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Key Takeaways

  • Mike’s book, “The Naked Negotiator,” offers practical strategies for salary negotiations. These strategies are applicable to any negotiation scenario and are delivered through an engaging narrative.
  • Women often secure smaller pay raises and negotiate more around non-monetary benefits, such as flexible work hours. Understanding and addressing this issue is essential for closing the gender pay gap.
  • According to Mike, 90% of negotiation success depends on thorough preparation, including conducting market research and rehearsing the negotiation conversation.
  • The use of visual presentations and mirroring the boss’s communication style are key elements for success in salary negotiations.
  • Maintaining a balance between assertiveness and aggressiveness is vital. Being assertive shows commitment, but coming off as aggressive can provoke a competitive spirit in the negotiation partner.
  • For startups unable to meet salary demands, transparency about the financial situation and the company’s future vision is key. Employees who believe in the company’s vision may forgo immediate pay raises for future growth opportunities.

Executive Summary:

Hey everyone; thanks for joining us on a new episode of the NEGOTIATEx podcast. We are joined by Michael Phillips, the founder, and head of Phillips Consulting, a firm specializing in commercial negotiations for both public and private sector companies. 

With nearly 30 years of experience, Mike has worked with diverse organizations, including the NHS, local councils, and global manufacturing corporations. His negotiation expertise spans a broad range of contracts, from nursing home placements to sewage pumps. He has clients globally and has spent decades coaching the science of negotiation. 

Mike also has a mechanical engineering degree from Brunel University in London and is the author of ‘The Naked Negotiator: How to Negotiate the Salary You Deserve.’ With that brief introduction sorted, let’s jump right in.

Mike’s Bold Leap into Entrepreneurship Amidst Family Responsibilities and Employment Security

Nolan sets the tone for the conversation by asking Mike to share his journey from being a mechanical engineer to becoming a negotiation consultant. Mike highlights that after graduation, he worked in the manufacturing industry, where he was often involved in or responsible for procurement. 

He enjoyed the work and found himself skilled in negotiations, which sparked a business idea to help organizations with their negotiations. However, starting his own business seemed risky due to his current secure employment, young family, and financial responsibilities.

The decisive moment came when Mike confronted his boss, who threatened to fire him if he ever voiced disagreement again. Disliking the idea of a company culture where assertiveness is discouraged, he and his wife decided to go ahead with their business idea. Soon after, Mike quit his job and started working on his consulting business from his living room. 

Navigating Three Decades of Business Negotiations

Next, Mike discusses the last 30 years of his career. Having started his consulting business on the 4th of July, almost 30 years ago, Phillips has carved a niche, primarily working with manufacturing companies with turnovers between $10 million and $100 million. He notes that companies smaller than this tend not to offer deals large enough to be worth his time, while those larger often incorrectly believe they don’t require external help.

Mike also talks about his experience working with the National Health Service (NHS) in Britain, focusing on the procurement of orthopedic implants. He explains how he navigates negotiations in this area, which are complex due to surgeons’ preferences for specific manufacturers. To encourage cost reductions, Mike collaborates with the surgeons to create an impression of potential supplier change, introducing uncertainty and leverage into the negotiation process. 

Unveiling “The Naked Negotiator”

When asked to talk about his book, “The Naked Negotiator,” Mike mentions that the book’s main objective is to equip individuals with practical advice and strategies for salary negotiations. Although the book is framed around salary negotiation, the principles discussed can be applied to any negotiation scenario.

Phillips presents the material in his book as a short story to make the content more engaging. The story revolves around a young female manager, Ellen, who believes she deserves a higher salary but lacks the knowledge to negotiate effectively. She encounters an eccentric negotiation expert known as “The Naked Negotiator,” who guides her through the process.

Mike further explains the rationale behind the book’s title. He believes that despite the uniqueness of individual negotiations, they all share fundamental elements of negotiation theory, which remain consistent. By removing the specific details of each negotiation, the “naked” negotiation remains the universal framework applicable to all negotiation scenarios.

Understanding Unique Challenges and Strategic Approaches for Women in the Pursuit of Pay Equality

Moving on, Aram and Mike discuss the unique challenges women face in negotiating their salaries and the potential solutions to these issues. 

Mike acknowledges that women are often hesitant to ask for a pay increase, and when they do, they usually secure a smaller raise. He notes the importance of addressing this issue in the quest to close the gender pay gap.

One theory for this is that men may judge their self-worth more by their salary level and, therefore, may be more assertive in asking for a pay raise. Aram adds that in his observations, men tend to be more direct in asking for a specific salary number, while women might negotiate more about flexibility, work schedules, and other non-monetary benefits.

Mike agrees and suggests that women first negotiate their salary as it offers the most flexibility and acknowledges the value of non-salary benefits. He advises individuals to assess these benefits’ worth in their personal context and use that evaluation to negotiate effectively.

The Power of Preparation in Salary Negotiations

On a similar note, Mike emphasizes the importance of preparation for salary negotiations. He believes that 90% of the success in negotiation relies on the work done before the actual discussion with an employer.

Mike advises individuals to gather and analyze relevant data diligently to support their case for a pay increase. He suggests that presenting this data graphically (e.g., in charts) can make a stronger impact than just providing tables of numbers.

Practicing or rehearsing the negotiation conversation is also recommended. This step is crucial in mentally preparing for the discussion and ensuring that all key points are covered effectively.

To prepare, individuals should conduct thorough market research. They can use job hunt websites to compare their salaries to industry standards. 

Overall, they should aim to be as specific as possible, considering factors such as their role, level of experience, and industry.

Mastering Communication Techniques in Salary Negotiations

Next, Phillips emphasizes the importance of effective communication techniques during salary negotiations. He reinforces the power of visual presentations, like charts, in conveying complex data or ideas to support one’s argument for a pay raise.

Additionally, he advises individuals to use language that mirrors their boss’s communication style. If the boss communicates empathetically, the employee should reciprocate in a similar language. On the other hand, if the boss is more business-like in their communication, the employee should also aim to match that. Phillips, however, cautions against overdoing it, which might appear insincere or artificial.

The overall goal of these communication techniques is to facilitate understanding and connection, ultimately improving the chances of success in salary negotiations.

Balancing Assertiveness and Aggressiveness in Negotiations

Mike also discusses the delicate balance between assertiveness and aggressiveness in negotiations. He stresses the importance of maintaining warmth and courtesy towards the other person while being firm on the issue. This tactic, he explains, is vital in all negotiation scenarios, including salary negotiations.

However, both Mike and Aram bring up an important point: perception of aggressiveness can differ greatly among individuals, and factors like gender or personal character traits can often influence this perception. Therefore, understanding the person you’re negotiating with becomes crucial.

Additionally, Mike suggests that some people might be more sensitive to assertiveness, perceiving it as aggressiveness. In such situations, one might need to tone down their approach. On the other hand, more direct, business-like individuals may appreciate a straightforward approach.

A key point made here is that while assertiveness is important to show that you mean business, aggressiveness can be counterproductive. It can incite a competitive spirit in the other party, leading them to focus more on ‘defeating’ you rather than considering the issue at hand. Therefore, it’s crucial to navigate the fine line between being assertive and aggressive in negotiations.

Addressing Employee Salary Negotiations in Financially Constrained Startups

Next, Nolan asks Mike for advice on a tricky situation that many small business owners and startup founders often face. That is, how to manage situations where deserving employees ask for raises but the company is not yet financially able to grant them.

Phillips suggests that from the employer’s perspective, it’s important to be honest about the company’s financial situation and articulate the organization’s longer-term vision. He stresses that the employer should communicate that they value their employees and wish to pay them the market rate when the business’s financial health allows it.

The conversation also reflects on the importance of the employees being well-prepared when asking for a raise. They discuss a situation where a manager asked his employee to read Phillips’ book and prepare a proper case for a pay raise, which resulted in a successful negotiation. The consensus is that negotiations are often more productive when both parties are well-prepared and understand their interests and the objective criteria involved.

Mike, Aram, and Nolan delve into a wide range of topics. We invite you to share your thoughts on this highly informative podcast by emailing us at team@negotiatex.com.

Thank you for your time!

Transcript

Nolan Martin : Hello and welcome to the NEGOTIATEx podcast. Really excited for today's episode. Aram, do you want to go ahead and take it away?

Aram Donigian : I will. Hey, today folks, we are joined by Michael Phillips, the founder and head of Phillips Consulting, a niche management consulting firm specializing in commercial negotiations for public and private sector companies. For nearly 30 years, Mike has led negotiations for organizations as diverse as the NHS, local councils and global manufacturing corporations. He's negotiated contracts for everything from nursing home placements to cinema screens, orthopedic implants to sewage pumps, and liquid helium to truck leases. That is a wonderful variety of different negotiations.

I hope we can get into a few of those, and that has been with clients in the UK throughout Europe, USA, Asia, and Mike has traveled the globe for decades practicing and coaching the science of negotiation. Mike has a bachelor's degree in mechanical engineering, which is an obvious lead, into the negotiation field from Brunel University in London.

He published his book, ‘The Naked Negotiator, How to Negotiate the Salary You Deserve’. Now we're going to have some fun getting into that, and he currently resides in England. Mike, thank you so much for being with us today.

Mike Phillips : Well, it's great to be here guys, and thanks for inviting me to talk with you.

NM : Absolutely. So Mike, again, thank you so much for being here today. Perhaps we could start off by talking a bit about the 30-year journey and negotiations and how you got here, as Aram had said, or it's obvious that you got here from your mechanical engineering degree.

From Engineering To Entrepreneurship: The Journey Of A Negotiation Expert (02:15)

MP : Yeah, absolutely. Yeah, so as Aram said, I did graduate from mechanical engineering. The way I got to commercial procurement was via manufacturing industry. So as an engineer, I tended to work after graduating in manufacturing companies and, almost kind of by accident, I was either working directly in, or responsible for procurement. And, I really enjoyed that work. But I wanted to work for myself. So my wife and I discussed, you know, a lot of business ideas, but to be honest, we were really struggling to come up with the idea, if you know what I mean. But because of my procurement responsibilities, I was involved a lot in negotiation, and I found I was good at it. So this sort of gave me the germ of a business idea, which was to help organizations with their negotiating.

I mean, at the time, we weren't sure about this because it was a big step, you know, I was in my employment, I was getting a good salary. We had 3 children under the age of 5 and a mortgage to pay. Then something happened, which sort of pushed me into action. I had a bit of a disagreement with my boss, who was the CEO of my employer at the time. We'd had quite an animated debate about a particular issue.

Afterwards, he called me into his office and he said, Mike, if you ever speak to me like that again, you are fired. You know, and I was [laugh] to say the least, I was pretty gobsmacked [laugh]. I felt, and I still feel this to this day, that I was assertive in our discussion, but in no way aggressive or discourteous. And, maybe we can talk a bit more about the difference between aggression and assertiveness later. But he obviously, evidently wasn't happy with assertiveness. He wanted submissiveness, if you like.

AD : Yeah.

MP : And I don't really feel you could run a successful organization with a management team of people who are fearful of saying what they think, it was right. And I remember it was a Friday that this happened, and I told him, look, you know, I really have a problem with what you're saying. I need to think about this over the weekend. So he was okay with that. And so over the weekend, my wife and I had a lot of discussions about the negotiating business idea that was sort of in the background minds anyway, and decided that we should go for it.

So on Monday morning, I went to work as usual, I went straight to my boss's office. I shook his hand, wished him well, but I told him I couldn't work for him any longer. So I got in the car, came back home. So by 10 o'clock I was back home. I sat at my desk, which at the time was in the corner of the living room, and I thought, now, where do I start [laugh]? You know, it was probably not the best way to start a consulting business. [laugh], You know.

AD : It's bold. It's definitely bold

MP : [laugh]. It might have been better to line up one or two clients before quitting my job, but, you know, there you go. That was the boldness of you know.

NM : Yeah, definitely bold. Mike [laugh].

AD : Just to put a pin in it. We will come back to this discussion around assertive versus aggressive, because I think that is, we need to look, talk about that. But, well, so hold on, before you go onto the next question though, how long has that been, since you did that and you're sitting at the desk? Now here you are.

Leveraging Doubt: How A Little Uncertainty Can Drive Cost Reductions (06:01)

MP : So that's nearly 30 years ago actually. It's 29 years on the 4th of July, which for US people seems a great day to start a business independently. [laugh]

AD : We do like that day. That's right.

MP : [laugh]. So, yeah. So that was 29 years ago. Now in the 30th year. And yeah, I've developed a sort of a niche or niche as we say. It's mostly, not exclusively, working for manufacturing companies. But, with a turnover between maybe a $10 million and maybe a $100 million. If the company's smaller than that, the deals are not really big enough to make it worthwhile. If the company's larger than a hundred million, they tend to think they don't need outside help. Although they're frequently wrong about that.

But yeah, that's the kind of niche that I'm in. And, as you mentioned in the intro area, I also have done work for the NHS in Britain, which is kind of very different because the culture's very different than a commercial company, but nevertheless, still fun and interesting.

AD : Can you say, sorry, and I don't want to get us off, I know we're going to get into your book and salary negotiations. Can you tell us just a little bit more about the nature of the negotiations that you assist with the NHS?

MP : Yeah, so with the NHS, typically the structure of the NHS is, it's made up of multiple trusts around the country. So like, a trust might be as small as a single hospital, but it might be two or three hospitals, although it's changed recently, a little bit in recent years. Generally the trusts do their own procurements. And well, between you and me and this podcast, they're not very good at it. [laugh]. Yeah. And, so I have been involved in lots of different areas, but an area that I've tended to specialize in is orthopedic implants, hips, knees, you know, that sort of thing. And the important thing about this is it is quite interesting from a negotiating point of view because the surgeons tend to rule the roost in terms of what they want. You know, they might have a particular, you know, manufacturer, they favor, you know, Stryker or DePuy or whatever, and that they want to use that and they don't want to use anyone else.

Now, of course, the rep from that company knows that their end user won't move from their products. You know, you haven't really got much leverage with them. So, I have to do a lot of work with the surgeons. First of all, reassuring them that I'm not going to tell them what implant to use. They're the experts on that. I'm not going to do that, but you know, I'm the expert on negotiating and they need to help me.

And the way they can help me is to imply, at least, to the companies when we meet them, that they are willing to move, even if they're not willing, they need to imply that they're willing. And then that opens up just a little bit of a leverage. So we only need to create a little bit of doubt in the supplier's mind that we might move and then the prices will come down.

And some surgeons, they don't really get on board with it, but some really love it. They really enjoy the commercial side of it. And I don't know if you have the apprentice in the UK, the TV program, do you? Where they have all these want-to-be’s and they all have given these tasks, but, if they get it wrong, they said like, you are fired, sort of thing. [laugh], I remember a funny time, I was working with an NHS trust and I had the surgeon with me backing me up, you know, giving me his input on it.

And he seemed to really get into this idea that he wanted, we needed to unsettle the supplier. And at one point he sort of just copying the apprentice, he turned around to the guy and said, you're fired. You know, with great [laugh] [laugh], he was only pulling his leg, but it was quite funny. [laugh]. Anyway, we got a big cost reduction, you know, like, I can't remember, 25-30%, big cost down.

NM : Well, that's great. And I think that we're going to definitely keep diving into a little bit more about this in the top of the hour, but first we want to talk about your book called ‘The Naked Negotiator’. And I don't like to assume anything, so please help us understand what this book is about.

The Naked Negotiator's Guide: Mastering Salary Negotiations With Confidence (10:00)

MP : Sure. You know, as I've just said, my expertise has been built up in organizations, and so it's around that organizational piece, but really negotiating is important for individuals as well. And so that's where the germ of the book came from, is how can I use my expertise to help individuals? So the book is about negotiating a salary increase, as the subtitle says. And this of course is something that, you know, many of us will face over the course of our career. But although it uses salary negotiation as a case study, that the theory and practice in the book, of course, can be applied to any negotiation.

So importantly, the idea behind this book is that it presents robust negotiating theory, but in an accessible, engaging, and entertaining way. So it is a book suitable, not just for negotiating nerds like us, but also for no-negotiating novices. So I've written it in the form of a short story. So, the plot follows a young woman manager Ellen, who loves her job, who's good at it, but feels she deserves better compensation, but she just doesn't know how to go about asking for it. And she happens across an aged rather eccentric negotiation expert, The Naked Negotiator. And he takes her on a journey that I hope educates, excites, and terrifies in equal measure.

Why does he call himself The Naked Negotiator? Well, the other day I listened to your excellent discussion that you had with John Dieffenbach, and I really enjoyed it. And I noticed that John said that every negotiation is different, and I agree with him, but there's also a sense in which every negotiation is the same.

When you strip away the specifics, the things that make the particular negotiation you’re in, unique, you are left with the sort of basic negotiation theory. And that always applies, and it's always applicable because we're human. And so when you strip away the specifics of the negotiation, you are left with that negotiation theory framework, what you might call The Naked Negotiation. So, hence the name.

AD : That's a point that I make with groups that we do training with too, Mike, which is, while the context is unique, the challenges, right? The things that then show up, what the way you are. Are very much the same, right? In terms of, you know, what's going to happen when this goes wrong, or if we don't get a deal, or what makes this conversation challenging. Those are things that are often the same.

So like, certainly like that point. Appreciate that your kind of hero in the story, Ellen, is a woman, you know, I'm wondering about your motivation here. You have three daughters of your own, I have four daughters. How much, you know, in terms of helping women specifically negotiate more constructively on their own behalf, how important is that to you? And, can you elaborate maybe on unique challenges that women face and how you try to help them be more constructive in negotiating?

A Female Perspective on Salary Negotiation and Addressing the Gender Pay Gap (13:12)

MP : Sure. My wife and three daughters are all of working age. So they all, you know, are potentially experiencing this. And so I did consult with them a lot in the writing of the book. I was keen to try and make sure that Ellen, the lead character, was sort of credible and understandable from a female perspective. And I guess, you know, the first thing to say is that, you know, when we're talking about differences, there's as much difference within gender as across them. Over the years I've met some really powerful female negotiators and really weak male negotiators. But having said that, you know, studies do show that in this particular context. So salary negotiation, women do tend to be more reticent about asking for an increase. And when they do ask, they tend to get a lower increase.

So, you know, I did have women in my mind when I was writing this book, you know, wanting to help women, you know, and obviously we've got the gender pay gap, which everybody wants to try and reduce. So yeah, so that's obviously important. I mean, as to why women are more reticent, there are a number of theories. It could be quite simply that men tend to judge their self-worth a bit more by their salary level. Maybe, you know, even in these enlightened times, you've still got the idea that the man should be the breadwinner. So, that may be a reason why men tend to be a bit more forward about asking for a salary and women maybe less so.

AD : Yeah. I've also heard, and you can correct me, where I'm wrong on this, please, that sometimes it's what women ask for versus what men ask for. So men tend to ask more specifically for the number, and women will often ask for some of the more tangible or, the more side things, right? So, the flexibility around maybe work schedules or other things that can come up in a negotiation. Do you see any of that in your work and research?

MP : Yeah, I think that's true. I would often say, you know, if I was advising a woman on this, to go for salary first, because obviously money in your bank accounts gives you, you know, the maximum amount of flexibility. But having said that, those other, if you like non-salary things, can be valuable. But I think what you need to do is you need to value them in your own head. You know, as if somebody offered me a job that had this lower salary but had this benefit, would I take it? And that gives you a feelings of what does that really mean to you? How do you evaluate and then you're in a position to trade in the negotiation.

AD : Right. So, you know, you're talking a little bit, the valuing stuff. I assume some of this happens in preparation. In your book, what do you talk about in terms of strategies or approaches that people can use to better prepare for a pay raise through negotiation. And how does, like, kind of gathering relevant data and information, what kind of support, that preparation piece, what data should they be focusing on as they prepare?

The Art Of Verbal Persuasion: Communication Techniques For Salary Growth (16:16)

MP : Well, the first thing to say, and this is very much emphasized in the book, that preparation is everything. 90% of your success in this will be based on what you do before you've spoken to work with your boss. So you really need to be assiduous, extremely diligent, and gathering the data to support your case. I think it's really helpful to, for example, make use of charts rather than, have more impact than a bland table of numbers.

You also might want to think about rehearsing what you're going to do, you know, role play. I've often done this when in recruitment and to be fair, some people hate it, but it's excellent preparation, [laugh]it's excellent preparation for negotiation. Some people say, well, I'm not an actor. Well, you know, maybe not. But it's important to get the, you know, your mind around, what you're going to be, covering.

So you really need to do your market research. You can go to, you know, websites like payscale.com, job sites in the UK; we have Indeed, Monster, and Reed. I don't know, you might have the same in the US. You obviously need to be as specific as you can. Try and make sure you get to your industry, your role, your level of experience. But it really is putting the time, make sure you are well prepared before you go and meet with your boss. That's the really important thing.

AD : Yeah, absolutely.

NM : You know, we talked a lot about the rehearsals aspect of thing. I think that that's so important because it provides the flexibility 9 times outta 10, the conversation's probably not going to go anywhere like you rehearsed, but at least you've thought through some ideas, you at least have thought through some different ways that this could go and you're at least a little bit more prepared so they can go a little bit more smoothly. So yeah, I think that that's definitely important.

So what are some effective communication techniques that Ellen can use during a pay raise negotiation to increase her chances of success?

Utilizing Visualization and Linguistic Mirroring to Connect with Your Boss (18:15)

MP : Yeah, I mean, I've just mentioned charts again. I'm a big believer that a picture paints a thousand words. So just make sure you think about that. Another one is, use the language your boss uses. Use the type of language your boss uses. So if your boss is a kind of empathetic type, you know, use empathetic language, but if your boss is a very straightforward business-like sort of person, you know, imitate that sort of language, it's a kind of analogous to, you know how we say sometimes when you meet with people, mirror their body language, mirror their actual language as well in the discussion, take care not to overdo it [laugh], but you know, you basically use the same type of language.

AD : And that concept that you just shared, I think that applies even beyond, because as you were saying, right? This book is really written, while it's written focused on salary, it's broader application. Anytime we're trying to influence a boss or senior manager, maybe it's even on the direction a project should go or the scale or scope of some whatever it might be. Speaking to their language and knowing what their concerns are and so forth. Speaking into that can be really helpful.

The Assertive Negotiator: Strategies For Effective Communication And Results (19:27)

MP : Absolutely, absolutely. We touched on this a little bit earlier. I would say be assertive but not aggressive. Now this is really important. As you say, generally in negotiation, but especially in this case. Now, what does that mean? I mean, I would kind of summarize it is that at all times, be warm towards the person, you know, but be polite, be courteous, you know, be nice for want of a better word, but be tough on the issue. We are discussing, this is important to me, you know, we've gotta get this right so it's warm towards the person, but tough on the issue

AD : And so aggressive, which is interesting because I'll just stay on this point for one more point. How much is aggressiveness in the eyes of the beholder, right? So I'm trying to be assertive. I am trying to be warm and at the same time strong on what the issue may be here. And you're taking that as my boss and you're saying, man, Aram is being really aggressive with this, Okay? I mean, how do you manage that?

MP : Well, you know, this is another area where there's a bit of a difference between men and women, isn't there? You know, I mean, I've been married 36 years and I can remember over the years from time to time, my wife would turn around at me and speak, stop being so aggressive and I'm like, what? You know, it's just not registering that I'm being aggressive at all. So, but again, I guess it's not only about the differences between the genders, it's also different characters as well. Yeah. So I guess there's a bit of experience there, kind of getting to know people, understanding what sort of character they are. It's similar to what I was saying about you, the use of language, you know, what type of person is this.

And if you've got a more, you know, for want of a better phrase, touchy feely person, you kind of maybe need to tone it down a little bit. If you've got a more direct business sort of polite person, you can be direct. And normally when I'm in a business negotiation, I am pretty direct, but I'm, you know, I'm very careful not to be aggressive. And of course the problem with aggression is that you can inflame the other person at the other parties' competitive spirit. And then once you inflame that, they're not thinking about the issue that you want 'em to think about anymore. They're thinking about how they can defeat you.

So that's why there's a really important difference between aggression and assertiveness. But you've gotta have assertiveness because the other party really must understand that you mean business and this is serious.

AD : You talked about, you know, an employee needs to determine their fair value, their worth, establish a realistic range, the importance of going to data and, you know, there's so much information now that's made of it, made out there.

In addition to that, how does one appropriately put value that may be less tangible than a dollar sign or a pound sign, I guess, whatever the, but, to other things that you may want to bring in, that are going to be important access to senior leadership, the ability to travel or do training or control over my work schedule or whatever it might be. How do you coach somebody to do that as well during their preparation phase?

The Power Of Conviction: Building A Strong Case For Increased Compensation (22:35)

MP : Well, I think Aram, these sorts of things are going to be fairly subjective, aren't they? Because there's a bit of it. What does it mean to you? How important is it to you? And I think, you know, you've gotta play the thought experiment as I say that, you know, if somebody else offered me the job that had this less money, but it had this benefit, would I want to take it. So that, in your own mind, can create a value to it.

I guess you might want to think about what the value is to the company as well. I don't know if it was a better healthcare cover or whatever. You may want to try and find out, you know, what that cost is? That may help you make a judgment about the likelihood of them agreeing to it. But I think it's pretty subjective. I mean, some things could be more easier to quantify. So for example, childcare, you know, if there was opportunity for childcare, you can work out, you know, what it's going to cost to have that funded elsewhere versus what maybe your employer would ask.

AD : Which is again, that's nice because that gets us back to an apples to apples comparison, which I heard you even around standards saying that's important right, to know my role, my industry, my level of experience as I determine a range for compensation in whatever form it needs to be apples to apples. And that's, I kind of hear that too is I think more broadly about what might negotiate, needing to do the same thing.

MP : Yeah, I think so. Because at the end of the day, part of this, in doing your research and The Naked Negotiator talks to Ellen about this, is you've gotta believe it yourself. You've gotta believe it yourself. You've gotta do it, you may do the research and find out that actually you're already well paid. Now that's going to be more tricky and, you know, not impossible, but more tricky. But assuming you do your research and you can make the case to yourself that you deserve more and after, that's what we normally go into a negotiation about. We think we deserve more, then you've gotta convince yourself you need to believe it yourself.

And then if you believe it yourself, you've got a much better chance of convincing your boss about it. But your boss is the person holding the purse strings and you know, he or she needs to be convinced that they're not going to just do it because you're a lovely person or you feel that you deserve more money. You have to make the case, you have to demonstrate.

AD : Yeah, I like that.

NM : Building on that question, I'm kind of flipping it a little bit. So my other job is running my company, Gray Line Media, and we're a website design, digital marketing agency. We have bootstrapped, we're basically in the bootstrapped growth phase, as I like to call it, where I'm not in a position as the employer to give raises to my team, despite them all being very deserving of it. So how do I have this difficult conversation where I want to acknowledge all of their hard work and everything that they've done, but not necessarily in a position where I can give them a pay raise. Like what advice would you have for me? From the other side of the coin?

The Long-Term Perspective: Balancing Personal Worth With Future Opportunities (25:07)

MP : Yeah, No, I'll answer that question, but just, it just sparked an interesting point I just want to share with you, is that, you know, when I wrote this book, I assumed, cause obviously I've got lots of contexts, contacts at NDC O-level because of the work I do, and I kind of assumed that most of the people at that level really wouldn't be interested in this book because they don't want their employees to have it, you know? [laugh]. But funny enough, one of the contacts I had, he read it and he loved the book and he told me a couple of weeks later that one of his employees had come to him and asked for a pay rise. And he said to him, go away and read this book, [laugh] read this book and then come back to me and make your case. And he did that and he got, you know, a significant pay rise. But I thought it was interesting that, you know, the MD was wanting the guy to make the case.

AD : Which I love by the way, because I often say I love work, I love negotiating with somebody who's equally well prepared.

MP : Yeah, absolutely.

AD : Who's clear in their mind about what their interests are, who's thought about some different ways to create this, who's well armed with, you know, objective criteria and so forth, right? I like negotiating with that person. Yeah. So I love the fact that that's what they told them to go do.

MP : Yeah, absolutely. Yeah. So, to answer your question and Nolan from the other side, you know, what about when you're not, you haven't got the ability to do that. Now, you know, I do say to people when we're talking about salary increases on one side of the coin that the financial health of the company to put it in the brutal sense is not your problem. You are selling a service to your employer. You know, these are my skills. You buy my skills off me, you have to pay the market rate. That's one side of the coin.

Now, having said that, you know, there is a case to be made to say, well, okay, look, we are in a growth phase. We want you to be part of this, we want you to be part of this, but it's going to, you know, Rome isn't built in a day. I want you to be paid the market rate, and you know, when that's possible we are going to do that. But you know that once upon a time, there must have been employees. I don't know, that Apple who had been at that point, you know, thinking, you know, I don't know, it's, you know, not going to happen. I'm not getting paid what I want .

But yeah. So I guess from your point of view, Nolan, you've gotta be selling the vision, haven't you? The vision of what's happening to the business. And, yeah, I think if you can do that, then people will make a personal judgment. Well, you know, I'm going to back this. And ultimately if they don't back it, then you know, they'll go somewhere else and get what they think they're worth

NM : Yeah, sure. No, that's great advice.

AD : And this reminds me, by the way, and just going a little further, it reminds me of like, as my students, teach MBA students who tend to go off, some go off into very mature industries where, as you were saying, for this job with your experience, this is where we typically start. It may still be a range based on a few different things. And then there's folks who are going off to startups where there is very little data available.

You're, you know, very small teams, you know, companies, 10 large people, and that's a much harder place for them to think through. Does your advice at all change or vary as you think about where the role or the industry that somebody's going in, in terms of how you tell somebody to kind of have that conversation?

Market Value VS. Personal Worth: Asserting Your Value In Salary Negotiations (28:22)

MP : Well, you know, from a negotiating perspective, you know, one thing, you know, I do say is that you have to have a threat. Because if you don't have a threat, then, you know, why would the other party concede anything? So in the salary negotiation context, even when you are, you know, with a startup, you have to decide for yourself, you know, whether you're going to back this startup and that effectively by agreeing to take a lower than market rate salary, in a sense you are investing in the company for the long term, you are back in the company.

But if you're not there, if you're not at that point, then, bluntly you've gotta say, well, you know, I need this level of pay and this is what I think is reasonable. You don't have to be too overt about it. You don't say, I'm going to walk out. But, you know, you can use language like, you know, this is important to me, it's a problem, you know, for my life if I haven't got the right level of pay, and you know, that's code for saying I'm going to get another job, you know.

But you are right. It does depend on where the business is in its growth phase and whether the individual is bought into the vision of that business. But if it's a big business that's making lots of money, then you know, frankly I would say you're being robbed if you're not getting the right market value for your job.

NM : Hey everyone, Nolan here. I have to jump in and end today's podcast for part A of the show. Be sure to rate, review and subscribe to the podcast if you haven't already. And also join us next week for part B of this awesome interview.

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