Chapter 11
Elephant: You’re Cagey About Negotiation
If you’re like a lot of people, the title of this chapter sent some shivers up your spine. Negotiation. People whisper the word as if they’re afraid to speak it aloud. Candidates and hiring managers alike shy away from it.
But negotiation is not a dirty word—it’s a normal, healthy part of any hiring process. As such, the negotiation process must take place out in the open between the hiring manager and the candidate. It’s not something to be pawned off on a recruiter or ignored altogether. Open and frank negotiation during the hiring process—and as needed once the new hire is in place—builds trust between the employee and the organization.
But there’s a right way and a wrong way to approach negotiation. In the wrong way, the hiring manager will post a job with absolutely no clues as to the salary range. Let’s say the company is hiring a CEO, and the description only says something about the salary being “executive level.”
The problem is that the meaning of “executive level” can vary wildly across industries. Perhaps one executive sees the posting and thinks the position looks promising. She is currently making $600K and believes this job will have similar compensation. When she finally talks salary—probably in the third or fourth interview—she is shocked to learn that the top compensation is $250K. The discussion is terminated; both parties have wasted each other’s time.
The fact is that candidates are becoming savvier. Job postings don’t rank as high in Google if they don’t include a salary range. Candidates who want to know a range for their industry or a specific company just need to visit Glassdoor. People leaders and hiring managers should expect that any self-respecting candidate has done his homework and knows the approximate salary range for the job.
Yet we’re still squeamish about the concept of negotiation. Often we view it as a zero-sum game. The hiring manager believes she has to keep the salary card close to the vest to be revealed only at the last moment. The candidate’s needs are not front and center. Rather, the hiring manager is thinking of everything she hopes to “get” out of the new hire for the desired price and hoping like heck the new hire will go along with it. Four outcomes are possible in this scenario:
1. The candidate agrees happily and is only slightly annoyed he didn’t know the number earlier in the process.
2. The candidate agrees begrudgingly. It’s lower than he hoped.
3. The candidate wishes to negotiate. From there, both parties play a game of “cat and mouse,” where only one side can come out a winner.
4. The candidate walks away, sorry to have wasted so much of his time.
The first three scenarios result in the candidate being hired, but none build good faith. Imagine the candidate’s thinking throughout this process. By not discussing salary openly from the beginning, the hiring manager has turned it into an elephant. Whether or not she feels it, the new hire she so desperately wants to win over does. He’s been thinking, When are we going to talk money? since the first interview, but he hasn’t brought it up out of politeness. By not being clear about the salary range, the hiring manager has taken advantage of the candidate’s good manners.
In this chapter, you’ll learn how to stop making negotiations so awkward. We’ll also see how it can be a win-win for you and your new hire. It ought to be. In fact, I’ll go so far to say that anything less than a “win-win” situation is actually a loss—and probably not a road you want to go down.
How Negotiation Can Be a Win-Win
Instead of viewing negotiation as a zero-sum game, try thinking of it as a collaborative process. Both parties should assume good intent. The candidate understands the job that’s being asked of him and how he could use his talents to best serve the company, while the hiring manager understands the candidate’s needs. Both know the standard market rates for the position because everyone has done their homework. Instead of seeing who comes out “on top,” they collaborate and work together to craft a deal. Both are clear about their needs and wants throughout the process. If hiring manager and candidate can arrive at a salary that suits both their needs, fantastic. If not, the candidate departs with no hard feelings.
A 2019 survey conducted by staffing firm Robert Half found that only 68 percent of men and 45 percent of women negotiated for higher salaries when receiving a job offer. What does this tell us? First, many job seekers are not taking advantage of the candidates’ market. Second, women still negotiate less than men. Many studies have shown that women are more likely to advocate for others than to speak out on behalf of themselves. Third, it’s worth it for candidates to push past their discomfort and negotiate for their full worth. Bonuses and raises are calculated from base salary, so a candidate who does not negotiate for a higher base salary is leaving money on the table more than once.
On the other side of the table, you should expect a unicorn to negotiate. Likewise, as a people leader, you need to talk dollars and cents as early in the process as possible. It’s the only way to have any kind of substantive discussion with a unicorn.
Don’t make the mistake of the CEO above, who was unpleasantly surprised to learn that her “dream job” came with a 350-percent pay cut. Is the job commission-based with no base salary? You absolutely need to ask as soon as possible. Recall my experience with my employee Rebecca in Chapter 8. I could have saved both of us a lot of unpleasantness if we’d had more frank conversations about pay structure from the very beginning.
This is something I feel so passionately about that I’d shout it from the rooftops if I could: Don’t have a third party conduct a salary negotiation. In my experience, a recruiter discussing salary immediately puts the candidate on edge. A better practice is to bring the hiring manager into the discussion at this point or even the CEO if the company is small.
For example, recently I was placing a candidate, Morgan, and we finally got around to talking money. I could tell she was slightly uneasy about bringing it up. “What kind of package do you think they’ll offer me?” Morgan asked.
“How about I get the CEO in on this conversation?” I suggested. I could immediately sense her relief over the phone.
If you’re a CEO or hiring manager and you’re not comfortable having the money talk in the candidate stage, how will you discuss pay raises and bonuses when it’s time for the performance review? Having open, frank discussions from the very beginning builds trust. As a recruiter, I wasn’t going to be the one paying Morgan. Even if you have the best damn recruiter in the world placing a candidate, you still don’t want her talking salary. A recruiter’s role is primarily transactional. At the end of the day, she gets her placement check for finding the talent—and then she’s gone. You don’t want someone with such a short-term stake in the hiring process conducting salary discussions with your candidate, who you hope will be there for the long run.
Don’t Leave Your Would-Be Unicorns Hanging
Remember—you’re aiming for a happy marriage between candidate and organization, so you want all your cards on the table from the very beginning. The fact is that great candidates have some very attractive options out there. Giants like Google, Netflix, and Facebook woo top talent with incredible stock options, flex time, onsite day care, etc. How are you going to compete with that? Do your would-be unicorns sense that company leadership is willing to go the extra mile for them?
If you’re crazy about a candidate, you have to show that, and it will not get through if you have a third party conducting salary negotiations. For critical hires, you have to get the key players involved. This is where not being a Facebook or a Google can actually be beneficial. Smaller companies wooing top talent can offer white-glove treatment—personalized attention and care from the very top. How can you make the candidate feel special? A $50K signing bonus? Freedom to work out of one of the overseas offices at will? Flex time? Working from home two days a week? If a candidate knows you’ve taken her specific situation into account and are tailoring your offer based on her needs and wants, she will feel special. And as a result, she is more likely to stick around for the long haul.
Recognize that if a unicorn is truly a star, she is likely to get competing offers. So what happens if your newly hired unicorn gets a seemingly unbeatable offer with another company within six months of joining your team? If she tells you about it because she is genuinely unsure which path to choose, what do you do?
There are lots of reasons people take jobs. Money is important, but it’s not everything. What is attractive about the other offer? What are your unicorn’s wants and needs for this stage of life? If you’ve shown her that you care about her well-being and want to support her—both in and outside the office—she may open up and share more details. Even if you can’t match the proposed salary, knowing your new hire’s true needs may enable you to counteroffer with a package more suitable to her current situation. I’ve seen plenty of people turn down higher salaries and awesome perks to stay with employers they feel truly have their backs. A giant may be able to offer a “bells and whistles” package that really wows. But relationships are more important. Not every company can create a space in which your unicorn feels truly known and appreciated—but yours can.
At the end of the day, it’s about respect. A unicorn who feels respected and valued from the beginning will be motivated to do her best work. Respect your key hires enough to have important money conversations with them from the get-go. Recognize that your unicorn is not dumb. (Or why would you want to hire her so badly?) She will sense if you’re pawning her off on someone else. When the two of you come to the negotiating table to see what you can do for each other, everybody wins. You really can have it all.
The Emotional Intelligence Factor
There is an emotional intelligence benefit when hiring managers leave the door open for candidates to discuss salary openly. Salary talks engage a candidate’s stress-management capabilities. Optimism falls under this category: A candidate who exerts some control over her salary is likely to feel more positive about the final number and her employer as a whole. Likewise, a candidate who negotiates her salary is engaging the self-expression component of EQ, particularly assertiveness. A candidate who will assert herself is an asset to an organization. Such an employee will speak up when needed, challenge outdated thinking, and articulate new paths forward.
If a candidate doesn’t want to talk salary until later in the process, it’s not an immediate issue. Depending on his background and motivations, he may not view it as appropriate. Or perhaps he is coming from the public sector, where exact salaries are searchable online and rarely up for negotiation.
Similarly, as a people leader, you shouldn’t fall into the trap of thinking that all your direct reports should be exactly like you. Say you’re incredibly ambitious and stay awake at night dreaming of ways to double, triple, or quadruple your salary. You should recognize that many candidates will not have this same point of view. That doesn’t mean they won’t work hard and be high performers—it just means they’re not as financially aspirational, and there’s absolutely nothing wrong with that. Don’t count out a potential unicorn just because she doesn’t share your financial goals.
The only way to truly evaluate how well you handle negotiation is by getting feedback from your employees. Until you know what it’s like on their end of the hiring dance, you won’t have a good read on how well the process is working. To get clear on this, do the following:
▶ Identify hires who joined your organization one month, one year, and two years ago.
▶ Ask them: What doubts did you experience during the offer stage?
▶ What would have made you accept faster?
If the negotiation process was awkward for your unicorns, ask them to tell you why. It may even be worth contacting a former candidate who signed with a competitor instead of you. Get a clear picture of the situation by looking at it from all angles. Your commitment to improving the negotiation process will pay off in the next round of hiring.