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20 Sep

What we tend to miss when thinking about negotiations

"In a tough negotiation, it's not enough to show the other party that you can deliver the thing they want. To have real influence you have to help them see that collaboration with you will avoid a greater loss and that you can be trusted with their longterm best interests."

— Chris Voss, Never Split The Difference

Many people get too selfish too soon. And it hurts their long-term prospects. Here's an example to illustrate the point better:

You're not happy with your current salary. So you think that you'll go get a job offer letter from another company and tell your boss you're leaving if they don't match/exceed it.

Don't do this, friends. The strategy may work well in the short term, but in the long run, it will hurt your prospects. Just think about second-order effects of what will happen if you did that.

You go to your boss and tell him,

"Something something.. match this offer or I'm leaving."

Now think from your manager's point of view. You're essentially putting her in a bind. She wasn't expecting it, and she cannot afford to let you go right now (which is why you may have decided to pull this move in the first place!).

So she says, "Ok let me see what can do."

She goes to Finance and, although she can't match the other job offer, she gives you a decent raise to try to keep you happy. So, you decide to stick around, considering you've worked there for many years.

But your boss can't stop wondering if you'll pull that trick on her again. And more importantly, she now knows that you're interviewing with other companies and aren't really into your job all that much. So she starts thinking about hiring your replacement in case you try to leverage some offer letter again.

If a new project comes up, she won't give it to you although you'd be the most qualified one to handle it. Because it's risky now. You might leave midway. Consequently, she puts you on smaller, more trivial projects with fewer liabilities. Eventually, you a have a hard time even finding good projects to demonstrate your skills. You're stuck on a bunch of small projects since you threatened to leave. And it's hurting your future job prospects also.

Now instead of doing this, what if you had asked for a raise in all sincerity and played a collaborative game instead of a competitive one? What if you told her,

"I genuinely love working here. But think my salary should be a bit higher based on the excellent work I'm doing for more than 3+ years now. <Here's proof.> I would like a raise. Can you help me with that?"

In this scenario, you 1. establish your worth and hence get the same raise, and 2. get yourself recognized as an excellent employee and set yourself up for even better opportunities down the line.

But, here's the larger insight around negotiations.

Every back and forth in a negotiation erodes trust.

I repeat:

Every back and forth in a negotiation erodes trust.

When someone places an offer, and you put a counter-offer, what you're signalling is that you do not trust them... that you think they're playing a game with you. As a result, the frame changes from that of collaboration to that of manipulation.

Just imagine if a lot of back and forth happens even before you join a company.

You've already whittled down the trust to a thumbtack, and now all future interaction — even if you arrive at a middle ground and choose to work at the company — will be purely transactional in nature. The trust has eroded.

Now, I'm not making a case for not negotiating at all.

Having one round of negotiations has almost become customary, as if it were an assumed industry practice. But going back and forth multiple times rarely works out in the long term. Because it changes the nature of the relationship and places money as the primary value being exchanged: not trust, not a common love for the goal, not a shared sense of mission, not the joy of making something happen together.

In general, the one who is willing to walk away from the table and is happy with a no-deal situation often ends up winning the negotiation.

But if you're willing to walk away, best make it clear upfront and walk away when it is evident that the company doesn't see value in what you bring to the table. No negotiation is needed, and any back and forth on compensation will make sure things don't work out in the long run even if you choose to collaborate.

A hiring manager who reluctantly decides to pay you the additional money you wanted will hold it as a grudge against you and you will forever have a target painted on your back.

If someone has decided to lose the negotiation and let you come on board, they have lost the power dynamic, which is now entirely skewed in your favour. Consequently, they will want to milk all the value out of you. The situation may turn toxic pretty quickly.

The only way out of this conundrum of keeping negotiations to a minimum and still being paid for what you're worth is simple:

Be very clear about the value you bring to the table and be very clear about walking away from the table if you don't think you're being paid what you're worth.

If the HR or hiring manager indulges in a lot of bargaining, it's a red flag. They are not sure about you. If you aren't sure about yourself either, take the deal being offered. Don't negotiate too much.

And if you are sure about yourself, just refuse and walk away. Do not come back if they indulge in more negotiations and dilly-dallying. It rarely works out for either party.

But most importantly, don't hold the manager at ransom. Don't play games. Don't change the frame from a collaborative, mission-oriented one to a manipulative/exploitative one.

If you do that, you're just making things bad for your own self down the line.

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