Negotiating the curve

 

I was reaching the end of a job interview with an apprentice candidate for our architecture team , fresh out of his Masters Computer Science program.

"And what starting salary are you looking for?", I ask.

The applicant said, "In the neighbourhood of $150,000 a year, depending on the benefits package."

I  said, "Well, what would you say to a package of five weeks’ vacation,  full medical and dental, company matching stock plan to 50 percent of your salary and a new company car leased every two years, say … a red Corvette?"

Corvette

The applicant smiles and said, "Wow! Are you kidding?"

And I replied, "Yeah, but you started it."

(fictional)

Negotiation Skills.  Another tool in the kit bag of excellent consultants. In the short space of this blog, allow me to share one of the best techniques I have found for negotiations.

Framing – A negotiation approach connected to the pattern of how information is communicated.

  • Contrast Frame
  • Risk – Opportunity Frame
  • Time Shaping Frame

Contrast Frame – The Contrast Frame influences the way  people experience things that are presented to them, one-after-another, in succession

example: We have done two analysis for you an upgrade to .NET 4.0 with a new Silverlight presentation layer and also a rewrite. The upgrade is $400,000 and the rewrite is about $6.9 Million.

This is the contrast frame. The upgrade seems inexpensive relative to the rewrite.

example: The development cost is $4 Million, the implementation cost is $900K and the annual Service Level Agreement (SLA) is $300K.

My concern in this case was selling the SLA. Positioning the SLA in contrast to the larger values allows for framing.

Risk – Opportunity Frame –  Generally, people do not evaluate agreements and decisions in absolute terms, but rather refer to some REFERENCE POINT.  A REFERENCE POINT can be a hope, the status quo, a prior contract, or industry standards. FRAMING JUSTIFIES a position

example: (standards) The industry accepted level of productivity for a good development team is 16 hours per function point. Our team will operate at 8 hours per function point , twice the speed. Yes we charge more per hour, but we will bill 1/2 the amount of total hours and be done twice as fast.

  • Human beings fear loss more than they desire gain. – make sure your proposal is protecting then from loss.
  • Certainty always trumps uncertainty – make sure your proposal highlights the items that are certain.

With the above in mind look at the 3 proposals below. Which one will likely be accepted?

Plan A: will result in the loss of 2 of the 3 feature sets and  cost an additional 4000 hours.

Plan B: will save 200 features in the first release .

Plan C: has the probability of saving 1/3 of the full feature set in all 3 planned releases.

Time Shaping Frame –  When TIME is reframed in terms of money, days, months and years –  it influences the way that  the outcome is valued

$25,000 Annual Service Level Agreement – “We provide 7×24 support, that’s only $2.85 an hour to have this coverage and peace of mind. The price of a Extra large Tim Horton’s coffee and a Bagel….”

The three biggest mistakes in negotiations

  • We ask our client to consider only our options, and then we present our product and/or  service
  • We then present the optimal features of our product, service, or proposal
  • We provide just a single option

Why?

  • Clients need to verify for themselves that your service is better than another and more desirable than others.
  • When we fail to present the sub-optimal choices first, people can’t contrast the best proposal to those sub-optimal choices.
  • This will make your proposal or idea

image

  • A single option is not an option, it’s an ultimatum. No one likes ultimatums.

______________________________________________________________________

I was reaching the end of a job interview with an apprentice candidate for our architecture team , fresh out of his Masters Computer Science program.

"And what starting salary are you looking for?", I ask.

The applicant said, "Well I have given this some thought and I thought perhaps we could discuss 2  options if that’s okay?”

“Sure”

“option 1 would be contract work, say $90/hour but with my guarantee that I will hit every deadline you give me or I bill at half that rate for the next piece of work”

“option 2 would be full time so  I wouldn’t expect contract rates, I think I could see a 15% plus reduction as I am sure you have a generous benefit package”

“I am really good at this kind of work, I encourage you to interview other candidates and hopefully you will see that I can perform above your expectations and my colleagues also applying for this job.  I am sure you have pressing deadlines and I can jump in right away to make sure you meet those goals. You know in my last project I was doing I exceeded the productivity by 30% and had 90% less bugs in my code than the entire team. I’d love to able to prove those skills to you. “

I  said, "Well, so you want $180,000 a year on contract. What would say if I suggested a $153,000 compensation over 3 years, a package of 6 weeks’ vacation with up to 2 in any year you want,  full medical and dental, and a new car leased every three years, say … a red Corvette that you can pay for out of your potential bonus?”

Corvette

Now it’s a real negotiation.

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2 Responses to Negotiating the curve

  1. Pingback: Infinite Shades of Grey – A year later and a little greyer | Infinite Shades of Grey

  2. Pingback: The perfect consultant – The Ambivert? | Infinite Shades of Grey

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