10/15/2014

SALARY

NEGOTIATION

NEKPEH LILIAN

10387450

DEPARTMENT OF FOOD PROCESS

ENGINEEERING

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EXECUTIVE SUMMARY

This report is in two parts; the first part gives a generic definition for negotiation as

a back and forth communication between parties to reach an agreement whiles

leaving each party positive. It also gives the types of negotiation; distributive and

integrative and goes on to give some examples or scenarios where negotiation is

used; managerial, legal and commercial.

The second part covers salary negotiation and defines it as the process of

determining and agreeing on the type of compensation package that an employer

will pay an employee in exchange for some form of labour. It talks about scenarios

where salary negotiation is needed and also gives the strategies for salary

negotiation for a new employee and also how to apply for a salary raise if one has

already been working in a particular organization.

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION ........................................................................... 4

NEGOTIATION ..................................................................................................... 4

TYPES OF NEGOTIATION……………… .......................................................... 5

EXAMPLES OF NEGOTIATION………….………………..…………………7

CHAPTER 2: SALARY NEGOTIATION ........................................................... 9

WHEN IS SALARY NEGOTIATION NECESSARY……….. ........................... 9

SALARY NEGOTIATION STRATEGIES………………………………...…10

HOW TO NEGOTIATE SALARY RAISE…………………………………...13

CONCLUSION…….....……………………………………………………….15

REFERENCES………………………………………………………………...16

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CHAPTER 1

INTRODUCTION

NEGOTIATION

Negotiation is the back and forth communication between people or a group of

people designed to reach an agreement while leaving the other side intact and

positive.

It is a process of interaction between two or more parties who consider that they

need to be jointly involved in an outcome, but who initially have different

objectives, seek by the use of argument and persuasion to resolve their differences

in order to achieve a mutually acceptable solution. Another important

consideration is that negotiation implies acceptance by both parties that agreement

between them is required before a decision can be implemented.

Negotiation can also be defined as the process of communicating back and forth,

for the purpose of reaching a joint agreement about differing needs or ideas. It is a

collection of behaviours that involve communication, sales, marketing,

psychology, sociology, a customer or a seller, a boss or an employee, a business

partner, a diplomat or a civil servant, legal system, government, and international

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affair. On a more personal level, negotiation takes place between friends, couples,

parent or children.

TYPES OF NEGOTIATION

There are two main types of negotiation: distributive negotiation and integrative

negotiation.

Distributive Negotiation: Distributive negotiation is a way of dividing up a

single, fixed quantity where a gain to one side results in a loss to the other.

While both sides may benefit from the deal, one side will definitely benefit

more than the other. Distributive negotiation is also referred to as the “zero

sum” or the “fixed pie” negotiation. Distributive negotiation is often used in

situations where there is a single, fixed issue to be negotiated, and where the

greatest concern is getting the best possible value. In real worlds of

negotiation, two parties face off with the goal of getting as much as possible.

You may have thought of situations such as buying an expensive item such

as a car or a house. In this instance, the seller wants to go after the best price

they can obtain, while the buyer wants to pay the lowest price to achieve the

best bargain. A distributive negotiation usually involves two people who

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have never had a previous interactive relationship, nor are they likely to do

so again in the near future. Also, when we are dealing with someone

unknown to us, and it’s a one-time only occurrence, we really have no

particular interest in forming a relationship with them, except for the

purpose of the deal itself. We are generally less concerned with how they

perceive us, or how they might regard our reputation. Ours and their

interests are usually self-serving.

Integrative Negotiation: Integrative negotiation involves a more

collaborative approach, where both sides work together in the hopes of

achieving the greatest possible benefit for both sides. Usually involves

higher degree of trust and forming a form of relationship. Both parties will

want to walk away feeling they have achieved something which has value by

what each wants. In purely integrative negotiation, both sides cooperate to

achieve the greatest benefit. This type of negotiation requires that you be

good at both creating value and claiming it. Your goal is to create as many

options with much value as possible for both sides. And then you need to

claim the best value for yourself among the options you have helped create.

This can result in both sides getting exactly what they want, but in most

cases it requires that each side compromise slightly to get what it values the

most.

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EXAMPLES OF NEGOTIATION

The art of negotiation is required in diverse fields of life. Some scenarios where

negotiation is used are:

I. Legal negotiation: These negotiations are usually formal and legally binding.

They are also contractual in nature and relate to gaining legal grounds. It

usually involves situations where an attorney, acting on behalf of his client

either as an advocate or an advisor, seeks to obtain a favourable outcome.

This is usually used in dispute resolution. The objective of legal negotiation

is to obtain an advantageous settlement of the matter in dispute prior to trial.

A classic example is when two parties contract to undertake a contract and

one of the parties fail to perform their part of the deal or honour the contract.

In such a case, since there has been a breach of contract, the two parties can

sit and with their attorneys negotiate how to compensate the offended party

without having to settle the matter in court.

II. Managerial negotiations: these types of negotiation are done within the

organization and are related to internal problems in the company or

organization. It is in regard to the working relationship between the groups

of employees. Usually, the manager needs to interact with members at

different levels in the organization structure. For conducting the day-to-day

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business, internally, the superior needs to allot job responsibilities, maintain

a flow of information, direct the record keeping and many more activities for

smooth functioning. All these require entering into negotiations with the

parties internal to the company.

III. Commercial negotiation: this is conducted with external parties. The driving

force behind such negotiations are usually financial gains. They are based on

a give and take relationship. Commercial negotiations successfully end up

into contracts. It relates to foregoing of one resource to get the other. A

typical example is when a person is awarded a job and has to negotiate his or

her pay (salary negotiation) or a common example like buying a house from

a realtor where the buyer could negotiate for the payment terms.

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CHAPTER 2

SALARY NEGOTIATION

Salary negotiation is the process of determining and agreeing on the amount and/or

type of compensation that an employer will pay an employee in exchange for some

form of labour.

Salary negotiation is not simply a series of talks designed to increase your pay.

Rather, it is an avenue for the employer and the prospective employee or “on the

job” employee to agree upon a complete compensation package that meets both

party’s needs. It is an important part of the interview process, and should always be

conducted in good faith.

For most people, discussing salary is a nerve wracking experience. However when

managed correctly, it can contribute to a positive and more fulfilling professional

relationship between you and your future employer.

WHEN IS SALARY NEGOTIATION NECESSARY

After successfully passing a job interview

An “on the job” worker applying for salary increase

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SALARY NEGOTIATION STRATEGIES

The way that you approach salary negotiation has a tremendous impact on its

outcome. The following five principles serve as a guide:

Know what you are worth and what the current market can bear. Successful

starts with a great deal of background research , as you will need to

determine the types and amounts of compensation that a person with your

level of experience, education, skills and other qualifications can command

in your industry.

Salary is best discussed when the employer has made an offer. This is to

avoid over-selling or under-selling one’s skills and capabilities. Example a

company could be able to offer a process engineer $2000.00 for his services

but if when asked in an interview how much that engineer will want to take

as a pay, and he makes the first offer of $1000.00, it could ruin his chances

of getting the $2000.00 which the company can offer. This may lead to

being under-paid. What’s, if the interview process reveals that you have

more to offer than originally expected, you could end up being considered

for a different job with a higher salary range. Because salary negotiation

shifts the employer’s focus from your attributes to your requirements, a

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premature salary discussion may prevent the employer from ever learning

that you warrant considerations for a higher paying opportunity

Salary should be viewed in context of other employment issues. A process

engineer must know that there are other employees to be paid and also there

are other things such as fuel, transportation, health insurance, employee

accommodation, water and other utility costs that the company bears.

Most offers are negotiable and target organization. Base your salary

requirements on information gathered from several sources. Speak to

professionals in your field; review the salary ranges for similar positions in

similar organizations; know the agency’s size/budget; and visit different

salary calculator websites to help ensure that your information is accurate.

It is okay to ask for what you want. Do not assume that an employer’s first

offer is the best offer. Many employers will initiate a salary discussion by

proposing a salary figure that is at a lower end of the position’s allocated pay

scale. This is to allow room for negotiation.

Consider how much experience you have: One must bear in mind that an

engineer who has recently graduated and searching for a job cannot earn

same pay as another who has been working in the field for several years.

Those with experience typically earn more money. Remember to talk about

the amount of experience you have if it will help you negotiate a better

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remuneration. If you do not have a lot or any experience at all, be realistic

about what you ask for.

Do not talk about how much money you need: When going through salary

negotiations, don’t tell your boss that you need to make money because your

bills are high, your house is expensive, you need to get married etc. This

information is irrelevant to him or her. The only time you can use these

excuses is if your job is being relocated to a region in which the cost of

living is higher and your employer is offering a salary that takes that into

account. Even with that, it should be done in view of the fact that it all goes

down to increase the company’s profits, since if your standard of living is

high, your productivity for the company will be high.

Be flexible: When negotiating your salary, you may not get as much money

as you want. There is a good chance that you will have to compromise. The

trick is to find out how much you are willing to bend and what you will do if

your boss does not offer you a salary that you find acceptable. Will you start

looking for another job or will you turn down the job offer? If it seems like

you cannot get the salary you want perhaps your potential employer can

sweeten the deal like offer you additional time off or some other fringe

benefits.

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HOW TO NEGOTIATE SALARY RAISE

In the situation where you may already be working and you know you deserve a

better salary, you are long overdue for a raise, your boss has not been forthcoming

with one or sitting around and waiting for a raise has not worked, this is how to go

about getting the raise.

Find out how much others working in your field are worth: The first thing to

do before asking for a raise is to learn about typical salaries in your field.

You can get this information by conducting salary surveys or if you belong

to a professional association, check with it to see if it has salary information

available. One must also figure out how much how much they can earn and

it can be done by using the number of years of working in that field.

Evaluate the financial health of your employer: if your employer is having

financial problems: if your employer is facing financial problems, it will not

be appropriate to ask for a raise. As an employee, you are probably aware of

your company’s financial health and this can ultimately be done by looking

at the financial reports of the company.

Prepare your argument: You really should not approach your boss for a raise

as an argument. Think of it as selling yourself just as you will do if you were

trying to get a prospective employer to hire you. Make a list of all the things

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you have accomplished for the company and also make a list of your

relevant skills such as the ability to use some specialized softwares for

working etc.

Decide on what to do if your proposal gets turned down: before you walk

into your boss’ office to ask for the raise, think about what you will do if he

says no or agrees to pay you less than what you asked for. Will you quit your

job? Or will you wait and ask for a raise at a later date/ your answer may

depend on what your boss says. Example, was the offer turned down

because of your performance? If so, ask yourself if criticism are valid. If

they are, think about which changes you can make. If they are not, you may

want to go somewhere else where your efforts may be appreciated.

Set up an appointment to talk to your boss: Show your boss how serious you

are about asking for a raise. Treat this as a business meeting. Do not discuss

your raise with him by email, at the water cooler or by telephone. You

should set up an appointment with his or her secretary or personal assistant

to meet him.

Present your case: Your boss may agree to give you a raise immediately.

Your case should be convincing enough to him and it should contain

information gathered about typical salaries in your field and your

accomplishments.

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CONCLUSION

In a nutshell, salary negotiation is an important aspect of one’s job and when done

properly can result in a fulfilling and positive relationship between an employee

and his employer or a “to-be employee” and his prospective employer. As such

more serious approach must be given to the exercise and all employees must learn

it right as the need may arise for it at any given time in a working relationship.

Remember that what you negotiate for at your first job affects the salary

compensation of all your future jobs.

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REFERENCES

Salary negotiation. Retrieved October 9, 2014 from

http://careerplanning.about.com/od/negotiatingoffers/a/raise.html

Negotiation. Retrieved October 9, 2014 from

http://www.skillsyouneed.com/ips/negotiation.html

Salary negotiation. Wagner F R. Graduate school of public service

Negotiation. Retrieved October 9, 2014 from

http://www.laynetworks.com/Negotiation-Skills.html