Negotiate Your Salary

For the complete article 3 Steps to Making Smarter Counteroffers : Get the Compensation Package You Deserve by Michael Chaffers click here.

#1: Get Prepared

Before the negotiation begins, take the time to [do your] research . . . Establish a reasonable range for [compensation], a typical benefits package and common additional compensation (e.g., stock options, annual bonus, performance bonus). This work makes it possible for you to know the ballpark in which any satisfactory agreement has to fall.

Then, from those general points, determine the most favorable compensation package for you. You should be able to justify that package given the field in which you work (since compensation differs across industries) and your experience, expertise and credentials.

Make sure that this package addresses the real needs you have -- you will likely have trouble asking for more later if you overlook something. This package is your counteroffer.

#2: Be Firm

[S]elect[] a reasonable and appropriate counteroffer -- one based on the data you gathered in your research -- and stay[] there until the other side offers a persuasive reason for you to move.

By "persuasive," I mean an argument based on additional data or information that justifies a different figure or package than you had developed. . . . . An example of an unpersuasive argument would be "Your figure is too high. We can't do that."

#3: Be Wise

Keep the big picture in mind. Your goal in the negotiation is to reach an agreement that satisfies your interests -- not to win a battle between positions. If your counteroffer is not moving you closer to an agreement, do not hunker down and defend it to the death.

Instead, think of another proposal that addresses your needs and concerns and is supported by data, and put that out as another offer. Use your energy to generate solutions, not to fight battles.

The interview season is over and you have three job offers.

One is from BigLaw in Manhattan, a dazzling, dizzying opportunity coupled with a salary that (you believe) would end all of the financial insecurity you've experienced after 7 years of part-time jobs; student loans; and, macaroni and cheese dinners.

The other offer is from the Justice Department in Washington, D.C. where you've been promised early trial experience and your own case load during your first year. The salary is livable but you've got enormous student loans to pay back. Still, you've always wanted to stand in a courtroom, look Jack Nicholson in the eyes and say, "I want the truth!!"

Your last job offer is from a mid-size firm in your own home town. You really like the people you met with there and you can see yourself spending an entire adult life with them. Getting married, raising a family. The local schools are good and the chance to build your own "book of business" is better here than in D.C., Manhattan, Los Angeles, Chicago or San Francisco. You'd be a big fish in a little pond, not to mention remaining close to your extended family.

What to Do?

We have no specific advice. We do want to alert you to Bazerman's and Malhotra's chapter on cognitive biases in their new book, Negotiation Genius, and particularly their section on

THE VIVIDNESS BIAS

(note to readers: whenever the word "McKinsey" appears, think Skadden, or whatever law firm would most dazzle your professors and classmates if you told them you'd been offered a job there).

Apparently, many Harvard MBA students change jobs very quickly after accepting their first position. Why? One important reason is the effect of the "vividness bias." They explain:

Specifically, [the student job seekers] pay too much attention to the vivid features of their offers and overlook less vivid features that could have a greater impact on their satisfaction. This is a potential trap even for seasoned negotiators.

M & B go on to conduct a little thought experiment, imagining their students talking about their job offers and, more particularly, the following attributes of those offers:

• great medical benefits
• proximity to extended family
• high degree of happiness apparent in the offeror's employees
• opportunity to travel to Europe on a regular basis
• $140K starting salary
• employees have a significant degree of control over work assignments
• the office space is comfortable; the environment inviting
• the offer is from McKinsey
• I would not have to travel too much

You know what's coming next.

Which of these statements will travel most quickly through the MBA student grapevine, conveying the highest degree of prestige upon the job-seeker.

For all of our knowledge and sophistication, we're pretty simple creatures. Bazerman and Malhotra believe that "the answers to these questions are the high salary ($140,000) and the offer from McKinsey (a top consulting firm)." They continue:

These two items are not only the easiest to communicate quickly, but also the easiest for others to evaluate. Students who receive these offers will notice the impressed reactions of their peers when such information is shared, and these reactions will make the information more prominent in their mind[s]. As conversation after conversation focuses on these two factors, other aspects of the offer will be overshadowed or entirely sidelined.

One result: students accept -- and soon quit -- high paying jobs with prestigious firms because they over-weighted vivid or prestigious attributes of their offers and under-weighted other issues that would affect their professional and personal satisfaction, such as office location, collegiality, and travel.

Malhotra and Bazerman's suggested solution to counter the vividness bias is to create a scoring system that assigns "weights" to job attributes. They suggest that a professional job seeker "who does not have at least five to ten issues ranked and weighted in her scoring system is probably not thinking rationally enough about all of the important issues in her job negotiations."

When performing this rigorous, logical, left-brained analysis of your job offers, remember what we recently learned from the Neuromarketing Blog's recent post on the new (must read) book -- The Best of the Brain.

the left hemisphere of the brain tends to screen creative thoughts from the right hemisphere. Too much screening, and creativity is stifled; too little, and useless ideas can't be eliminated. Creativity also requires topical knowledge and a detailed examination of the problem. While there's no simple path to creative thinking for most of us, Kraft concludes by recommending that relaxing and stepping back from the problem are often helpful in letting the brain do its work.

To conclude our series on job hunting for lawyers, I leave you with the the following list of dangers and pit-falls based upon my own experiences and those of my colleagues, all of whom have been practicing law for at least twenty-five years.

• property, power and prestige are the most dangerous siren-songs to follow (seethe Cost of a Thing is Your Life);
• if you're one of those people who believes you can take a BigLaw job, save your excess salary and then move "down" to a more congenial firm, just make sure you have the mental toughness to do so -- I have seen many lawyers "trapped" by the lifestyle this salary can afford them -- I know dozens who have been miserably stuck there for years if not decades;
• your mom and dad really will continue to love you no matter what you do; you do not have to take an impressive job to prove to them that the kid who could never keep his room clean is all grown up now and a credit to his family; and,
• money can't buy it (Annie Lenox)

Yesterday, we talked about recognizing, naming and claiming your "distinct value proposition" (your DVP in Bazerman & Malhotra's lexicon) to negotiate the best terms and conditions as possible for your first law job.

Today, because the beach is beckoning (yes, even bloggers are entitled to Hawaiian vacations) I offer this experience-based post on hiring summer associates and first year law students.

First, let me assure you that you all look stunningly brilliant and accomplished on paper. The trouble is, members of the hiring committee have difficulty telling you apart.

"Good grief!" I thought the first time I waded through a stack of law student resumes. "They're all Phi Beta Kappa. They all have undergraduate GPA's hovering around 4.0. They're all in the top 20% of their law school class. How in the world do I choose among them?"

I could have just pulled every third resume and then tried to distinguish among the applicants. It wouldn't surprise me if the first and second "cut" of resumes is as random as this at many law firms.

When I was on the hiring committee, however, I always looked for someone I wanted to work with. And frankly, your Phi Beta Kappa didn't interest me all that much, nor your class standing, nor your Law Review credentials. At certain levels of practice, those are simply the base requirements.

How could you possibly know, then, what someone like me was looking for in a young associate?

Ask Questions

As I said yesterday, now's the time to earn your chutzpah stripes.

• Pick up the telephone, call the administrative head of the law firm's professional recruiting staff and ask a lot of questions,
  • "who's on the hiring committee," "what's the cut-off class-standing rank for professional hires from my law school," or even something terribly open-ended like, "what is the firm looking for in first-, second-, or third-year law students this year?"
• If you want to be really proactive and the firm is local (or you'll be in their town for another interview) ask them out to lunch or for coffee at the local Starbuck's.

Tailor Your Resume to the Law Firm (or Have Several Geared Your Top Five Choices)

You now know who's on the hiring committee and what the recruiting director believes the firm is looking for in summers or first year associates.

• take your research a step further and google all of the members of the hiring committee.
• email the one hiring committee member who seems most compatible with your interests and background -- usually someone who went to the same undergraduate or law school, or who shares similar interests (river rafting! squash! the theater!) or is in a practice area about which you're passionate.
• Ask that person for a convenient time for a telephone chat.
• Ask all of the questions you have about the firm as if you're interviewing it (you see, you're shifting the bargaining power balance already)
• Ask that person out to lunch or for a coffee.

Trust me, they'll be impressed by your passion, your inventiveness, and your courage. You're just the kind of hard-working, out-of-the-box thinking, courageous young associate they're looking for.

And remember, you're making a decision whether you're interested in them as much as they're making a decision whether they're interested in you. If your google research (and inquiries of young associates) reveals that you have nothing in common with these people and wouldn't want to spend a weekend with them at a fancy country-club on the beach, for heaven's sake, save everyone time and money and cross them off your short list.

What does this have to do with negotiation? Preparation. Preparation. Preparation.

Just as you'd never argue a motion or an appeal without preparing for oral argument, you never enter a bargaining session without preparing for it by ascertaining your bargaining partner's intererests and giving some serious thought to how you and you alone could best satisfy those interests.

I understand from a reader that the interviewing season has already begun (in August?????).So we'll pursue this topic further tomorrow.

And please, if you have questions or comments, leave them here for the benefit of yourselves and your law school classmates everywhere.

(and for those of you in the bottom half of your law school classes -- it's actually far easier to negotiate a deal you want because the firms you're looking at will be far more flexible than the mega-bureaucracy's that the AmLaw100 mostly have become -- nor is BigLaw out of reach to you if you can identify and "sell" your DVP, remembering that you can have anything you are capable of negotiating -- and that's more than you've ever dreamed of).

Yesterday, I suggested that young attorneys use the considerable bargaining power they do not believe they possess to negotiate the terms and conditions of their first year associate positions with the AmLaw 100.

Because I know a young man who is about to commence his first year in those ranks, I also know all of the reasons why this can't be done:

1. although the $$$ involved are considerable ($160K/year) the day-to-day terms and conditions of an AmLaw 100 first year's employment are so apparently set in stone that negotiating terms has not even crossed young lawyers' minds;
2. the push back from the top firms is predictable, even understandable:
   • making exceptions among first year ranks will sow seeds of dissent among all associates with unpredictable (but unquestionably bad) consequences;
   • WADITW: We've Always Done It This Way.
     • the system is in place
     • everyone depends upon it being this way
     • exceptions will invite chaos into an orderly and predictable regime
     • we're prospering
     • since it's not broken (from OUR perspective) don't fix it.

HOW FIRST YEARS CAN NEGOTIATE THE TERMS AND CONDITIONS OF THEIR EMPLOYMENT

First, let's not kid ourselves, it would take brass $#%^'s to say to Skadden Arps, "listen, there are a few things I'd like in my employment contract that aren't contained in your offer."

On the other hand, if you're reading this from the point of view of a recent Harvard or Yale Law School Graduate who was Editor-in-Chief of the Law Review and a Clerk for a Federal Appellate Judge, now's the time to earn those %$#&# while at the same time creating the one and only professional life that you have already, in large part, earned.

• You Are Not a Widget in a Widget Factory

Since your first year in law school, your employment search has made it seem as if there were only a few coins to earn and spend -- class standing; law review or moot court, and the relative prestige of your clerkship. Oh yes, and the all important ability to get along reasonably well with your colleagues duirng your summer clerkship.

Because there are many other bright, hard-working law students with qualifications similar to yours, you've come to think of yourself as fungible, which any fool can see you are not. Nevertheless, there's good reason for you to believe that you must accept the terms offered by your future employer because the "system" was in place before you entered it; has been in place for decades and seems a whole lot more powerful than you are.

• Identify and Leverage Your Unique Value

In this situation, where you have no apparent bargaining power, Bazerman and Malhotra in their indispensable new book Negotiation Genius suggest that you "identify and leverage your distinct value proposition." They call this your DVP because academics, like lawyers, love acronyms.

Malhotra and Bazerman explain:

How can you create and claim value when your counterpart [here, your potential employer] is only interested in discussing price [no matter how high that "price" might be].

[Y]ou can improve your prospects by changing the game you are being forced to play. Consider that, in negotiation, your ability to legitimately claim value is a function of your ability to create value. . . .

[V]ery often, you do bring something to table that distinguishes you from your competitors [i.e., other Law Review EOC's from Ivy League law schools]. This is your distinct value proposition (DVP) and it need not be a lower price . . .

If you bring . . . value-adding elements to the deal, you have the possibility of using them to get what you want . . . The key is to figure out how to make your DVP a factor in the negotiation.

Unique Value + Understanding Your Bargaining Partner's Interests + the Courage to Claim Value for Value = the Rest of Your Professional Life

You've been competing for so long in the stratosphere against the same cohort (people in the top 1%of the bell curve) that you've forgotten how uniquely valuable you are.

• Therefore, step one to negotiating the professional life you want is to sit down, take a deep breath, and list everything of value you have to bestow on a law firm other than academic and clerkship accomplishments.
• Step Two is to identify your potential employer's interests, which include:
  • landing you as a first year;
  • retaining you for at least five years so that your employer's considerable investment in recruiting you has the meaty pay-off of your billable hours and book-of-business-building ability that commences in earnest between your fifth to seventh years of employment;
  • keeping the entire class of first-years stimulated, appreciated, and fairly rewarded; and (which will require a reasonable "excuse" for treating you differently);
  • creating new and valuable niches of expertise in the firm to increase the firm's market-share.
• Step three is to offer to meet more of your potential employer's interests than it ever considered you might be able to satisfy:
  • contracting to continue your employment through the end of your fifth year;
  • offering to defer a certain percentage of your yearly income until the end of your fifth year as your incentive to abide by your agreement;
  • offering to help the firm expand a new (or suffering) area of its current practice by committing to, for instance, write two publishable articles per year in that niche practice area; and/or,
  • if you have contacts, offer them now, i.e., "I've already spoken to my dad's friend, the CEO of X Corporation, and he's agreed to meet with the ___________ practice group for the purpose of putting this firm on its short list of "go to" counsel for, say, IP or securities fraud or regulatory litigation.

In exchange for which you want what?

Well, how about a first year that is devoted solely to learning with no billable hour requirement.

If you're a litigator, you might want to observe and then take depositions, as well as defend them, during your first year. You'd like the opportunity to join a team that is on its way to trial and you'd like to second (or third) chair that trial. You want to argue motions and/or appeals.

If you're a transactional attorney, you want to go to client meetings, observe negotiations, help with the drafting of critical contract terms, and, be included in the strategy sessions.

Perhaps most importantly, you want to be included in practice development with one or more of the firm's few rainmakers.

These are just suggestions. This is about what you want.

You have value.

Name it.

Claim it.

Negotiate it.

If you're entering the job market, you'll want to check out Forbes' Magazine's Tips for Negotiating Your First Salary.

If you do not negotiate your first salary, you stand to lose half a million dollars over your lifetime.

Who says? The women who brought you Women Don't Ask: Negotiation and the Gender Divide

And for women entering the job market, here are the grim statistics:

• women's earnings relative to men's have stagnated at 73.2 percent.
• In surveys, 2.5 times more women than men said they feel "a great deal of apprehension" about negotiating.
• Men initiate negotiations about four times as often as women.
• When asked to pick metaphors for the process of negotiating, men picked "winning a ballgame" and a "wrestling match," while women picked "going to the dentist."
• Women will pay as much as $1,353 to avoid negotiating the price of a car, which may help explain why 63 percent of Saturn car buyers are women.
• Women are more pessimistic about the how much is available when they do negotiate and so they typically ask for and get less when they do negotiate-on average, 30 percent less than men.
• 20 percent of adult women (22 million people) say they never negotiate at all, even though they often recognize negotiation as appropriate and even necessary.

Women Suffer When They Don't Negotiate

• By not negotiating a first salary, an individual stands to lose more than $500,000 by age 60-and men are more than four times as likely as women to negotiate a first salary.
• In one study, eight times as many men as women graduating with master's degrees from Carnegie Mellon negotiated their salaries.
• The men who negotiated were able to increase their starting salaries by an average of 7.4 percent, or about $4,000.
• In the same study, men's starting salaries were about $4,000 higher than the women's on average, suggesting that the gender gap between men and women might have been closed if more of the women had negotiated their starting salaries.
• Another study calculated that women who consistently negotiate their salary increases earn at least $1 million more during their careers than women who don't.
• In 2001 in the U.S. women held only 2.5 percent of the top jobs at American companies and only 10.9 percent of the board of directors' seats at Fortune 1000 companies.
• Women own about 40 percent of all businesses in the U.S. but receive only 2.3 percent of the available equity capital needed for growth.
• Male-owned companies receive the other 97.7. percent.

Women Have Lower Expectations and Lack Knowledge of their Worth

• Many women are so grateful to be offered a job that they accept what they are offered and don't negotiate their salaries.
• Women often don't know the market value of their work: Women report salary expectations between 3 and 32 percent lower than those of men for the same jobs
• men expect to earn 13 percent more than women during their first year of full-time work and 32 percent more at their career peaks.

You Can Do It

It's not that we're not good negotiators. A Harvard study (which I'll find & link to later) showed that women negotiated as successfully as men when they were negotiating for someone else!

So just pretend you represent yourslef and go for it.

I won $200 at Morongo recently, accompanying my husband to one of his law firm's business development events. I always think gambling (excuse me, gaming) outings are good for lawyers and business people -- the litigation risk- taking analogies being so plentiful.

The lesson from this trip, however, was not about sunk costs or risk aversion. It was about my own subjective experience of money.

"Don't worry," I was saying to Mr. Thrifty, as I pulled three twenties from my wallet to pay for an afternoon gourmet picnic in Griffith Park. "I'm paying for it with the casino's money."

Thrifty gently reminded me that this was the third time I'd spent my winnings --the first on that spa visit before I hit the gaming floor; the second on a few Crate and Barrel essentials we picked up at the outlet stores so conveniently located next to the hotel; and, the third for our picnic in the park. Actually, by the time we were collecting our food tickets, I'd also "spent" my unexpected windfall on the gift I'd planned to buy for my father's birthday the following week.

Spending Your Negotiation Dollar Ten Ways from Sunday

The lesson of my little gaming foray? In negotiations, two and two is rarely if ever four. You can place your two dollar bets on winning; fairness; future opportunities; or, investment return. You can lay your chips down on need or equity or equality. You can wager your money (or more importantly, your negotiating partner's money) on common sense or risk aversion. You can spend it on respect or conserve it with empathy and understanding.

The brilliant part of all of this is that you can spend the same two dollars on each of these things during any negotiation session, doubling your two with every move so that by day's end it has become six, eight, ten or even one hundred.

When your mediator is engaged in shuttle diplomacy, she is consciously doing that which we all unconsciously do everyday -- rationalizing numbers and creating subjective monetary "accounts." How important are these subjective "accounts" and how influential our monetary rationalizations? Leigh Thompson of the Kellogg School of Management at Northwestern University tells us in the Mind and Heart of he Negotiator, that monetary accounts are important enough to strongly influence the outcome of a negotiation even if they are meaningless.

Any Reason is Better Than No Reason at All

It's no suprise that busy social psych researchers have studied the art of getting what you want by saying why you want it. In one study, the usual cadre of beleaguered undergraduates were asked to negotiate cutting in line at a photocopy machine. Id. Those who provided no rationale were, not surprisingly, the least successful. Id. Only sixty percent of them were allowed to "cut" into the line. Id.Those who presented a logical rationale, however, got what they wanted an extraordinary 94% of the time. Id.

But here's the truly remarkable part. Those students who presented a meaningless rationale such as, "I want to cut in line because I need to make copies," racked up a ninety-three percent success rate, only one percent less than their logical peers. Id.

Proven Rationales Acquire the Largest Slice of the Distributive Pie

Even though any excuse whatsoever appears to do the trick, Thompson offers the following advice for "spending" your two dollars as if they were a hundred:

1. use objective sounding rationales and invite your opponent to buy into them;

2. label your proposals as "fair," "even splits," or "compromises," understanding that notions of fairness are purely subjective -- each deal-maker focusing on only those norms that serve his own interests;

3. avoid falling for the "even split" ploy which invariably benefits the person who offers it; and,

4. understand (and use) the three basic "fairness" principles -- equality, in which everyone benefits or suffers equally -- a principle governing the distribution of government resources ; equity or proportionality which is based on merit and governs the distribution of resources in the private sector; and, need, which often comes into play where the parties are of greatly unequal bargaining power.

Id.

Those are today's tips. I'm off to spend those gambling winnings on my dad's birthday gift. The only person this kind of accounting never fools is Mr. Thrifty. And to him, all I can say is, "I'm sorry honey but I've got a lot of other fine qualities."