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MGMT 566 Negotiation in the Workplace

Module 8a Overview

Year	Salary	Additional $1000	Additional $7000
1	40,000	41,000	47,000
5	45,020	46,146	52,899
10	52,191	53,496	61,324
20	70,140	71,894	82,415
30	94,263	96,619	110,759
40	126,681	129,848	148,850
45	146,858	150,530	172,558
Total income	$3,708,794	$3,801,514	$4,357,833
Difference due to negotiation		$92,720	$649,039

Learning Objectives

Assess the context and complexity of job offer negotiation

Develop a plan for a job offer negotiation

Conduct a successful job offer negotiation

Understand the key post-offer strategies

Readings

Appendix 4: Negotiating a Job Offer

Article: Malhotra, D. (2014). 15 Rules for Negotiating a Job Offer. Harvard Business Review, 92(4), 117-120.

Video 1: Overview

Video 2: Case Debrief: Why Is Job Offer Negotiation Different?

Video 3: Case Debrief: Your Proposals

Video 4: Case Debrief: Should You Send a Message?

Video 5: Case Debrief: Evaluate Your Message

Assignment – Case Analysis #2

Analysis and insights

Supporting evidence from the case

Connection to course material

Interaction with peers

Assignment – Final Reflection Paper

Deadline: End of the semester

Task:

Conduct a real negotiation

Report on (1) your plan; (2) your strategies; (3) your negotiation style; (4) the outcome; (5) lessons learned

Please DON’T watch other video lectures UNTIL you complete your case analysis #2 Name Your Price!

MGMT 566 Negotiation in the Workplace

Module 8b Case Debrief: Why Is Job Offer Negotiation Different?

What is different between the situation faced by Louie and Monroe?

What happens if you treat your negotiation with Jim Hummer the way Louie treated his negotiation in the video?

Advice to Monroe….

Aim high

Don’t be greedy

Know your worth

Be confident

Remember, you will be working with Jim

This is your chance to make a good impression

Don’t focus too narrowly on the short-term

Put yourself in Jim’s shoes

Use this as an opportunity to strengthen the relationship

Which One Would You Emphasize?

Money vs. relationship

What is achievable vs. what is fair

Short-term vs. long term

Salary vs. performance-based compensation

My perspective vs. their perspective

MGMT 566 Negotiation in the Workplace

Module 8c Case Debrief: Your Proposals

	N	Minimum	Maximum	Mean	Std. Deviation
Salary Option Bonus Valid N (listwise)	401 401 401 401	10000 10 0	550000 150000 200000	112797.44 11738.94 30844.85	37819.444 10719.689 19307.672

Descriptive Statistics

N=401 MBA Students at MSU

How do you think Jim will respond to the proposals that fall into these four quadrants?

What is he looking for from Monroe?

Monroe’s offer – its structure and how it is presented – will send multiple signals, e.g. his aggressiveness, self-confidence, priorities, salesmanship, risk-aversion, trust, and commitment.

Monroe needs to manage the negotiation regarding his compensation and the negotiation regarding how he is perceived.

MGMT 566 Negotiation in the Workplace

Module 8d Case Debrief: Should You Send a Message?

Never let your offer speak for itself – tell the story that goes with your offer!

MGMT 566 Negotiation in the Workplace

Module 8e Case Debrief: Evaluate Your Message

Sample Response 1

No Response

Thanks for your consideration. I believe this compensation package will fit the needs of both parties.

Sample Response 2

No Justification

Sample Response 3

“Jim,

I put my salary at the upper end of the range for HBS students in the health services field because I’m worth it, and I believe you know I’m worth it. I’ll flex on the incentives based on what the actual targets are, but this is mutually beneficial to both of us.

Monroe”

Arrogance Parading as Justification

Dear Jim, Thank you for your email and an offer. After some research, deliberation, and consultation with the advisors at Harvard University I’ve decided on the following figures: Compensation: $115,000 Bonus: $10,000 Stock Options: 10,000 option contracts The compensation figures above are competitive with the health services industry salaries for HBS graduates. I hope that you will find my offer reasonable and I will be able to begin my employment with Whole Health Management following my graduation from Harvard Business School. Sincerely, Monroe Davies

Sample Response 4

Justification

Jim -

Please see attached for my proposed compensation package. I welcome the challenge and I look forward to learning from the future errors I am destined to make under your watch.

"If you're not making mistakes, you're not taking risks, and that means you're not going anywhere. The key is to make mistakes faster than the competition, so you have more chances to learn and win".

-John W. Holt, Jr.

Thank you for you consideration and hope to hear from you soon.

Monroe

Sample Response 5

Context and Relationship

Jim - First and foremost thank you for the offer to join your team at Whole Health Management. Over the past few months I have really enjoyed getting to know you and meeting your team. I think I would be a great fit and really be able to make a difference at Whole Health Management. I am excited to take on the three major contacts you have offered and start my work here as soon as possible. I also appreciate the opportunity to help you in crafting my job and compensation package. It is a good challenge that I am ready to take on. Above is the package that I would propose and as always I welcome your feedback. I am requesting a reasonable salary for the work that I will be doing with a larger part of my compensation in the bonus and stock options. I favor this distribution of compensation because I would like to take a greater personal share in the performance of the company. This will allow my personal compensation to more closely mirror the successes and challenges of the company as a whole. Regarding relocation, I ask only for the basic package to cover the cost of moving and finding a new apartment. I look forward to being part of your team. Kind regards, Monroe

Sample Response 6

Justification + Sensitivity to Context and Relationship

Effective negotiators get the best deal possible while strengthening the relationship.