To BE or NOT to be!!!! ASK for MORE $$?!
1. Background & Introduction
Salary negotiation is very inevitable in order to retain experienced current staff and recruit new talents. Every company has its resources and budgets which are allotted to staff salary. Even though there is always leeway in the negotiation of salary, these resources are not unlimited. As an employer, that must be realistic about what can be offered to the employees and what it cannot be offered. Although the pay may not be ideal for the staff, the working conditions and benefits may also be the golden factors and used as a bargaining chip during salary negotiations.
Salary negotiation is increasing difficult and may taint the employee-employer relationship. Salary negotiation is a typical process at the time of a job offer in which the staff attempts to obtain the best compensation package from the employer. It is essential task for employers, as the compensation package directly affects employee job performance and the company’s budget. Since employers tend to lower the compensation due to company’s cost-control measures, salary negotiation becomes more significant for staff to obtain the best competitive salary. Negotiation may let employee to get a better salary or quicker promotion. If not, the employer may offer different form of welfare, benefits or compensation such as more study allowance, vacation leave days, option of working from home few days a week.
In the assignment 1, Ms. Iris Cheung works at the Marketing Division of MTR Corporation Limited and Ms. Cynthia Tai is her supervisor. MTR runs property and railway-related business. Due to its substantial development and many complaints such as long waiting time, bad facilities, high fares, frequent accidents, on train service are reported recently, it is very important for MTR to build up a good image to gain support and its Marking Division would be one of the core competences of the corporation. Being promoted for three years but without a big jump in salary compared with other Unit Heads prompts Iris to negotiate with her boss, Cynthia again. Actually, Iris had discussed with Cynthia on this many time but of no avail. In view of the cutting of bonus for staff of above supervisory level, Iris has decided to negotiate with Cynthia again.
Salary negotiation is increasing difficult and may taint the employee-employer relationship. Salary negotiation is a typical process at the time of a job offer in which the staff attempts to obtain the best compensation package from the employer. It is essential task for employers, as the compensation package directly affects employee job performance and the company’s budget. Since employers tend to lower the compensation due to company’s cost-control measures, salary negotiation becomes more significant for staff to obtain the best competitive salary. Negotiation may let employee to get a better salary or quicker promotion. If not, the employer may offer different form of welfare, benefits or compensation such as more study allowance, vacation leave days, option of working from home few days a week.
In the assignment 1, Ms. Iris Cheung works at the Marketing Division of MTR Corporation Limited and Ms. Cynthia Tai is her supervisor. MTR runs property and railway-related business. Due to its substantial development and many complaints such as long waiting time, bad facilities, high fares, frequent accidents, on train service are reported recently, it is very important for MTR to build up a good image to gain support and its Marking Division would be one of the core competences of the corporation. Being promoted for three years but without a big jump in salary compared with other Unit Heads prompts Iris to negotiate with her boss, Cynthia again. Actually, Iris had discussed with Cynthia on this many time but of no avail. In view of the cutting of bonus for staff of above supervisory level, Iris has decided to negotiate with Cynthia again.
2. Employer Perspective
Cynthia said “Working experience is one of the important criteria for consideration of job promotion and salary increment. I think Iris you just need more working experience at our company to expand your networking within the company and external party. With more understanding of our company culture and operation, you can work more efficient and effective. The other unit heads have been working here and being senior and management position for many years. I understand that you are able to do the job well and handle it without any problem. Staffs are always company valuable asset and Marketing team is very essential department to MTR. I do treasure your contribution and appreciate your work. However, you are just too young and much less working and managerial experience for the job.
Moreover, according to company regulation, there is a salary range for all positions and scope of salary within our company. Staff salary increment should be based on its job level position, education qualification and working experience, performance etc. I can truly tell that we have already offered you highly competitive remuneration package compare with market value for this position. Furthermore, different departments have its financial budgets for salary increases. For this year and coming two years, it has a limited amount of money to allocate to your workforce.
MTR recognizes an employee for longevity and loyalty with our organization. We do well to take advantage of the positive employee feelings.
What I want is you gain more managerial experience here, enhance leadership skill and expand your networking within the organization and external parties.”
3. Employee Perspective
Iris said, “I have been working at MTR for so many years. I worked at MTR as an Assistant Junior Manager, Marketing Division after I acquired MBA qualifications. Then, I have been promoted to Unit Head of Marketing Division after two years. The Marketing Division has become more and more important in building up the company image in recently years. My supervisor well knows about my ability to handle the Unit Head position and I am confident that I am able to handle adverse situation as other Unit Heads do. It has been three years since the promotion but there is no big jump in salary. Moreover, it is noted that I am under paid at HK$5,000 when compared with other Unit Heads with similar qualifications but with more working experience.
I have made a few attempts to ask for the pay raise but being rejected. My boss always thinks that I am still too young, less experienced and lack of networking compared with other Unit Heads. I think this is not fair for me of getting less pay but working as the same level and having similar qualification.
However, I really want to develop my career path in MTR because it is not only the rapid transit railway system in Hong Kong, which runs the Hong Kong MTR metro system, and also a major property developer and landlord in Hong Kong. I am sure I can learn a lot and expand my network by working here.
The unfair pay is my main concern on whether or not to stay with this company and staff above the supervisory level will no longer receive bonus. I have decided to negotiate with my boss about a big jump of salary again. I will quit MTR if my boss rejects my request this time as I believe with my portfolio, I could get better salary and compensations from other companies. I am enough of his excuses.”
4. Negotiation tactics that did not work :(
Win-win situation cannot be reached due to ineffective strategies which slice the pie instead of expanding it (Leigh L. Thompson, 2009). In the class exercise, we have come across the below situations:
i) Employer and employee see the world from their eyes only
When employer and employee negotiate only from their points of view, try maximizing their own benefits as much as possible without considering the other party’s interest, it will only alleviate the employer-employee relationship and outrage both parties. Eventually, it will lead to lose-lose situation.
ii) Compromise Too Early
Compromise tends to slice the pie but not expanding it (Leigh L. Thompson, 2009). Actually, Iris has discussed with her boss about the salary several times but of no avail due to early compromise with no alternative request and follow up.
iii) Focus on Long Term Relationship
Sometimes, in order not to ruin the long-built relationship, people tend to compromise easily in negotiation. If Cynthia stands firm for not increasing the pay and Iris is afraid of being unemployed, Iris would finally decide to accept the unfavourable offer in order to keep a good relationship with her boss.
iv) Be Cooperative
Never reveal one’s BATNA during negotiation. Negotiators should not intend to cooperate and it would keep them from focusing on the right information at right time (Leigh L. Thompson, 2009). At workplace, usually the boss would tend not to give what the employees’ request but an alternative offer. If Iris tends to be cooperative, she may accept any suggested offer easily, not leading to a win-win situation.
v) Take Extra Time for Negotiation & Discussion
When an agreement cannot be made at the moment, employer usually arrange another time for discussion or a period of time for employee to consider the alternative offer. However, extra time does not mean better quality of win-win outcome. Usually, it is a tactic for employer to buy time to distract the employee’s from her real need.
I have made a few attempts to ask for the pay raise but being rejected. My boss always thinks that I am still too young, less experienced and lack of networking compared with other Unit Heads. I think this is not fair for me of getting less pay but working as the same level and having similar qualification.
However, I really want to develop my career path in MTR because it is not only the rapid transit railway system in Hong Kong, which runs the Hong Kong MTR metro system, and also a major property developer and landlord in Hong Kong. I am sure I can learn a lot and expand my network by working here.
The unfair pay is my main concern on whether or not to stay with this company and staff above the supervisory level will no longer receive bonus. I have decided to negotiate with my boss about a big jump of salary again. I will quit MTR if my boss rejects my request this time as I believe with my portfolio, I could get better salary and compensations from other companies. I am enough of his excuses.”
4. Negotiation tactics that did not work :(
Win-win situation cannot be reached due to ineffective strategies which slice the pie instead of expanding it (Leigh L. Thompson, 2009). In the class exercise, we have come across the below situations:
i) Employer and employee see the world from their eyes only
When employer and employee negotiate only from their points of view, try maximizing their own benefits as much as possible without considering the other party’s interest, it will only alleviate the employer-employee relationship and outrage both parties. Eventually, it will lead to lose-lose situation.
ii) Compromise Too Early
Compromise tends to slice the pie but not expanding it (Leigh L. Thompson, 2009). Actually, Iris has discussed with her boss about the salary several times but of no avail due to early compromise with no alternative request and follow up.
iii) Focus on Long Term Relationship
Sometimes, in order not to ruin the long-built relationship, people tend to compromise easily in negotiation. If Cynthia stands firm for not increasing the pay and Iris is afraid of being unemployed, Iris would finally decide to accept the unfavourable offer in order to keep a good relationship with her boss.
iv) Be Cooperative
Never reveal one’s BATNA during negotiation. Negotiators should not intend to cooperate and it would keep them from focusing on the right information at right time (Leigh L. Thompson, 2009). At workplace, usually the boss would tend not to give what the employees’ request but an alternative offer. If Iris tends to be cooperative, she may accept any suggested offer easily, not leading to a win-win situation.
v) Take Extra Time for Negotiation & Discussion
When an agreement cannot be made at the moment, employer usually arrange another time for discussion or a period of time for employee to consider the alternative offer. However, extra time does not mean better quality of win-win outcome. Usually, it is a tactic for employer to buy time to distract the employee’s from her real need.
As both employer and employee have different point of view regarding the salary increment, they need to be content about the salary price and have interested-based negotiation. Although the problem is hard, that could be soft on the people. The following deal will come out with fair, stable agreement attempts to meet mutual interests with emphasis integrative bargaining.
i) Make Package Deals, Not Single-Issue Offer
Never haggle on one issue as it seems doesn’t have any improvement (Leigh L. Thompson, 2009). Iris understands her value to the Corporation and she can easily research her value in the marketplace by benchmarking may open the doors to effective communication (Bottos, Lena M; Coleman, Bill, 2003). By listening to her boss’ response, she knows that asking for HK$5,000 wage increase would be impossible at the moment. Instead, she would consider the alternative offer in package with equivalent value.
“Make a list of the key bargaining points you plan to bring to the table, and include several items of minor” (Sales Insider, 2012). Iris has made a checklist on her expected terms before the negotiation to facilitate her to consider the alternative offer. In view of the cancellation of the bonus system to staff of above supervisory grade, the suggested additional HK$2,000 salary could be a replacement.
In addition, owning to the small network and not sufficient experience compared with other Unit Heads, having the opportunity to participate in gathering between important clients and senior management would widen her social network and it would be an added value for her career growth. Other items are the privileges only granted to Iris which providing her with more flexibility in work and further study.
ii) Make Multiple Offers of Equivalent Value Simultaneously
iii) Offering information and priorities
“If you share information, the other party will often share as well. Negotiators who provide information to the other party about their priorities are more likely to reach integrative agreements” (Thompson, “Information exchange in negotiation”). In the salary negotiation between Iris and Cynthia, both parties mentioned about their perspective and views towards the other party. Iris has stated her priorities clearly in the negotiation. She wants a big jump in salary raise and she also wants to learn more, expand her network and develop her career path in this company. Cynthia also mentioned she agrees on Iris’s ability on handing situations very well but she lack of experience and lack of networking. She also has to improve some soft skills such as leadership, communication and team-working skills. Therefore, Cynthia suggested providing training allowance on Leadership, high collaboration, communication courses as the privilege other than salary raise.
iv) Unbundle the Issues
“One reason negotiations fail is because negotiators haggle over a single issue, such as price. By definition, if negotiations contain only one issue (e.g. price), they are purely distributive (i.e., fixed-pie). Skilled negotiators are adept at expanding the set of negotiable issue adding issues, unbundling issues, and creating new issues can transform a single-issue, fixed-pie negotiation into an integrative, multi-issue negotiation with win-win potential” (Lax & Sebenius, The manager as negotiator). Both Iris and Cynthia are adept at expanding the set of negotiable adding issues. Iris knows that asking for HK$5,000 salary increase would be very hard at the moment. Therefore, she would consider the alternative offer in package with equivalent value. Same as Iris, Cynthia knows Iris would like to develop her career path in this company; she also wants to have the opportunity to participate in gathering of important clients and senior management to widen her social network. Therefore, besides on salary raise, other items are the privileges only granted to Iris with providing her opportunities to gather with important clients.
Below are the win-win agreements we have made in the negotiation:
1. Five day work (instead of Mon-Sat)
2. Meal and transportation allowance (taxi) when overtime work after 9pm
3. Training allowance on Leadership, high collaboration courses, etc.
4. Home office (once per week)
5. Offer 2 more days of annual leave
6. Increase salary rise of $2000
7. Conclusion
We have experienced different roles by acting as employer or employee alternatively at salary negotiation exercise. It is realized that there are different interests and preferences between the two parties and it is quite hard to come with a win-win agreement. In real life, it is even harder. As an employee, he/she should have a big courage to take initiative to and apply effective strategies to negotiate with your boss to ask for the best remuneration and benefits. As an employer, one should try his/her best to please the employees under the limited resources and keep the experienced and valued staff in salary negotiation. Besides saving more gunpowder such as excellent performance outcome, acquired better professional knowledge and experience, etc (from employee perspective) and limited financial resources, two-way communication, alternative offer, etc, (from employer perspective), effective strategies in negotiation is also crucial for the final outcome, whether to come to a win-win agreement or not.
By learning the inhibitors and facilitators from both perspectives, we hope to apply in workplace to strive for better career development and beware of the tactics used by the counterparty, senior management and subordinates. All these strategies learnt can also be applied in negotiation of project collaboration and acquisition deal, very useful in daily work.
References:
1. Leigh L. Thompson (2009) The Mind and Heart of the Negotiator
2. Bottos, Lena M; Coleman, Bill, The new salary negotiation, Compensation and Benefits Review 34.
2 (Mar/Apr 2002): 22-27.
3. Three negotiation strategies that keep you in the driver’s seat, Sales Insider. 6/15/2012, Vol. 6 Issue
3. Three negotiation strategies that keep you in the driver’s seat, Sales Insider. 6/15/2012, Vol. 6 Issue
138, p4-4. 1/3p.
4. Halliday, Simon. Engineering Management. Feb2007, Vol. 17 Issue 1, p38-39. 2p. 2 Color
4. Halliday, Simon. Engineering Management. Feb2007, Vol. 17 Issue 1, p38-39. 2p. 2 Color
Photographs. DOI: 10.1049/em:20070109.
5. Lax & Sebenius, The manager as negotiator
6. Thompson, “Information exchange in negotiation”
7. Leonardelli, G.J., Medvec, V., Galinsky, A.D., & Claussen-Schulz, A. 2008 Building interpersonal and economic capital by negotiating with multiple equivalent simultaneous offers
5. Lax & Sebenius, The manager as negotiator
6. Thompson, “Information exchange in negotiation”
7. Leonardelli, G.J., Medvec, V., Galinsky, A.D., & Claussen-Schulz, A. 2008 Building interpersonal and economic capital by negotiating with multiple equivalent simultaneous offers
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