During pre-negotiations you gave some broad hints about salary without giving an exact figure or mentioning salary directly. During the interview, when you realized that you had made a sale, you stated a specific salary to negotiate from. Which was 15 to 20% above the top of your range. Several things can happen at this point:
- The PE may name a salary figure within your range that you find acceptable.
- The PE may counter with a salary at the lower end of your range (or below it) that you are not ready to accept at this time.
- The PE may state his own salary range, which may or may not overlap yours.
- Finally, the PE may defer a decision, stating that he must discuss the matter with his staff and asking you to return for another meeting later.
If the PE counters with a range, your target is of course the top figure of that range. Chances are you will not be able to get more than the top figure. However, if your minimum acceptable salary is above this, now is the time to say so. Tell the PE that the job appears very challenging and you feel you would enjoy working for the company; however, you already have an offer for $X (a figure 10 to 20 percent higher than your minimum acceptable figure). If he immediately counters with a figure which is higher, but still below your minimum acceptable figure, tell him that you feel the minimum acceptable salary taking all factors into consideration is $Y (a figure X percent above your minimum). You will leave room for further negotiations without going below your minimum acceptable figure, and you may still get more than your minimum amount.
If the PE refuses to move into your acceptable range, thank him for his offer and tell him you are unable to accept. Let him know that you are still very interested in the job, and ask him to contact you in the next week or so if there is any way that the salary level can be increased. If the PE says that it is impossible to go higher, try to make up the difference by negotiating for fringe benefits above the standard package offered.
In addition to salary, you can try negotiating for a company automobile, an expense account, club memberships, a bonus, or stock options. You might also consider more frequent salary reviews or an initial review after three to six months. Sometimes even though the PE cannot increase the basic salary for the job, he can increase the fringe benefits, so this approach is more than worthwhile.
If an impasse occurs, tell the PE that you'd like a few days to think the situation over. Make an appointment for an additional meeting on the spot. Before you return for the second round, think up several additional arguments to support your minimum acceptable figure. If the PE appears uninterested at this point, or if you sense that he will not change his stated (unacceptable) offer and will not or cannot negotiate fringe benefits, it is best to thank him, break off negotiations, and not waste any more of your time.
What if the top figure of the PE's range is within your range? The situation is similar to that of the previous offer, except that you now have a top figure which you can accept. However, the PE may be willing to go higher, so you should keep negotiating. Again, you can cite a mythical offer.
I sometimes get asked about mythical offers. First, are they ethical? I believe they are. As a friend of mine who teaches negotiating says, "A lie is not a lie when the truth is not expected." What he is talking about is the fact that few expect total factual accuracy when negotiating. You may have seen examples of this yourself on TV news reports of strikes. The reporter questions a representative of either labor or management about the other side's latest offer. "Unconscionable. We can't live with it. We will never accept it." The next day there are smiles all around. The offer has been accepted. That's negotiating. No one points out that "the facts" stated by both sides turned out to be false. And the company is still profitable and the workers still earn a living-even though this was stated to be "impossible" only a few hours previously. Job hunters also want to know, "What if they ask me the name of the companies that made the mythical offers?" You don't need to tell your PE everything they ask. The PE really doesn't expect an answer to a question like this. Just smile and say, "That's proprietary and competitive information."
Okay, so tell the PE that you already have an offer at $X (the PE's top figure). In response, the PE may meet or even better the mythical offer. At worst, he will probably continue negotiating.
Why Harriet C.'s Husband Was Mad At Me-But Not Afterwards
Harriet C. was one of my first students. She learned her lessons well. Within eight months after my course she had a senior position with a well-known company. Several years later, she quit work and went back to school full time to get her MBA from a well known university.
Several months later, she called. "I used the letter campaign again; however, I want to be a management consultant with a major firm in this area. There weren't that many PEs to mail to. Anyway, I got an interview with… (A prestigious management consulting company). I had a series of good interviews, and they made the offer yesterday. My PE told me they were going overboard to get me and made an offer of $40,000. (That year $40,000 a year was among the top 1% offered to new MBAs.) I asked him if he could do any better, and he told me that $40,000 was the absolute maximum."
"Why do you want more," I asked. "$40,000 sounds pretty good."
"Well, said Harriet, I read that a graduate of Harvard Business School got $47,000. I should be able to do the same. Anyway, I took the advice in your book. I told him I really thought his company was tops and I really wanted to work for him. However, I have two other offers at more money, so I would have to think it over."
"Are they real?" I asked.
"No," Harriet replied, "they're mythical offers. And my husband is really mad at you. $40,000 a year is more money than he makes as a chemist, and he's been working for ten years. He said I should have taken the $40,000."
"What are you supposed to do now?"
"Well, I'm supposed to get back to them tomorrow. What should I do?"
"Don't worry," I said. "You're in great shape. When you go in tomorrow, tell him again how much you want to work for him. But then say, 'But one of my offers is at $47,500. Will you meet that offer?"'
"What if he says 'no', "asked Harriet,
"Than just pause for several seconds as if you were thinking say, 'I wouldn't do this except that I really want to work for you, so I'll take the $40,000.' If there is any chance of you getting more, you'll get it."
Harriet called me the next day. "My husband isn't mad at you anymore," she exclaimed. It happened just as you said. When I asked him if he would meet the $47,500 offer, he said, 'Harriet, I can't. The best I can do is $45,000.' That's when I almost screwed up. I jumped up and said, I'll take it.'"
Note that the PE had told Harriet earlier that $40,000 was absolute tops... but it turned out to all part of the negotiation.
