A Project, Submitted as part of the Negotiations Lab Course in the 5th term of the PGPX Course for the year 2016~17.
Note: Due Permission has been obtained by the Course Instructor, Prof. Biju Varkkey and other concerned authorities to publish this content and it has been checked and cleared for any conflict with regards to interest or confidentiality.
This paper is part of our course submission for the Negotiations Lab Course and has been perceived by the authors to serve as both a reflection piece based on their experiences as well as a helpful document for future lateral MBA candidates on the job market. The framework of the paper rests on the 15 rules of negotiating a job offer which has been laid out by Prof. Deepak Malhotra (HBS) in a Harvard Business Review Article. However, instead of relying on the content of the article, the authors of this paper have discussed on the application of these rules in their localized context of negotiation of job offers for their batchmates. All attempts have been made to generalize learnings, and no names of either candidates or companies have been used. The authors wish to thank the Institute, the PGPX and Placement Chairs, the Placement Committee and Professor Biju Varkkey and Luthufi for all the great conversations and advice.
- The intent of the course: The Negotiations Lab course is an elective course in the 5th term of the MBA course, which deals with negotiation and conflict resolution techniques used extensively by individuals and business leaders. Some of the objectives of this course are the development of ability to analyze the primary negotiation process, learn about different negotiation styles and approaches, learn valuable communication skills like active listening, to provide adequate feedback and empathy. Negotiations are viewed through the lens of problem-solving approach and techniques which are both integrative and distributive are explored in the workplace and personal career situations. The case method was used for discussions and analysis in class.
- Our intent in writing this article: As students of a unique one-year general management program at IIMA, we spend much time, effort and thought into preparing for the recruitment process before and during the course. Owing to the diverse and experienced profile of our batch, our recruitment procedures also tend to vary quite a bit, when compared with the approach of the two-year PGP programs. Since recruiting firms typically do not to tend to follow a “One-size-fits-all” approach and are instead looking for specific requirements for each position they hire, this condition also results in a larger latitude for the candidate to obtain an offer which contains elements of the candidate’s choice. This article is our attempt to distil our collective learnings from the recruitment process at IIMA and view them through the perspective of the Negotiations Lab Elective course, thus capping off a summary of an immersive experience.
In the process of preparing for the recruitment process from campus, the authors of this paper had seen a video on the 15 rules for negotiating job offers by Prof. Deepak Malhotra of the Harvard Business School. We found these rules useful and relevant to our subsequent experiences both as candidates in the job market and as a member of the placement committee (one of the authors). Hence, we propose to add our interpretation to each of the 15 rules and also cite practical experiences about these rules.
- Link to the Original HBR article: https://hbr.org/2014/04/15-rules-for-negotiating-a-job-offer
- YouTube Video of Prof. Deepak Malhotra: https://youtu.be/km2Hd_xgo9Q
- Link to the book ‘Negotiations Genius’:http://amzn.in/5K0dHXA
We feel that a good way to internalize this aspect is to religiously follow one of the cardinal rules of a consulting career, which is “Don’t be an asshole.” Many roles in consulting and other client facing scenarios (which are the norm in post-MBA jobs) place much emphasis on the impression the candidate creates as the company is evaluating whether they can confidently place the candidate in front of their clients. Even when a candidate has a point of contention which he/she feels is significant, the way in which it is put across needs to come across as professional and dignified.
First impressions are crucial, and the way a job offer is negotiated provides an insight into the character of both the candidate and the company. In many cases, we have seen that the candidate not willing to go ahead with roles where he is not impressed by the recruiter, owing to some reasons like the recruiter not being prepared, being rude or is stalling the candidate for time unnecessarily. Similarly, recruiters like candidates based on their profile but back away after the discussion with the candidate. This can happen in any rounds of interview or even during negotiation.
We have been witness to many discussions involving the choice of location or function where the candidate can articulate why he/she would choose one option over another. This is particularly important in the context of management education programs where many candidates are interested in switching functions or industries. In such a case, it is not always easy to ask for a particular role as well as demand a certain seniority or a higher salary unless the candidate can justify the claims. If the firm is an established company with a traditionally strong hiring process with policies, they are not indulging in value discovery during the interaction with the candidate but instead have an excellent idea of what they should be offering. Hence, any delta in requirements is difficult to substantiate even for the recruiters within their organization.
When the candidate wants a particular job, and the negotiations are still in a zone of uncertainty, it is advisable to take a position that he/she is indeed keenly interested in the job but has a concern which will not be a roadblock, as a location constraint. Some candidates have shown agreement to sign on the spot if given an offer, perhaps showing too many of their cards! However, some positions that could be problematic and an awkward corner to get out of are:
- The candidate is giving a hint that he/she is still evaluating the company and asks questions like why the company has fired some employees in the last quarter.
- The company is interested in hiring the candidate for a particular role but does not have an opening at that point of time. However, the company wants to park the candidate in another position for a short period and move him/her later on. Candidate wants a particular function and is not open to any other
- Candidate asks the company what value they see in him. Unless the candidate is sure about how he/she will add value to the company and the role, it is not possible to portray clarity of why there is a fitment.
It is critical for the candidate to research not only the company but also the representative. The candidate needs to understand the agent’s position and role within the organization structure of the company and accordingly carry out the conversations. For example, if the CEO is conducting the negotiations, there is a larger zone of possible agreement as the CEO can probably take a wider spectrum of decisions. An HR recruiter who is just coordinating for the duration of the interview process may not have such latitude will have to convey every request back to the power centers within the organization. One candidate followed up incessantly with an employee of the hiring company on joining location and date, only to get to know in the third interaction that the particular employee was only responsible for entering the place and time preferences in the company’s HR database and nothing else!
It is strongly advisable to approach a company and its representative as a party across the table and not an all-powerful patron whose every statement needs to be adhered to without question (of course, without being guilty of tilting too much towards the other extreme!). The company also has restrictions in its basket of negotiation options. For example, they need to recruit a minimum or a maximum number of candidates across different campuses. No matter how much they like a candidate, companies cannot offer him/her more than a max range because of internal disparity. When a company hires more than one candidate, then providing a higher compensation to one candidate would mean offering similar terms to all the other selected candidates as well, which may not be possible easily.
6. Be prepared for tough questions
A blanket advice which applies to all situations is to never lie in a negotiation as it inevitably does long term harm to the candidate. Even an iota of doubt about honesty and integrity will impact the candidate badly, especially in the context of the new relationship which is being built between the candidate and the company. Some tough questions which are usually encountered are:
- Frequent job changes are difficult to answer.
- A candidate needs to be very well prepared and show some relevance for switching functions
- The company might like to know if they are the top/only choice and may test this aspect by providing a spot offer and imploring the candidate to accept the offer immediately.
- A current offer like a sabbatical should be pre-disclosed.
7. Focus on the questioner’s intent, not on the questions:
The underlying philosophy of this point is to understand that the topics raised by the company are not all fact seeking but may also be exploratory about the candidates and their frame of mind. For example,
- The candidate may be repeatedly asked if he/she is going to stay in the company. Often, offers are structured to lock in a candidate over a longer period, as companies invest in further training and skill enhancement. Some examples are a very low starting salary which escalates steeply after the candidate has a proven track record over a period of two or three years or substantial stock options.
- The candidate may be asked questions about previous compensation structure, and this discussion often has a broad range of probable implications. The range of salaries which the company might offer might not be aligned to the previous salaries.
- The candidate needs to reassure the company in case of a movement from a bigger brand to a smaller brand.
It is common for someone faced with a 15-minute discussion on the benefits to focus on a few points, especially salary and a key constraint such as location or employee band. It would be wise for a candidate to consider beforehand their requirements regarding the key and non-key criteria, and prioritize the same. Further, in the job description as well as the negotiation, a view must be obtained of both, the current offer and its near-term prospects. If in a discussion, few of the parameters fit in well, and others are around the minimum levels set by the participant, the offer must be considered favorably, if the near-term prospects seek to improve on the key criteria further. As a common example consider a candidate who focuses more on aspects such as immediate salary, and ignores the benefits such as leaves and paid international travel for family members, as well as the power of the position offered.
We have also observed a few people ignore a few offers due to lack of immediate salary benefits, while being completely aware of the dominant position it would have thrust them into in a short span of time. An easy to observe case could be “leadership programs” which are offered to at a few MBA campuses. Essentially, it is not important to optimize on every parameter, and see which other parameters can compensate for them.
An important thing to remember is that when a candidate has more than one demand or ‘ask,’ they must transparently put them across the table to the company’s representative together. In an overwhelming majority of the cases, the representative is not the actual decision maker and will need to reach out to someone else with the ‘ask’ as well as the basis for the ‘ask’ and convince someone above them in the hierarchy for a decision for the candidate. By giving only a few at a time, you not only spend more time in the process for the representative but also lose his/ her advocacy for you for the position leading to a lower probability of getting a favorable outcome. In one case, the candidate wanted better salary that matched the grade along with change of location and more specific definition of role. As all the demands were requested in one go, company considered it positively and agreed to meet all the demands.
In the case where an offer made by a company is considered suitable by the candidate, he/ she must restrain from negotiating to make it feel as if the company has not met the needs suitably. Companies do put in much effort behind making an offer for med-senior laterals, and as such the offers are based on their prior experiences as well as industry benchmarks. Further, several companies are seen as having either an implicit or explicit ‘no negotiations’ policy, or clear terms about offers, which they would not move beyond. At times, these are defined in the job descriptions, or a smart candidate can glean the same in the negotiations round as well. The candidate must thus take a very calculated call and decide if negotiating further would push back a company into declining a position.
In these competitive times, there are a handful of companies that seek to recruit exclusively from select campuses. Companies are observed as making offers to candidates from an average of three campuses, and as such do calculate their chances of being rejected by a candidate, and prepare for making offers to an alternate candidate from another campus which may be pending for interview/ be in the negotiations stage. With limited availability of openings, it becomes crucial to consider the timing of an offer. Candidates often consider very strongly the terms that are explicit, usually monetary, geographical, etc. but a common overlooked implicit term is in fact ‘Time.’ If the negotiations reach a stage where the candidate may be getting an acceptable deal, and the response from the candidate is delayed, it is fairly reasonable to assume that an offer will be made to another candidate, elsewhere, and the current offer may not transpire/ be withdrawn. At the same time, if the shortlisted candidates undertake immediate acceptance of offer, it gives a positive impression to the company.
Asking for a reasonable amount of time to make a decision may be valid. But candidates and recruiters at campuses are well aware of the placement rules given to confirm or deny on an offer. It would be wise to have pre-facto considered most points, and at best ask for 24-48 hours, and no more in most circumstances. There are however some ways in asking for more time, without being obvious about it. Especially when interviewing with a startup, it may be reasonable to ask to speak with the CTO/ CFO/ CMO (primarily a self-initiated additional round of discussion) when at a relatively advanced stage of the negotiation. This would take some time to setup and conduct, thus buying the candidate the additional time that he/ she requires. Caution: if this extra discussion has not been prepared for well, it can backfire and blow up negatively for the candidate.
12. Avoid, ignore or downplay ultimatums of any kind
When candidates have a specific ‘ask,’ they must make an effort to elaborate the basis of why they feel it is important for them. This is important, especially for criteria such as location. Basis the feedback from HR’s, there are instances where the need has been met, but the way it has been conveyed has not been taken well, and the candidates were already seen in a poor light right at the beginning of the relationship. Further, a candidate must take care not to represent such requirements as ultimatums as it only serves to show the candidate as being inflexible, and unwilling to discuss.
In the opposing case, if a company gives an ultimatum, the candidate must be careful to sidestep and continue the discussion as if it were without the ultimatum. This ensures that the atmosphere of the discussion does not get vitiated and a feasible solution may be worked out, if not for the present, then for a near-term. This may mainly be seen to work well with constraints put across by companies such as salaries, other perks and location specifications. Further, for candidates who seek to make functional or industry shifts, this can come in handy, where the interviewer may state that they seek someone only from a particular background, but the candidate has the knowledge and the capability to fulfill the role under discussion.
It is important to know that recruiter also has a set need, to hire a good candidate. His questions, queries, demeanor may not always reflect that, but the candidate must remember they are not an enemy and are not out to belittle or get you. They simply wish to do the best by their company and fulfill their role, and as such may occasionally push a candidate to check their behavior and response as a part of the process. For the candidate, such things must be taken in their stride, and patience must be maintained, as the candidate is highly relevant to the interviewer’s job. Further, there may be aspects of the negotiation that the interviewer may not be able to give an answer to during the first discussion. In this case, a candidate must seek to gain information about who in the hierarchy may be able to provide the response awaited, and facilitate the interviewer by providing them the necessary information/ time. They may suggest perhaps a meeting again later in the day, allowing space for the recruiters internal discussion and making it clear about the interest and willingness to wait. This is of course, considering that the requests made are reasonable in nature and the company would be able to fulfill them. Negotiation itself is another round of interview and candidate may be selected or declined based on the discussion during negotiation.
The candidate must always remember, if he walks away from the discussion in any manner, via any signal, even verbal, the further discussion is just moot with no outcome. For constraints that may seem to be insurmountable, it would be a good idea to ask about the best the company can do, and if feasible ask for time to decide. Keep the interviewers interest open in the candidate and not close the doors completely on the discussion. For terms that seem not entirely acceptable, the candidate would need to put some effort to look for alternative terms which may be improved in lieu as well. Overall, be nice!
It is important to have done research beforehand and know enough about the company’s/ divisions future so that the candidate can genuinely understand the near-term and long-term benefits of the role, as well as ask queries about projected career progression paths. In the case of startups, it becomes even more pertinent to know about their founder’s backgrounds, other interests, source and quantum of funds, current indicative financial and time-to-market positions. This will help to understand the real potential of the role in the company under discussion. In some cases, there would be interviewers with well-set backgrounds in the business, and asking about their growth and experiences can help to refine the perspective well. Candidates who do this adequately are expected to land roles which allow them to grow well in the chosen path, and not take up a role via placements to only get a job for the sake of income, or job hops after some time.