“Boldness be my friend! Arm me, audacity, from head to foot!”
– William Shakespeare
TWO ACTUAL CASE HISTORIES*:
Case History #1: Sharon, 47, was offered the position she had dreamed about for many years: Chief Financial Officer of a privately owned software design firm. It seemed the perfect combination of her two areas of expertise: financial management of growing companies, and software development.
There were two other significant advantages to the position: First, it was in the same city she presently worked, so no relocation would be necessary; that was especially important to her, as she had two teenage daughters she did not want to relocate. Second, part of the compensation package discussed was a significant number of stock options. Assuming the company did well, over five years her options would likely be worth at least $2 million.
Discussions of her compensation and responsibilities had gone well. An employment agreement was being prepared. In the meantime, she prepared and presented her resignation in a private meeting with her direct boss. Two days later, Sharon’s boss announced her upcoming departure, and that a member of her team would take her position.
It was then that Sharon received her draft employment agreement. To her surprise, it said nothing about a stock option grant, and offered a salary set at $50,000 less than she thought had been offered. She took the job, but never got over the feeling that she had been hood-winked, short-changed and taken advantage of. But she had no leverage at that late date. By resigning before finalizing all details of her employment agreement, she had prematurely changed her “position,” leaving herself vulnerable, to her substantial detriment.
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Case History #2: Pierre had spent three years in central China working for a San Francisco-based manufacturer of vitamins as its On-Site Director of Quality Assurance. His job was to ensure that the Chinese factories, and the Chinese suppliers, did not permit “adulteration” of the vitamins, by allowing either unsafe chemicals or other things – such as dust, dirt or bugs – into their products. He was the company’s only American employee at the facilities, and was highly competent, dedicated and trusted.
Rumors surfaced that his employer was about to sell its Chinese operations to the largest vitamin company in the world, based in Europe. The rumored price – $350 million – was three times what Pierre’s employer had invested in its Chinese operations. Sure enough, the rumors turned out to be true, a deal had been struck, and a contract had been signed. The sale was to take place in two weeks.
Pierre’s supervisor in San Francisco asked him to fly in for a meeting. At the meeting, Pierre was heartily congratulated for his three years of hard work. Pierre’s boss told him that the buyer was very interested in keeping Pierre on as their Director of Quality Assurance, at least until they became familiar with the plant and its operations. In fact, there was no one else in the world who knew the language, knew the factory, knew the local suppliers, and – most importantly – could be trusted not to succumb to the local custom of “polite bribery.” In fact, Pierre’s boss told him that, if he signed a contract to work for the new company for at least one year, his present employer would give him an $85,000 cash bonus.
Pierre retained our firm to review the papers for him. We soon learned that the sale contract for the Chinese operations had an express condition in it: Pierre’s agreement to continue in his position for one year. In effect, the $350 million deal had become subject to Pierre’s “approval.” Foolishly, Pierre’s employer had changed its position by entering into the contract without first making sure Pierre had already agreed to stay on. In doing so, it gave Pierre enormous positional leverage – without him doing a thing.
We negotiated for Pierre. Instead of the $85,000 bonus Pierre was promised upon the closing of the deal, we secured for him a bonus of $1.7 million. You see, his employer could not “go forward” without Pierre, and it could not “go back” and lose its $350 million deal. An error for them, a windfall for Pierre.
LESSON TO LEARN: Negotiating is a matter of motivating another person to do what you would like them to do. How can you motivate others to do so? We use the word “leverage” as a synonym for “motivator.” Leverage comes from many different sources, the most common of which are “risk” (sometimes called “fear”) and “reward” (sometimes called “greed.”)
But often times great leverage can be gained – or lost – from a change in one of the negotiating party’s “position.” This is what we call “positional leverage.” It may simply be “being in the right place at the right time.” Or it may simply be “being in the wrong place at the wrong time.” “Positional leverage” can also be gained or lost simply by not changing your position until the other party changes theirs.
Think of it this way: almost every playground has a piece of play equipment commonly called either a “see-saw” or a “teeter-totter.” Remember how where you sit (that is, your “position”) on that “see-saw” or “teeter-totter” can give you greater or lesser weight (that is, “leverage”) relative to your friend on the other end. That’s a graphic illustration of what we call “positional leverage” in workplace negotiation.
As noted in our Two Actual Case Histories, above, being aware of your “positional leverage” can make a very big difference in the success or failure of your workplace negotiations and navigations. Without knowing it, you may give up great positional leverage, or without others knowing it, you may strategically increase your positional leverage. As always, it’s all up to you.
WHAT YOU CAN DO: Here are six (6) ways you can gain the substantial advantages of “positional leverage”:
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