When Negotiating, Leave Money On The Table…Build A Sense Of Fairness

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Over the past year I’ve been involved in several large and important negotiations. Failure to negotiate well in any of those situations would have had some ugly effects on my businesses. The following is some guidance that has helped me successfully work my way through those discussions and get to a place where I’ve been happy with the outcomes.

I read a great article in Fortune a while back. Joanna Shields of Bebo.com quoted her dad: “Your career is long and the business world is small. Always act with integrity. Never take the last dollar off the table.”

Fantastic advice. Unfortunately many of us never heed it. We get wrapped up in near term numbers, performance bonuses, and, yeah, I’m gonna say it, greed. In economic times like the present, these pressures are amplified.

Many folks look at business as a competition. In many cases it is (duh, hence the term “competitors”). Sadly we sometimes extend the definition of competitor to include anyone sitting across the table from us. Quite often, that person across the table is supposed to be our partner but we engage in completely dysfunctional competitive or territorial behaviors. Then bad things happen. What kinds of bad things? You know I’m going to tell you.

Shields’ father continues: “You can always do a slightly better deal, but that incremental dollar or windfall is not worth creating an imbalance that affects the relationship. You have to have the intuition to know when to say, ‘I’m going to make sure that we walk away feeling like we’ve both done well.’”

The Hosed Supplier

I had a business partner and friend who was a supplier to a longtime customer. They had a wonderful relationship up until a new manager was brought into the mix at the customer’s organization. My friend traveled to the new manager’s location and introduced himself then reviewed what they had accomplished together as business partners.

He thought the meeting had gone well. He was wrong. A month or so later the customer requested another piece of work from him. After he quoted his normal rate he’d had with this client for several years, he received a terse note back that “this rate is unacceptable. It needs to be $X or we’re taking our business elsewhere.” To clarify, $X was about 75% less than the rates this client had paid him (eagerly, might I add) in the past.

My friend was distraught. Eventually they came to a more reasonable and acceptable rate but the relationship had been poisoned. I’m sure the manager at the customer did very well on her performance review because she slashed costs (he wasn’t the only supplier she had scorched). Unfortunately there probably wasn’t a section on her review for “supplier relationship quality” because she would have failed. Miserably.

My friend no longer trusts this customer. They didn’t care about the impact they’d had on his company. Now when he has to choose whether to do a piece of work for the customer or another customer, his choice is pretty clear. I’m pretty sure that customer no longer gets my friend’s best efforts. And to be honest, I can’t say I fault him for it.

New Hires and Starting on the Wrong Foot

We’ve all hired people. I have a buddy who recently went through an interview process. He loved the management and the team members he’d be working with. They loved him too. They loved him so much they made him a job offer.

Then HR stepped in. They sent him the offer and it was lower than he was expecting. They then proceeded to negotiate and nickel and dime him on all aspects of his package – base, bonus, signing bonus, moving allowance, etc., etc., etc. Every aspect of the offer became a painful negotiation. It got so painful that he called the hiring manager.

“I’m sorry but I’m not going to be able to take the role.”

“What?! Why not? We love you and I thought you loved the team and the position.”

“I do. But I hate the people you have negotiating my compensation package. If that’s how I’m going to be treated, I’m pretty sure I don’t want to be part of your organization.”

He didn’t take the job. Incidentally, my friend heard after the fact that the hiring manager had gone ballistic on the individual negotiating the package. That manager clearly understood why taking the last dollar off the table is a terrible idea.

I’m asking you to remember this principle. Whether you’re negotiating a big deal, a new contract, a new hire offer, or simply a rate change, remember you’re going to have to work with these people after that event. Sure you can be the hero and save a bunch of money short term but longer term you’re building a terrible reputation and eventually no one will want to work with or for you.

Leave the buck on the table. The goodwill and sense of fairness you build by doing so is worth infinitely more than that dollar.

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