by Jim Camp Jr., Author – “Lead From No”
Growing your startup typically involves hiring staff, and hiring staff typically involves negotiations around compensation. Consequently, negotiation is a skill that startup founders should invest time in developing. By becoming a more effective negotiator, you can get the talent you need without making concessions that leave you overextended.
One of the biggest mistakes founders can make as they negotiate is assuming financial compensation is the most important to their candidate. It may be, but there may also be other issues influencing potential employees’ decision-making. Examples are their ability to grow, promote, work remotely, and be inspired by you and your product or service.
Identify the negotiation purpose
Startup founders, like any other business leaders seeking an agreement, must start by identifying an overall mission and purpose with each teammate. Ask yourself, “What am I trying to help this candidate see and discover? How do they benefit from joining our team?” Although it’s tempting to focus on the results you’re hoping for, the key to any successful negotiation is the vision you uncover and create. Allowing yourself to feel that you “need this person” is a mistake.
Equally dangerous is assuming what it will take to get them on board. Ask good questions to eliminate your preconceived notions. Don’t talk “to” them; listen. What you hear is far more important than what you say.
By adopting the mindset that negotiation is simply the effort to reach an agreement with two or more parties having the right to “veto” or the right to say “no,” emotions lower on both sides of the interview. As part of the interview process, ask why the potential hire applied. Questions such as, “What prompted you to take the interview in the first place?” will get them talking. You won’t be able to prepare a meaningful compensation package if you don’t honestly know what matters to the applicant. Do they want to relocate? Do they need better growth opportunities? Maybe they left their last position because their former company went under and are looking for more stability. Or perhaps they just had their first child and are looking for flexibility.
Help them see the opportunity you provide, how you’ll deliver it, and how they will succeed if you both determine it’s a good fit. Stay centered in their world, not yours. This is the best way to determine precisely what’s important to them. You may discover something you didn’t anticipate. In the end, you might reach a far more beneficial agreement than you ever imagined. If you reach an impasse, don’t panic. Ask a question such as, “Where are we falling short? What’s the real problem that we’re trying to solve?”
As you identify their problem — whether a lack of growth opportunities, flexibility, or healthy company culture — you can determine if you’re willing to offer a solution. Keep in mind that your posture and behavior during this negotiation are critical. Honesty, sincerity, and remaining respectful of their decision are not only good for any negotiation but also make you a more impactful leader.
Prioritize the compensation factors
As you gain a deeper understanding of the applicant’s motivation, you’ll be able to prioritize the various factors involved in compensation. Salary or other financial factors are often just part of the puzzle rather than the highest priority. In fact, recent studies have shown that the majority of workers value culture over salary when it comes to job satisfaction.
If you know that the candidate is primarily looking for a growth opportunity that you can provide, highlight it and give them as many details as possible. Instead of hitting them with this right from the start, be patient. When you have their vision first, you can tailor your presentation to the vision they’ve shared with you. You may find that compensation is not the most important issue.
Tap into the applicant’s emotions
To truly excel at negotiations, it is critical to understand that every decision involves emotions. If you can control your emotions, you have a better chance of successful negotiations, which is why identifying your negotiation purpose and focusing on the world of your candidate is so valuable. Identifying your purpose beforehand empowers a systemic approach rather than an emotional approach.
When interviewing candidates for your startup and negotiating compensation, you should strive to get them to make the emotionally driven decision that they want to work for your company by helping them see that you have the solution to their problem. Show them you can address their pain points. Once they decide your position is the solution they have been looking for, financial compensation becomes just a detail to be worked out.
Compensation will always be an issue that must be addressed in the hiring process, especially for start-ups. When negotiations are necessary, founders should seek to define their purpose, understand the candidate’s vision, and appreciate the role that emotions will play. Following those steps can uncover problems and decide if the applicant is a good fit. Remember, if you hear “no,” it’s not over — it’s a decision that can be changed.
When you hear what you perceive as a final “no,” stay calm and ask, “Where are we falling short?” If you want this person on your team, you will ultimately decide when the negotiation ends. Don’t fall prey to unnecessary compromise by offering more than what’s required when you feel the deal slipping away.
Jim Camp Jr., Author of “Lead From No” and Co-owner of Camp Negotiations, is a retired Major General in the United States Air Force who served for many years as the Commander of the Ohio Air National Guard and National Guard Assistant to the Commander of the US Transportation Command. In the corporate world, Camp helped build Camp Negotiations as a coach and contributor to the book, “No: The Only System of Negotiation You Need For Work and Home.”
