By STEPHEN C. SOPKO (June 13, 2005)
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.
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
- 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.
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.