When negotiating for a new job, leaders often focus so much on financial terms that they neglect to adequately negotiate their roles. Overlooking the importance of role negotiation is a key leadership failure, wrote Jeswald Salacuse in his book Real Leaders Negotiate! Gaining, Using, and Keeping the Power to Lead Through Negotiation.
Consider the Walt Disney Company’s leadership negotiations in 1994 after its president and COO, Frank Wells, died suddenly. Disney’s then chairman and CEO, Michael Eisner, believed his longtime friend Michael Ovitz—founder and majority owner of Hollywood talent agency Creative Artists Agency (CAA)—was the ideal candidate for the role of president.
At CAA, Ovitz was earning $20 million to $25 million per year, far more than Disney had paid Wells—and more than any CEO in the United States was earning at the time. To land him, Eisner felt compelled to match Ovitz’s current salary. After discussions with Disney’s board, Eisner offered Ovitz $24.1 million per year. Ovitz also negotiated a potentially lucrative termination clause in the event he was fired without cause within five years.
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Two other top Disney executives pushed back, saying Ovitz would be a bad fit. Nonetheless, Eisner moved ahead with his decision.
The hiring proved disastrous. Ovitz had expected to co-lead Disney with Eisner, but Eisner, backed by other senior executives, worked to maintain full control. After just 14 months, Eisner dismissed Ovitz, who walked away with severance payments of $38 million in cash and about $100 million in Disney stock options. The payout triggered a shareholder lawsuit that took 10 years and many more millions to litigate.
The Two Job Negotiations Leaders Face
In Ovitz’s initial hiring negotiation with Disney, what went wrong? He and Eisner thoroughly negotiated the terms of his employment but failed to negotiate the role Ovitz would play within the organization.
Whether you are applying for a leadership position with a new company or seeking to move up in your current organization, you will face two significant job negotiations: one for your position and one for your role, according to Salacuse.
The process of negotiating your position includes discussing and agreeing on your title and responsibilities, determining how much power you will have, bargaining over pay and benefits, and so on, with those who have the authority to appoint you. Most of these negotiations take place before you accept an offer, though they can continue after you’re on the job.
By contrast, negotiating your role involves reaching agreement with many others in the organization on the functions, priorities, and limitations of your job. We engage in role negotiation during the hiring process and with our co-workers throughout our tenure—by discussing concerns about our abilities and qualifications, listening to their hopes and fears for the organization, and working with them to set the scope of our duties.
Ovitz successfully negotiated high compensation, but he failed to negotiate the role he would play as Disney’s president.
5 Guidelines for Leadership Role Negotiation
In Real Leaders Negotiate!, Salacuse gives the following advice for leaders looking to set themselves up for success:
- Don’t over-rely on your job description. It’s too easy to jump to incorrect assumptions about how you should behave on the job based on your understanding of the position’s requirements. Don’t assume that the functions and tasks you feel called to carry out as leader align with how those you are to lead view your position. Instead, prepare to launch a role negotiation with constituents both within and outside the organization.
- Consider the expectations set by your predecessors. When negotiating a new business deal, we often start with a clean slate—but this is usually not the case when negotiating a leadership role. Your counterparts will have certain expectations of how you should carry out your role based on the habits and precedents of those who filled the job before you. It’s crucial to understand those expectations. If you want to go in a different direction, you will need to develop a leadership and communication strategy to shift others’ expectations.
- Assess constituents’ level of support. As you plan your role negotiation campaign, identify the various constituents involved to determine who supports you already and whom you will need to persuade to come on board. This support will be critical to your ability to pursue your goals. Don’t allow yourself to become isolated and alone in the organization.
- Negotiate your role constantly. It would be a mistake to view role negotiation as a short-term task that can be concluded early into your tenure. In fact, the best leaders continually negotiate their roles, working to understand and adjust others’ expectations as they set new initiatives and goals.
- Prepare for changes in scope. Organizations often give successful leaders increased autonomy as time goes on. But if decisions you make turn out poorly, don’t be surprised if your superiors place new limitations on your role. Stay attuned to those shifts, and continue to negotiate your level of freedom.
Question: What additional advice would you offer job candidates preparing for role negotiation of leadership positions?
Claim your FREE copy: Negotiation Skills
Build powerful negotiation skills and become a better dealmaker and leader. Download our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.