Win-Win Negotiation
on maintaining Talented Staff
Background:
As continuation to our class discussion on roles as employee, manager, and observer. We prepared our blog as employee, manager, and Human Resource manager.
To further elaborate our case on "employee & Employer Negotiation exercise" our group created an imaginative case with 3 great leaders, who are with different experience working in the same occasion in an Information Technology company. Each of us has shared our personal perspectives according to our working experiences.
Are you satisfy of your salary?
The Case
In front of you is a young and talented staff Steve, that you know he will grow and shine to become one of the Leaders. One day Steve complaint to his director Obama, that he has been working as “Acting” Manager for 3 years but he found out his peer Bill is earning a salary at 35,000 that is 5,000 more than his.
How would we manage this dispute with as Employer as Inhibitors on salary increase negotiation and come to a win-win outcome.
To further elaborate our case on "employee & Employer Negotiation exercise" our group created an imaginative case with 3 great leaders, who are with different experience working in the same occasion in an Information Technology company. Each of us has shared our personal perspectives according to our working experiences.
Self reflections for our self:
Are you satisfy of your salary?
Are you satisfy of your boss?
Are you satisfy ???
The Case
In front of you is a young and talented staff Steve, that you know he will grow and shine to become one of the Leaders. One day Steve complaint to his director Obama, that he has been working as “Acting” Manager for 3 years but he found out his peer Bill is earning a salary at 35,000 that is 5,000 more than his.
How would we manage this dispute with as Employer as Inhibitors on salary increase negotiation and come to a win-win outcome.
The Talents
Young Steve
q MBA academic background
q Work at MicroApple as Assistant Junior Manager, Marketing Division for 2 years and later placed as “Acting” Manager for one of the marketing division for 3 years.
q Current salary $30,000.
q Leading team “Apple” with 8 subordinates
q Revenue generated 1M last year
Mature Bill
q MBA + PhD academic background.
q Work at MicroApple as Manager for one of the marketing division for 8 years.
q Current salary $35,000.
q Leading team “Microhard ” with 10 subordinates.
q Revenue generated 1.5 M last year.
How Does Human Resource do in these kind if issues?
Prior to the negotiation, HR conduct a details research on follow :
1. Education Background comparison between Steve and Bill.
· Steve MBA vs. Bill MBA + PhD
2. Experience against other peers to Steve.
· Steve 5 years vs. Bill 8 years
3. Team size and capabilities of Steve and Bill’s team.
· Steve 8 subordinates vs. Bill 10 subordinates
4. Revenue by Steve and Bill’s team.
· Steve 1M vs. Bill 1.5M
5. Salary structure in the company.
· Salary range for manager position from 30,000 to 50,000 per month
6. Market benchmarking.
· 30,000 to 50,000 per month
7. Salary increment history of Bill.
· 8% to 10% each year
8. Performance rating of Bill for pass year
· Meeting all expectation
9. Goals for Bill for coming year(s).
· Revenue increase at least 15% and team size remain unchanged.
False conflict:
Many people had a false though that Employers are unwilling to provide salary increase to retain employees. Instead we found that 56% of employers expect to hand out hiring and retention bonuses this year, up from 52% in 2012.
Furthermore, many people had though that employees are only working for paychecks (salary and wages). In reality, Employees are looking beyond their salary, examining things such as the company benefits package. Company-paid benefits and perks include items such as health and life insurance, retirement plans, training and advancement opportunities within the company.
Employees are also increasingly attracted to benefits that help create a healthy balance between their lives at work and at home. Supporting a good work/life balance includes benefits such as paid personal days, company sponsored social events, discount programs and wellness programs.
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Edited copy of
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http://leaseguy.crestcapital.com/wp-content/uploads/2009/02/cash_vs_lease2.jpg
Why Steve does not have a salary adjustment?
Steve believes that he is well performance and with 3 years worked as acting Manager for the organization, he is deserve to have a salary adjustment. The salary adjustment should be also same as his peer Bill. It is also based on his role is same as Bill in the organization. In fact, most of the people work for money and then job satisfaction and finally recognition. Industrial Relations: A Journal of Economy and Society Volume 3, Issue 1, pages 3–8, October 1963. Based on the comparison on background of Steve and Bill, it is suggested to not offer any salary raise for Steve.
Fixed – Pie Perception:
For company prospective, if raising Steve’s salary it may to contain more than one issue after that. Bill may also bring up the same request later on. The salary review should not be based on the role but to experience and revenue brings to the company. The perception about unfair pay to Steve is that his assumption on pay structure. This is one of the majority issues that could makes Steve upset about the result.
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| httpwww.wellnessnowjcmh.orgp=2913 |
Compromise:
The
lose-lose outcome could be Steve leaving the company and the company lose
business after Steve left. Even HR split
the difference and list out all the research data to Steve. The relationship
could be broke due to false negotiate and different point of view on the value.
Timing of negotiation:
Negotiation
is based on the needs of urgency. In this case, Steve maybe upset about the
arrangement. Finding the best timing to
negotiate will be one of the key factors to resolve the case. Sometime, quick
response can showing the respect and faster way to resolve before it comes to
worse. However, if every cases response too quick that may create another
problem likes insufficient time to dig out all the information or data to
support the negotiation. Furthermore, it also based on how much bullet that
Steve has. For example, if Steve is handing many key customers with large
amount of business or his subordinates will follow he leave once the failure of
negotiation. Or else Steve is putting in a long term pension scheme that if he
leaves the company within 10 years, he will unable to withdraw the entire
contribution from company. Therefore, it
is important to know who leading the negotiation whether the company or Steve. In
anyhow, details evaluation is key to prior to negotiation.
Illusion of transparency:
Based on
the above mentioned, the negotiation must be took placed and in right time. The
data of all areas research should be sharing with Steve properly. Like the education background, experience
against Bill, revenue generated by himself and Bill etc in order to let him
understand in company perspective. More importantly, if company is value about
Steve, the transparency of coming career plan as well as the salary adjustment
plan should be fairly show to Steve. That should erase the questions or
concerns in Steve’s mind. Moreover, Steve maybe not totally understands the
reason of being turn down of the request. The negotiation not only to reject
what Steve request but to remove the concerns and keep him motivated. The
company could bring their coming expectations of Steve onto table and list out
the doable areas. Through this negotiation it could move forward both side’s
potential opportunities on building a long term relationship as well as the
achievable outcome on when can gives Steve an increment in future.
Win- Win outcome negotiation
Background:
The performance and outcome of Steve and his team were both very good. Obama wanted to motivate Steve to work better than before even since he could not give Steve salary jump of extra 5,000 per month once only because of the limitation of salary structure of their company. As a skilled negotiator, Obama wanted to capitalize on difference in valuation, expectations, risk attitude, time preferences and capabilities among company, himself, and the manager to achieve win-win outcome negotiation.
Differences in valuation：
The valuation of Obama’s company was to offer its extra resource and award to its best employees. Steve’s valuation focused on the recognition for his ability by his company or his boss-Obama. The recognition is not only qualified position but also the interrelated salary. Basing on these two different valuations, Obama could use the honor of “excellent manager” for Steve to motivate him. As a excellent manger, Steve would get the following benefits:
Ø His past year performance was recognized by his company
Ø Be honored with medals and bonus
Ø Represented for the entire employee to speech on behalf to public events
Ø The promotion perspective
Differences in expectation：
Obama’s company cooperated with local traveling agency to offer it discount traveling coupon and traveling service. Steve got married and he had a kid. He was desired to travel with his family. But he always had no time because he was always very busy on his work. Obama wanted to offer Steve the chance of free traveling with his family to motivate Steve. Here was the package of the traveling award:
Ø Offer Steve one off travel scheme for himself and his family. The travel package could be 15,000 per person (3 x 15,000 = 45,000 which is less than 5,000 x 12 = 60,000 per year).
Ø Offer Additional 1 week annual leave for him to enjoy the holiday with their family. (30,000 / 30 x 7 days = 7,000).
Differences in Capabilities：
Steve was really a talent manger. Obama believed that Steve would like to challenge his own capabilities. So Obama wanted to exchange Bill’s position and Steve’s position. For this job rotation, there were two main win-win outcome as follows:
Explore the potential capability that Steve may achieve.
Incent Bill to work hard if he wants keep the same compensation with before.
After three month probationary period, if Steve is really qualified with his new position, then Obama would give the real salary jump as Steve expected. For Bill, if his outcome is not good, he could be deducted the salary.
Differences in Time preferences：
There are two distinct type of retirement scheme Mandatory Provident Fund (MPF) and Occupational Retirement Scheme Ordinance (ORSO).
Mandatory Provident Fund (MPF) Effective July 1, 2005; is the most common one today - which you and your company will have to contribute 5% of your MPF Salary to the MPF Scheme and the contributions will be invested in Capital Preservation Fund.
Occupational Retirement Scheme Ordinance (ORSO). In one company for example which has used this scheme as an alternative to MPF. Employee are not required to contribute 5% of their salary, instead the company will be contributing 10% as of employees' salary. But employee are only eligible to carry percentage of this retirement scheme based on years of service in the company. For example if a employee prefers leaving the company after two years he can carry 5% of ORSO fund, 10% in three years, 50% in the fifth year, 100% after serving 7 years or more.
As if the company applies ORSO as the company's retirement scheme. Director Obama should take advantage of this retirement scheme. And negotiate with Steve, and suggest Steve to continue serve the company to get win-win outcome.
