Enduring the Perspiration Principle in
Negotiation: When Money's the Hurdle but Not in the Way You Think
Don't say "Maybe" when what
you really mean is "No"
I've been spending a lot of time lately talking about
how fastest-growing startups should negotiate when
they are trying to hire experienced,
relatively senior talent (especially in the sales area) for their companies.
Lateral hires are hard for all kinds of reasons (especially when you're
bringing people in to manage and direct folks who have been with your business
from the start and helped to build it). The vast majority of these hires fail
for four reasons: (1) a quickly-emergent and readily apparent lack of energy
(stamina) and/or little enthusiasm for the day-to-day aspects of the business;
(2) a weak connection to and empathy for the rest of the employees; (3) an
early tendency to criticize the way you have run the business in the past; and
(4) a focus and excessive interest in and emphasis on financial and
compensation issues.
But make no mistake,
tough and risky or not, to grow your business beyond the grocery store, you
will need to hire some grown-ups. In the process, you can evaluate, tease out,
and control some of the primary failure causes, but the biggest exposure isn't
what you don't learn in advance, it's what you do or don't do in the course of
the negotiations that will have the most important consequences further down
the line. In many negotiations, people care less about where things ultimately
end up and a lot more about how you behave and the way that the parties reach
the final arrangements.
So, if you're heading
down this path, there's one crucial fact and one absolute rule that I tell
every entrepreneur involved in these kinds of discussions to keep firmly in
mind.
The fact is that this
new person is going to need your backing 110 percent of the time without any
second guessing; without any interference or micro-managing; and without
permitting anyone in the business to go around him or her and come to you with
their problems or concerns. Once you've put that person in place, it's gotta be
full speed ahead - no retreat and no surrender - and everyone in the place will
be watching you to see how you are handling the situation.
And, believe me, I
know how hard this "hands-off" approach can be when it's your baby
and when you find yourself biting your tongue because you might have done a
bunch of things in different ways. Rolling your eyes or shrugging your
shoulders is just as strong a statement as anything spoken and just as
unhelpful and, in fact, damaging to the new hire and to the whole onboarding
effort.
So, you'll have to
learn to turn a deaf ear to the complaints about how the new guy or girl
doesn't "get it"; doesn't know every single thing on day one; isn't
fitting into the system or the culture, etc. If you're not all in and fully
supportive, then the odds against his or her eventual success move dramatically
in the wrong direction. Reservations are OK in the restaurant business, but not
when someone desperately needs you to have their back - rain or shine - and all
the time.
But the rule is even
more important. Just as you can't be a little pregnant, you can't afford to be
half-hearted in these decisions or not fully convinced yourself that you made
the right choice. "Almost" only counts in horseshoes and hand
grenades. The rule is that "you should never say 'maybe' when you need to
say 'no.'" And that rule applies in spades when you're talking about new
hires.
Don't kid yourself or
try to talk yourself into these things either. When you say, "you just
don't know," the truth is that you do. Doubts and concerns are rarely
abated with the passage of time - trust your gut - and go on from there. Things
and attitudes that you didn't like during the interview aren't going to go away
- they're more likely to be intensified and amplified under the stress of real
battle conditions.
Money is always a big
hurdle to get over, but not necessarily in the way you might expect. The
absolute dollars will matter for sure and sometimes there's just too much
distance between the parties to get the deal done. The parties can part friends
- no harm, no foul - and get on with their lives. But what most outsiders don't
understand (along with a lot of prospective hires on the other side of the
conversation) is just how personally the entrepreneur takes the compensation
negotiations.
I've seen
entrepreneurs work for days trying to come up with a fair offer for someone
they'd love to have onboard - sweating the numbers, comparing the offer to the
comp of other key players, checking with outside advisors, doing every bit of
homework possible in order to get to their best proposal. They become heavily
invested (financially, but even more psychologically) in the offer and the
outcome because they believe it's fair to everyone and the absolute best they
can do.
And then, I've seen
the same entrepreneurs crushed (and/or pissed off) by some candidate who
summarily rejects the proposal because (a) he read in some know-it-all book
that you're supposed to always do that with initial offers and (b) he thinks
it's just an opening salvo and not a first, best and last offer. These people
rarely understand how much time and emotional energy a really good entrepreneur
puts into these things. And they also don't understand that each counter-offer
they make sucks a little more joy out of the whole deal. It's the same kind of
resentment that builds up when you've borrowed money from someone and you know
that you can't pay it back.
In these cases,
eventually you get to a bad result - either because no deal gets done or - far
worse - because the entrepreneur grudgingly and half-heartedly accepts a deal
that he's unhappy with and angry about for what he thinks is the good of the
business. The truth is that it's the worst thing he can do because he's just
lit a fuse under the whole relationship and most likely doomed the new hire as
well. Taking one for the team; bidding up and against your own best offer;
sucking it up and accepting a deal that you're not sure the company can afford
-- these are bad choices and consistent signals that there're bigger issues and
problems coming. You may not want to admit it, but it's gonna be a lot harder
to support and stick up for someone when, in your heart of hearts, you think
they were a pig in the negotiations and overdid it.
The funny thing is that they probably don't even realize that
there's a problem. It only recently dawned on me as to why the guys you're
trying to hire from the corporate world don't get emotional about this stuff or
understand that it's not simply an interesting exercise or some kind of a game
of back-and-forth bargaining. The reason that they don't get it is because, in
their world, it's never their money. If they have to hire someone, HR
gives them a number (or more likely a salary range) and their job is to get a
deal done with someone. Paying a few bucks more, changing a bonus or some
performance targets, adding a few vacation days - who really cares? Just get
the deal done.
But for the
entrepreneur, it's a completely different world. Every dollar is hard-earned.
Every buck makes a big difference, and nothing is taken lightly because in the
world of scarce resources you're always stealing from some Peter or Penny to
pay Paul. And, as the boss, the buck stops with you and you owe it to everyone
in the business to make the best and smartest decisions you can. It's not
"just business," it's your business, and it's very personal. If you
haven't been in this particular hot seat, this may sound a little overly
dramatic, but ask anyone who has been there, and they'll tell you that there
are few harder decisions that the CEO has to make.