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Salary negotiations can be anxiety-filled on both sides. Maybe that is why people try to avoid it in the first place.
For instance, up to 59% of workers in the USA accepted the salary they were first offered, according to Glassdoor’s Salary Negotiation Insights Survey.
In fact, only one in 10 employees reported they came out victorious in this grueling tug-of-war.
While employers seems to have the upper hand in such salary talks, they may end up not being able to retain talent, considering more than half of employees believe they must switch companies in order to obtain any meaningful change in compensation.
Indeed, it is commonly observed that talent might leave their firms if they feel they are not getting wht they deserve.
In order to retain your talent, here are a few tactics to make salary negotiations more smooth and create a win-win situation.
Get close and personal
According to Wharton professor Adam Grant, negotiation tends to be more successful when both sides share information related to their personal details over the course of the negotiation.
In one experiment, Stanford and Kellogg students negotiated over email. When they only exchanged their names and email addresses, they reached deals less than 40% of the time. When they shared information that was irrelevant to the negotiation, schmoozing about their hobbies or hometowns, 59% reached agreement.
“When you open up about something personal, you send a signal that you’re trustworthy, and your counterparts will be motivated to reciprocate, matching your disclosure with one of their own,” explained Grant.
Understand employee’s priorities
The second tactic is called rank-ordering, and it involves listing the issues on the table, and sharing the relative importance of them.
In a job offer negotiation, for example, employee might say that salary is most important, followed by location, vacation time and signing bonus.
Research shows that rank-ordering is a powerful way to help your counterparts understand your interests You can then ask them to share their priorities, and look for opportunities for mutually beneficial tradeoffs.
But don’t try to reach agreement on one issue at a time, by keeping all of the issues on the table, you have the flexibility to propose trading location and bonus for a bump in salary.
Provide a salary range instead of a distinct figure
In the past, organisational psychologists thought a range would work against you — wouldn’t people just fixate on the lower number?
But research from Columbia Business School, demonstrated it is not the case.
The research explained that giving a range works better because it gives your boss/ employee information about what you’re actually asking for or offering, and it makes you seem polite and reasonable — which means you’re less likely to get hit with a hard-line counteroffer.
In another research from Columbia Business School, authors suggests that using precise numbers makes a more powerful anchor in negotiations because exact numbers leads the other party to think that you’ve done research to arrive at those particular digits — and that, in turn, makes them think you’re likely correct.
Be the one to make the first offer
While it is widely believed that by encouraging a counterpart to make the first offer, you gain an information advantage.
But it is an wrong assumption as demonstrated by one thorough analysis of negotiation experiments.
The analysis showed that every dollar higher in the first offer translates into about 50 cents more in the final agreement.
Why is that? “First offers serve as anchors: they set the tone for the negotiation. When we hear a first offer, we find ourselves pulled in that direction, and have trouble adjusting our own judgements,” said Grant.