salary and compensation negotiation skills

8/13/2019 Salary and compensation negotiation skills

1/5

practice applicationsBUSINESS OF DIETETICSSalary and Compensation Negotiation Skills

for Young ProfessionalsThis article was adapted from a speech given by R. Pinkley at ADAs Food & Nutrition Conference &

Expo in San Antonio, TX, on October 25-28, 2003.

This article is reprinted from the July2004 issue of the Journal (2004;104:1064-1068).

What distinguishes the best ne-gotiators, the class of negotia-tors called master negotiators,

from others who have lots of experi-ence but do not bring back the kindsof outcomes that master negotiatorsbring back?

Masters are distinct from other ne-gotiators in that they have a very firmobjectiveto maximum their owngain. Normally, people want to findan outcome that maximizes jointgain. When the objective is to maxi-mize joint gain, what people end updoing is measuring it in terms ofwhen-when or happy-happy,which would be fine, except happy-happy is really, can you live with it?

Both parties work to obtain their bot-tom line. Having obtained it, they aresatisfied and they quit. Joint gain is acounterproductive objective. Not onlydoes it decrease the gain that you get,it actually decreases the gain to theemployer. Master negotiators havethe objective of maximizing their owngain, and then using the best of thewin-win strategies, which are strate-gies for finding ways of enhancingjoint gain. Salary and compensationnegotiations are the most importantnegotiations in your life. They affect

professional and personal well-being,and the objective should be to maxi-mize your own gain.

Secondly, master negotiators havea clear plan for maximizing their owngain. What they do is very simple.Master negotiators recognize thatthey have to partner with the other

side. They have to manage not onlythemselves in their own strategies,but they have to manage the othersides strategies in order to take themto where the master negotiator wantsthem to go.

In addition, master negotiators usea very flexible strategy while having afirm objective. Master negotiatorspull from the best of the creatingstrategies and the best of the claimingstrategies, to apply them specificallyto the person with whom they are ne-gotiating, the circumstances of the

negotiation, the boundaries aroundand limitations of that negotiation,and the kind of negotiation they aredoing. Everything effective negotia-tors do falls into these categories.

Convince the employer that yourethe best candidate, youre the onethey really want, and do so in a waythat is respectful and constructive.Constructive negotiation means be-ing honest and being straight-for-ward. Being honest does not mean be-ing timid; it means telling the truthclearly and accurately. You need to beinterested in problem solving and try

to constructively brainstorm to findthe best solution for yourself in such away that it translates into utility forthe employer. That, in a nutshell, iswhat effective negotiators do.

NEGOTIATION PERSPECTIVES

Most negotiators who are consideringnegotiating salary and compensationtend to fall into a couple of differentcategories. In Perspective A, negotia-tors dont want to come across as

greedy by asking for too much be-cause they want to start on the rightfoot and have a good relationship withtheir employers. In Perspective B, ne-gotiators believe they can do this jobbetter than most people because oftheir personal skills, education, andexperience.

Headhunters and recruiters, eventhe ones who dont negotiate, believethat it is acceptable to attempt to ne-gotiate. The majority expect candi-dates to negotiate, so 90% of employ-ers do not include all of the value theyare willing to offer for a position inthe first offer. If you accept the firstoffer as made, you are not claimingthe value that you could have ob-tained. You are walking away withless than they expected they wouldneed to pay you. You increase theprobability that you would be behind

not only the external market and howothers are doing, but also the internalmarket. The longer you stay in thesame position, the more likely it isthat you get behind the market.

We find that only 25% to 50% ofpeople negotiate salary and compen-sation. Actually, when we talk to can-didates they tell us that 50% of thetime they negotiate. But when wetalk to recruiters, they tell us thatonly 25% of the people they interviewattempt to negotiate a job offer. Only15% renegotiate salary and compen-

sation, despite the fact that the longeryou are in a position, the more likelyyou are to be behind the market. Isntthat an interesting difference? I thinkits because some people negotiate insuch a timid way that the recruiternever even knew they were attempt-ing to do so.

There are many men in the dietet-ics profession, but the majority arewomen. However, women on averageare paid 75 cents compared with thedollar that a man receives for the

This article was written by RobinL. Pinkley,PhD, associateprofessor of Strategy andEntrepreneurship and director ofthe American Airlines Center forLabor Relations and ConflictResolution, Edwin L. Cox Schoolof Business, Southern MethodistUniversity, Dallas, TX. E-mail:[email protected]: 10.1016/j.jada.2007.02.036

2007 by the American Dietetic Association Supplement to the Journal of the AMERICAN DIETETIC ASSOCIATION S23


2/5

same position. The statistics get evenworse when we talk about minoritywomen. For example, African-Ameri-can women get about 63 cents on thedollar. Over the course of a lifetime itcan accumulate. Fifty years of workand the fact that people move about

every 5 years, starting with a basesalary of $50,000, over a lifetime ca-reer the financial differences for thosewomen who negotiated and those whodont is over a million dollars. Womenare much less likely to negotiate sal-ary compensation than are men and,when they do, they do it in a way thatis less assertive. There are all kinds ofevidence that suggests that this fac-tor alone, the failure to negotiate, ac-counts for at least half of the variancebetween mens and womens salaries.If we can get women to negotiate job

salary and compensation, and do soeffectively, we can wipe out that dif-ference.

Ninety-two percent of women, com-pared with 21% of men, view them-selves more in Perspective A than inPerspective B. The vast majority ofpotential employers prefer person Bto person A. You would think theywould prefer people who dont negoti-ate, but recruiters prefer people whonegotiate to those who do not, as longas they do so constructively. Whenyou negotiate effectively, you aremodeling exactly the kinds of skills,

personality traits, and strategies thatemployers want: a good problemsolver, someone who is capable, some-one who thinks strategically, some-one who does their homework and hasdetailed information about value,someone who is willing to assert thatvalue in a way that is highly construc-tive, and someone who is flexible.

BARRIERS TO NEGOTIATION

Why dont people negotiate? Manypeople think they lack power. Who do

you think has more power, candidatesor recruiters? Is it the person who isbeing asked or the person who is ask-ing? The person who is being askedhas already had the employer ac-knowledge their pick, that you aretheir preference. You have not yet de-cided that this is the organization foryou. In reality, you have more powerin many instances than the recruit-ers. However, these things do varysignificantly in terms of the economy.In the current economy you have less

power than you had in the past. Inresponse, some recruiters are usingstrategies they would not have usedin the past, but most will still negoti-ate. If you talk to recruiters, guesswho they say has more power? You.

Another reason why people dont

negotiate is that they are afraid it willhurt the potential organizations per-ception of them. Well, weve alreadydistilled that myth: they are actuallygoing to perceive you in a more favor-able light if you negotiate than if youdont. Negotiation is a productive de-cision-making process. It is not onethat necessarily instills conflict. A lotof negotiation has to do with how youapproach it personally. You can bevery warm and direct and respectfulto the employer, but it doesnt meanyou have to make concessions and

compromises all over the place. Youcan assert yourself and still be ex-tremely likable and personable.

THE QUESTION OF SALARY

Salary history is one of the firstthings that any potential employerasks for. They ask you for that infor-mation for two reasons. One is be-cause they want to know how muchthey are going to have to pay you. Theother is to look at the salary they areoffering compared with other candi-dates they are considering, and to

look at their salary in terms of howmuch you make vs the other candi-dates. Employers make all kinds ofattributions about why it is you arebeing paid more than others, and itsnot because they think you must havenegotiated and the other party didnt.The attribution they make is if youare paid more, youre better. If yourepaid less, youre not as good. Salarysays things about the quality youbring to the organization, as well ashow much they are going to have topay you. You cannot afford to have

information that you are behind themarket in the marketplace.We also find that if you go in and

start at the same time as other pro-fessionals in your organization, andthey negotiate and you dont, they endup making more money than you do.If your performance is equivalent, youwould think they would let you catchup. It doesnt happen. That self-per-petuates regardless of whether youare staying in the same position ormoving positions.

If you want something, and the em-ployer is not offering it in the frontend, youd better ask for it. In addi-tion, you need to realize that whatyou get paid is a combination of whatyoure worth and whether you negoti-ate, and if you do negotiate, how suc-

cessfully you do so. Therefore, if youwant to have the salary compensationthat you believe youre entitled to,youve got to learn to negotiate effec-tively.

STEPS TO SUCCESS

Step one: start negotiating. The worstthing the employer can say is, No.Im sorry, its not negotiable. Theworst thing that will happen if youdont negotiate is youll end up withless than what the employer is willing

to pay you. Step two: learn the righttime to negotiate. Premature negoti-ation is a bad thing. Normally, youdont want to have the discussionabout salary and compensation untilyouve been made an offer, if at allpossible. The problem is that if youare willing to tell employers the sal-ary and compensation you want, be-fore you get an offer, you need to rec-ognize that they are going to use thatinformation to determine what theyneed to pay you and whether or notyou are in their subset of potentialcandidates. Are you likely to go in and

lowball how much you say you want,or ask for the extreme? Most peoplelowball. They lowball because theydont want the chance of being kickedout of the pool. They want to increasethe probability that they are going toget an interview. However, if youstart by asking something or sayingsomething that will keep you in thepool, it will probably haunt you as youdiscuss salary and compensationlater. The employer will use whateveryou said to make up a proposal to youthat is also lowballed and probably

low in terms of the market. You wantto avoid the problem of being kickedout of the pool, and therefore beingable to provide high numbers whenyou talk about salary and compensa-tion, numbers that can be substanti-ated by information that is availablein terms of the marketplace.

Doing your homework before youveeven had the first interview is veryimportant. Occasionally, employerswill insist that you talk about salaryand compensation right away. If they

BUSINESS OF DIETETICS

S24 April 2007 Suppl 1 Volume 107 Number 4


3/5

do, you want to be able to talk aboutit. You want to be able to say: Ivedone my homework. Ive gatheredthis information, and what Im find-ing is that for positions of this type,with this level of experience, salariestend to be this. I perceive myself as

somebody who is higher in terms ofthat market. Therefore, what Imshooting for is this amount. Of course,we can discuss salary and other as-pects of compensation in some detaillater. Cite the market. Give reasonswhy you are putting that amount outthere.

You want not only to gather perti-nent information, but also plan yourown approach to the negotiation.First, you should think about all ofthe issues that are relevant to you inthis negotiation. Now, many of those

are likely to be concrete issues, suchas salary. Sometimes there are otherissues that are also really important(eg, the responsibilities, the upwardmobility of the position, the quality,and how much this fits with what it isyou really enjoy doing in terms of pro-fession). Things like these are implicitissues, but we want to assign value tothe implicit issues, just like the moreconcrete issues; otherwise, you willallow salary and other forms of com-pensation to dominate, which leadsyou to accept an offer even thoughthat opportunity might not be as good

as an alternative. You want to man-age yourself by including issues thatare of value beyond specific concreteissues. You want to list all the issuesthat are relevant.

Next, you want to consider whatyour bottom line is for these issues.Now, it could be that you only have abottom line for salary and that every-thing else is just a combination. As amatter of fact, I encourage you to fo-cus more on having a bottom line forthe overall package than for each is-sue. If you have a bottom line for each

issue, its going to make even the triv-ial issues deal breakers. Its going tomean that you might be willing toreject an offer that is far better thanany alternative, simply because theemployer didnt meet the bottom lineon one of your least important issues.

You need to come up with somemetric that allows you to compareeach issue to another, apples to ap-ples, not apples to oranges, so that itwill allow you to determine and movein accordance with giving up lesser

issues for the sake of getting moreimportant issues. To do that you cancome up with a point scale of somesort (Table). You can start with 100points and divide it across the issuesand the issue options, in terms oftheir relative assessment value. Do-

ing this exercise is also a very infor-mative way to figure out what youcare about in a job. You can start withsalary in dollar figures, but thentranslate that into points. Then thinkabout the other things in terms ofpoints in accordance with how valu-able they are compared with salary.The only relevant point is that youcreate a point system that informsyou of the value of each issue com-pared with the others, the values ofhow much you give up or gain duringthe negotiation. The point system

also allows you to compare the overallvalue of this deal with another possi-ble offer or your current position.

You also want to include the valueof your best alternative to a negoti-ated agreement. Your best alterna-tive may be another offer you haveelsewhere thats worth more thanyour current position in terms of allthe issues. You need to compare thecurrent offer to your best alternativebecause you want to keep yourselffrom accepting an offer that does notprovide as much value as your bestalternative.

If there is an impasse and you cantreach an agreement and dont takethis job, what does that mean? If youaccept a job that is really low in com-pensation, the problem with that is,again, salary history is predicated onthat amount. It will take forever toget yourself back up to where youshould have been, if you start out be-hind in that regard. Sometimes it isbetter to reject a low offer and stay inthe market for another month or twothan it is to accept a low offer. That iswhy it is important to think about

your walk-away.If you just pick a bottom line andfocus on it, guess what you end upwith? You get the bottom line and youquit. Pick a bottom line and stick to it,but get information and think aboutwhat you aspire to, what you wouldlike to obtain. Determine what is yourhighest goal for this particular posi-tion and use that as your target. Thenwhat you have is a bottom line thatyou stick to, but a target that youfocus on. What that ends up doing is it

makes it so you dont satisfy and quitright after you get your bottom line.You walk away with a salary andcompensation that is worth morethan if you just picked a bottom lineand focused on it.

Your target should be the highest

amount you can defend. Where didthat salary come from? What do youhave to substantiate it? How does itcompare to the information you ob-tained from the market? What is ityou have to say to verify and confirmthe reasonableness of that position? Ifyou made it up, now you have no cred-ibility in the rest of the negotiation,plus you now have a black markagainst you in terms of the way inwhich you do business.

THE COUNTER-OFFER

How do you counter-offer? It is impor-tant for you to base your strategy bothon your own bottom line and walkaway and the whole overall picture;however, its also very informativeand tells you what directions to go in,if you know why the employer se-lected a particular compensationpackage and salary. For example, oneof the things that is common is thebasis of your education and the qual-ity of the institution that you went to.An organization will compare you toall the candidates in the whole na-

tional network, all the candidateswho have the same experience fromvarying institutions. They will havebiases about the quality of the educa-tion and the experience that you camefrom, one institution vs another. Youneed to know if the employer usesthose kinds of measures for determin-ing what kind of salary and compen-sation you get because then you canaddress such issues: I know you did agreat deal of work to survey the mar-ket, to see all the viable candidatesthat were out there. I know you did an

amazing job based on my interviewfor assessing the value of each of usrelative to others. I know that havingdone all that work, youve decidedthat I am the most promising candi-date and are making me the offer.Given that, you have just told me thatI am better than the marketplace.You have just told me that the skills Ibring to the table are at the top of thepool you saw. Well, guess what? Whatyoure telling me is my experienceand background and education come


April 2007 Supplement to the Journal of the AMERICAN DIETETIC ASSOCIATION S25


4/5

together to make me at the top of themarket. Therefore, I anticipate thatyou will pay me at a level that reflectsthat. To make those kinds of ad-dresses, you have to know why theemployer made the offer they did. Youneed to be familiar with all of theissues that are often included in ne-gotiating, things like compensatingadditional education or paying for you

to go to conferences. You need thatinformation and you need to thinkabout how it compares to others, asyou ask questions about the nature ofwhat it is the employers are propos-ing.

Whenever possible, should you bethe first one to put an offer on thetable in negotiations of this type? Itsinteresting and weve all been told

that you dont want to be the first toput an offer on the table. People areafraid they are going to ask for anamount that is less than the organi-zation may be willing to offer them.What we find is that most agree-ments, and this is particularly true in

salary and compensation, fall be-tween the first offer and counter. Itfalls somewhere near the middle be-cause we have this compromise, win-win mentality. Because of that, weend up near the middle. Except it iscloser to the first offer. The first bidon the table becomes an anchoragainst which every other solution iscompared. I would rather have mytarget out there than the employersproposal.

If you dont know what the em-ployer might propose, dont make an

offer because the cost is too great. Be-cause dietetics professionals haveADAs2002 Dietetics Compensation &Benefits and Salary Survey,the prob-ability that you will ask less thanwhat the employer is willing to offeris very slim. Now, Ive said before,dont talk about salary and compen-sation until the employer makes anoffer. They will tell you they are goingto make you an offer, or youre goingto be in that pool, which is when youwant to talk about it. You should feelfree at that moment, if they have notgiven you a formal offer, to tell them

the things you are looking for. Itsadvantageous to do that before theemployer makes an offer because itcan often mean that the recruiter willgo back and negotiate with the orga-nization to try and enhance the offerthat they give you. Its easier to dothat at this point than to get them togo back and try to change after thefact.

If the employer makes the first of-fer, dont come in with compromises.Respond with good supporting infor-mation about the marketplace that

corresponds to the contribution youthink you are going to bring.Your goal is to change the form of

the offer, not the value of the offerbelow your target. To do that, itmeans that you can either compro-mise or have the employer compro-mise, or you can find other creativeways of enhancing your value withoutcosting you value.

Remember, you want to try to shoottoward obtaining your target. Typi-cally, organizations are willing to dis-

Table. Sample point system for assigning value to issues in a salary/compensation negotiation

Issue OptionsRecruiterpoints

Candidatepoints

Bonus 10% 0 2,8008% 400 2,100

6% 800 1,4004% 1,200 7002% 1,600 0

Job Assignment Division A 0 1,000Division B 500 750Division C 1,000 500Division D 1,500 250Division E 2,000 0

Vacation Time 3 weeks 0 1,6002.5 weeks 700 1,2002 weeks 1,400 8001.5 weeks 2,100 4001 week 2,800 0

Starting Date August 1 0 1,000July 15 500 750July 1 1,000 500June 15 1,500 250June 1 2,000 0

Moving Expenses 100% 0 3,20090% 400 2,40080% 800 1,60070% 1,200 80060% 1,600 0

InsuranceCoverage Plan A 0 1,600

Plan B 800 1,200

Plan C 1,600 800Plan D 2,400 400Plan E 3,200 0

Salary $95,000 0 6,000$90,000 1,500 4,500$85,000 3,000 3,000$80,000 4,500 1,500$75,000 6,000 . . .

LocationSanFrancisco 0 4,000Los Angeles 500 3,000Atlanta 1,000 2,000Chicago 1,500 1,000

New York 2,000 0


S26 April 2007 Suppl 1 Volume 107 Number 4


5/5

cuss what issues are the most impor-tant to them and ones on which theyhave less flexibility. That way you geta sense of their priorities vs your pri-orities. Salary is most important tothe candidate, bonus is second, andoffice is third; the recruiters priori-

ties are not the same. When prioritiesare not the same, it provides a won-derful opportunity for enhancing gainwithout costing benefit.

In negotiations, we have a tendencyto talk about one issue at a time. Wetalk about salary, resolve it, andmove onto vacation. However, it isbetter to talk about combined is-suestalk about vacation at thesame time as salary. If you talk aboutone issue at a time, the only strategyavailable is compromise. For exam-ple, salary is the first issue that is the

greatest importance to both sides.The two sides want opposite things,but they care about it equally. Some-body has to compromise. But that isonly one type of issue. In most issues,one side does not value it at the samelevel as the other side. That is thecase with bonus and office. The can-didate cares much more about bonusthan they do about office space, whilethe recruiter cares a lot more aboutwhat office they send you to than theydo about bonus. If you compromiseyou would have a bonus of $10,000and an office of y. If you are willing to

take a step back on an issue the em-ployer cares less about to take twosteps forward on an issue you caremore about, then what you find isthat by trading off those issues,rather than compromising, the em-ployer gets what they care more aboutand you get what you care moreabout. You end up with, instead, abonus of $15,000 and office space x.You want to find creative ways ofmaximizing your own gain.

You need to listen carefully and askquestions about what is motivating

the recruiters offer. Sometimes theycant give you salary of a certain typebecause there is that boundary (inter-nal equity within the organization),but you have other compensation is-sues. For example, you just finishedgetting your masters degree and youowe money to the institution. Sincethey have a program where they payfor education, would they be willing tocompensate for the degree you justobtained? One of the things that peo-ple use more and more successfully

are contingency contracts, wherebyyou determine where the employerhas certain expectations that you willbring in. You can, however, eventhough they cannot pay you as muchsalary as you like, create a systemwhereby you are additionally com-

pensated, contingent on the addi-tional value you bring in beyond theemployers expectations. Its thesekinds of strategies that require us torealize that negotiating does not in-volve all issues that are I want theopposite thing as you and We careabout it equally. Those things arestrategic, not the objective.

Another thing that people are usingvery successfully is early performancereviews. Perhaps the employer cantpay you this because the starting po-sition only allows for this; however,

based on your performance, you couldbe reviewed in 6 months and get yoursalary increase then as opposed to 1year. Its that kind of flexible thinkingthat we find is very productive in sal-ary negotiations.

If you follow these steps, if youthink creatively, if you are deter-mined to maximize your own gain,and are willing to be assertive interms of that and still be warm, re-spectful, and constructive, you canachieve your goals.


April 2007 Supplement to the Journal of the AMERICAN DIETETIC ASSOCIATION S27

salary and compensation negotiation skills

Documents