Salary Negotiation: Framing negotiables correctly to unlock hidden value.

One of my favorite negotiation anecdotes is from Stuart Diamond’s book Getting More.  In it, he describes a scenario where a child would like to have a cookie, but the parent says no.  Undeterred, the child then asks if he can get half a cookie and the negotiation ensues.  I love this example because it shows how a winning situation could be found with simple framing.  If the child thought in black & white, he would only see the options as: I can either get the cookie or I can not.  Fortunately for the child, kids are natural negotiators. They have little power, so they have to negotiate everything. He does not fall for the adult trap of thinking in absolute terms.  Unfortunately for many adults, we lose that gift as we age.  We start to see things in absolute terms.  Either you can have it or you can’t.

In negotiations value is unlocked by being able to trade off your position on a negotiable based on how you weigh its importance.  If you think in absolute terms, you will lose much of your flexibility to trade off your positions.  With this loss of flexibility, many potential outcomes will be out of your reach.  To bring the power of flexibility into focus, let’s frame 3 negotiables in absolute terms:

Negotiable 

Answer

Is there a performance bonus?

Yes, No

Will stock options be provided?

Yes, No

Is a 401K plan offered? 

Yes, No

In this negotiation scenario there are 9 (32) permutations and flexibility is low.  Fortunately, dramatically increasing the flexibility and possibilities only requires a slight change in perspective.  First, don’t frame the question as a yes or no question.  Turn it into a question where you are trying to identify a range.  Second, lets increase the number of outcomes per negotiable from 2 (yes or no) to 3 (low ,medium, high).  You can actually have more than three outcomes per negotiable, but we want to show how a small change can have a big impact.

Negotiable 

Values

Performance bonus value

low, medium, high

Stock option value

low, medium, high

401k value

low, medium, high

By moving from 2 outcomes per negotiable to 3, the number of permutations increases to 27  (33) from 9 (32).  This greatly increases the odds of being able to find an outcome that makes both parties better off.  If you increase the number of categories per negotiable from 3 to 5, the number of permutations increases to 243 (35).  Each time you add a layer or subdivide the range, you increase the permutations drastically providing more potential offers to choose from.  This additional potential will increase the likelihood that you can choose an offer that makes both of you happier.

Proper framing also has other benfits.  It will force you to think like an investigative negotiator.   Instead of accepting yes or no as the answer, you will ask yourself why not and what ranges would be acceptable.  This investigative mindset can help you uncover other ways to create value together.  

During your next salary negotiation make sure you frame your negotiables correctly to maximize your potential outcomes.  You may find yourself able to get half a cookie instead of no cookie at all.  Wealth is, after all, built half a cookie at a time.

Ramon Andino

Author, inventor, creator and mobile negotiations expert

Ramon Andino is the creator of zopaf, a novel salary negotiation app.  The app couples the Harvard Business School negotiation class with his experiences modeling jet engines at GE.  Together, these experiences are helping the world unlock and capture value that would otherwise be left on the table.  The level of insight provided by zopaf was only available to a  select few, until now.

 

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