While talking with a recent Scotwork participant who runs a small business, he reflected how much more comfortable he is now, when having discussions with staff who ask for more money (which seems to happen often for him).
Previously when he was propositioned, he would reply with something along the lines of ‘the business can’t afford it’… which is a fancy way of saying ‘NO’. Invariably , this resulted in a level of resentment from the employee as a result of their unmet expectations. Such ill feelings would simmer, creating down-stream issues.
Now, he responds differently. In fact, he goes as far as asking, ‘How much would you like?’ If they haven’t thought of a number yet, he sends them away to think about it. If they do have a number in mind, he proceeds to show them what they would need to achieve for him to be able to pay it. Typically, this involves a range of productivity gains to offset the additional salary.
Interestingly, once the employee’s expectations have been structured so that additional salary is linked to additional productivity, the majority of people have chosen not to pursue it further. However, the key difference is that because the decision has been entirely the employee’s… it is much less likely for them to harbour resentment.
It has also been good news for the couple of employees who have accepted the challenge. They strive to reach their stretch productivity goals because these are directly linked to their own income aspirations.
How does this fit with Scotwork’s advice not to invite proposals?
The answer is that it falls into one of the few exceptions to that advice - grievance handling. In a sense, an employee's request for more money is a form of grievance; if they genuinely do feel that they aren't being appropriately rewarded then, in a very real sense, they are aggrieved. Looking at it another way, if you treat such an approach as a standard negotiation and try to make the first proposal, the chances are that you'll get the number wrong. Offer too little and you double down on the morale problem; offer too much and you've not only "overpaid", you've probably set a very unnecessary and unwanted precedent.
What if you simply can’t meet their expectations?
One of my Scotwork Colleagues who previously ran a large division was approached in a similar fashion by a direct report – ‘I have been offered $25,000 more by a competitor to head up their equivalent business unit, although, I would prefer to stay here, heading up yours. Can you match it?’.
Unfortunately, internal policy and salary banding meant that my colleague couldn’t match it under any circumstances – so trading a salary increase for an appropriate wish list was impossible.
They needed to be creative if they were going to make this work. Rather than getting bogged down on the $25,000 in base salary, they quickly put it aside and the direct report made a proposal: ‘If you can agree to fund this European 16-day executive development program with business class travel and 5-star accommodation, then I would forgo the additional $25,000 in base salary’.
This was tabled after a good and unemotional exploration of what would and wouldn’t be possible. Although the Division Leader didn’t have any further discretion on salary, he did have discretion for training. Repackaging from $25,000 salary to executive education satisfied the employee; the Division Leader was satisfied by the education being traded against his relevant wish list item.
So, what are the lessons?
Saying ‘NO’ to people’s requests is likely to have a longer term detrimental impact on relationship. Do you really want your employees, customers or colleagues to harbour resentment towards you and your company?
So how can you say ‘YES’ to requests without eroding value?
1. Beware of ego and emotion. Salary negotiations are typically emotional because they directly impact what we ‘take home’, and that ties back to our perceived ‘worth’. It will be more productive for both sides if the emotion is kept to a minimum and the focus is on what is possible (rather than ‘bogging down in the historical’).
2. If meeting their expectations isn’t possible, break the bad news early and refocus on what would be possible. Again, this will be much more productive if the emotion is in check.
3. Prepare a wide range of valuable wish-list items ahead. These are hard to think of under pressure, so if you don’t have them ready, consider taking an adjournment to prepare them.
4. Link and trade their requests against your wish-lists items. If you agree to ‘abc’, then I’d be happy to give you ‘xyz’. The bigger ‘their demand’, the bigger ‘your wish list’.
5. Good negotiators do their best not to deny people what they want; instead they try to give people what they want on terms that work for them.
Need help learning how to give people what they want on terms that work for you? Explore our Negotiating Courses