BAD TIMES LET THE GOOD TIMES ROLL!
How to negotiate advancement in a troubled economic market
By Professor Suzanne de Janasz and Beverly DeMarr - June 2012
You don't get what you don't ask for. This adage is especially relevant in the tough economic times that find individuals and organizations struggling to keep pace. Are employees so grateful to have a job that they choose not to seek a raise? Does knowing that the organization is struggling keep employees from asking…assuming they wouldn't be successful and choosing to avoid hearing "no?"
Asking for a raise or otherwise drawing attention to oneself at a time when many employers are cutting costs, often by workforce reductions, may seem counterintuitive. Despite widespread pessimism, savvy employees recognize that tough economic times may offer unique opportunities to improve their employment situation by helping their employer reduce costs, increase revenues, or improve competitiveness. Your ideas and innovations will provide invaluable rewards to the company; a small share of those rewards in the form of a raise is realistic and a way to make you feel appreciated.
Know what you want and why
To increase the likelihood of a successful negotiation, start by clarifying exactly what you want and why. If you are seeking a raise, you need to articulate the amount you expect and a compelling reason for it (NOT that the rent on your flat was just increased). Research salaries for someone with your responsibilities, education and experience…and in your geographical region. Salaries in London are higher than they are in Warsaw. If you believe you are underpaid, demonstrate this with reliable data. Better still, demonstrate your worth, by pointing out inefficiencies that your ideas have reduced or new clients you've brought in. Who could argue with a 10,000 Euro raise for someone who has increased revenues by 175,000 Euro last year?
Finally, consider the other party's goals in your preparation. Would your promotion enable your boss to offload tasks that would free up his time for more strategic activities? Look for voids that you might fill or problems you might alleviate. And always, remember when dealing with an employer, maintaining a good relationship is a key interest regardless of the substantive outcome of the negotiation.
What if the boss says "no?"
When you know what you want and why, you're better equipped to consider multiple satisfactory alternatives. Going in with an ultimatum is unwise; such threats can harm the working relationship. In times of budget crises, more salary might be difficult to agree to, but there are other ways to meet your needs for recognition, autonomy, responsibility or even free time. Working from home one or two days a week would save you several hours of commuting, as well as petrol, and wear and tear on your car (and your nerves!). Leading a team in the newest location might not immediately change your salary (though it will change your responsibilities), but if your company values expatriate assignments, this investment could pay dividends in the future. Considering attractive alternatives to your goals gives you more confidence in the negotiation process since you aren't in the position of having to accept whatever is – or isn't – offered. It also gives you the ability to be persistent without alienating the other party. By suggesting other possible solutions, you help reframe the negotiation into a collaborative problem-solving session.
Finding a "yes"
Sometimes, negotiation ends in a stalemate. The employee leaves unhappy, and, as is often the case when a boss's hands are tied by rules or other constraints, the boss leaves frustrated. Friction remains, along with the employee's declining motivation and commitment to the organization. The economy may be tough, but talented employees with in-demand skills will find other options. The unhappy, talented employee is attractive to other employers, and if he leaves, the losses will be great (recruiting and training costs, learning curves, lowered morale among remaining employees, loss of employee's clients). Research suggests it costs as much as 2.5 times the annual salary to replace a professional/managerial employee.
To avoid this situation, prepare to present a yes-able alternative. For example, you might negotiate an increase (or bonus) that is tied to the accomplishment of a specific goal.
"If my plan for decreasing production costs succeeds and I can demonstrate a 5% reduction by 31 December, I think it's fair to receive a bonus equivalent to 10% of that overall savings, with another 10% of that savings distributed among the team I'm leading. Compared to this time last year, that would mean a 150,000 Euro savings: 15,000 to me, 15,000 split among the team of six, and 120,000 savings to the company. How can we get senior management's approval on this?"
Or, "How about we make the raise (or bonus) contingent on exceeding my sales targets? That is, if I exceed my target by 10%, I get a 5% bonus, and if I exceed my target by 20%, I get a 10% bonus?"
Another yes-able alternative would be a phased-in agreement.
"Considering the data I presented which shows I am underpaid by 20% compared to all the recent new hires, how about we increase my salary by 5% in June, with an additional increase of 5% at year-end, if I bring my project in on-time and on budget?"
Or, at the very least, you might agree to revisit the conversation at a specific time, for example, in three months.
Closing the deal
Whatever is decided in the negotiation, be sure you nail down the specifics of your agreement (verbally, and in a follow-up email), including the measures to be used and timelines for a phased agreement. Thank your boss for taking the time to discuss this important issue, and remind her of the benefits she and the company will reap.
In tough economic times, your good performance is more valuable than ever. There may be cheaper employees available, but no one knows the job—or is as committed to seeing the company succeed—as well as you. Remind yourself of that, and prepare yourself thoroughly to remind your boss what you deserve and why. You might not get everything you ask for, but you will certainly get none of what you don't ask for.
Suzanne C. de Janasz is Professor of Leadership and Organization Development at IMD, where she teaches in the MBA and Orchestrating Winning Performance programs, as well as in numerous customized executive development programs. Beverly J. DeMarr is a Professor of Management at Ferris State University in Michigan. They are the authors of Negotiation and Dispute Resolution, Copyright 2013 by Pearson/Prentice Hall.