Monday, 02 October 2017 10:53

Negotiating contracts

Written by  Tessa Nicholson
Helen and Tony Smale from Forté Management. Helen and Tony Smale from Forté Management.

As an employee, attending a contract negotiation can be as nerve wracking as waiting on a report card.

For employers, it can be a case of waiting to be hit up for more money. But it doesn’t need to be, as Tessa Nicholson discovers, while talking to Tony and Helen Smale, from Forté Management, business consultants, trainers and coaches.

By nature, New Zealanders are not the best at negotiating workplace contracts, according to both Tony and Helen Smale. That has a lot to do with the fact that as a nation we are not used to negotiating. It is not something that we grow up familiar with. That may have something to do with the fact that until a few decades ago, the majority of contracts were negotiated not individually, but by unions.

“We have an idea that negotiation is about beating up on the other party,” Tony says. Nothing could be further from the truth however. So let’s take a look at the dos and don’ts of negotiating, from both sides of the table.


Employees

Just what should you know before you go into a contract negotiation? For one thing, you should go in with as much information about the role you are undertaking as possible.

“Know what the ball park that others in similar situations, with similar education and experience are being paid,” says Helen. “That way you ensure you are negotiating from a perspective of having knowledge, rather than going in unprepared, waiting to see what is going to be offered. If you don’t know the background, then you will have nothing to bounce back with.”

Sites such as Job Seek or Trade Me Jobs can help with that sort of information.

Be realistic about your economic worth to the company. Just because you think you are a valuable asset, doesn’t mean you will automatically be raised to the top of the food chain (or pay bracket in this case), Tony adds.

“A lot of young people have an unrealistic expectation about their economic worth. What is missing is the realization that we need to climb to the top of the ladder, not land at the top.”

Go in with an open mind – a take it or leave it attitude is not helpful to you or the employer. (That goes both ways it has to be said). Which means, don’t limit yourself to only one outcome. Tony says there is a lot more to negotiating than just haggling over the price of the wage rate.

“Especially when you are just starting off. It is not soley about the money you are going to be paid, it is the experience you will gain.

“When you are negotiating, you may be wanting to eventually work in a particular area, or you have a bent to an area. If you can negotiate some way of gaining experience in that area, that is just as valuable as coming out with a few more dollars in your pocket each week. In lieu of pay rises and promotion, having an opportunity to develop yourself and your skills is so valuable.”

Both consultants say another common mistake made in negotiations is when an employee goes in aggressively, spouting their “rights”.

“That is a no, no,” Tony believes, as it is the quickest way to get up the nose of an employer who is the one whose business is on the line.

While you are entitled to take someone into a negotiation with you, Helen believes you should think carefully about that. Not because it is a bad thing, but because it is hard to create a symbiotic relationship if a third party is involved. Good employment relationships are built on mutual trust.


Employers

Many of the points that employees have to take notice of are also important for employers undertaking contract negotiations. Being prepared, open minded, and positive can help ease the pressure.

Not all negotiations need to be about an hourly wage increase, Tony says. Think laterally if you have someone who has done something exceptionally well over the previous year.

“Clients often say to us they have this person who has done an absolutely fabulous job and they are afraid he is going to be poached. As it’s not time for the annual wage round, we suggest they pay a bonus. It has a lot of benefits, from everybody’s point of view. It comes as a pleasant surprise for an employee, but it also comes as a one off for the employer. So if someone has had a good year or done something exceptional, reward them.”

Beware of how you approach the strengths and weaknesses of your staff. Recent research has shown that when weaknesses are brought up early in negotiations, the person on the receiving end tends to shut down mentally.

“Biologically,” Tony says, “when we know someone thinks we have a weakness, we expect it to be exploited. So when an employer says you are pretty weak at such and such, the employee feels under threat, all they are focused on is getting out of that situation. I expect that is what happens in a lot of negotiations. People feel threatened. They go into this fight or flight mode, they are no longer listening – all they are interested in is the threat.”

The basic structure for any negotiation should be positives first – what the person has done really well in the past year, to ensure they are in a positive mindset. And frame any conversation that involves an employee’s weaknesses in a more positive light.

“What can you do better, or what do you need to be better at your job, which is the positive equivalent to what you are weak at,” says Tony.

“That has an effect on a person – it allows them to see they can do better, they can step up. It is much better, as it is not a negative.”

Think laterally. If you can’t afford to offer a wage rise, what about offering to pay for extra training. Or maybe a gym membership. Again, the pair say, it doesn’t always have to be about cash in hand.

One final word of advice, comes from Tony, who says New Zealanders have the most strongly developed sense of fair play, of any country in the world. Which means as an employer, you need to be very conscious about how you are perceived.

“When you are negotiating with an employee and there is a Maserati in the driveway, paid for last season, the employee is probably not going to be too considerate of the fact that you have had a bad current year.

“As Kiwis we believe in swings and round-abouts, and rightly or wrongly employees believe it is a one way process. ‘When it is a bad year I am supposed to suck it up, but when it’s a good year you don’t come back and say, oh we couldn’t give you anything last year, but we’ll give you 10 percent or a bonus this year to compensate.’

“Doing something like this is an extension of good faith, moving from a legal concept to a moral one.”

 

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