Everyone's an Amateur When It Comes to Negotiation
August 22, 2014 | The Wall Street Journal
Executives Master the Art of Business Deals, But Some Don't Bargain Well for Themselves
By Joann S. Lublin
When Noah Hanft was general counsel and chief franchise officer of MasterCard Inc., MA -0.75% he observed management colleagues deftly arrange deals for the big credit-card company.
Yet when it came to their own careers, some executives' negotiation skills seemed to vanish. Mr. Hanft says he once refused to promote a senior manager because his 20-minute monologue pushing for an executive role showed "he couldn't communicate well." In May, the 61-year-old Mr. Hanft took charge of the International Institute for Conflict Prevention and Resolution, which helps settle business disputes.
A surprising number of executives stumble in negotiating for job offers, pay raises or promotions, recruiters and coaches say. Some don't understand the best ways to reach agreement, while others simply feel uncomfortable advocating for themselves.
"When you negotiate for yourself, it can be quite emotional – and nerve-racking," says Deborah Kolb, a leadership consultant and coach for executive women whose book, "Negotiating at Work," appears in January.
Negotiation is a hot research topic, and such skills are increasingly seen as critical for closing the gender pay gap or boosting women into executive roles. One study cited in Dr. Kolb's next book, for instance, says women who act assertively in compensation negotiations are less likely to be hired and deemed good colleagues.
Poor personal negotiating skills have far-reaching consequences for both genders. The MasterCard senior manager left the company after realizing that he never would become an executive there. His unsuccessful advancement pitch "was clearly a derailer," Mr. Hanft adds.
"It's a real challenge to be as business-based as possible" in managing your career, says Mr. Hanft, whose current employer provides a network of mediators and arbitrators. "To be a good influencer, you have to be a good listener."
Inadequate preparation hurt one drug-industry veteran. The youthful chief executive of a midsized pharmaceuticals company offered him its presidency in January, only to withdraw the written offer days later, with no explanation.
The rejected applicant subsequently discovered that his imminent arrival threatened a longtime board member and chum of the CEO. He now wishes he had dug deeper into the organizational dynamics. Such an outreach "would have raised red flags," he remarks. But "that is easier said than done.''
To better grasp the needs of the person on the other side of the table, "you must do role reversal, putting yourself in their shoes," wrote Stuart Diamond, an emeritus professor of negotiation at University of Pennsylvania's Wharton School in his book, "Getting More."
You act out the part of the other person while a friend or spouse pretends to be you. "You get to watch yourself negotiate,'' Mr. Diamond explains in an interview. Reverse role playing provides "a lot of insight into how to start the negotiation," he says. "You frame everything as being in the interest of both parties."
Another common mistake: making aggressive demands too early in the process. Executives keen for upper-level spots sometimes overstate how much they earn or initiate pay negotiations too soon, several recruiters say. When management jobseekers appear mainly interested in making more money, employers may conclude they "may not be the best fit," suggests Geoff Hoffmann, CEO of search firm DHR International.
About 18 months ago, Mr. Hoffmann interviewed a possible deputy whom associates had met and approved. Within 10 minutes, the candidate described his present pay package and hinted that the search firm couldn't afford him.
"Let's make sure you're actually qualified for this role and mesh well within our culture," Mr. Hoffmann testily replied. "Compensation won't get in the way of our ability to hire the right person." The CEO picked someone else.
Other top managers make the mistake of selling themselves short –a tendency that is especially prevalent among women, studies show.
During the 2009 recession, a management consultant in line for a promotion told her boss that she faced difficulty signing up new clients – and thus "branded herself as someone who couldn't get the job done," even though she was holding her own with her peers, says Gail Golden, her executive coach. "She put herself in a weak position." Rather than move up, the woman got downsized.
She learned from her misstep. Hired at a higher level by another management consultancy, the executive was promoted in 2011 after presenting evidence "to back up the financial value she had brought," Dr. Golden says.
Aiming too low can prove costly for different reasons. Clinton J. Mueller joined an Oscar de la Renta division in 2012 as vice president of global sales. The industry novice says he didn't seek sales commissions in addition to his salary because "I was too green."
Yet Mr. Mueller had no trouble arranging good deals for Oscar de la Renta. "The pedigree of having the company behind you…makes it easier to negotiate deals than to do so on your own behalf,'' he remembers.
Advised by John Mattone, a leadership coach and author of "Intelligent Leadership," Mr. Mueller changed gears during his pursuit of a vice presidency at the North American unit of Air Val International in 2013. The global consumer-products concern accepted his request for a potentially sizable commission after "I had effectively sold myself to the people involved," he continues. Mr. Mueller started this January.
A finance executive at a transportation and supply-chain management company feared her tough boss might reject her desired relocation to the Midwest from its Southern headquarters in 2012. As a tradeoff, she considered proposing a demotion to middle management.
But an internal mentor who's a senior vice president challenged her demotion idea. "Why would you ever put that on the table?" he demanded. "Take that off!"
She agreed, won the transfer – and flourished. This summer, her employer gave her an operational management role for the first time.