Getting More in Any Negotiation

Anita Brick: Hi, this is Anita Brick, and welcome to CareerCast at Chicago Booth. To help you advance in your career. Today, we're delighted to be speaking with Stuart Diamond, who is one of the leading experts on negotiating and author of a fabulous book called Getting More. He has advised executives and managers from more than 200 of the fortune 500 companies, has taught 30,000 people in 45 countries, and has also taught at Wharton, Harvard, Columbia, NYU, USC, Oxford and Berkeley, and advised the UN and the World Bank. He has a JD from Harvard Law School and an MBA from Wharton. Thank you so much for making the time. A friend recommended your book. I read it, fell in love with it, and I'm so honored that we're having this conversation today.

Stuart Diamond: I'm glad to be here.

Anita Brick: What do you believe are the initial steps in a successful negotiation, whether it's with your kids or with a large multinational company?

Stuart Diamond: It's got to start with them and their perceptions. Not with your proposals, not with spreadsheets, not with any set of facts, but with their perceptions and emotions. Most negotiation today deals with power, leverage, logic, etc. but that's not how people operate. The studies I've done over the last quarter century have found that if you understand their perceptions, you've got a much better starting point for negotiation. If you value those perceptions, you're much more likely to go along with them. And so the pictures in their heads, no matter who they are, are the most important thing you can do in a negotiation.

Anita Brick: Great. We had a lot of questions from students and alumni globally. An Evening Student asked, would it be wise to propose an offer or offer a range first, or is it better to wait for the other side to disclose their offer or their range? I heard it's best to propose a range first. I'd love to get your perspective.

Stuart Diamond: Thanks a lot. With respect, none of that is right. First of all, if you propose a range, you'll always take the part of the range which is in their interest. So if you say, I want to make 40, $50,000 a year, we'll take 40. If you say I want a medium to large, also give you a medium offer, so you never want to propose a range.

That's number one. Number two, you don't want to propose anything. What you want to do is find out what their needs are and then gradually work toward what you should do. For example, I really like to work for you. I want to meet your needs. What are your needs? He told you we need you. Say that's interesting. I could do that.

Then you would discuss what the parties' needs are, especially theirs than yours. And then you would have gradually ensured what our proposal is, which includes money and is not limited to money. For example, in somebody's first job out of school. Most important thing is not the salary, but who you work for, what kind of work you do that will much more influence your long term career success than any particular monetary number. So most people are barking up the wrong tree completely.

Anita Brick: So you're saying I understand what they need, but also understand what you need in terms of positioning more than count, right?

Stuart Diamond: If somebody holds a gun to my head and says, make an offer, I want them to make the offer. I want to say, why don't I hear your offer first? Or if they tell me an offer I want to use a standard. Well, what I understand is here's how you make decisions. And based on that, here's what I propose again. It's got to start with them and what they perceive.

Anita Brick: Okay. There's an existing MBA student who said, when I go into a negotiation, I start from a position where I'm afraid of making a mistake. What can I do to reduce my stress and increase my confidence?

Stuart Diamond: Find out more about them. Then you won't make a mistake. If I found out what their needs are, I can't make a mistake. Or I might say, you know, I'm really a little uncertain here on what you want. So I want to make sure I meet your needs. So which is your best kind of candidate? And what's your worst kind of candidate?

In almost all negotiations, people don't collect enough information about the other party, whether it is business, whether it's personal. And so the job of the person who's trying to get a job is to get as much information as you can about the people in the situation. I want to tell you a little anecdote here. Has the students held Trivedi, who was 18 times by companies.

He took my class and I said, okay, let's get some offers from the same companies. And he thought that was crazy. But I said, I want you to find out each individual that you're being interviewed by. I want you to rewrite your resume for each individual based on who they are. And then I want you to present yourself based on what that person needs to give up.

After so many offers with like a dozen, he'd know what to do with them. But that's because he focused on the individual, not on who he was and what he had to offer to some generic individual.

Anita Brick: So if you go into this situation, into an interview, obviously you need to do homework before you walk in the door. Isn't it possible that you'll be seen as weak if you keep asking them what their needs are? Because shouldn't you know that before you walk in the door?

Stuart Diamond: Well, I can say, here's what I know so far. Am I on the right track? Is there something else I should know? They certainly don't expect you to know everything coming in, but you want to take the issue by saying what's going on? I've done a significant amount of preparation for the company, yet I don't know everything.

Am I missing anything or is this on the right track? You'll be asking them for advice and valuing them, and you're also showing that you've done some preparation but are interested in learning more, so it sends all the right signals if you do it that way.

Anita Brick: Agree. Good point. There's another evening student who is about to negotiate a raise with his current employer, and he asks, what advice would you give someone so that they avoid common mistakes when they go in to negotiate for a raise with their current employer?

Stuart Diamond: What I want to know is what they think of me, what their standards are, and criteria for giving raises. Have I met enough of their needs to get a raise? If not, then what do I need to do to get one? And I want to make sure I have enough value to be able to get a raise. Employers in general have no problem paying for a percentage of value the people that employees create for them, and in fact, they're more likely to pay that value from next year's budget.

And this year or last year's budget. So if you ask for a raise for something you've already done, unless you've got this standard straight in your mind and they have the best interest rate in their mind, they may not have the money. But if you ask for a raise from next year's budget, they're going to be happy to give it to you if you meet the standards.

So I'm always telling you students to think ahead. Very few people ask for raises from next year's budget, and so there's more money involved there. So I want to start with their standards and needs, find out if I've met them and if I haven't, I want to know what I can do next year. Again, it's gotta start with meeting their needs. You know, when I have an employee who works for me and they say I deserve a raise, it's not as impressive as when they say to me, how do I meet your needs so much? I got a raise.

Anita Brick: So planning ahead and having those conversations long before the bonuses and or raises come out.

Stuart Diamond: That's exactly right. When people are having a startup company, if they wait until the company makes $1 million off the stock, they're in real trouble. That's why they do it in the beginning.

Anita Brick: Right? Good point. Speaking of startups, there was a weekend student who said, I'm in the midst of negotiating with funders for my startup, and we really need the infusion of capital. I feel like so many things are beyond my control. What would you recommend so I can get some control over the negotiation and not give up too much of my company just because we need operating capital?

Stuart Diamond: What I want to know is what are the goals of the people involved? What's the goal of the funder? Do they want us to develop the best ideas? Do they want us to have a certain amount of autonomy? Do they want to get involved in every single decision? What does this company look like to them in a couple of years? That's the first thing I want to know that will tell you whether they want to run the company, whether they want you to run it, etc. and I'll give you a sense of how they view you. Next thing I want to know is, well, what's the best action to meet our goals? What level of funding, what level of autonomy?

What level of consulting? One of the things people don't do around the world enough is to say, what are our goals? What actors do we take to meet those goals? And so that's how I would start with the funder, okay?

Anita Brick: An MBA student said, how do you ask for a significant raise because of hours worked and an unhealthy level of conflict and crisis management, they do not reflect current compensation. How do you do this without sounding like it's an ultimatum?

Stuart Diamond: A company is not going to pay you punitive damages for having a conflict of environment. That's not going to work unless you want to quit and sue them for workplace harassment. You've got to forget that. You've got to say, what's my job worth? I suppose there is a hazard off duty pay if you have physical danger, I suppose, but emotional danger, that's a pretty hard sell.

But I want to know instead, what does the company compensate people for when they work unusually hard? That's the first question. They may pay something. They may pay nothing. The next question is there seems to be a large amount of workplace conflicts here. Do you feel it's or. And if you do, is there something we might do about this to make everybody more productive?

This way? You're then sharing this with them and not making it a threat. And be grateful because you want to work on a common problem with them. The more you make things a common problem instead of a me versus them, the more they're going to want to give you what you want.

Anita Brick: Well, you're absolutely right. I know sometimes people say the squeaky wheel gets oil, but usually that's not the case. Usually the people who are complaining or have an attitude of entitlement don't get very much at all.

Stuart Diamond: Right? The people who say we have a squeaky wheel, how do we fix it? They get degrees, right?

Anita Brick: Got it. Okay, so here's a question about negotiating in different cultures. And even students said different places have distinct cultures that will affect ways of negotiating in those areas. But I'm wondering from all of your years of experience negotiating on an international scale, is there anything in negotiations that you've observed that's common, for example, techniques and people's psychology?

Stuart Diamond: Yes. This really hits a nerve. And this is one of the most important things I have to say. Cultural differences in terms of countries and stereotypes is a red herring. Around the world, people are the same. They may be interesting stereotypes for social, economic and political studies, but in one on one negotiations, there are relevant studies. We've shown that around the world, people first value family, friends, personality, hobbies, occupation, and then stereotypes.

So you can say, I like it here in Paris with you speaking French. What better to say than your family? And so around the world it's the individual personal connection. It's so important. I convince 3000 growers in Bolivia, say I've grown coca and start growing bananas. And I began by saying to them, we're different, but I bet we want a better life for our children.

And it took 10s to make a connection, whatever the culture happens to be. So all this stuff about cultural differences is greatly overstated. Now, it is true that there are micro cultures. For example, I'm a member of the garden club, I'm a software engineer for certain kinds of programs, and that's where people get their identity from. Micro culture is important, but you have to actually find out what microculture people think they belong to.

It may not be that women think they belong to the gender culture. They may think I belong to the culture of mothers with small children. That's the stuff we have to find out, and that's the things that are important.

Anita Brick: Got it. So there are questions about getting anchored to your previous salary. How would you respond when your new employer, which is all in Caps, insists on applying your compensation to your current compensation, meaning they ask for the amount. You tell the truth. They want to see your base offer. They want to see your w-2s, as opposed to looking at your market value and what you can actually offer them. How do you get around that?

Stuart Diamond: Well, I certainly would be honest with them about what my current compensation is, and most employers want to just go off that because it means they'll have to pay less. I do want to say, let's assume we start the year because you want to. How do we figure out my value going forward? That, again, is about this year's budget versus next year's budget.

Because if you have a job, it's not generally for a year, it's going to be longer than that. And if you want to change people's perceptions, you have to change them incrementally. So you might not get what you want in this particular negotiation, but you want to set the stage for the future. I certainly would ask the question, why don't we talk about what my value is?

And the employee will say, you have improved your value to me. Just because you did something somewhere else doesn't mean you'll do it here. That's why I want to be safer and go with a percentage above your last salary. And then you say, fine, how do I prove my value? And how much time do we take doing that? That's how I'd approach that situation.

Anita Brick: It's interesting because I think people want to when they move to a new employer, they view it as a time where they're assuming more risk and they want to be compensated for that part of it, too. How do you then make sure that you have assumed too much risk, given the incremental jump that they may give you in terms of compensation?

Stuart Diamond: I want to find out what kind of job security there is so I have an employment contract that lasts a certain amount of time. Are there some metrics by which to evaluate people? By filling in need? They actually have to have and I am working with somebody that I like, all those things are a way to mitigate risks that you have to ask specific questions about the place you're going to.

Obviously, if a company's moving to France and I'm the only person in the company who speaks French, I have pretty good job security, at least for a time. So I want to know how I may meet the company's needs in a way that will keep me employed for a certain period of time. I also want to know what the turnover has been in the company and what's the nature of the turnover.

If it's a company with high turnover, I know there's something that the company may not be loyal to individual employees. So those are all the kinds of metrics I want to ask to reduce my risk, to ask a company to pay you more money for your increased perceived risk. It's not some companies you don't want to do.

Anita Brick: Typically they want they'll pay you for value, and especially if you are one of a few that can fulfill that need rather than the 9 million people behind. You can also do that.

Stuart Diamond: Exactly. And of course, what I'm talking about here is so different from what's implied in the question. Mostly questions you're about. I'm a candidate. I'm saying, what about the other party? It's got to be about them first about them and then about me. How do I meet your needs? So you give me what I want. That's really got to be the mantra.

Anita Brick: And I agree. I think it's true. Whether you're negotiating a promotion inside your company, whether you are going to a brand new company or like was the earlier question about funders, what do they need? Is my company going to fill in a gap in their portfolio that will make them aware?

Stuart Diamond: It's about, how do I get my wife to give me dinner? How do I get my kids to do his homework, how do I get a travel good enough guest? And they give me intelligence? It's all the same principle. First, you figure out how to meet their needs and then they meet yours. And if you're not sure about the risk, you take a step that's more incremental, where you find out more information so that you're comfortable.

Anita Brick: Now, what if they won't share their real interest? What if they won't tell you a lot about their real needs? What if they won't tell you that? What if the culture is very private? How do you break through some of that to get the information that will help you help them?

Stuart Diamond: Sure. How do I meet your needs if you don't know what they are? I want to meet as much of your needs as I can. Then I want to ask, are these your needs or those your needs, etc. so therefore I could better meet those needs if I knew more of what they are. And also I wanted to say, why is there some discomfort in telling me these needs so I can see whether there's a better match here? I'm trying to be as helpful as I can.

Anita Brick: That takes a courageous person though, because some people are afraid of rocking the boat, so to speak, when they're in the midst of either building a relationship to get into a company, having an interview with a company, it takes a boldness to do what you're suggesting.

Stuart Diamond: So if they don't do that, then you really have to do research with somebody else. You have to find out other perceived needs. And there's plenty of avenues for research and you have to ask questions. As I understand it, these are some of the needs I discovered for the company, and I'd like to know if I'm on the right track. And then I'd like to explain how long to be able to meet those needs. If you can't have the kind of discussion you want to have with the other person, you've got to go right to third parties and you've got to find out with third parties, I'll tell you.

Anita Brick: So third parties like people in the company, people who used to be in the company, vendors, suppliers.

Stuart Diamond: You have a big alumni network at the University of Chicago, and chances are that many of the companies people want to work for, some of you already worked there. That network is going to be used.

Anita Brick: Oh, absolutely. No question, no question. Here's a little bit of a granular question around kind of what we've been talking about from an alum. And she said, is there a successful strategy for getting a new employer to compensate you for giving up deferred non invested compensation at your old employer when you switch jobs?

Stuart Diamond: First, I've got to find out whether they've ever done this before, because if they have it and there's no precedent, it's a harder decision. Next thing I want to do is say, you know, I've got this investment here that I'm going to lose. What do you think we might do about this? And I want to give them the problem and let them come up with the answer instead of my making a demand.

There may be some other program they have. Maybe a particularly generous 401 K program or some other kind of program that they have they could substitute for. You won't know about it unless you ask for them. So instead of just telling them I want X, tell them, here's my problem. How do you think we can solve that? So again, it's something that you do together. That's what I would do.

Anita Brick: And I love that you talk about that a lot in your book. You give example after example of let's solve this problem together rather than here's my need, here's my problem. You go figure it out.

Stuart Diamond: I have found that collaboration produces four times as much value as power and leverage. It produces twice as many deals and each still gets twice as much. One of the reasons that we're having so many economic problems in the U.S. is just too much conflict and not enough collaboration. Collaboration doesn't mean I give away the farm. It means you work on a problem together. And if you get more minds working on a problem, especially if there are different perceptions, you generally get more creative ideas.

Anita Brick: I agree, I think it's hard for some people to shift that without thinking that they're losing leverage. I think you have way more leverage. If you and I are collaborating in problem solving together, then yes, we're both going to own the outcome too.

Stuart Diamond: I trained a Navy Seal, Special Forces Special Operations people for their work around the world, and they have figured out using this model that if they make a human connection with a tribal leader, that tribal leader will tell them where the bombs burned in the road and lives get saved. So even with people who might seem to be part of the enemy, you can make the right connections if you ask questions.

Anita Brick: I agree, this person said upfront. She thought that this might be a rather complicated question. So this is a bit of a long question, so bear with me. All right? It's an alumni question, she said. I have three potential job offers coming to me in the next month. I'm mid-career. Exactly who's held CEO positions previously. Two jobs are CEO positions.

How can I get these companies to speed up the process of making their offers without sounding shrill, or like I'm not interested in them and pressuring them to make a decision? I have let you know that I'm talking to other companies and have told them there is a timeline involved. My goal is to have the highest fall in offer, including salary, benefits, position support at the back end, if the company gets acquired, and so on. Perhaps this is too complicated a question, but your advice is much appreciated.

Stuart Diamond: The first thing is I. Without disclosing confidential details, I would tell each company that I have multiple offers and I would tell them that I have a time frame to make a decision, and that time frame needs to be real, not arbitrary. In other words, I have got to get my kids in school at a certain point. I've got these other kinds of constraints, and then without demanding they make a decision, my X date, I like to ask them if they would be comfortable making a decision within X time frame.

Again, I want to keep giving them the decision and I want to ask them what their process looks like. That's how I would do it. In terms of what position you take, I certainly would look at my longer term goals, where you want to be in five years, in which one is more likely to get you where you want in five years, not just the compensation going in, but what that would be is all your needs.

For example, if you have kids to bring that up again, which ones will you actually spend more time with your kids? Which ones will give you time off during your kids' spring break? You know which ones we'll do other things for you that you want to do. And so those are the kind of things I ask you about each individual job.

But I'm a big believer in telling people what's going on. Most people think you should hold information close to the vest. Actually, the right principle is to disclose as much information as you can, as long as it doesn't jeopardize your goals. And so the more information you disclose, the more credibility you will value, the more creativity. Although you must pay attention to. Is there some way they could torpedo my goals by telling them this? If not, then tell them whatever you can.

Anita Brick: Okay, that makes sense. Again, people feel a little nervous if they disclose too much, but you have to be smart about it. And I guess the other thing is, what's the culture like if the culture feels withholding and not completely honest? Maybe it's not the right culture to be working for in the first place.

Stuart Diamond: You're sure? I tell my students that the nicest a company's ever going to be to you is when you interview after me, you have to take a second look at that.

Anita Brick: You're absolutely right. That is the time that they are going to be extending so many things. I mean, you see it all the time. You see where they fly, where they put you up when you're interviewing, if it's out of the city where you currently live and it just goes on and on and on, but if they're not doing it then and they're not treating you well, then it's never, ever going to happen.

Stuart Diamond: Exactly right.

Anita Brick: So there was another question from the other side. So this is another alum. And he said I launched a company a few years ago and we're ready to bring in senior talent. What is the best way to think about negotiating with them? So we create a solid, enduring working relationship.

Stuart Diamond: Creative vision, create a vision of what the company will look like if they buy into the vision. We'll do a lot of things for you if they want to. Just another employee spends a lot of time talking about your vision and your strategy and seeing if you buy into it. And when they do, then you'll say, we've got financial constraints, you've got this constraint, and they will help you solve those problems. If they buy into the vision and they've got a piece of the upside at a certain point when I say these things, people say this is just common sense. And when they say that, I refer them to Mark Twain, who said, common sense is not all that common.

Anita Brick: Good point. Well, it's true. I mean, the bottom line of all of us is that you treat the other person like a human being, and you have a dialogue with them where you are willing to maybe have some of your thoughts changed as you learn new things. Not be confrontational, but be collaborative and ask questions. Which may sound simple, but most people ask questions and they've already made their minds up. They're never going to listen to the answers. I think the other part of the question asking the question is actually taken, and consider the answer as well, so that you are actually collaborating.

Stuart Diamond: You're exactly right. I just want to underscore that this model is collaborative but fair. It doesn't say you give up the farm. It does say you have to have a certain set of standards. You want to hold them to be given, that you want to make sure that you get the most you can. On the upside for both parties.

Anita Brick: Well, as a lot of people miss that point, that the goal is not just to get more for you. The goal is grow the pie, grow the pie so that there's more for you and more for them.

Stuart Diamond: Yes, life is about the trade and if you can find the trade, then everybody gets more. And what I talked about in the book is trading items of an equal value. So for example, a Navy Seal told me that he was trying to get his three year old daughter into the bath. And she said, as usual, with her arms and legs crossed on a rug in the bedroom, said, I'm not getting a bath.

And he said to her, if you get in the bath of your favorite song and put it on my iPad, I'll serenade you when you're in the bath. And he said, within one minute, choosing the bath, he said, I tried the same thing with her. And her brother did both of teeth and went to bed. And he said, within minutes, my entire relationship with my children had changed because he found the trade. And that's true in all walks of life. People value things differently. And when you find it out and you trade them, everybody gets more.

Anita Brick: You know, you're absolutely right. And it's such an important point to remember, because I've been involved in negotiations, that I've also heard from many others, that once you walk into that, you forget all this.

Stuart Diamond: You get emotional. That's why.

Anita Brick: Yeah, yeah.

Stuart Diamond: And so that's another interesting thing. Every negotiation in the world worth doing is high stakes negotiation, whether it's world peace, a $1 billion deal or like he wants an ice cream cone. When people feel high stakes, they get emotional. There's something listening and they've got quite a judgment. They forget about their goals. And so you've got to think about calming yourself down, valuing people, giving them emotional payments and not taking things personally. Rush or just get distracted. And you see evidence of this everywhere around the world.

Anita Brick: Oh yeah. It's so true. It's so true. Do you have time for one more question? I do okay, great. We kind of like to wrap up things with some clear takeaways. You've given us a lot to think about, and I think it's very straightforward. And it's important for people to experiment with it and see how that works. If you are going to give advice to someone, what are the top three things that someone should be thinking about and doing? If they really want to excel in any negotiation, whether it's with their three year old or with a multibillion dollar deal.

Stuart Diamond: Number one, it's got to be about them first, their emotions and their perceptions. Number two, you've got to find things to trade that their parties value and equally. And number three, you've got to not get distracted from your goals. Those are the three main things.

Anita Brick: Okay. That's great. Any other words of wisdom.

Stuart Diamond: Practice I have a firm grasp of the obvious and say what's going on and the negotiations over. When you say just not be sure. If they say no, you just always are tomorrow.

Anita Brick: It usually means no, not now or not the way that you just proposed. It is very, very, very good.

Stuart Diamond: Exactly right.

Anita Brick: I love the way you approach things. I love the fact that it is collaborative and this is just personal. I think of it as a positive bias of mine. I love the fact that in getting more, you have each idea and concept wrapped around a story, something that is practically based so that it's very, very easy to understand and absorb whatever you are conveying.

So thank you for doing it that way. Thank you. And there's lots of good stuff on Stuart's site. The site is the name of the book which is Getting More, so it's gettingmore.com. Stewart, thank you so much for making the time. We really, really appreciate it. Thank you. And thank you all for listening. This is Anita Brick with CareerCast at Chicago Booth. Keep advancing.