One thing I learned in a class on negotiation was that many people look at negotiation as a one-time thing. Examples like buying a car happen for most buyers once every 5 to 10 years. It is also a negotiation that most often happens with a new sales agent / sales manager combo for every transaction.
However, a large number of negotiations in business happen with the same group of people over and over again. The example was a set of directors in a large org negotiating over budget. That kind of thing might happen every single business quarter between a stable set of peers.
Whenever I see strategies like these I consider those two cases since they have influence on how negotiations are done. In the car-sales case, there is an incentive to get the most out of the individual negotiation since you almost certainly will never see each other again. In the business case you are incentivized to prioritize the relationship with your peers over any individual negotiation.
So I don't agree with the simplistic conclusion in the article. It seems to only consider fairness within the context of a single transaction/negotiation. It does not consider what happens when this strategy is repeated between actors across multiple negotiations.
> Whenever I see strategies like these I consider those two cases since they have influence on how negotiations are done. In the car-sales case, there is an incentive to get the most out of the individual negotiation since you almost certainly will never see each other again. In the business case you are incentivized to prioritize the relationship with your peers over any individual negotiation.
Very insightful point.
The biggest salary negotiation mistake I see is when people assume the negotiation is of the first type (one-off, never see people again) instead of the latter type (part of an ongoing relationship).
If a company works hard to minimize someone's compensation expectations and convince them to accept below-market salary, they're going to pay for it later when the person wises up and leaves for something better. This scenario is well-known.
The less discussed scenario is when a candidate aggressively negotiates a very above-average compensation but subsequently performs in a below-average manner. This is one of the most common complaint scenarios in a private manager forum that I'm part of: Managers who get wowed by people with excellent interviewing and self-selling skills who end up underperforming their lesser-paid peers later. It generates a lot of guilt and anxiety for managers when they realize they've been duped into inverting the contribution:reward relationship in their compensation structure.
These people are the first to go in any downsizing, reorgs, and layoffs (and rightly so), but they're often great at talking their way into the next highly paid job almost immediately. This is one of the main reasons experienced managers will go extra deep on reference checks for people with job-hopper resumes.
> The less discussed scenario is when a candidate aggressively negotiates a very above-average compensation but subsequently performs in a below-average manner. This is one of the most common complaint scenarios in a private manager forum that I'm part of: Managers who get wowed by people with excellent interviewing and self-selling skills who end up underperforming their lesser-paid peers later. It generates a lot of guilt and anxiety for managers when they realize they've been duped into inverting the contribution:reward relationship in their compensation structure.
Isn't this more a failure of the management? What can justify having wide disparities in starting comp for the same role? Seems like the striving candidate should be bumped up a level & you just hold them accountable to the higher bar, rather than evaluating their performance based on comp.
That's the point - If you bring someone in at the wrong level (higher comp = higher level) then you have a major problem.
Compensation does vary within a role, though. Even at organizations that publicly share salary info there is often a wide range within each band and the salary bands may overlap.
Paying everyone in perfect lock-step with each other sounds great in theory, but you end up either paying significantly more than you need to or locking yourself out of otherwise great hires that were just a few thousand short of your fixed salary. Obviously, not everyone within a role performs exactly the same.
> The biggest salary negotiation mistake I see is when people assume the negotiation is of the first type (one-off, never see people again) instead of the latter type (part of an ongoing relationship).
That depends what you're negotiating. As a counterexample, if you negotiate a big raise upfront for your promotion and then "coast" for 5-10 years, you're still better off than negotiating a series of smaller raises every 2 years, because you forego the overhead of multiple negotiations. Personally, I'd rather just focus on the work.
Negotiation is costly if you're not good at it. It's easier to justify your value once, than multiple times. Due to anchoring, and people getting used to the increased output you bring, it will become harder and harder to negotiate as you go further.
I prefer the way my company does it. There is no negotiation. Roles are fixed and everyone in the same role makes the same amount of money. If you get hired for a certain role you will make the associated salary and not a dollar more or less.
Which also might be fine. Trying harder doesn’t always lead to more useful work done, you might be better at your job if you’re more relaxed and don’t overwork yourself, and if your motivation of work is to keep up with an image of how other people work there’s a good chance you won’t be as good as an employee who cares about doing work well because they care more about quality than quibbling about fairness.
Sometimes people don’t do as much or as well for things that are none of your business and if that becomes an incentive problem for you, you’re the problem.
> One thing I learned in a class on negotiation was that many people look at negotiation as a one-time thing. Examples like buying a car happen for most buyers once every 5 to 10 years. It is also a negotiation that most often happens with a new sales agent / sales manager combo for every transaction.
You may have been implying this already, but just to reinforce the message: it's an asymmetric event frequency.
For the buyer, it occurs once every few years. For the seller, it's occurring on a weekly or perhaps daily basis.
That means that the seller is fairly likely to know most of the common weaknesses and opportunities for buyers, and the ways in which those buyers communicate (or fail to communicate) them. Sellers can choose to do what they want with that information advantage.
To me the question is a broader one: why are Alice and Bob accepting to enter into some byzantine challenge where they have to co-operate in order to receive a larger amount of pizza? And why is there an entire book for sale on the topic, when at first-glance it seems to closely (~80%) resemble what can be defined as the prisoners' dilemma within a paragraph?
I think Alice and Bob should publish the ridiculous situation they've been faced with at the pizza restaurant and find somewhere else to go to eat, and I don't think they require a book to teach them that.
I can’t quite tell if you’re missing the point. The pizza analogy is just some simple case that’s easy to explain in a paragraph. The book is on negotiations, so they need some easy case to negotiate.
I’ve had to negotiate for my team at work before and one common thing I hear at private discussions with other parties when in planning for the meetings is that it’s backwards and toxic to have business politics and they want to leave the team over it. this feels like you’re take - and it misses the point that today, you have to accomplish some task. Even if you’re against politics at work, you’re beholden to them once they start. Tomorrow is for deciding if you should accept reality or make changes. And some things aren’t likely to go away.
Generally I think my perspective on the issue is that a lot has been written already, and that people have a tendency to rewrite and bring-to-market content that is a rehash of existing knowledge, as opposed to gathering people together towards consensus (and expansion, and critique) of existing best-known information. Perhaps writing books is an expression of that; and perhaps my frustration is because I wonder whether we could do better in the digital age.
In the context of workplace politics: again, these are all patterns that have been repeated for generations. Perhaps it's possible to document and make those patterns public, and then help people to view and decide upon the kind of workplace(s) they'd like to contribute to.
Or, as in this case, "first, assume a pizza parlor owner who, when two people cannot agree on how to split up the whole (which they presumably already paid for) will give them just half a pie, but asymmetrically allocated".
Sheesh. What real world scenario is this supposed to model?
>there is an incentive to get the most out of the individual negotiation since you almost certainly will never see each other again
You've got great insights here. That said, I can't help but think that perception - that it is a one-time, transaction relationship - is a key difference between winners and losers. What I mean is, from the standpoint of the salesperson, they should be seeking a long-term win and not just a win in this transaction. We'll use your example of a car, but I can think of many other places where this also applies. In the the car situation - you really want to sell / lease them the car, but you also want there services business. You want them to tell their friends to come buy from you. You want them to come back in 5-10 years and buy/ lease their next car from you. None of that happens if they walk away feeling like it wasn't a fair situation.
Likewise, even in a seemingly "done" negotiation, things have a way of cropping up. Like the buyer comes to take possession of the car and decides that the tires look more worn than what they believe, and suddenly want to renegotiate. Or, maybe you've agreed on price already, have started signing the paperwork, but then the salesperson wants to upsell you on the truecoat. Point being - I think you were even more right than you may have intended, in terms of the ongoing nature of negotiations rather than a fixed-position scenario.
this is game theory 101 too. The prisoner’s dilemma is a simple game, like tic tac toe, and the only correct move is to betray the other player every time. But repeated prisoners dilemma is a much more complicated game about trying to get as much out of your opponent as possible without breaking down cooperation altogether.
I like the way you say that. I was going to say that Ann can push to split the pizza 7-5 if it is OK that she is being an a@#hole. If not, she should split it 6-6.
I think the author makes a good point in the article, but he should have at least mentioned future ramifications.
The lack of context in the original deal is such that it might make sense to call Alice an "a@#hole" for not agreeing to 50/50, but I don't thinks that's the case in any real-world example of this.
Why was Alice being offered 4 and Bob 2? Perhaps Alice had done twice as much work as Bob to get the original pizza. Perhaps she had invested twice as many resources. In that case, why would the "fair" deal be one in which Bob is suddenly getting the same compensation as Alice?
The solution outlined in the article makes more sense.
The pizza parlor owner is simply invented as an all-powerful force in the universe, with the capability to decide on the fallback positions. It is totally unclear to me what real-world scenario this is supposed to refer to.
However, a large number of negotiations in business happen with the same group of people over and over again. The example was a set of directors in a large org negotiating over budget. That kind of thing might happen every single business quarter between a stable set of peers.
Whenever I see strategies like these I consider those two cases since they have influence on how negotiations are done. In the car-sales case, there is an incentive to get the most out of the individual negotiation since you almost certainly will never see each other again. In the business case you are incentivized to prioritize the relationship with your peers over any individual negotiation.
So I don't agree with the simplistic conclusion in the article. It seems to only consider fairness within the context of a single transaction/negotiation. It does not consider what happens when this strategy is repeated between actors across multiple negotiations.