Why Great Negotiators Earn More Money

Great negotiators recognize the importance of expanding the pie of value for all parties at the table. In the process, they claim more money for themselves.

By — on / Salary Negotiations

Great Negotiators

What’s the best way to claim more money in a negotiation? Many professional negotiators would recommend hard-bargaining tactics, such as asking the other party to disclose their bottom line, standing firm on price, and threatening to walk away. But truly great negotiators recognize that using haggling strategies alone may leave significant money on the table. To improve your economic outcomes in negotiation, it pays to look for ways to collaborate in addition to competing.

Back in 1986, researchers Dean G. Pruitt and Jeffrey Z. Rubin identified that negotiators often fail to achieve mutually beneficial outcomes that are readily available to them. Even when compatible issues are on the table—outcomes that would be pleasing to both parties—many negotiators nonetheless fail to capitalize on them. In the workplace, negotiation failures lead to costly strikes, conflict, and subpar results for the organization. For individuals, such negotiation failures cause us to leave value on the table and walk away with less money and other resources.

Why Do We Leave Money on the Table?

The failure to cooperate and engage in creative problem-solving lies at the heart of the common tendency to leave money on the negotiating table. Why do negotiators so often focus on competing rather than collaborating?

Typically, negotiators come to the table with the assumption that the pie of resources is fixed. The mythical-fixed-pie mindset leads us to view most competitive situations as purely win-lose, according to Harvard Business School professor Max H. Bazerman.

It’s true that the pie of resources is limited in some one-shot negotiations. If the price is truly the only issue on the table, you and your counterpart will have no choice but to haggle over who gets the better deal. When you are purchasing a piece of jewelry in a bazaar, for example, you may have difficulty identifying issues other than price to add to the discussion.

In the majority of negotiations, including in business negotiation, however, you can discuss many other issues beyond price, including delivery, service, financing, bonuses, and relationships. When you’ve identified a variety of issues, you can begin to identify tradeoffs that you can make across issues to give each party more of what it wants.

For example, if you value on-time delivery above all else, you may be able to negotiate for a higher price for a product by offering delivery guarantees. Similarly, when negotiating a business partnership, if your counterpart has less cash to put into the venture, you could negotiate for a greater share in the partnership in exchange for putting in more funding.

When we move beyond the fixed-pie mindset, we avoid the need to make costly compromises by capitalizing on what each party values most. Great negotiators understand that the more issues they add to the negotiation, the more money they are likely to make. In the vast majority of negotiations, it’s simply not true that “what’s good for them is bad for me,” and vice versa. When we see the flaws in this win-lose attitude, we open up new possibilities to create and claim value.

How Great Negotiators Earn More in Salary Negotiations

The context of salary negotiations is one area where negotiators tend to assume that any gains made come at the expense of the other party and vice versa. Yet when we start looking at “salary negotiations” as “job negotiations,” we realize this doesn’t have to be the case.

Think of the myriad issues available to add to the discussion when you are engaging in a job negotiation. When negotiating salary, what tradeoffs could you make to get a higher offer? Maybe you could offer to take on added responsibilities, make tradeoffs on benefits, or look for other ways to add value to the employer. The employer should be happy to accept a tradeoff that leads to no net financial loss to the organization.

In salary negotiations, greatnegotiators share information and ask questions. The more information you can provide about what you value (without revealing your bottom line), the better equipped you and the other party will be to identify new issues to discuss. And the more questions you ask, the more you will learn about what the other party values. This type of information exchange will put you in a good position to claim as much money and other value as possible for yourself.

What strategies do you use to maximize your outcomes in negotiation? Do any great negotiators inspire you? Leave a comment.

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3 Responses to “Why Great Negotiators Earn More Money”

  • Carola J.

    When it comes to making more from one’s job, obviously, negotiations play a major role. Everyone goes about it differently, but with the right proposal in place, negotiations are easier to take part in.

  • Dan S.

    I think it is important to provide inofrmtion to set up a good base for negotiation, but it should be important to not give too much information . I believe this could weaken your negotiation.

  • Christ Z.

    As a side note, when you offered the following, “when negotiating a business partnership, if your counterpart has less cash to put into the venture, you could negotiate for a greater share in the partnership in exchange for putting in more funding.”. There are important tax considerations when using that suggestion. Namely, the IRS will treat the extra equity beyond the amount paid by the person who is not investing as much money as compensation and taxed that way even though the person is only getting extra stock. For example, if one person contributes $1 Million for 50% of the company and the other person $500,000 for 50%, the IRS will treat that extra as taxable wages since that person has to work more for that 50%.


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