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Choose Your Negotiations Wisely

By Jul 03,2014 Follow Me on Google+
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Summary
Everything is negotiable, and thus it is important that you choose your negotiations wisely. First, judge your negotiating environment and determine when you can and cannot negotiate; in many important matters, negotiating may actually work to your detriment. Your success in both career and life depends far more on your contributions than your negotiating skill, and having things offered to you is always preferable to demanding them.

Many years ago, I hired a very successful and well-known recruiter to work for our company. This recruiter was a “superstar” sort of recruiter, who generated millions of dollars in fees wherever he went. Prior to hiring this recruiter, I had spent a few weeks getting to know him over several dinners and trips to his hometown. I got to know his significant other, spent time in his home, and he in mine. By the time I was ready to make him an offer, I was very happy about hiring him and his future with our recruiting firm. In response to my offer, he very politely told me that he would love to come to work for me–and that his attorney would “be in touch” shortly.

A few days later, I received a telephone call from an attorney in a major law firm, who had marked up the offer letter I had sent over to the recruiter. He had made so many notes that the document, which was formerly two pages long, now was around seven or eight pages long. In addition, he had attached a “suggested employment contract” that was more than 45 pages long.

“Who are you?” I asked the attorney during our first phone call. I was a little astonished by the intensity with which he was negotiating some relatively small things. For example, the recruiter wanted to ensure that his desk was positioned within 20 feet of “cold filtered spring water,” which would need to be in ready supply for him to drink during his workday.

“I actually do this for Fortune 500 CEOs all the time,” he said. “This is my specialty, negotiating these sorts of things.”

I spent at least a week exchanging frequent phone calls with the attorney and had an in-house attorney from our company talking back and forth with the attorney every single day. After a week of this, I received a phone call from the recruiter:

“Can we wrap this up? This guy is charging me $750 an hour and I have already spent more than $30,000 on this. I cannot afford to keep paying the attorney,” he said.

“I do not know how that is possible. He is negotiating every single little thing there is. We keep going back and forth,” I said.

When a chief executive officer of a major corporation is hired, the executive typically has an attorney from a giant law firm negotiating on his or her behalf. The executive is offered the position and then, in response to the offer, the lawyer suddenly appears and starts negotiating. This is what the attorney we were talking with was doing. The list of points he was trying to negotiate with me and my attorney was so voluminous that it would be impossible for me to remember all of those points now. The list included things like being in “Class A” office space, having air conditioning on the weekend, first-class airfare for all business-related travel, and more. When people get more powerful in the business world, they have a tendency to demand more. However, the other side to this is that they become more focused on taking and not giving value. They become more concerned with the accoutrements of success rather than focusing on what got them there, usually a lot of hard work.

Unless I am using miles that I have saved up for years before taking a big trip, I always travel in economy. I always try to get seats at the very back of the airplane because I will be less likely to have someone sitting next to me. In fact, just about every single time I have done this, I have had at least two empty seats next to me–even on the fullest flights.

A few weeks ago I was traveling, and for the first time I can remember, I was seated next to a woman in the very back of the airplane. The woman was wearing a scarf and you could not really tell who she was; however, after the flight took off we started chatting. It turned out that she was married to a famous man and was part of the “Hollywood society”; she knew all sorts of movie stars and various famous people. While I liked to sit at the back of the airplane to have extra room, this woman liked to sit in the back of the airplane so that no one would recognize her. Personally, I did not recognize her.

As we talked, we came upon the subject of a very famous person whom she had known for years, who had fallen out of favor with the people who make movies and are generally regarded as being in power in Hollywood. She said something to me that I will never forget:

“Every person that succeeds and then fails in Hollywood has become more concerned about their ego, getting as much as they can, than with what they gave in order to become successful in the first place.”

I was really struck by this statement. What the woman was saying, in effect, was that at some point when they become successful, many people lose sight of what got them there. Instead, they start focusing on something else completely–themselves–and not on what they can contribute.

Several times throughout my negotiation with the attorney negotiations “broke down” and I simply said I was unwilling to agree to this or that. Eventually, however, we reached some sort of agreement and the papers were signed. I do not remember what it was, but some condition was apparently not met on the first day the recruiter showed up for work several weeks later, and the recruiter’s lawyer called me. Everything completely broke down from there. The guy ended up working for us for around three hours in total, if I recall correctly. His prized assistant, whom we were supposed to have hired in addition to him, had shown up to work on the first day and did not feel comfortable with his supervisor or with the level of responsibility he would be having.

I am not sure how much this recruiter spent on legal fees or exactly how much time he spent negotiating with me; however, I would venture to guess that he spent at least $50,000 on legal fees and that the negotiations went on for at least three weeks or so. When the entire negotiation was done, I no longer liked the recruiter or felt comfortable with him. To say I thought he was calculating and difficult would be an understatement. Had he not tried to negotiate with me so much and just taken the job, he probably would still have been here today. In hindsight, I think that what he did wrong was put too many conditions on what it would take for him to be happy in his job. The original offer that I made him was not much different from the employment agreement he ultimately ended up with. The only thing that was substantially different was the taste left in my mouth.

For the past several months I have been trying to sell some property. I have gotten some good offers; however, I always negotiate in response to an offer. Every single time, the person with whom I have attempted to negotiate has simply walked away and purchased some other property. And why wouldn’t they? There are thousands of properties out there for sale because everyone is interested in unloading assets in this economic environment. It is like this with jobs too. There are so many people looking for jobs that there is no reason for most employers to negotiate. Why would they? In almost every instance, there are tons of people who can do the exact same work that you can do. If you negotiate too hard, you risk alienating a potential employer and possibly losing a job offer. Negotiation is not always a good strategy and sometimes, in fact, it is a horrible strategy. I am not saying that you should never negotiate; what I am saying is that you need to be extremely careful if you are going to negotiate. There are many risks associated with negotiation. Be sure your condition is something you really cannot work without.

Several years ago, I hired another employee who did everything within his power to negotiate with me. He negotiated vacation days, guaranteed bonuses, titles, salary, guaranteed raises, and more. The person ended up “winning” the negotiation, getting most of the things that he asked for. However, the problem with all of this negotiation was that many of the things the person negotiated for were fluff, which gave the person far more small, incidental things than other employees in the company had at the time. When the person did not completely live up to the expectations I had of him, as his supervisor I ended up having a fair amount of resentment toward the person, because other employees were working much harder and doing a better job–people who did not have this level of “fluff” in their compensation packages.

If you are negotiating over something very serious like a job or a relationship, you may end up being worse off for negotiating. Be sure what you’re negotiating over is worth it. Your success in a job, relationship, and so forth most likely will come down to how much you contribute, more than how much you are able to negotiate. It is always better to have people offer you a raise, benefits, and other perks than for you to demand these things. If you are offered various benefits instead of asking for them, your employer will feel like they gave these things to you of their own volition. They will want you to have and enjoy these things a lot more than if you had demanded them.

While negotiating big things is often risky, negotiating small things often is not and I am all for this. Several years ago when I was in college, I discovered that electronics stores will negotiate.

They will negotiate a lot.

I will never forget walking into an electronics store in Detroit and seeing a Panasonic cordless phone that I liked. This cordless phone had an answering machine attached to it and was around $179.00. In another corner of the store, they had returns, which were various items that people had purchased and then decided to bring back to the store. Because these items were no longer new, the store sold them at a discount. In the returns section I saw the same phone for $139.00. I took the phone up to a salesperson. I do not know how I got up the nerve, but I asked him:

“Could you sell me this phone for $49.00? It’s all I can afford to spend.”

“Sure,” the salesperson said. He acted like my request was the most normal thing in the world, and he went up and rang up the phone like that. I could not believe it. I still have that old phone stored away somewhere. Still stunned from this transaction, a couple of months later I went into another electronics store and tried the same thing with a television. That worked too. I still have that television to this day.

One of the most interesting things to me in the business world is the process of offers and negotiations. It is such a fascinating subject in so many ways because you can achieve so much and, conversely, be held back so much by the process of negotiation.

Everything is negotiable but you need to be careful. You should first judge and understand the environment in which you are negotiating. Sometimes you can negotiate and other times you cannot. It is important to learn when you can and when you cannot negotiate. If you choose to negotiate, be sure you are not risking more than you are willing to loose. Choose your negotiations wisely.

THE LESSON

Everything is negotiable, and thus it is important that you choose your negotiations wisely. First, judge your negotiating environment and determine when you can and cannot negotiate; in many important matters, negotiating may actually work to your detriment. Your success in both career and life depends far more on your contributions than your negotiating skill, and having things offered to you is always preferable to demanding them.

  • steveaustin

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  • http://www.beattherecessiontoday.blogspot.com antonio

    I absolutely agree with you this blog is brilliant the information that you have provided is so relevant to how we need to choose negotiations wisely. I have looked throughout various websites for some good information but nothing has been as good as this. thanks for this excellent blog and keep up the good work.I shall reccommend your blog to all friends and business partners.

    antonio did not rate this post.
  • Gaurav

    No doubt, the process of negotiation is an integral part of most businesses. But there is no need to overdo it. Some persons are compulsive negotiators and they do it even in petty matters as if their life depended on it. Unnecessary negotiations are just a waste of time and energy. Only judicious use of negotiations can be fruitful.

    Gaurav did not rate this post.
  • steveaustin

    This website is one of the best website in the world. Because many peoples are got the good job through this website. I will see this website one time,then I will get lot of matters, so I recommend this website for you. You will come here, you will also got the job…

    steveaustin did not rate this post.
  • Joel Segar

    Harrison,

    Thanks for your insights on interviewing and negotiating tips. Not having to go through this for some time now, it is insightful to see how various professionals view these skills.

    Joel Segar did not rate this post.
  • Amos Branch

    I really enjoyed the various lessons shared. It has me thinking, I need to do a little more with my personal and business and stop “taking” and not giving, thank you so much, you just may have saved my marriage…

    Amos Branch did not rate this post.
  • Gary Jones

    Mr. Barnes,

    I especially enjoyed reading your article about negotiation. I have been an accountant for twenty years and, for whatever reason, have never made it onto the fast track. Since I have not been on that track, I have never been in a position where I had any leverage to negotiate anything. I suppose that since I come from middle class, Middle American stock, it is more important to me to prove my worth and, in turn (hopefully), be rewarded.

    As you mentioned, we are in hard economic times. Just yesterday I read something that quoted Ronald Reagan, when he said…”Recession is when your neighbor loses his job. Depression is when you lose yours.” Going by that, I feel as though we are in a depression. I have been jobless for 16 months, the middle of August 2008. Was it Hoover who would say that prosperity is just around the corner? I just wish I could find that corner. That recruiter you negotiated with was self-aggrandizing, gas bag of a jerk.

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    • Lilian

      14 percent is high, I think with your crdiet score you can find a loan for 10% or 9%. Rather than finance the car through the dealership, why don’t you look for a third party lender, or take out a personal loan from your bank?Here’s the math: 10000 2000 2500 = 5500. A $5500 loan is pretty small. If you get that financed at 14% for 54 months, you are looking at monthly payments around $138 per month. If you can afford to pay more per month, say $250, then your lender may offer you a lower rate. The thing to consider is that if you pay more per month, you will pay down the loan faster and pay less in *total* interest. I would negotiate a better loan by offering to pay more per month for fewer months. A 4.5 year loan for a used car is a long length of time. Over time, your car could be worth less than what you owe!If you take out a loan for 36 months at 10%, your monthly payments would be $177 per month. And if you take out a loan for 24 months at 10%, your monthly payments would be $254. You should find a better lender!

      Lilian did not rate this post.
  • amol

    very good

    amol did not rate this post.
  • Alex Rhodes

    Great article and even better advise. To accent your article I believe Ecclesiastes 3:1 says it best “To every thing there is a season, and a time to every purpose under the heaven:”. Thank you.

    Alex Rhodes did not rate this post.
  • vidyasgar sharma

    very captivating incidents but too lenghty.shorter,crisper ones would be more appreciable.

    vidyasgar sharma did not rate this post.
  • Alyne Assunto

    Dear Mr. Barnes:
    I read every one of your articles and find them very insightful. The way you think seems to be rare among recruiters and CEOs. If I can ever be of service, please let me know.
    Alyne Assunto
    PS Have you considered publishing these essays in book format?

    Alyne Assunto did not rate this post.
  • Taylor Dasher

    I used to think highly of lawcrossing and refer it to my friends, but I can no longer do that because your customer service is the worst I have ever encountered. A month ago, I cancelled my membership by phone as instructed by the website. I made a written record of the call for my own records.

    Three weeks later, my credit card was nonetheless charged $49.97. I emailed John Simpson, the Customer Service rep on your website multiple times and received only a form response about having to cancel membership via phone. Upon calling the customer service phone number again, I was told by the customer service rep that there was no record of my cancellation (the fact that *I* had a written record was irrelevant to the customer service rep) and that I could cancel my membership as of that day but that there was absolutely no one the planet who could give me a refund. The customer service rep continued to ignore what I was telling him – that I had cancelled my refund weeks ago – and also refused to transfer me to anyone else, saying that there was no one else with lawcrossing whom I could possibly speak to.

    To add to the irony, I continue to receive emails from lawcrossing. Thus it appears my membership has STILL not been cancelled.

    And now since I continue to receive no response it appears I have to call the Better Business Bureau to complain and to call my credit card company to report unauthorized charges.

    Needless to say, I expected better.

    Taylor Dasher did not rate this post.
  • Annette Davis

    are they any administrator position in major law firms

    Annette Davis did not rate this post.
  • Michael Tine

    Hi, Mister Barnes!

    I’m very glad to read your message everyday! I retain each day the power of your ideas that help me have success in my life. I agree with you and appreciate all you do. Now I have begun seeing clear in my life and can behave correctly next time! I have written many topics about life (many titles) like you have and still do! God bless you and your family and also your colleagues!

    I’m always behind you!

    Thank you for all! I hope to hear from you.

    Your friend,

    Michael Tine

    Michael Tine did not rate this post.
    • Naiara

      At this point, just ask them to lower your interest rate. Credit card isuesrs are increasingly willing to help borrowers, only because they don’t want to take a total loss. Tell them the situation and see what they’ll do to meet you in the middle

      Naiara did not rate this post.
  • Dawn Dziuba

    In my previous situation I was making less than $360 per month and literally had to go to HR to get help because the school has rules that would not let me take out any more loans in order to pay for the research. I contributed more than anyone else in the organization and it was my capital that created the value. How do I capture the value I created??? So many value extractors tried to push me down that there was a long term loss in value because I didn’t have the resources to meet my basic needs. I hate complaining but I had to complain because I made less per month that what my rent was. This is while working all the time and self-financing my way to present the research at conferences. The more I worked, the more value I created for other people, but I didn’t receive it back in compensation. Thoughts???

    Dawn Dziuba did not rate this post.
  • Jirka

    Good basic advice, BUT when aniksg for the salary review in 3/6/12 months, what is to prevent to company from continuing to say “no” to any increase. It seems the company still holds all the cards, especially when it is as subjective as the review process. If at this time, we still don’t “get what we want” are we then to think seriously that the decision to work for the company in the first place was flawed? Should we then begin the job search again? What other options are there which can be more objective during the review, especially in an analytical/technical services career field?

    Jirka did not rate this post.

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