Pre Negotiation Plan

Employer's Perspective Summary

Cris Peterson is a Senior Manager of Finance for Greenbaum Financial Services. Cris has been looking too long for a new financial analyst. In addition to the challenges of managing 30 financial analysts, Cris has also been tasked with hiring for the new position. While the market offers many candidates, the challenge is finding the “right” candidate. Cris is looking for someone with the right qualifications, of course, but the real challenge has been finding candidates with that special spark of ambition that will make them outstanding in the workplace. After a 6-week search and many interviews, Cris finally interviewed a candidate that might be the right fit. Sam Ursaline had everything needed to be successful. Sam’s résumé was incredible, but Sam’s dedication outside of the classroom to becoming a true professional was exceptional and exceeded that of other candidates. Additionally, Cris really liked the fact that Sam had developed a strong work record and had an outstanding internship in preparation for entering the workforce. The interview with Sam proved even more promising. Sam came off as incredibly genuine with a real zest for finance that Cris had not yet seen in any other candidate. Even better, Sam is graduating at the end of this semester, which would allow a rapid start in the new position . . . just when the company needed it. In short, Sam was the perfect fit for the job. Now comes the challenging part of making a hire: the offer. Cris plans to contact Sam after lunch. In that call Cris plans on offering the position and explaining the compensation package to Sam including a salary, vacation, and a summary of the benefit program offered by Greenbaum. Cris hopes that Sam, like so many others finishng their degrees, will be thrilled to have the opportunity to have a position immediately after graduation, and this eagerness for a position will allow Sam to accept the position at a reasonable salary. The following represents the constraints for the opening offer:

Salary: $50,000 to $60,000
 Vacation: 1 week after the first full year of employment. After 3 years of continuous employment the employee is eligible for 2 weeks of vacation annually. Medical/Dental/Vision: The current plan requires a monthly contribution of $150 for a single person or $200 for a family plan. The company’s contribution is $400 per month for a single person or $500 for a family. Costs here are fixed and nonnegotiable.
 Relocation: $1,500 maximum for relocation expenses.
 Signing Bonus (Optional): A maximum of $1,000 could be granted as a signing bonus but only if absolutely necessary to get the candidate to agree.
 Additional Consideration: During the interview Sam mentioned plans to marry Pat, an accounting professional who is also facing graduation. Sam did not mention Pat’s plans for the future at the time of the interview; however, in the event that Pat needs a position, Cris may be able to help. Cris knows the head of Accounting and is aware of a potential opening at the end of the summer.

Prior to the call, Cris considers options carefully. Offering too little would mean that Sam might turn the offer down outright. However, offering too much at the open- ing would leave little room to move if Sam decides to negotiate. Further was the consideration of the unknown: Does Sam, a perfect candidate, have other companies offering jobs in competition with Greenbaum?

BATNA OPTION: Cris has done countless interviews during the hiring process. Cris recognized an alternative hire in the event that Sam declines the offer, Payton Jones. In this role-play, the BATNA for the Cris would be hiring Payton. Payton is also a new graduate with far less experience than Sam. Payton does have a high class rank- ing, but the lack of professional development is a concern for Cris.


Terms

Best alternative to a negotiated agreement (BATNA): BATNA represents the option that one exercises if the negotiation breaks down. It is, in short, the back-up plan for the negotiator that would be taken in the event that the negotiation does not go well. It should be noted that, most often, the BATNA is not a monetary amount. Rather, it is an option of what one will do in the event that the reservation point (RP) is not achieved. Consider this example: Employee A has a job as a manager at an insurance com- pany where he/she is paid $80,000. The employee is happy with the job but always open to new opportunities. The employee is approached by an outside company who encourages him/her to come in for an interview. The interview goes well, and the out- side company plans to make Employee A a job offer. Employee A knows that, in order for him/her to consider leaving, that the job offer presented must exceed his/her cur- rent salary of $80,000 (his/her RP). In the event that the extended offer does not exceed the RP, Employee A will take his/her BATNA to continue in his/her current job.

Reservation point (RP). The RP is the break-off point for negotiations, that is, the time when the negotiator will exit the negotiation without an agreement. The RP is, in the mind of the negotiator, the worst-case scenario for the negotiated outcome. For example, if you were selling a car to Party A and already had an offer from Party B of $20,000, it would be illogical for you to sell the car to Party A for anything less than $20,000. Thus, during the course of the negotiation, if Party A failed to offer more than $20,000, you would then break off the negotiation and either sell the car to Party B or keep it on the market in the hope of getting more. It should be noted here that the RP is a very firm position set during the pre-negotiation planning phase and is completely immune to the influx of new information presented by negotiators during the negotiation itself.

Target point (TP). The TP is the aspirational point set by a negotiator during pre- planning. The TP is, in the mind of the negotiator, the best-case scenario that he/she hopes to achieve during the negotiation process. A key criteria for setting this point is that the TP must be aggressive but realistic. For example, if you are negotiating the price of a new Ferrari, it would be aggressive to think that you could buy it for $100.00, but it would not be realistic to do so. Setting an appropriate TP results from assessment of the scenario faced and proper outside research.

Pre-Negotiation Plan Questions

Answer the following Question and upload to Canvas

Your role play position:

Summary of Negotiation Who are the participants in the negotiation? What is the situation? What is the reason for the negotiation? 


Issues What are the issues for you in this situation? What might the issues be for the other party(s)? 


Strategy What is your BATNA(s) and why? What is your Target Point and why? What is your Reservation Point and why? 


Goals (Content, Relational, Identity, Process) What are your goals? What are the goals for the other party(s)? 


Problems and Planning What potential problems and roadblocks can you envision? What are your plans to deal to with any roadblocks?