Salary negotiation is a really hard process, and one of the top concerns of job-seekers in any industry. It’s the “poker round” of the hiring process, where both sides try to set aside their enthusiasm for working together and think in their own best interest, cards closely held to their vest, and wait for the other to either show their hand or fold. It can be gut-wrenching and nerve-wracking, because nobody ever wants to leave money on a poker table.
Before I go any further with this analogy, I want to say a couple of things. First, I am a lousy poker player and in many ways, a lousy negotiator, because I’m not motivated by money. I’m usually motivated by fear of losing money, and a desire to win. And I struggle with both, and can be frustrating to play poker with, as a result. I am usually the one to fold early, and I have a lousy poker face. Other players can usually tell when I have a winning hand, and they will fold early rather than fork over a lot of money. So take my advice about poker and about negotiation at your own risk! I usually end up leaving money on the table, or having others walk away out of sheer frustration.
But come along for a moment, and let’s break this down, using the poker game analogy, because I think many people can relate to it.
When you are dealt a hand in poker, you know what it is, and depending on whether you are playing stud, or draw, you either know your hand outright, or you can make a couple of trade-outs for fresh cards, to see if you can find a hand worth playing.
If you are playing stud poker, you know your hand from the get-go, and can make your bets based on that hand and your perceptions of the moves others around the table are playing, and whether they are betting, calling or holding.
If you are playing draw poker, you may place an initial bet, based on your gut feeling about being able to cobble something together worth doing, and then raise, call or fold, again based on the moves that other players make in response.
In the salary negotiation process, you also have to start with the hand you are dealt. It starts with your Unique Value Proposition. This is the where you describe your knowledge, skills and experience in ways that show your potential fit into a position. The keys to putting together this UVP (also referred to in the business world as a Unique Selling Proposition or USP) is that you have to explain who you are, what you can bring to the table, and why you are the best person to do so.
Let’s put a formula to negotiation, using your Unique Value Proposition:
- First, describe who you are, in terms of current education, skills and experience.
- Second, differentiate your education, skills and experience from other candidates.
- Third, describe, in terms as concrete as possible, the value that you will add to the employer’s bottom line, that others cannot. (i.e., how you will solve their problems.)
- Fourth, be ready to fold and walk away when the stakes get too high.
As I mentioned before, I am a lousy negotiator and this does affect my bottom line. I’m going to be spending more time in the near term explaining the Unique Value Proposition for this site and for my coaching programs, trainings and consulting services.
In the process, you’ll see content on this site, and the nature of the free and paid programs that go with it, change. I’m doing this for two reasons: so you can clearly see the value offered, and so that I can tweak the business model so that it results in sustainable business. In short, because being a good coach and a lousy businessman isn’t sustainable, and I really want to win, for the sake of my family and all they’ve sacrificed over the last couple of years to help me build my sites and my business.
It’s basic economics in action. Let’s return to what I learned in ECON 201 when I was actually listening to Dr. Benjamin’s lectures in Sirrine Hall my sophomore year at Clemson, when I wasn’t sleeping off the night before, or checking out the cute sorority girls who wouldn’t really even tell me the time of day.
Transactional business is driven by the concept of marginal utility. The success of any business model hinges on the perceptions of price in relation to utility of the product or service. In business transactions, people (including employers) don’t pay for experience. They don’t pay for history or content. They pay for value.
When utility (perceived value) outweighs price (i.e., risk), people will pay more (by upping their ante.) When price (risk) outweighs utility (perceived value), it’s easy to fold and walk away.
Key questions to consider in preparing for negotiation:
- How are you presenting your value?
- How are you contrasting your unique value against other options (other candidates, or starting over with a search.) This might also be seen as overcoming objections to price.
- How comfortable are you in protecting your unique value, by folding (walking away)?
Once you get these points down, you’ll be ready to not only play, but to win.
So are you going to up the ante, call, or fold?
Hate my analogy? Love it? Tell me in the comments!
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