It’s compensation adjustment season, which means a lot of people are thinking about negotiations right now. So we wanted to offer some perspective for both sides of the hiring table.
We’re not sure how often this advice is actually given, but for some reason the idea that “you should always negotiate” is burned into the back of our brain. There’s truth in this. Negotiating can be healthy. People should advocate for fair compensation.
But in our experience, how someone negotiates usually tells you more than what they ask for.
In negotiations class in business school, one of the first concepts covered is that a primary goal of negotiation is to both create and capture value. The issue is that most people skip right to the dividing part.
We like this story from Mary Parker Follett:
Two highly competitive sisters were fighting over a single orange they both wanted. Neither would budge, so their mother stepped in and resolved the dispute by cutting the orange in half down the middle. One sister squeezed her half to make orange juice. The other grated hers for the zest to bake orange scones.
The best outcomes happen when both sides find ways to create a bigger pie, not just fight over how to divide the existing one.
In hiring, when a candidate focuses almost entirely on the number, haggles over everything, and narrowly defines the negotiation, we think that is a signal worth exploring. It’s not “why are they negotiating”, but “what’s driving the negotiation”?
We’d also offer this potentially controversial opinion:
The people who choose roles because they’re excited about the work tend to create more value in the long run. And the people who create more value tend to capture more of it over time.
Here is Stan Druckenmiller, a well-known investor, on a recent podcast:
“If they’re going in it for the money, they should go elsewhere, there are too many people in the business like me that just love the game and the passion… and they are not going to be able to out work the people that are passionate in the game.”
We don’t think the point Stan (a billionaire) is making is that money is irrelevant. It’s that motivation matters. Passion and potential usually beat short term optimization.
So yes, negotiate. And if you are hiring, it’s okay if someone is negotiating. Just make sure the negotiation isn’t defined too narrowly, and if it is, take that as a cue to probe a bit more on fit.
Squeezing only half of every orange is a tough way to stay competitive.
Until next time,
Your Spherion South Central WI & Northern IL team