What is Negotiation?
Negotiation is the communication process where two or more parties come to an agreement for a certain outcome. When you think of negotiation, you may think of a sales executive and her client sitting in a meeting to discuss the final terms and price of a purchase agreement. However, negotiation is more common than that. In fact, you are negotiating all the time in your daily life. For example, debating with your partner who will cook dinner tonight is negotiating. Haggling with the car salesman for the used car is also negotiating.
Having strong negotiation skills provides many advantages. You’re more likely to get what you want in life. Additionally, being able to reach win-win agreements means you will be able to satisfy your needs without alienating other parties. At work, this can help you stand out as high-performing by accelerating your sales or being disposable when it comes to managing client relationships. More importantly, being able to get what you want can mean a better salary and work benefits, which leads to higher satisfaction at work.
The Elements of a Negotiation
There are seven key elements to a negotiation. They include:
Interest – negotiations can exist if there is desire and or interest of a certain outcome by both parties.
Legitimacy –the belief that the agreement should and will be legitimate and fair is a key element. Absent of this, negotiations will fall apart as there is no trust. As a result, each party may reject the other.
Relationships – between the parties, some type of relationship must already exist or come into existence after the negotiation. For example, if you are a potential hire negotiating the terms and salary of your position, your relationship will exist after you finalize the agreement.
Options – options are the choices that either party may use to satisfy their interests at the negotiation table. There may be contingencies, trades, and or additional conditions.
Best Alternative to a Negotiated Agreement (BATNA) – these refer to the alternatives that are outside of the negotiation. This is slightly different than options as they are choices that a party makes which leads to leaving the negotiation table.
Commitment – the terms and or promise that you make to the other party is the commitment. In the salary negotiation example, the commitment of the employer to the employee is the agreed-upon salary.
Communication – the primary element of the negotiation is communication. Within communication, there is a number of sub-elements that you should consider as you prepare for a negotiation. For example, sub-elements like the communication channel, your tone, and positioning, and how you start the discussion can have a real effect on the outcome.
How to prepare for a salary negotiation
One of the most important negotiations that you conduct is for your salary or a raise. In certain situations, where you land with your salary negotiation can really set the tone of how satisfied you will be with your role. Below are the key steps to ensure that you do not short-change yourself when discussing your salary with a potential employer, or a raise with your current manager.
Do your research
The first step to any salary negotiation is to do your research. Use market reports and other online resources to understand the salary range for your role. When possible, speak with existing and or past employees to understand where the salary ranges in your organization are. While market surveys provide great median and average salary data, not all organizations are the same. It is less likely that a small to mid-size software company is offering software developer salaries at the range of Google or Facebook. Understanding the range will prevent you from overshooting and providing a sticker-price shock.
Consider all the elements of compensation
In addition to salary, also take into consideration other factors, such as benefits and perks. Things like flexible work schedules and or generous vacations can be serious game changes for your job satisfaction. These elements can also become the options that you can negotiate if the salary falls short of your expectations.
Figure out your personal options and BATNA
Understanding your personal options and BATNA is important in determining how you will negotiate. With options, this will help you decide where you have the opportunity to make trade-offs. For example, would you take a lower salary if benefits, such as education and or an extra week of vacation are provided?
Understanding your BATNA will determine how much the negotiation is worth to you. For example, in a salary negotiation, if you do not receive the salary you want, do you have another offer in hand? Or are you heading back to school if this role falls through? Having a line of sight into what your alternatives are will help you decide what your boundaries are in your negotiation.
Think about the other party (or parties) in the negotiation
Once you understand what you want to get out of the negotiation, take time to brainstorm what the other party is looking for. Negotiations where there is only one winner rarely end well. More importantly, one of the vital elements of a negotiation is the relationship. If you are too aggressive with the salary negotiation with a new employer, this may sour the rest of the working relationship.
Provide the first number
Be the first to provide the salary you want. Doing so provides the anchor for the rest of the salary conversation. If you have done your research and are picking the salary within reason of your experience, the number should be close to what recruiters are expecting.
Be specific with your number
When asked for your expected salary, give a specific number instead of a range. The more specific the number is, the more it signals to managers that you’ve performed your research. Therefore, instead of suggesting $70,000 – $80,000, narrow down your salary to the exact dollar you want, like $78,500.
Position yourself with value
In every negotiation, you must be prepared to counter what offers may come. For salary negotiations, it is key to position all your counterpoints through the lens of the value that you uniquely bring to the organization.
It may seem intuitive to leverage external factors, like what the market is paying or saying that you need the salary because of student loans. The truth is these factors are universally applicable to all candidates. If you recognize that the company may be paying below-market rates, then be sure to demonstrate that you can perform X skill, which on the market is worth $X.
Practice
Not all negotiations are built the same. And while it is likely that you are negotiating in your daily life, some moments are more important than others. With that, take the time to practice before having such conversations with your employer. This will strengthen your confidence in being able to approach the discussion. Furthermore, continue to refine your negotiation toolkit by tapping into resources. There are many great books on negotiation, such as Chris Voss’ Never Split the Difference.
Be prepared to walk away from an unfair Negotiation
There are many reasons that can lead to a negotiation going south. The expectations of both parties may be too far apart. Or one party may present themselves as highly inflexible. Either way, always be prepared to walk away.
Key takeaways
- Negotiation is the communication process where two or more parties come to an agreement or a commitment.
- When preparing your reasons for a salary raise, remember to position the key points around the unique value that you bring to the organization.
- Not all negotiations lead to an agreement. Therefore, understand your alternatives and always be prepared to walk away from the deal.
Related Readings
Professional Leadership Institute (PLI) is an educational website providing professionals from all types of businesses with practical education in entrepreneurial leadership. To keep evolving your leadership toolkit, additional PLI resources below will be useful:
