“‘Positional Leverage’ in Workplace Negotiating”

“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.

Resignations can be tricky – and treacherous. To help you, we offer a 100-Point Master Pre-Resignation Checklist. All you need to know and remember. To obtain your copy, just [click here.] – Delivered by Email – Instantly!

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”:

(1) Be aware of, and sensitive to, your “positional leverage”: Each party to a negotiation starts off in a “position” relative to the other. For example, if 10 people are applying for one open position, each applicant feels he or she has little leverage to bargain with, and all the negotiating leverage seems to be on the employer’s side. However, if 12 people resigned from that company at one time, as happens when a group of colleagues leaves together, each of the 10 job applicants would – all of a sudden – gain considerable “positional leverage” without having done a thing, and without even negotiating. Be aware of, and sensitive to, how your “position” relative to your negotiating counterpart’s position may change for the better, or worse, during negotiations.

(2) Recognize that “positional leverage” can be fleeting: Perhaps the most interesting aspect of positional leverage is that it can change, and then change again, in a matter of moments. If you are negotiating a pay increase, and your best college buddy becomes the CEO of your firm’s biggest client, your position has surely changed for the better. At the same time, you could lose all of that newfound leverage just as quickly, if that best college buddy who became the CEO of your firm’s biggest client was fired the very next day.

(3) Don’t change your relative position(s) prematurely or unnecessarily: Perhaps the worst thing our clients tend to do when negotiating is to give away their positional leverage. In Case History #1, above, Sharon’s resigning from her former job literally gave away her leverage in negotiating her next job. This happens to many of our clients. If possible, never “move your position” in a way that gives up leverage until either (i) your negotiating counterpart has moved his or her position, or until (ii) it is otherwise safe to do so. If Sharon had waited to resign from her former position until she had a signed contract for her future position, that would have been both (i) waiting for her new employer to change its position, and (ii) until it was “safe” for her to move hers. It sure would have made her happier had she done so.

(4) Let others move their positions if it enhances your own: As a corollary to suggestion #3, above, permit, encourage or require your negotiating counterpart to change its positions in any way that increases your own positional leverage. In Case History #2, above, if Pierre knew that the company’s purchaser required Pierre’s services after the deal closed, he would have been foolish to say, “Hey, don’t forget to tie my hands before it gets real expensive to do so.” Instead, in those circumstances Pierre would have been quite smart to let positional leverage flow his way.

(5) Don’t openly discuss positional leverage but, instead, simply “put it to work”: It’s in the nature of positional leverage that you’d be wiser not to discuss it when negotiating, but rather simply make it work for you. That is because, once brought to the attention of your negotiating counterpart, he or she can then take steps that will serve to minimize the advantages you would otherwise enjoy. Likewise, it’s also in the nature of positional leverage that some people – especially employers – can actually resent your taking advantage of positional leverage, and discussing it openly can result in bad feelings. It’s a bit like rubbing something in the face of another person: be smart, don’t do it.

(6) Be bold and audacious in this regard, not timid, hesitant or fearful: Leverage is what makes your negotiating counterpart take steps that are good for you, your finances, your career and your family. It is leverage that motivates your negotiating counterpart to take steps that he or she would otherwise not take. In applying positional leverage don’t be timid, hesitant or fearful. Rather, remember that in the event and to the extent positional leverage flows to your negotiating counterpart, he or she will surely use it against your many important interests. Just remember that, all you do, do with dignity, grace, humility and humanity.

It takes practice, patience, courage and conviction to negotiate for yourself at work. Don’t forget for a moment that you, your finances, your career, and your loved ones depend on your willingness to negotiate and navigate to your best ability. Consider taking these steps to your best advantage. On one thing you can surely depend: your negotiating counterpart will take maximum advantage of positional leverage if he or she can. And by not protecting yourself, you are effectively giving to your employer enormous advantage that really belongs to you.

Want to learn more about workplace negotiating? Consider viewing our Sklover On Demand Video entitled “Can I Really Negotiate with My Boss?” Just sit back, relax, watch and listen. To do so, just [click here.]

Our SkloverWorkingWisdom™ Methods of Workplace Negotiating emphasize smart negotiating – and navigating – for yourself at work. Negotiation and navigation of work and career issues requires that you think “outside the box,” and avoid risks and attain rewards at every point in your career. Knowing ways to locate and take advantage of leverage is a distinct advantage in navigating workplace life. Learning the “in’s and out’s” of doing so is what we are here for. Now it’s up to you.

Always be proactive.  Always be creative.  Always be persistent.  Always be vigilant. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “rewards” and eliminate or reduce employment “risks.” That’s what our SkloverWorkingWisdom™ Methods are all about.

*A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.

Please Note: This Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.

© 2011 Alan L. Sklover All Rights Reserved. Commercial Use Prohibited. Attorney Advertisement.