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Multi-Issue Negotiations:�Negotiating a Job Offer

Roman Sheremeta, Ph.D.

Professor, Weatherhead School of Management

Case Western Reserve University

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Exercise: Rules

  • Exercise: New Recruit
    • Two-person negotiation over a possible hire.
      • A buyer: the recruiter.
      • A seller: the candidate.

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  • Rules:
    • You will be randomly assigned a role.
    • You will have 30 minutes to read the instructions.
    • You will be matched with somebody else in the other role.
    • You will have 30 minutes to reach a deal.
    • All signed contracts must be submitted before the deadline.

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Exercise: Role Assignment

  • Roles:
    • The recruiter = odd number (1, 3, 5, …)
    • The candidate = even number (2, 4, 6, …)

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Matching

1-2

15-16

29-30

43-44

57-58

3-4

17-18

31-32

45-46

59-60

5-6

19-20

33-34

47-48

61-62

7-8

21-22

35-36

49-50

63-64

9-10

23-24

37-38

51-52

65-66

11-12

25-26

39-40

53-54

67-68

13-14

27-28

41-42

55-56

69-70

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Negotiating a Job Offer

  • The average person changes 11 jobs during his or her career.

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  • Negotiating a job offer usually has two components:
    • Distributive components.
    • Integrative components.

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Preparing for Job Negotiation

  • (1) Self-assessment:
    • Determine your target (aspiration).
    • BATNA (know your worth, learn how much others are making in similar positions).
    • Reservation point (bottom line).
    • Determine the issues (salary, bonus, insurance, etc.).

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Preparing for Job Negotiation

  • (2) Assessing the other party:
    • Learn as much as you can about your potential employer (who will be interviewing you, how much they pay, bonuses, etc.).
    • Research the employer’s BATNA (who are the other candidates).
    • Be prepared to answer hard questions.

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  • (3) Assessing the situation:
    • Do negotiations involve more than one offer?
    • Are there time constraints?

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Exercise: The Recruiter

  • What is recruiter’s target?
    • Target: 13,200 points.

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  • What are recruiter’s BATNA and reservation price?
    • Finding another candidate.
    • Reservation price: 0 points.

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Exercise: The Candidate

  • What is candidate’s target?
    • Target: 13,200 points.

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  • What are candidate’s BATNA and reservation price?
    • Getting another offer.
    • Reservation price: 0 points.

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Exercise: Multiple Issues

  • Negotiated issues:
    • (1) Bonus
    • (2) Job Assignment
    • (3) Vacation
    • (4) Starting Date
    • (5) Moving Expense
    • (6) Insurance
    • (7) Salary
    • (8) Location

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  • Were all issues equally difficult to negotiate?

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Exercise: Compatible Issues

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  • (2) Job Assignment (similarly valued)

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  • (8) Location (similarly valued)

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Job Assignment

Option

Division A

Division B

Division C

Division D

Division E

Recruiter

0

-600

-1200

-1800

-2400

Candidate

0

-600

-1200

-1800

-2400

Location

Option

SF

Atlanta

Chicago

Boston

NY

Recruiter

1200

900

600

300

0

Candidate

1200

900

600

300

0

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Exercise: Compatible Issues

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  • (2) Job Assignment (similarly valued)

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  • (8) Location (similarly valued)

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Exercise: Distributive Issues

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  • (4) Starting Date (opposing interests)

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  • (7) Salary (opposing interests)

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Starting Date

Option

June 1

June 15

July 1

July 15

August 1

Recruiter

0

600

1200

1800

2400

Candidate

2400

1800

1200

600

0

Salary

Option

$90k

$88k

$86k

$84k

$82

Recruiter

-6000

-4500

-3000

-1500

0

Candidate

0

-1500

-3000

-4500

-6000

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Exercise: Distributive Issues

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  • (4) Starting Date (opposing interests)

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  • (7) Salary (opposing interests)

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Exercise: Integrative Issues

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  • (1) Bonus (differently valued)

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  • (3) Vacation (differently valued)

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Bonus

Option

10%

8%

6%

4%

2%

Recruiter

0

400

800

1200

1600

Candidate

4000

3000

2000

1000

0

Vacation

Option

25 days

20 days

15 days

10 days

5 days

Recruiter

0

1000

2000

3000

4000

Candidate

1600

1200

800

400

0

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Exercise: Integrative Issues

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  • (1) Bonus (differently valued)

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  • (3) Vacation (differently valued)

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Exercise: Integrative Issues

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  • (5) Moving Expenses (differently valued)

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  • (6) Insurance (differently valued)

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Moving Expenses

Option

100%

90%

80%

70%

60%

Recruiter

0

200

400

600

800

Candidate

3200

2400

1600

800

0

Insurance

Option

Plan A

Plan B

Plan C

Plan D

Plan E

Recruiter

0

800

1600

2400

3200

Candidate

800

600

400

200

0

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Exercise: Integrative Issues

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  • (5) Moving Expenses (differently valued)

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  • (6) Insurance (differently valued)

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Exercise: Total Surplus

  • Joint bargaining surplus:
    • 4,400 if splitting the difference on each issue
    • 13,200 if making all improving trade-offs

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Strategies for Job Negotiation

  • Present yourself:
    • Rehearse and practice the best ways to present yourself.
    • Provide information about your interests and priorities.
    • Provide justification for what you are asking for (keep your CV up to date, your experience, successful projects, etc.).
    • Be realistic (don’t try lowballing) but optimistic (setting a high target).
    • Tell the truth in a smart way.
    • Do not reveal your BATNA or your reservation point!

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How Much do You Make?

  • Question: “How much do you currently make?”
    • You do not have to answer this question, your finances are your personal business.
    • Your negotiating leverage goes down when you reveal your salary.
    • Don’t be horrified giving the recruiter a different answer than the one she’s looking for.

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  • Possible answers:
    • Avoid the question by saying: “I am willing to take a reasonable offer”.
    • You can also indicate what you want: “I’m focusing on jobs in the $90-$100K range”.
    • If you think it necessary for you to answer the question, you should focus on the highest point (i.e., all the benefits and bonuses, per hour if you work long hours).

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Strategies for Job Negotiation

  • Offer:
    • Don’t rush the offer!
    • Your goal should be to get multiple offers close to one another so that you can build your BATNA.

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  • Initial response:
    • Do not immediately agree to the offer!
    • Be enthusiastic and gracious.
    • Get the offer in writing.
    • Don’t negotiate if you are not or could not be interested.

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Strategies for Job Negotiation

  • Negotiate:
    • Assume that the offer is negotiable (don’t ask permission).
    • Negotiate multiple issues simultaneous – don’t get stuck on salary only, there are always tradeoffs.
    • In trying to reach an integrative solution, (1) ask questions about interests and priorities, and (2) provide information about your interests and priorities.
    • Reanchor the interviewer by reviewing your needs and your rationale.
    • Don’t offer more than a single concession at a time (don’t negotiate with yourself).
    • Understand and appeal to norms of fairness if needed (equality, equity, and need-based).

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Strategies for Job Negotiation

  • Follow-up:
    • State exactly what needs to be done for you to agree.
    • Use a rational strategy for choosing among job offers (identify issues, weight them by importance, come up with a single measure).
    • Do not try to create a bidding war, know when to stop pushing.
    • Build a long-run relationship.

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Things to Consider

  • Compensation:
    • Salary, bonus, stock/equity.

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  • Retirement:
    • 401k, savings plans.

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  • Additional benefits:
    • Payed leave: vacation, sick, holidays, personal days, parental leave, etc.
    • Insurance: life, disability, health, wellness programs, etc.
    • Reimbursements: moving, travel, gas, transportation, etc.
    • Other benefits: child care, education grants.

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“For The Experience”

  • Just Go With It

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Thank you!

Roman Sheremeta, Ph.D.

Professor, Weatherhead School of Management

Case Western Reserve University

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References

  • Thompson, L. (2004). The Mind and Heart of the Negotiator. New Jersey: Prentice Hall. (Appendix 1 & 4)

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