Mind over matter. We’ve all heard it before, and you know it’s true. The mind is a powerful tool. So powerful in fact, that you should harness it in your salary negotiations.
Here are two (counter-intuitive) strategies to help you foster the right kind of negotiation mindset.
Strategy 1: Deal with ALL terms at once
Believe it or not, your biggest enemy in negotiation isn’t your counterpart; it’s a ‘fixed pie’ mindset.
A fixed pie mindset leads us to interpret competitive situations – like negotiations – as win-lose affairs, so that a gain for you means a loss for them and vice versa. The result is that you end up competing over a limited pie. After all, who wants to end up with the smaller slice of pie?
Consider your next salary negotiation for example. Your employer offers you $90,000. But you want $100,000. If salary is the only issue on the table, then one or both parties would need to ‘concede’ ground to reach a deal.
Even if you manage to negotiate a middle-ground compromise of say $95,000, that outcome is actually worse for both of you than you’d initially hoped for. You’ve failed to optimize the value that could have been created.
So how do you break out of the fixed pie mindset to create maximum value outcomes for everyone?
Fixed pie mindsets occur because both parties focus on a single issue – like salary. To grow the value of the pie, you’ll need to ‘open up’ the discussion to focus on mutually beneficial tradeoffs which deal with various issues.
You can do that by considering multiple terms of agreement at the same time. Let’s face it – there’s more to a job than salary. Terms to consider could include:
- Annual leave
- Hours of work
- Flexibility (e.g. ability to work from home)
- Scheduled salary increases
- Benefits and perks
- Fixed term contract…. And so on
With all these terms on the table, you have the flexibility to negotiate an outcome that creates more value for you and for your counterpart. For example, you might be very happy to accept $90,000 with higher commissions and the flexibility to work from home two days each week. A fixed pie mindset – where only salary was on the table – prevents those kinds of creative trades.
2: Rank Relevant Terms
Once you’ve listed your terms, how exactly should you negotiate those terms?
The research is clear: you should rank the terms in order of importance (Pruitt, 1998).
You see, parties often rank the importance of each term differently. Which means that, in the ranking process, you’ll often discover scope for reciprocal flexibility and potential trade-offs. For example:
- With a long commute to the office, you might value very highly being able to work from home a couple of days a week.
- (Your employer might not see your presence in the office as vital to your position, provided the work is done and sales are made).
- Your employer might be exasperated by having had frequent turnover in the role, and might be willing to pay more for the certainty of a fixed term contract.
With all terms on the table and potential trade-offs highlighted, salary becomes just one element of the negotiation.
By the way, avoid negotiating your ranked list of terms one by one – resolve them all at once – as part of a holistic deal. That way, you retain your bargaining power: you can concede on less important items to gain greater value in more important areas instead of entering into a multitude of mini positional negotiations – the very thing you were trying to avoid by introducing more of the interests.
If you want to see some examples of these kinds of negotiation strategies ‘in action’,
check out our free negotiation video series here.