URGENT

Exercise 24b Job Offer Negotiation JANE TECH AND ROBUST ROUNTERS

NEGOTIATION 7e  LEWICKI ▪ BARRY ▪ SAUNDERS 

Confidential Role Information for Leigh Bultema

You are Leigh Bultema, a product manager at Robust Routers (RR) who joined the company at its inception and worked successively through roles in marketing, product management, sales, and business development. CEO Craig Hall has kept an eye on your career, personally appointing you to your current position in charge of product management for RR’s new terabit router.

Despite recent market turbulence, RR is poised for solid future growth. The market for its

networking products continues to grow at a healthy clip. The challenge to maintain RR’s leadership position and dominant market share is attracting and retaining talented employees. In fact, RR’s CEO has explicitly made recruiting a high priority, and is awarding extra options to managers who meet recruiting goals. Recruiting has dramatically improved since this initiative was announced. As RR evolves from an entrepreneurial company to a large multinational business, the diverse and multi‐functional skills of a “general management” workforce have become more important. This has led RR to increase its recruiting of talented new graduates.

In the last year you have focused virtually all of your efforts on product objectives related to

the terabit router, and have neglected your recruiting goals. You are motivated to remedy this underperformance during the current recruiting season, and the offer to Jane Tech is a good start. You look forward to bringing Jane on board early this summer, when marketing activity related to the terabit router will begin to accelerate in advance of the fall purchasing season. You made recruiting visits to three other first‐rate universities this year, and identified some attractive candidates. However, you were quite impressed with Jane’s effort and performance during her internship last summer. You would prefer to hire her over the other possibilities, who seem bright and talented, but did not intern at RR.

Jane received an offer from RR back in early fall (the offer letter is included as an appendix

to the Background Information provided in the Reader), with a March 1 deadline. You figured that someone as talented as Jane would explore other possibilities, so it isn’t particularly surprising that you haven’t heard from her in recent months. It is now February, and with the offer deadline approaching, Jane has asked to speak with you about the offer. You assume that she wishes to negotiate some aspects of the offer before deciding whether to accept.

The offer letter itself was generated and signed (on your recommendation, of course) by

your boss, the managing director of the Product Management Group. You, as hiring manager, are authorized to negotiate the offer. Recruiting specialists in the firm’s human resources (HR) department have briefed you on priorities and parameters that should guide your negotiation with Jane Tech. These can be summed up as follows:

Salary/Title: Job titles are important at RR because they are tied not only to salary, but also to stock option grants and year‐end bonuses. The salary range for assistant product manager (the position Jane has been offered) is $48,000 to $66,000. The salary range for the next step up – associate product manager – is $52,000 to $73,000. New hires with Jane’s level of experience are almost never brought in

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above the assistant product manager level, and you are reluctant to do so in this case. If Jane were to absolutely insist on an associate product manager title, you could do it, but because of her inexperience she would have to start out at the very bottom of the salary range ($52,000). In other words, she would have to give up quite a bit in base salary in exchange for the loftier title. If she is willing to accept the assistant product manager title, however, then there is a little room to move up on salary from the $57,000 she has been offered. Really, though, she is being offered a fair salary given the job and her experience. Any movement upward in salary should be slight, and intended merely to make her a little happier about choosing RR over whatever alternatives she might have. Another element of pay at RR is the annual bonus. These are awarded at the end of each year, and vary widely based on individual performance as determined by one’s manager. In the last few years, year‐end bonuses have ranged between 5‐20% of annual base salary. In general, RR management isn’t fond of bonus percentage guarantees for new hires because they remove the performance contingent element. If Jane were to request something along these lines, however, you do have latitude to offer something. HR has cautioned, however, that it would be unwise to offer more than a 10% guarantee, and that such a guarantee should apply only to the first year’s bonus (which would be pro‐rated down to actual salary earned for a new hire who works only part of the year). Assignment: Jane has expressed an interest in working in business development. While the offer to work in product management may not seem as attractive to Jane, you are confident that the importance of the terabit router to RR should be a persuasive argument in convincing Jane to accept the offer. In fact, it is a very prestigious offer, given the fact the CEO Hall is closely watching the performance of this unit and those involved. If Jane insists on a position in business development, all you can do is say you will do everything in your power to help her make a move there after she has been at RR for a few years (and possibly sooner if the right opening crops up). Signing Bonus: The recruiter in the HR division told you that you have some flexibility here. Because this money comes out of your budget and you control it, you can offer a bit more on the signing bonus if necessary. Having said that, the $3,500 bonus offered in the letter seems more than generous for a student who is just finishing a bachelor's degreel. You are also worried about the precedent that might be set if you paid a much higher bonus, and then the word got around to other new hires who were not treated so generously. Relocation: HR informed you that relocation is a common point to negotiate. The firm does prefer, however, to specify a lump‐sum amount rather than to assume the open‐ended cost of agreeing to a complete, full‐service relocation package that can run into the tens of thousands of dollars. The relocation amount offered – $2,000 – is RR’s standard amount for undergraduate hires right out of school. You are allowed to go higher, up to $4,000 at most, if you think it is essential to closing the deal for a recruit that you really want.

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Start Date: The start date is important to you because of expected activity during the summer as the terabit router group prepares for the fall purchasing season. You recall that Jane mentioned in a casual conversation last fall that she was planning an extensive trip to Europe with her fiancée after graduation, and that this might be the last chance she had to take a “real” vacation for a while. You are concerned that she will seek a delayed start date (June 1 is the date given in the offer letter). Although you could stretch this by a couple of weeks to mid‐June, you really don’t want to, and are wondering what you could offer her in return for giving up her European trip.

In summary, Jane is clearly your preferred candidate for this position, and your goal is to

find a way to bring her on board. At the same time, the other candidates to whom you will turn if Jane does not elect to join RR represent clearly acceptable alternatives. You want to reach an agreement with Jane that is fair and generous to her yet consistent with firm precedent and policy. Hopefully, Jane is negotiating in good faith rather than playing off multiple offers against one another. Ahead lies the conversation with Jane Tech.