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NEGOTIATE FOR A HIGHER SALARY/ NEGOCIAR UN AUMENTO DE SUELDO

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Negotiation Strategies and Salary Negotiations: How to Negotiate for a Higher Salary

Posted By PON Staff On November 30, 2015 @ 12:00 am In Business Negotiations | No Comments

What negotiation strategies [1] should an integrative negotiator use in the following scenario from salary negotiations [2] and the world of business:

Imagine that you are a sales rep with a company that is getting hit hard by a financial crisis. No one has been laid off yet, but everyone is nervous about that possibility. In an effort to save jobs, your sales manager has quietly proposed that everyone take lower base salaries, along with more performance-based pay and other pay that would be contingent on the company’s future performance.

Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals [3], from the Program on Negotiation at Harvard Law School.

Efforts to “variable-ize” costs that have historically been fixed are becoming more commonplace especially during times of economic uncertainty. For developing negotiation strategies, standard theory suggests a number of reasons this shift might benefit both you and your company. For example, performance-based pay can better align incentives between the company and the individual, potentially leading to higher performance and improvements in the company’s bottom line. In the long run, the company might also attract sales reps who are optimistic about their own or the company’s performance, enhancing a “win-win” negotiation situation.

Three Things to Consider in Salary Negotiations [2]

Before your boss implements this type of change, however, there are three important costs to consider:

1. Destructive competition.

If performance is measured individually rather than collectively, you boss’s proposal might inhibit desirable teamwork within the sales force. Although the context is somewhat different, this is what happened at the venerable investment bank Lazard in the 1990s. The “eat what you kill” approach to compensation led to infighting that almost destroyed the bank, until CEO Bruce Wasserstein installed a new compensation system in 2003.

Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals [3], from the Program on Negotiation at Harvard Law School.

2. Behavior-distorting kinks.

Another potential problem with performance-based incentives is that you might create “kinks” that distort individual behavior. For example, Harvard Business School professor Ian Larkin has found that sales reps who are paid based on quarterly performance will drop prices in the few days just before the quarter ends, often to the detriment of the organization. To comply with arcane salary cap rules, football players in the National Football League often have contracts with lots of kinks. The result is frequent concern that athletes are “playing to the contract” instead of doing the right thing for the team. Thus, your boss should be vigilant for kinks and smooth them over, if possible.

For more information on contract negotiations [4] or download our negotiation free report Win-Win or Hardball: Top Strategies from Sports Contract Negotiations [5], drawn from the latest negotiation research from the Negotiation Briefings [6] newsletter.

3. The “Joe Torre” problem.

Economic models typically assume that individuals are driven solely by financial incentives, but human nature is more complex than that. Extrinsic motivation, such as performance-based pay, can interfere with intrinsic motivation – the simple desire among professionals to do a good job.

In one recent case, a company offered a bonus to a top manager it was recruiting if he could start earlier than the previously negotiated start date. The employer intended this to be a show of goodwill, as it would be sharing the large value that the manager would add by coming on board sooner. Yet the manager was insulted by the suggestion that he needed financial incentives to start as soon as possible.

This type of disconnect apparently played a major role in the departure of longtime New York Yankees manager Joe Torre. In 2007 contract negotiations with the Yankees owner George Steinbrenner, Torre walked away from an incentive-laden negotiated agreement [7] because he felt that it implied he wasn’t trying hard enough to win a World Series. The lesson: Before switching to a new pay system, carefully think through the pros and cons.

Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals [3], from the Program on Negotiation at Harvard Law School.

Related Business Negotiations [8] Article: Contract Negotiations in the Building Trades [9]

How Negotiation Games Can Help You Develop Skills to Resolve Business and Commercial Disputes [10]

Originally published February 14, 2012.

Article printed from PON – Program on Negotiation at Harvard Law School: http://www.pon.harvard.edu

URL to article: http://www.pon.harvard.edu/daily/business-negotiations/negotiating-performance-based-pay/

URLs in this post:

[1] negotiation strategies: http://www.pon.harvard.edu/tag/negotiation-strategies/

[2] salary negotiations: http://www.pon.harvard.edu/tag/salary-negotiations/

[3] Business Negotiation Strategies: How to Negotiate Better Business Deals: http://www.pon.harvard.edu/freemium/5-common-negotiation-mistakes-and-how-you-can-avoid-them/

[4] contract negotiations: http://www.pon.harvard.edu/tag/contract-negotiations/

[5] Win-Win or Hardball: Top Strategies from Sports Contract Negotiations: http://www.pon.harvard.edu/freemium/win-win-or-hardball-learn-top-strategies-from-sports-contract-negotiations/

[6] Negotiation Briefings: http://www.pon.harvard.edu/category/publication/negotiation-briefings/

[7] negotiated agreement: http://www.pon.harvard.edu/tag/negotiated-agreement/

[8] Business Negotiations: http://www.pon.harvard.edu/category/daily/business-negotiations/

[9] Contract Negotiations in the Building Trades: http://www.pon.harvard.edu/shop/contract-negotiations-in-the-building-trades/

[10] How Negotiation Games Can Help You Develop Skills to Resolve Business and Commercial Disputes: http://www.pon.harvard.edu/daily/teaching-negotiation-daily/how-negotiation-games-can-help-you-develop-skills-to-resolve-business-and-commercial-disputes/