MBA Comp Negotiations

Win-Win Techniques
Worth $1000$$
Donald Asher
Asher Associates
(415) 710-4289
don@donaldasher.com
We All Negotiate, All the Time
1. Where to eat tonight
2. Allocation of assignments on a team
3. Whos going to pick up the kids
4. To get a hearing for your ideas at school or
at work
5. 1000 times a week we negotiate
A Major Life Skill
If you cant negotiate, you will be taken
advantage of by bosses, spouses, and
colleagues

Thats just a tough fact of life

Classic Situations
Buying a car (10%+)
Buying a house or land
Any time you start a new job: (compensation
package, salary, perks, terms, job description,
start date)
Any business contract
In other cultures: everything
Important Point
People expect you to negotiate in all of these
situations, and that is built into their initial
pricing ploy

They are surprised if you dont negotiate!

What % Negotiate?
At top MBA programs, almost all students
negotiate salary
FACT: 100% of employers expect
candidates to negotiate
Okay, not always 100%
92 percent of HR officers say salaries are
negotiable, and
82 percent expect candidates to make a
counteroffer

Source: Society for Human Resource Management

Ok, There Is a Gender Problem

More highly educated women negotiate for

salary than lesser educated women
BUT
More highly educated men negotiate for their
salary than highly educated women
Data from recent MBA class at
School A [cant say]
Less than half negotiated
100% of negotiators got increase
Increases ranged 8 to 15%
Prior year study, avg. bump for negotiators:
$5000
Take their median of 103

Increase of 8% = $111,240*
Increase of 15% = $118,450*
*every year for the rest of your working life plus the extra bump in
every single raise for the rest of your working life
Data from School B [cant say]
Less than half negotiated
100% of negotiators got increase
Increases ranged from 3% to 28%
Minimum increase: $2400

Moral to the story: You can earn $2400 by

saying two simple sentences.
I really had in mind more than that.
What can we do?
Men vs. Women: Any Difference?
Conflicting studies:
Men negotiate at slightly higher rate, but
women who negotiate are equally successful
(i.e., get just as high an increase)
Women and men professionals negotiate at
the same rate, but women get slightly less but
this was driven by higher % of women who
used an accommodating style of
negotiations [cooperative good, integrative
good, but accommodating bad]
Accommodating Style
Conceding in advance: Im going to accept
no matter what you say, but I just have to
ask

Vs.

Simply saying, I really had in mind more than

that. What can we do?
Gender Issues
Women almost always just as effective as
men
Women dont negotiate as often as men
Techniques from Sandbergs Lean In:
Negotiate on behalf of your family or all women,
example:
Ive read that a major cause of the gender-based wage
gap is that women dont negotiate for salary as often as
men, so, because I want to do my part to reduce this
social problem, I guess I have to force myself to ask:
Can you raise this base? Would you give me the same
base as a man who negotiated hard for the maximum?
Cost of Not Negotiating
Negotiating salary upon leaving an MBA
program takes a few minutes

Base determines raises for a lifetime

Loss is $750,000 for middle income jobs, and
$2,000,000 for high-income jobs

Source of above: Linda Babcock, economist, Carnegie Mellon University

NOTE: $5000 was the average increase for negotiators, Journal of Organizational Behavior
 Total, both increased income and
increased raises: minimum of $1m+

So, for MBAs: Its a million-dollar+ error not to

negotiate for salary
Perceived Value Difference
To compound this further:

Employers perceive negotiators as having

stronger and more desirable skillsets than
non-negotiators, leading to better
assignments, faster advancement, more
raises,
The Big Fear
Employers will withdraw the offer
IF AN EMPLOYER WILL WITHDRAW THE
OFFER IF A STUDENT POLITELY TRIES TO
NEGOTIATE AN INCREASE IN PAY,
do you want to work there?
Three Principles of All Negotiating
1. You never negotiate for salary until you
have a job offer (Dont negotiate until youre
ready to sit down and make a deal)
2. The first person to name an exact figure has
lost strategic advantage
3. If you cant walk away from the deal, youre
not negotiating; youre begging
First Principle
Never negotiate until you sit down to
define the terms of deal
Sell when youre selling; negotiate when
youre negotiating; dont mix them up
Why? The Power Equation
You only have power when the other person
wants to make a deal with you
Dont Prematurely Negotiate
Put off all attempts to negotiate until your
adversary is ready to sit down and close a
deal
Just deflect the issue; put it off

Thats the time you have maximum leverage

Selling Negotiating
Sell, sell, sell until they are ready to buy

Only negotiate when they sit down to buy

Second Principle
The first person to name an exact figure
has already lost competitive advantage
Can be proved by Game Theory
Fact: people tend to move at the same rate
toward resolution
First person to name a number allows the
other person to control end point
Heres How this Works

zero $ $

Your Target Point

Heres How this Works
their first offer

zero $ $

Your Target Point

Heres How this Works
their first offer you counter here

zero $ $

Your Target Point

Once Two Points Are Set

You march to the middle

Big negotiating tip:

You can counteroffer in an asymmetrical
pattern
Third Principle
If you cant walk away, you have no
leverage
Even if you cant walk away, tell yourself you
can, and make the other party believe you
can and will if terms are not sufficiently
favorable
The car buying model You have to leave to
get the best price
You Can Always Walk Away
Negotiating with the hit man in the movies:
you simply cant
Never promise to make a deal, or accept a
job; always say things like

If we can get the details right for both of us,

Im sure this will work out
Other Rules
Set aside a sticking point and return
to it later
Any time there is going to be an
ongoing relationship, Win / Win
wins, zero sum loses
Use gambits, i.e., offer up a solution
if the other side cannot produce one
Gambit

n. An offer, ploy, or position, taken in

negotiations, that if accepted, is binding.

In short, dont use a gambit you dont want

to see accepted!
Peculiarities of Comp
If theres only one hire in the category, the
range will be wide and soft
If there are many hires in the category, the
range will be narrow and--relatively--
inflexible
Peculiarities of Comp, continued
Regional differences make two people
nominally earning the same amount
experience vastly different purchasing
power
Perks can make two people nominally
earning the same amount actually earn
vastly different sums
Internships Are Different
For internships, dont negotiate too hard
for salary -- The point is experience,
exposure, and opportunity
OK to ask, and maybe later ask again, but
thats it
Right internship: You should pay them
Two Factors in Play

1.Knowledge
2.Technique
Ideally, you have both
Two Pronged Strategy
1. Knowledge of marketplace, the particular
company, and this recruiting season
You need to know your value in this
context
2. Negotiating technique
A completely separate issue
Three Models for Technique
1. Tug of War (zero sum philosophy, strictly I
win, you lose; a beginners model)
2. Slicing a Pie (hot tip: you can change the
size of the pie, go for the bigger picture)
3. Scales of Justice (throw anything on the
scale to make it balance, and I do mean
anything)
Bring Knowledge to the Process
You have to know market rate for you and
for the job
1. Gossip
2. Career Center
3. Salary & Relocation Calculators

If you dont negotiate from a position of

knowledge, it will cost you money
Do Your Homework First
Your due diligence:
What is the companys reputation? A strong
payer or a market laggard?
What is the industry standard for a position like
this?
What is the regional expense profile?
Expensive? Or a real value?
Do not walk into an interview blind
Again: Three Steps to Research
1. Career Center: Ask your career center what they
estimate this company will pay for this type of
position

2. Info Interviews & Gossip: Find a friend or

acquaintance or alumnus/a at the company or in
the business, and ask them

3. Internet Salary Sites: Get list from career center;

focus on MBA hiring
Talking about Salary
Do not ask recruiters about salary; do not bring
up the topic first (unless you dont want a job
from them).
For other contacts, dont ask about their salary or
salaries at their company
Ask:
What would be a typical salary, industry-wide, for
a position like this?
What could a person expect to make in a position
like this?

Then subtract 10 to 40%...

Career Center Is Best Source
Career Center knows the organizations
that recruit on campus, what they typically
pay, the types of jobs they recruit for, how
signing bonuses look this year, etc.
Best source of real-time data, which does
change every year!
You Need to Know
Median and max offer from last year for
someone like you (industry and level of
experience)
Median and max offer from last year for
this employer
Median and max offer for this industry and
type of assignment
Salary Sites
Salary sites are notoriously inaccurate
Titles, jobs, and regional variances are hard
variables to control; difficult to be sure youre
comparing apples to apples
E.g.: An associate may be i-banker with 150k
base plus bonus, or
An associate may be an hourly worker in retail
More on Why Salary Calculators Are
Suspect
Salary calculators collect data from large,
high-paying organizations
Data skewed in favor of higher pay
In short: reality may be a bit more modest
Sources for Salary Info
Your career center has last years data
http://jobstar.org/tools/salary/index.php
salary.com
payscale.com
glassdoor.com
wagespot.com (new)
salaryexpert.com
Association Surveys
naceweb.org (subscription)
www.mbacsea.org (subscription) MBA Analytics
Onet and CareerOneStop (BLS data available at
www.careeronestop.org/SalariesBenefits/SalariesBenefits.aspx)
Relocation Sites
On the other hand, relocation sites are
useful

Is 65,000 in Tulsa more than 70,000 in

Dallas? Is 85,000 in Dallas more than
144,000 in San Francisco? Find out
Relocation Calculators
www.quintcareers.com/
relocation_resources.html
money.cnn.com/calculator/pf/cost-of-living/
www.homefair.com
www.stevensworldwide.com
www.bekinsmoving.com
www.bankrate.com
www.moving.com
Your Goal in the Process
Your goal in the interview process is to get
information without giving information
Win-Win Language
Avoid hard numbers on your side: Whats
possible? is win-win vs.
Id require $5000 more than that at least!
Avoid ultimatums (that last clause is an
ultimatum)
What can we do? puts you both on the
same side, opposite the problem, working
together to solve the problem
1st Deflection
Whats kind of a salary are you looking for?
Salary is really not my first concern. Im really
more interested in the people, the opportunity,
and the job itself. Im sure this will not be a
problem for us. Can you tell me what
advancement potential this assignment has? For
example, what kinds of next jobs have people
earned who had this assignment before me? If I
do a really great job for the company, whats
possible for me?
2nd Deflection
Answer a question with a question: What range
did you have in mind? What does a job like
this typically pay?

Then you say: Well, I really had in mind a little

more than that, but were in the same ballpark.
As long as you can offer the market rate, Im sure
this wont be a problem for us. Can we come
back to this later?
3rd Deflection
No, really, whats it going to take to bring
you on board?
You say: You know, Bob, you seem a
little nervous about the salary offer. Is
there any reason you wont be able to
make a competitive offer?
4th Deflection
We need to make sure were not wasting our time
here I need you to name a number. Whats
your salary goal?
Are you offering me the position?
Yes - Upon what terms?
No - Well then it seems a little early to be negotiating
the terms. Weve already discussed ranges, and Ive
said this will work out, so as soon as youre ready to put
an offer on the table, we can move forward.
Using Ranges
A student can use ranges to get around naming a
specific number, either as a goal or as a report
Depending on where I was assigned, I guess Id
expect to make somewhere between $60k and
130. Do you think your offer could fall within
those parameters?
Using Ranges
Ranges de-personalize, and de-fuse
From my research, it seems to me that logistics
managers earn somewhere between $60k and
130, depending on size of company, scope of
responsibility, and geographic location. Id be
happy with a competitive offer within industry
norms. Im sure this wont be a problem for us.
Negotiate Base First
As seen above, base comp is vitally
important, as that is the compounded
number
More Lines
Avoid I and you. Say We and our and
us

I really had in mind more than that. What can

we do?
More Lines
Whats possible?
Im sure when they sent you out to recruit for
this position, they gave you a salary band.
Can you share that band with me now?
What I made in my last position is not
relevant to this position. It was a different
industry and function. Im happy to share that
with you, but the real issue is the market rate
for this position
The Order of Negotiations
Very important!
1. Base
2. Signing bonus
3. can you help me understand the
management bonus practices?
4. What can you tell me about opportunities
for equity participation?
5. Relocation assistance
6. 90 days in a corporate apartment
Base vs. Bonus
Q: When is $5,000 worth more than $10,000?

A: When its $5,000 added to base vs. $10,000

one-time bonus
Base vs. Bonus
$5000 to base surpasses $10,000 bonus in
the second year, but continues to impact
income in excess of $692,000 by age 65
(7% raises, no interest)

It could cost you $687,000 to take a

$10,000 bonus over a $5000 increase in
base
Again, Complete Negotiations for Base First

Base is king
All future raises based on base

Then, And what will my signing bonus be?

Signing Bonus Rationales
Theyre paying truck drivers in Tulsa
$5000 signing bonus
Surely you think Im worth more to the
company than a truck driver
Youre Going to Need Signing Bonus
New car
Relocation expenses
New condo, apartment, or house
New wardrobe
Student loans
And what about opportunities for
equity participation?
Options Grants
Dont be fooled by # of shares:
10,000 x 0 < 1000 x $1

Contingent comp: management bonus, profit-

sharing schemes, merit awards, 401-K
match, stock options and grants, etc., etc.

Much of this is not negotiable, but you want to

understand it
Relocation Allowance
Two Types:
1. You provide receipts
2. You dont provide receipts

NOTE: If you dont provide receipts, this is

just another signing bonus with a
different name!

unrestricted relocation allowance

Corporate Apartment
Always ask for 90 days in corporate
apartment
Its 90 days free rent
Rationale: I want to concentrate on
doing my job, and not worry about buying
a condo in the right neighborhood etc.
Stick to the Order!
Cash comp
Signing bonus
Standard management bonus
Profit sharing
Company-wide bonus by level
Benchmarked performance bonus
Individual contribution overall
Meeting specific projects or goals
Equity participation: share options and grants
Relocation assistance and 90 days hotel
Special circumstances (e.g. weddings,
relocations, vacations)
Get Out of Jail Free Card
If they get mad at any point:

Hey, Im not trying to throw ultimatums on the

table, here. Im just trying to find out whats
possible.
Stall for Time
Whats normal: 1 week, 2 weeks, or 1 month, it
depends
I really appreciate this offer. This looks great!
I have another company that Im in
discussions with, and I think it is going to take
them a bit longer to finish their process. I
definitely lean toward you guys, at this point,
but I want to feel that Im making a choice.
Would it be okay if I had some more time to
get back to you with a decision?
Stall for Time
Senior Management Version:
I really appreciate the offer. I run all this type
of stuff past my financial advisor, and
sometimes it take a few days to nail her
down. Would it be okay if I have ten days to
get back to you with a definite answer?

Whats normal: 2 or 3 days, maybe a week, at the exec

level
Alternate: run this by my attorney or run this by
my wealth advisor
Benefits
You do want to understand your benefits, but
theyre usually not negotiable
Healthcare
401K match policies (always sign up to max
out!)
Holidays
Travel rules
Education benefits
You Need to Calculate
Get help if you need it:
Calculating true value of base vs. bonus
Calculating the value of various benefits,
e.g., whats a car worth?
(Answer: way more than you realize)
Total Compensation Package
You need to calculate total compensation
package, employer will not do this for you
Base, signing bonus, other bonus,
relocation, car, 401k contributions,
holidays, education benefits, everything
Who to Negotiate With
Who is the decision maker??

Recruiter
Line Manager (your future boss)
Department Head (your future bosss boss)
HR Officer
Where to Negotiate
Order of descending investment:
HQ site visit with multiple managers
Conference call or Go-to-Meeting with multiple managers
Face to face with recruiter, cell phone in room
By Skype, or by phone
Email

Reality: Most of this happens by email; at least

escalate to Skype or phone
Rule
The greater the investment of the
opposing party, in terms of money, time,
management resources, the greater
leverage the other party has
Make them invest in the process
Win-Lose vs. Win-Win
Win-Lose
Tug of war, I gain, you lose
Based on a vision of limited or finite
resources
You force the other party to provide
solution to the problem
Win-Win Language
Youre solving the problem together:
I really had in mind more than that. What can we
do?
How can we bring these numbers closer
together?
Gosh, I really love your company, but Im pretty
sure Im worth more than that on the market.
What can we do?
Under what circumstances have you moved
these numbers in the past?
Win-Lose vs. Win-Win
Win-Win
Both parties feel theyve made a good deal
Both parties can tell others they won
Based on a vision of increased resources
created for both parties
Sell into the Close!
Love your company
Think its the right fit for me
I could really see myself thriving in your
culture, delivering wins right away but also
making increasingly significant contributions
over time
I think I could be a major contributor
Id deliver 110% from day one
I really like this job, and Id like to come to
terms and close this deal
Selling Your Honeymoon
If you squeeze every nickel out of your
future employer, you may have sold your
right to have a learning curve
Creativity
Creativity leads to solutions!
Reduce risk (benchmarked)
Change the size of the pie
Accelerate salary review (warning)
Swap gains (vacation vs. $$ vs. company car
vs. signing bonus vs. start date)
Mid-Level Managers
Most creative way to solve negotiating issues:
Contingency bonuses: $10,000 upon
opening the Chicago office and making first
sale, $10,000 upon hiring the fourth CPA for
the Toronto field office, $5000 if costs drop
5%, and so on
You Will Make a Mistake
They do this every year, youre only going
to do this every once in awhile
You will make a mistake, and you may
blurt out a number
Dont feel bound by that number
Sure, I said Id take $60k a year, in
Manhattan, Kansas, but in New York I think
a more fair number would be _____.
 I just needed something to write in that
window of your application, and I didnt
have a chance to do any research. Now
that Ive done that research, it seems a
more appropriate number would be way
north of that

I know I mentioned a low number in

passing, early on in our discussions, but
Ive done more research
Appeals & Gambits
Gambits that dont work:
Appeal to personal need

Gambits that do work:

Objective and universal, market based
Use Evidence!
Dont argue from I need
Establish your case on evidence!
1. Market rate
2. Salary info from your career center
3. Salary offers your friends got
4. What their competitors are paying
5. Potential salary from your other career options
Negotiating Competing Offers
Competing offers are great to flush out
offers
Be sure you dont bluff
Candidate has greatest strength
RULE: Ask for what would make you
delighted
Who Is Likely Not to Negotiate?
Investment Banking
Venture Capital
Glamour Industries (e.g. major league sports)

But even there, I was hoping for more than

that. Is there any room to move this number?
Gender Issues reminder
Women just as effective as men
Women dont negotiate as often as men
Techniques from Sandbergs Lean In:
Negotiate on behalf of your family or all women,
example:
Ive read that a major cause of the gender-based wage
gap is that women dont negotiate for salary as often as
men, so, because I want to do my part to reduce this
social problem, I guess I have to force myself to ask:
Can you raise this base? Would you give me the same
base as a man who negotiated hard for the maximum?
Getting Multiple Offers
Search tip: Occupy mental space every
couple of weeks or so
Know their cycle!
Try to get your first-choice employer to make
the first offer
I have another company that I think is about
to come to the offer stage. Where are we on
this? I really think your org is a better match.
Can we accelerate the process?
Need More Time?
Be careful about extending deadlines
Ask: This is great. Id like to consider this.
When do you need an answer?
Reassure: Ive made a big investment. Im
at a major turning point in my life and career.
When I accept your job, I wont be looking
back
Ask other companies to accelerate their
employment decision, even if its no
Time to Consider
Ask an open-ended question: This is a
really big decision for me. I know Im
going to give 110% to my employer, and I
want to be comfortable with the decision.
How long do I have to respond to your
offer?
Or, ask for a specific date: Could I give
you my answer on [name a specific
date]?
I have some exams, I have some family
travel over the holidays, talk to spouse,
meet financial planner, etc.
Communicate, Communicate, Communicate!

memorialize the
Get explicit, and

agreement in an email
To reiterate what we discussed on the
phone, you said that I have at least until
the first of the month to give you a
response. I truly appreciate your
flexibility
Norms
Students should have at least a week to consider
a negotiated offer, two weeks is kinda typical,
and more than a month and they are being
generous,
So, a week to a month is pretty normal
In a tight market, watch for exploding offers
Internships may result in open offer
In a tight economy, everything will run late, so
thats pretty stressful for candidates

Warning: this varies by school and year, so ask

around to know what is normal here
Warning
This year the job market feels unsettled to
me, but firming up

Watch for late offers

Beware sure things that disappear at the
last moment

Run a parallel plan!!!

Competing Offers
Try to get offer from your first-choice
company first
Once you get one offer, you can push
other employers off the fence
I have an offer in hand from another
company, and I wonder if we could
accelerate the process
Counter Offers
I have an offer on the table of $X from
this other company, but I really like your
organization better. What can we do?

Never, never, never bluff!

Ethics Reiterated
Never bluff
Never make a recruiter go to bat for you if
you know you are not going to accept
anyway
Dont play games
Communicate, communicate,
communicate
Once You Accept, Game Over
Send an announcement to all your open
applications:

I have accepted an offer to join [Company

A] with the title of [Title]. I certainly
appreciate your consideration, and if in
the future I can be of any assistance to
you, let me know
Problem Questions
Response to Stonewall

If they say they dont negotiate, ask,

Under what conditions have you moved
these numbers in the past?
Other Lines
Is this the best offer youve made to anyone this
this year?
Whats the difference between me and the person
you are going to pay the most to this year?
I think youre below the market, and heres why:
(a), (b), (c).
Comp Analysts
If, and only if, youre going for a unique
position, such as the companys very first
offshore assignment, or the companys
very first employee ombudsmen or
something like that:

I think youre off the market for this

position. Can we get the comp analyst
involved?
The Power of Silence
I really had in mind more than that

Wait 20 seconds ..
More Rules
Dont negotiate at all for jobs you are not willing
to accept
Dont bluff
Dont use rigid language
Dont get the last nickel, i.e., Dont sell your
honeymoon.
Dont appeal to your personal need; appeal to
objective standards
Problem Questions
We dont negotiate. Thats our offer, take
it or leave it
Problem Questions
What did you earn in your last position?

(assuming it was very low, different industry,

etc.)
Problem Questions
The Low Ball: Were expecting to be
able to hire someone for this position for
$50k. Would you be comfortable with
that?
Problem Questions
Early disclosure, in the first or second
interview:

We need to make sure were not wasting

anyones time here. What kind of salary
are you after?
Problem Questions
Applications without salary history will not
be considered
What if the Web Site Demands Salary Goals?

Try writing discuss at interview

Enter 0 and see if it will advance to next
window
Enter a wide range, and see if it will
advance to next window, e.g., $50,000-
$110,000
Enter $10,000
Whatever you enter, dont feel bound by it!
Problem Questions
We pay people more who have industry
experience, sure, but your background is
in another industry
Problem Questions
With this market I could probably get
someone from [Wharton, Stanford,
Harvard] for that kind of money! Why
should I pay you this much?
 How to Train Negotiators
Cognition vs. Behavior
Daniel Goleman and his landmark book,
Working with Emotional Intelligence
In short: you must design rehearsal and
practice, or you cannot achieve behavioral
change
Resources
Lean In, Sheryl Sandberg (best career book in a generation)
Ask For It: How Women Can Use the Power of Negotiation to
Get What They Really Want, Linda Babcock
Women Don't Ask: Negotiation and the Gender Divide, Linda
Babcock and Sara Laschever (must reading for MBA directors)
Negotiating Your Salary: How to Make $1000 a Minute, Jack
Chapman (the definitive classic)
Get Paid What Youre Worth, Robin Pinkley and Gregory
Northcraft
101 Salary Secrets, Daniel Porot and Frances Bolles Haynes
Perks and Parachutes, Paul Fargis