The best foundation: A common assessment system

Having discussed the necessary preparations for salary negotiations on the previous page, I now want to explain the principle that enables constructive negotiations on equal terms.

How salary demands and offers come about

Regardless of whether the negotiating partners are aware of it or not, everyone negotiates within their own assessment system. This is a system comprising a number of different criteria which are used to determine one’s own proposals in terms of a reasonable salary and to evaluate the offers from the other side. Each assessment criterion may be of very different nature and depends strongly on the circumstances. Here are a few examples:

On the candidate’s side, the scope can include purely personal factors such as the family’s financial needs or the desire to earn more than in the current job. Of course, it is also common to use the situation of others with comparable qualifications, in similar positions, in related industries, at the same locality etc. for evaluation. The latter would be examples of reference to relatively neutral criteria.
The hiring manager may also have criteria of purely personal origin. An example of this would be to achieve a certain operational cost reduction target in the financial year through moderate salary agreements and thus maximize the level of his or her own profit share. Of course, neutral criteria also exist on the employer’s side. Here, the same criteria that I have mentioned above for the candidate would normally apply too. In addition, a collective wage agreement could be mentioned and so on.

If salary negotiations are little constructive and unpleasant, this is usually due to the fact that at least one of the participants is not sufficiently aware of the underlying assessment systems or does not accept them. In the above examples, it would be more than obvious that the employer will not necessarily recognize the candidate’s family’s financial needs as a relevant criterion, whereas the applicant would likely be unwilling to consider the company’s budget reduction targets. To prevent running into this at a later stage, you should do the following before the start of the talks:

Before the start of any salary negotiations, I will verify whether my own assessment system is largely based on neutral criteria and thus increase the chance of its acceptance by the other side.

Create a common understanding

Once it has become clear, how salary demands and offers come about, the solution to typical problems when negotiating them is evident. Before the actual negotiation can begin, one must first of all agree on a common assessment system. That works best if one uses neutral evaluation criteria because in this case, the agreement of all involved is particularly probable. Purely personal factors do not have to be excluded, as long as all sides are willing to consider them too.

It is very important that the assessment criteria to be applied have really been agreed between all parties before the individual points are negotiated. In most cases, this should be relatively simple if you have prepared yourself and specifically address the issue at the beginning. You can do this by not immediately answering the question about your salary expectations with information, but by first proposing a reference system on the basis of which you would substantiate your arguments. Then ask the other side if they share your view, or if they want to raise objections, make changes or suggest extensions.

There is no issue if there is no immediate agreement and you first have to discuss the different viewpoints. It is important, however, that this discussion is conducted to establish the assessment system and that no arguments regarding the actual amount of your salary are negotiated just yet. As long as the foundation for it does not stand, only the problems already mentioned would turn up. However, the time to create a robust basis for discussion is well invested, because once this has been established, the weighing of the individual arguments not only becomes easier but also much faster. I will describe this process in more detail on the following page.

So, my recommendation for the initial stage of salary negotiations can be summed up as follows:

Before I discuss the individual arguments with my counterpart during the salary negotiations, I will first pay attention to establishing a common assessment system.

Plan B: If you cannot find common ground

In my experience, this happens very rarely. But let’s assume that, despite intensive efforts, you cannot agree on a common reference system at the beginning of the salary negotiations. In such a case not everything is lost yet, because your minimum expectation may be below the maximum concession of the other side – for whatever reason that may be. Of course, reaching an agreement here will follow oriental customs. Especially in this case, it is very important that you know your personal lower limit very well and thus when you have to end the negotiations and withdraw your application.

Perhaps you are quite skillful in this type of negotiation and are likely to achieve a result that is satisfactory for you. I would nevertheless urge you to be cautious with a commitment in such a case. If you cannot reach a factual agreement with your potential new boss at this point, how will you later work together constructively on a daily basis?

This is not critical, however, in the case of preliminary negotiations which are conducted by third parties (headhunters, agencies etc.) for example. Those are primarily interested to check if your ideas can likely be reconciled with their client’s specifications later. All you need to do here is to know your lower limit. Do not communicate it immediately but begin with a relatively high starting demand instead. Headhunters are normally interested in a high salary for you themselves because their commission is usually based on it. For this reason, they will normally only try to negotiate you down to the upper limit of the range specified by their customer if necessary. If this is not yet below your actual minimum, there is nothing left to do at this point, because you do not have to decide just yet.