Another Monday, another exasperated Human Resources Director.
"But we never negotiate salaries. Surely your candidates must know
that!"
When hiring a negotiator, HR professionals are shocked that the successful
candidate always wants to negotiate the offer. I've only encountered two
negotiators who did not come back with some sort of counter to my initial
discussion about salary and intangibles. I immediately moved on to other
candidates. If they won't negotiate for themselves, why should I expect them to
do a good job negotiating for me?
There are six challenges facing anyone hiring a negotiator. The fact that
they want to negotiate their salary is a result of these challenges. In order to
hire and retain the best, you need to understand the challenges, and modify your
hiring process to meet them.
Negotiators are rarely identified by their title or job description. They can
be sales people, contract administrators, business development or corporate
counsel. That said, if the job you are hiring them for requires negotiation, you
are hiring a negotiator, whatever the title.
Before working with Human Resources on your next negotiator position, have a
talk with them about the type of people likely to receive an offer, and what
will happen during the resulting negotiation. Better yet, bring them a copy of
this article and review it together.
Challenge #1: Negotiator Positions usually Omit the Word
"Negotiator"
It is rare to find the word "Negotiator" in a job title. Most jobs
involve negotiation of one sort or another, therefore most employers view
negotiation as an assumed skill and fail to mention it in the job title or brief
description. This causes problems in two dimensions: the recruiting process and
interpreting candidate skill profiles.
One example is the position of "Corporate Counsel" to a sales
organization. Most people reading the job description would never realize how
much negotiation is a part of the job. Corporate Counsel for another division
might have very little need of this talent. My favorite example from Public
Sector is the title "Supply Clerk," used to identify a mid-career
professional negotiating multi-million dollar intellectual property deals.
Solution - when specifying the profile to Human Resources or your recruiter,
use the word "negotiate" in the first line of the job description. By
all means, include it in the short job description, and detail the kind of
negotiation to be conducted in the long description.
Examples:
Sales Account Executive Builds effective, enduring customer relationships,
negotiating customer purchase agreements and following through on delivery…
Sales Support Manager Leads a team of professional negotiators, expert at
turning opportunities identified by sales teams into executed agreements…
Procurement Agent Responsible for a broad class of commodities, negotiating
long-term agreements with global suppliers…
When sending these job descriptions to the HR team, make sure you
specifically identify that these positions will involve negotiations. If you've
never met your recruiters before, now is the time to introduce yourself and
educate them about your business. If they know ahead of time that your
requisition will require extra effort, they will either (1) head for the hills,
or (2) plan to devote extra time and energy to the staffing process. Without
fail, I've found that the preparation pays off, and true staffing professionals
appreciate the engagement in the actual business need.
Challenge #2: Successful Negotiators are Hard to Identify
Many agreements specify that the terms, conditions, pricing and other
negotiable elements are confidential information. Beware a negotiator who is too
willing to share intimate details with you. They are probably violating their
current or former employer's policies, and you might expose your company to risk
by listening to them.
In this environment, then, how is a prospective employer to determine the
success of prospective negotiators? Simple, check their references - not from
the current employer, that will just be name, rank and serial number. Look for
names the candidate cites as past negotiation partners. Suppliers make for risky
references - they did business with your candidate in the past and hope for
future business. Customers are far less likely to sugar coat the truth. If you
are hiring for a type of position that only deals with suppliers, look for
internal customer references in past positions. In both cases, sell-side and
buy-side, look for peer references in similar, competing businesses.
When speaking to the reference, and you as the hiring manager are best
qualified to do this, listen for key phrases:
What the Reference Says |
What They Might Mean |
Very easy to work with. |
We took
them to the cleaners. |
Their team was tough but fair. |
I don't remember the
person, but the entire team was good. |
Very responsive, proactive. |
They were
quick with NO. |
Struggled with his/her internal bureaucracy. |
May not have good
skills in managing internal approvals and relationships. |
Some follow-up questions:
- Did the candidate sign the deal?
- Who was the lead negotiator?
- Was the candidate simply part of a winning team?
- How long have you dealt with the candidate?
- Have you observed him/her on other negotiations?
- Do you think he/she knew about your company before beginning the
negotiation?
- What did you observe about how they handled other members of their
negotiating team?
- Were there disruptions in the process? How did the candidate handle them?
Finally, do not be fooled by a lot of negotiation classes on the resume. This
can be a bad sign, as it may mean that improving poor negotiation skills were
identified by the candidate's management - who picked up the tab for the
classes. It may also mean that the candidate was a junior team member on a lot
of deals, but rarely the strategist or lead negotiator. They could be attempting
to use classroom experience as a gateway to more significant negotiator roles.
Challenge #3: Size Matters
Beware hiring negotiators from businesses vastly different from yours in
size. Negotiators for big companies have a significant amount of leverage, and
often struggle when shifting to smaller companies. Likewise, negotiators for
smaller firms can miss key opportunities to exercise the power of size when
working for bigger companies.
Does this mean you should only hire negotiators from similarly sized firms?
It depends on the ramp time between hire date and full effectiveness. If you
have a long time (45-90 days) to induct and train the negotiator, you can
broaden your search. If you expect full productivity in just a few weeks after
the hire, try to stay in the same weight class when screening candidates.
Challenge #4: There are Different Types of Negotiators for Different
Situations
So, if negotiators rarely have their skill noted in their job title, how can
recruiters identify people with significant negotiation background? To meet this
challenge, we must consider the significant variation in what the word
"negotiation" means in a business context. In recent years, the field
has evolved into many specialties, including:
- Terms & Conditions
- Deal Structure & Pricing
- Alliances & Partnerships
- Intellectual Property
- Procurement
- Sales
- Public Sector
- Outsourcing Services
This is where the long-format of your job description can provide clues for
the recruiter. Most prospect resumes simply state, "...negotiated $4B
contract…" without specifying what that means. It is unlikely that a
resume will break down the specific negotiation tasks performed; so your
pre-screening calls from the recruiter should ask for specifics. Specific
negotiation examples include:
"Negotiated contractual terms and conditions for $4B contract"
means someone else set the price. Dive deeper here by asking, "Was the
price a part of the negotiation? If so, who set the pricing and what was your
role in that process?"
"Led pricing negotiations" usually means there was a T&C expert
on the team, or there was very little give in T&Cs. Dive deeper here by
asking "Give me three terms of the contract that were specific challenges
in this negotiation. How did you approach them?"
"Organized joint venture to pursue a $4B deal" might mean that
there was no negotiation at all, simply project and personality management of
existing partners. Be very wary here, as many people confuse Relationship
Management with true negotiating. Ask, "Were the members of the Joint
Venture already under contract with your company? What were the specific roles
of each of the JV players in structuring the final deal?"
"Negotiated a $4B deal with a Government…" is very different than
negotiating a deal with GM. Not easier, just very different.
None of these are bad things. In today's complex business environment it is
rare to find a single person doing it all. That said, be mindful of the type of
role you expect your negotiator to play. If you lean heavily on Legal for
T&Cs, look for someone who is more versed in the art of the deal. If you
have very little support or process, look for a negotiator with some T&C
background relevant to the types of deals you expect to be doing. If your
company rarely pursues business alone, look for someone with experience building
alliances. If you find someone with a broad variety of these experiences,
realize that you will need to keep them challenged - too many of a single type
of negotiation and this high-powered candidate will get bored.
Challenge #5: Salary Negotiations are Run by HR
Now, you've navigated the challenges above, and have a short list of
candidates. You select your favorite and tell HR, "Go forth and hire."
This is the most dangerous time in the entire hiring cycle. Your staffing
department will review compensation policies, what other people in the same job
code make, and the earning history of the selected candidate. At that point,
they may or may not consult you, the hiring manager, about how best to present
the offer to the candidate.
To avoid disaster, communicate to staffing that before any offer is made, you
must be engaged and have a significant role in reviewing and approving the
offer. You have to prepare for this negotiation like any other, and if your HR
team is unused to negotiations, you have to prepare them as well.
As in any negotiation, finding out as much as you can about the counterpart
is key. Compensation can do this via background, references and credit checks.
If you don't have a Compensation department, put your staffing expert to work
finding this information. Do not, under any circumstances, do this research
yourself! Privacy laws are nothing to mess with; leave it to the professionals
in your HR or Legal department.
Once you believe you have enough information on salary background, ask the
candidate for a salary history. Many will refuse to provide one, but highly
qualified, confident candidates will not hesitate. Compare the candidate's
representations to the facts your HR team has unearthed. If they match, great.
If they don't, you may want to bring that to the table while negotiating salary
with the candidate.
Allow your staffing expert to open negotiations, calling the candidate on the
phone and saying, "We are ready to make an offer of $X." When the
candidate immediately counters, or expresses concern that you can "do
better," do not say, "We never negotiate." Ask for an unambiguous
counter (by email is best, less opportunity for miscommunication) that the
candidate would accept.
This is not an article on how to negotiate salary, but, here are a few things
to consider as you do:
-
Negotiating imbalance here
is enormous - the candidate is approaching this 100% personally, whereas you
and HR are treating it like just another business negotiation. This sets the
stage for deadlock unless you phrase things in personal terms from the
hiring side of the table.
-
Too many Staffing
departments fail to ask for a counter offer from the candidate after the
initial offer. Encourage them to do so. This sets the candidate's "Top End"
price. If it is within your means, do not simply accept it to be done with
the process. If you do, the candidate will think they did not ask for
enough, and may throw in unreasonable additional demands.
-
Use the same negotiating
channel the job will require. If the job requires a face-to-face negotiating
presence, this is the way to negotiate salary. If most of your negotiations
are done via email, do it that way. If you usually get neutral ground for
negotiations, find it for this discussion. If, however, you are always
negotiating on the customer's turf, put the candidate in that position. This
is your last, best chance to evaluate the professionalism, poise and
creativity of the top candidate - don't pass it up just to save time or
travel dollars.
-
Let the hiring manager say
"Yes," use the staffing professional to say "No," The hiring manager needs
an excellent working relationship with the candidate after they start, don't
let a tough negotiation ruin that.
-
Use soft concessions. Too
many people focus only on cash compensation. In fact, many HR departments
forbid "promises" to employees that aren't cash. Even in that environment,
both sides need to demonstrate creativity and flexibility. If you are stuck
on the last $5000, ask why the candidate needs it. If it's for a car,
education, child care or home office, the company might be able to help.
Challenge #6: Top Negotiators will Walk from Inflexible Employers
In this article, I've encouraged you to view the employment negotiation as a
final test of your candidates. The reverse is true as well. It is the
candidate's final chance to see how your company operates. Let's close with two
stories, think about the company and boss for whom you would want to work.
Sally Candidate has been through 11 rounds of interviews at BigSlow, Inc. She
is being considered for a Deputy to the Assistant Director of Sales Contracts.
She has not spoken with the hiring manager since round eight of the interviews,
and he is not returning her calls. When he did interview her, he refused to
answer any questions about the job, department or role in the company. The
staffing professional, Ed Stingy, from BigSlow offered a starting salary that is
only 5% more than Sally currently makes, and refuses to discuss any salary
concessions. In addition, Ed set a sharp deadline after which the offer is off
the table, saying, "We will just move on to the next candidate."
Think about Sally's experience here. What opinion might she form about
BigSlow?
-
Requires eleven rounds of interviews - This company thinks it is thorough,
but in fact it looks like nobody is able to make a decision. They probably
waste time the same way on other issues.
-
"Deputy to the Assistant Director of Sales Contracts" is
evidence of a hierarchical, title-oriented company.
-
The hiring manager, probably on the advice of HR, is totally disengaged
from the hiring process. Sally might think, "Wow, if he doesn't care
about me when he is trying to attract me to this job, he surely won't care
after I am working for him!"
-
Another problem with the hiring manager is that he did not answer Sally's
questions about the job. That probably means that he does not feel the need
to "sell" his team to candidates. This can be an indication that
he is weak at selling the team to other business units or power players in
the company.
-
Ed Stingy is playing hardball, with a cheap offer that hardly entices
Sally to move. This makes BigSlow look cheap, and probably indicates how
raises and bonuses work as well.
-
Ed's refusal to negotiate and use of time pressure to force Sally into a
decision indicates that the company revels in its power. They probably
negotiate with customers and vendors the same way.
Now, let's look at a different story.
Sally is also considering an offer from UtopiaSoft. The contrast with BigSlow
couldn't be more obvious. UtopiaSoft made an offer after two rounds of
interviews. The hiring manager, Cindy Stellar, flew to Sally's hometown to talk
over the package at the corner Starbuck's. The opening offer was generous, 15%
higher than Sally's current compensation, but some of it is at risk, based on
meeting sales targets. The only time Sally has dealt with anyone other than
Cindy is when she asked for something (a company car) that Cindy did not have
the authority to authorize. Cindy has expended a lot of effort showing off her
company, department and this job to Sally. It is obvious that Cindy is proud of
what she does, and while she hopes Sally will join the team, she said, "If
we aren't able to reach agreement now, let's leave the door open and talk again
in a year or two."
-
Two rounds, then an offer - UtopiaSoft does not waste any time; they
decide things quickly and efficiently.
-
The manager really cares about getting Sally on the team, otherwise why
would she come to Starbucks? This makes the company look like they will be
as customer-focused in their negotiations.
-
While the offer is generous, Sally has to stretch to earn it. This
indicates that UtopiaSoft is focused on rewarding star performers.
-
Sally respects Cindy because she obviously has the "juice" to
negotiate on behalf of UtopiaSoft. This bodes well for the future working
relationship.
-
Finally, Cindy eliminates the high pressure sell by offering a long-term
relationship. Things may not work today, but Cindy demonstrates confidence
that they will eventually. This is a great demonstration of relationship
selling that communicates something about UtopiaSoft's corporate culture.
Conclusion
These six challenges often appear insurmountable. This is because they can
only be overcome with advance planning, great communication, and a lot of
effort. When the candidate opens negotiations, it is usually too late to begin
education of the HR team. Every stellar negotiator can be counted upon to
negotiate their next job. If your company wants to hire and retain the best,
while preventing a crisis every time you hire a negotiator, make this
negotiation a desirable part of the hiring cycle.
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