Radiating confidence - salary negotiations, Pedersen & Partners

December 09, 2015

Conrad Pramböck, Head of Compensation Consulting at Pedersen & Partners, explains how to confidently approach a salary negotiation.

Imagine you go to your bosses to ask them for a 10% raise, and they reply, "that is out of the question. You had better get back to your work." What next? Whether or not you will leave the meeting with a bigger paycheck in your pocket will depend primarily on who has the better BATNA.

BATNA is short for "Best Alternative To a Negotiated Agreement". In other words: Who has the better alternative if negotiations fail and no agreement can be reached?

Better performance and greater responsibility are particularly strong arguments in favor of a raise. However, it can happen that, although you constantly accept more responsibilities and are a top performer year after year, you do not earn more because you lack a better alternative to your current job and pay.  

Arguments for a raise should be contemplated well in advance.

A lawyer invited the shortlisted candidates to her office for a final interview round. "Ladies and gentlemen! We would really love to hire you all, but, alas, we have only one vacancy to fill. In front of you, you find a pen and a piece of paper. Please write down how much you would like us to pay you. If yours is the lowest bid, you are the successful candidate and will start working with us next Monday."

Who has more bargaining power in this case? The lawyer, without a doubt. Why? Because her BATNA is better since she can choose from among a number of equally qualified candidates.

Something similar happened to a friend of mine who holds the position of art director in an advertising agency. Thoroughly prepared, she went to her boss to ask for a pay increase. However, he interrupted her, pointed to a huge pile of papers on his desk and asked: "Do you know what this is? 200 applications for your job. Any more questions?"

But it is by no means a given that the employer has more bargaining power. A headhunter called a candidate, saying: "You are the only remaining candidate on the shortlist for our client's vacancy. Please tell us your price."

The rule of thumb is: The more unique your skills and your network, the greater the demand for you on the job market. Having more options is usually synonymous with having a better BATNA. In everyday life, we may have the agony of choice. Career-wise, however, the opposite is the case: Not having a choice is agonizing because it means you must put up with everything.

When it comes to negotiations, it is important to keep the following in mind: If you force people to do something, you will cause lasting damage to the relationship of trust between you and them. Ideally, negotiations result in win-win situations that are in the best interest of all parties involved and will benefit them on a long-term basis. Exerting pressure is usually counterproductive. The same goes for blackmailing, which is rarely advisable and will work only for a very short period of time.

What you can do, though, is actively develop your BATNA. Ask yourself: "What am I going to do if I do not get what I want?" Being aware of your options will make you feel confident, relaxed and calm. As a result, you will emanate inner strength during the negotiation process, knowing that nothing can happen to you. Whatever the outcome, you will win.

However, you need to be extremely careful as far as revealing your BATNA is concerned. If you confront your boss with the fact that you have a job offer from another company, you must be prepared to leave your current position immediately.

Should the other side reveal their BATNA, you can point out to them that it is not as good as they think it is. A boss told an employee, "Feel free to accept our rival's job offer, but let me assure you it will not make you happy. Most newcomers leave the company again within three months at the most because of the negative working atmosphere. You are still young. Perhaps you have to go through this experience, but as a friend, I would advise you against it. If you start feeling unhappy there, you are more than welcome to give me a call. Who knows, maybe we can hire you again."

The key to a successful career is to do a good job, accept responsibility and build a professional network. In order to be able to achieve negotiation success, you need a BATNA, and it is important you always keep developing your BATNA. With a better alternative under your belt, you are ready to negotiate your paycheck with confidence at any time.  

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