The Power of StandardsHow not to negotiate your salary
My last column addressed the first step in a successful negotiation: understanding both your own and the other person’s interests. But what happens when your interests conflict? This is usually the fundamental challenge in salary negotiations: you want enough money to support your lifestyle, while your boss wants to keep the company’s costs down. The key is to agree upon an objective standard—a lesson I learned the hard way.
After two years teaching law in Nigeria with the Peace Corps, I returned to New York City in the middle of a hot July and began to look for a job, only to find that most law firms had already done their hiring for the year. One firm had an opening, however, and after a series of interviews, I found myself in the office of the managing partner, who told me the firm was prepared to make me an offer. “How much do you want?” he asked. How much did I want? I thought he was supposed to tell me how much they were going to pay me. With a gulp and a quick calculation, I gave him a figure I thought would allow me to live comfortably in the city. He accepted the number and shook my hand.
As I settled into New York and began catching up with law school classmates, I came to realize that my firm was paying me almost 10 percent less than my classmates at other firms were making. How had this happened? Had I been too timid in my salary negotiation? Had the managing partner exploited my ignorance?
The basic cause of my predicament was that I had failed to use an appropriate standard in my salary negotiation. Rather than blurt out how much I wanted, I should have first tried to agree on a fair salary standard—say, the prevailing wage for new associates or the current salary level for corporate lawyers two years out of law school—and then negotiated a specific figure.
Whether you are negotiating a salary, the sale of a car, or your share of partnership profits, linking your proposals to an objective measure has several advantages. First, it makes you more persuasive. Asking for a raise so you can make payments on your Ferrari, your Park Avenue condo, and your annual two weeks in St. Bart’s is a lot less convincing than justifying your request based on the salary of your predecessor or others with your qualifications in the same industry.
Second, the use of a standard helps to avoid turning a negotiation into an emotional battle of wills that will inevitably leave one side feeling exploited. Third, using standards not only facilitates agreement at the table but also helps the other side convince their superiors that the deal they have made with you is fair and in the best interests of the organization.
The story of my own botched salary negotiation offers some lessons:
Make the development of an appropriate standard part of your preparation for any negotiation. That means doing some research before sitting down with the other side. If you’re not armed with the right information, you could be caught off guard and fail to secure your objective.
A standard used in a negotiation may have its basis in a variety of sources: precedent, prevailing industry practice, a legal or moral principle, an independent expert opinion, custom, market value, a cost-of-living index, or the prime rate, to name just a few. Choose the standard that best advances your interests.
Insist that the other side use objective standards, too. If your boss states a figure, before you accept it, reject it, or argue with it, ask what standard was used to arrive at it. If he justifies it based on “company policy” or “the way we do things around here,” ask him to state the objective basis of that policy or precedent.
If you and the other person propose two different standards, discuss an objective basis for choosing one. If you can’t agree, seek out a respected third party.
Salary negotiations can be among the trickiest parts of landing a job, but just as you wouldn’t go into an interview unprepared to answer questions about your strengths and past performance, don’t neglect to bring objective data to plead the case for what you’re worth. It’s sure to make a good impression on your new employer, and who knows, you may make those Ferrari payments after all.
Jeswald W. Salacuse is the Henry J. Braker Professor of Law and a former dean of the Fletcher School of Law and Diplomacy. He is the author of The Global Negotiator (Palgrave Macmillan), from which his commentary in this issue is drawn. His latest book is Leading Leaders: How to Manage Smart, Talented, Rich, and Powerful People (AMACOM 2006).