11 Commandments For Smart Negotiating

By Lee Miller

The job market is the best it's been in 20 years. The Commerce Department estimates that U.S. businesses will need to hire one million new computer scientists, engineers, systems analysts and computer programmers by 2005. Yet graduates with degrees in computer science are being produced at a fraction of the rate needed. The Information Technology Association of America reports 190,000 current job openings for web experts and other information-technology specialists, and similar shortages are cropping up in other industries as well.
These market conditions provide a great opportunity to negotiate an excellent compensation package, but only if you understand how.
There are 11 basic commandments to help you negotiate the best possible deal when changing jobs, whether internally or with a new company. They are:

1. Be prepared. The more information you have about your market value and the prospective employer, the greater your likelihood of success. This is the first commandment because it's the most important. There's a wealth of information available on the Internet, at the public library and through professional associations and networking groups. Time spent learning how to negotiate and preparing for negotiations may be the best investment you'll ever make.
2. Recognize that employment negotiations are different. When the negotiations are over, you'll have to work with the person with whom you're negotiating. Moreover, your future success may depend on that person. So, while you want to negotiate the best possible deal, you need to do so in a way that doesn't damage your image. At the same time, the employer's primary concern isn't negotiating the least expensive compensation package it can get away with. Rather, their focus will be on getting you to accept the job.
3. Understand your needs and those of the employer. To be successful in this type of negotiation, you need to examine your priorities. What do you really want? Are you comfortable with a low salary and a large equity stake? Are you able to handle dramatic swings in income from year to year? Understanding your needs will also help you determine the type of company you want to work for. For example, a family-owned company may be able to offer a competitive salary and a large bonus based on results, but may not be willing to offer significant equity to a non-family member. A start-up company, on the other hand, may not be able to offer market salary, but will typically offer stock options. By recognizing what an employer can and can't do, you'll be able to determine what issues you should press.
4. Understand the dynamics of the particular negotiations. Sometimes you'll have skills that are in great demand. And sometimes, you may be one of several qualified candidates the company would be happy to hire. Sizing up the situation and understanding the relative position of each party will help you determine when to press your advantage and when to back off.
5. Never lie, but use the truth to your advantage. It's not only wrong to lie, but in employment negotiations, it's ineffective. If you lie during negotiations, sooner or later you're likely to be caught. Once you are, even if you don't lose the offer, you'll be at a tremendous disadvantage, and your credibility will always be suspect. On the other hand, total candor won't be rewarded. You're under no obligation to blurt out everything you know. You can determine what you want to say and how you want to say it, and try to put everything in its most positive light. One key element of your preparation should be to recognize areas of concern so you can rehearse how to handle them when they inevitably come up.
6. Understand the role fairness plays in the process. The guiding principle for most employers when negotiating is fairness. Within the constraints of their budget and organizational structure, employers usually will agree to anything that's fair and reasonable to hire someone they want. Appeals to fairness are your most powerful weapon. Thus, you should be able to justify every request you make in terms of fairness. For example, if other computer programmers in similar companies are being given sign-on bonuses, you should expect to be treated no differently. Your prospective employer will want you to accept its offer and feel that you've been treated fairly. Understanding the importance of fairness as a negotiating principle can make the difference between success and failure.
7. Use uncertainty to your advantage. The more information you convey to a potential employer about your bottom line, the more likely it will limit what you get. Before making an offer, a company typically tries to determine what it will take for you to accept the position. With that information, the prospective employer will be able to determine the minimum package it needs to offer. While they may not offer you as little as they can get away with, if you've divulged too much information, they likely won't offer you as much as they might have otherwise. By not disclosing exactly what your current compensation is or exactly what it would take to get you to leave your job, you'll force a potential employer to make its best offer.
8. Be creative. Consider the value of the total package. Look for different ways to achieve your objectives. Be willing to make tradeoffs to increase the total value of the deal. If you're creative, you can package what you want in ways that will be acceptable to the company. You'll also be able to find creative "trades" that allow you to withdraw requests that might be problematic to the company in return for improvements in areas where the company has more flexibility. That way, you can maximize the value of the package you negotiate.
9. Focus on your goals, not on winning. Too often in negotiations, the act of winning becomes more important than achieving your goals. And it's also important not to make your future boss feel as if he's lost in the negotiations. You'll have gained little by negotiating a good deal if you alienate your future boss in the process.
10. Know when to quit bargaining. The one sure way to lose everything you've obtained is to be greedy. There comes a point in every negotiation when you've achieved everything you could have reasonably expected to gain. While most companies will want to treat you fairly and make you happy, few companies want a to hire a prima donna. Being perceived as greedy or unreasonable may cause the deal to fall apart. Even if it doesn't, you'll have done immeasurable harm to your career. This brings us to the 11th and most important commandment:
11. Never forget that employment is an ongoing relationship. Job negotiations are the starting point for your career with a company. Get too little and you're disadvantaged throughout your career there; push too hard and you can sour the relationship before it begins.

Understanding these principles will allow you to effectively negotiate the terms of your new job. Then do your job well and continually seek out new challenges. As you take on added responsibilities and learn new skills, there will be opportunities to negotiate further improvements.

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