotional “bank accounts”
Play your cards close to your chest (most of the time)
First, emotional bank accounts. If you think of your relationships with people as a give and take, it’s really easy to align it to a bank account where you’re constantly making deposits and withdrawals. Sometimes you have to make another deposit if you want to make another withdrawal. You can’t always be asking someone to compromise if you’re unwilling to compromise yourself. That would be like asking the bank to keep giving you money from an account that’s never received a deposit. Eventually, that person (or bank) will cut their losses and walk away. Similarly, if you’re always the one making compromises then maybe you should consider asking for something or walk away yourself.
As far as I’m concerned, this concept holds true to each kind of relationship - friendship, employee, romantic, partnership, etc. - and each person might have a different tolerance for the balances, but eventually something has to give when things are not balanced for long enough.
Lastly, with negotiations you have to play your cards close to your chest and be willing to walk away from a losing hand. I’ll align this point to a car purchase. It’s possible that you might see a price on the window and say “that’s okay by me” and write a check and call it a day. Depending on your situation, that might be ideal…but more than likely you’ll want to pay less than what’s posted. If you’re financing or leasing, you might have a different amount of wiggle room here, but even then you’re not likely to just pay the sticker price no questions asked.
If you come into a negotiation and tell the salesperson that you’ve budgeted $400/mo for this car, you’re putting all your cards on the table. If there was a person that bought the same model yesterday paid $325/mo, do you think they’d instantly offer you the lowest possible price to make that happen? In an ideal world, they would…but sadly that’s not how car buying works. They’d probably take 20 minutes to “find a way” to make $415/mo a reality for you so they can test your willingness to budge on that number. Based on what you told them, you’ve basically gotten what you asked for and they just sold the car for a couple thousand dollars more than they did yesterday. Even if you hold firm at that $400, they’ll take another 20 minutes and find a way to squeak just under that budgeted amount.
If you instead challenge them to meet a certain number (choose something slightly unrealistic) so they have to come back with something competitive but not quite possible, and it’s something that’s less than your budget so you have the wiggle room…you’re likely going to get a better outcome.
In a buying and selling scenario, a common negotiating tactic is to “ask the manager” - and they’re counting on you waiting around to shift the balance of the power to their side of the table. “I’ve already invested an hour here, I’m just ready to buy it already…if they come close I’m good to go.”
Remember: You’re the one with the money. You can always take it somewhere else.
If they’re unwilling to make the numbers work (or make a certain concession that’s important to you), you need to be willing to get up and walk away. In this sort of a negotiation, you’re not building a relationship - you’re conducting a win-lose transaction, and the ultimate loss for a salesperson is watching your money walk out the door after an hour of stringing you along. Ultimately, it can be a win-win if you get the car you want for a price you’re happy with…but remember that the salesperson is incentivized to get as much out of you as possible and paying for “delivery” on a vehicle that’s already on their lot is silly. Don’t let them convince you otherwise.
