Having Uncomfortable Conversations About Money

http://blog.quoteroller.com/2013/09/19/uncomfortable-conversations-about-money/

by trcull • 13 years ago

55 12 13 years ago

blog.quoteroller.com

msacca• 13 years ago

Some really good reminders in here - thanks for posting

jonnathanson2• 13 years ago

A lot of good points, but this one I'm not sure I can agree with:

"Back yourself into a coner - Nothing makes asking for more money easier than not having an alternative."

Maybe that makes the conversation more urgent and steels your nerves. I could see how there'd be a psychological benefit there. But the best way to build leverage in a negotiation is to have a strong hand before starting the negotiation. This concept is known in behavioral sciences and business theory as BATNA ("best alternative to a negotiated agreement"). In layman's terms, it's your Plans B, C, D, etc. The stronger your backup options, the better your position in the discussion.

This correlates with the market-based theory discussed in the article ("If you can find someone to pay you X, you're worth X"). You increase your chances of getting X if you can get Backup Y as close to X as possible.

Glassdoor is extremely helpful for leveling a lot of the information asymmetries that push a money discussion in the employer's or client's favor. But Glassdoor isn't the same as leverage. Just because a typical Role X makes $Y doesn't mean you are entitled to that...unless you convince the market that you should be, i.e., by getting someone to give you that much (or more).

chatman• 13 years ago

Exactly! Having more alternatives makes it easy to talk about money more openly and calmly. You are assured you have nothing to lose, and so does your manager.

NovemberWest2• 13 years ago

If one of your biggest obstacles to financial success is personal discomfort with the social/emotional piece, being cornered is an excellent experience for getting over it. I am going through that currently. It really is helping me change things about myself I have long been frustrated with but could not figure out how to change. So it kind of depends, I guess.

jonnathanson2• 13 years ago

I totally get that, and I respect that line of thinking. It's a psychological/motivational thing. But if you've got no other options, keep that in mind. You are playing at the table with a weaker hand, and you run the risk that the other side will call your bluff.

At the end of the day, whatever works best for someone works best for him. I would just caution against intentionally backing oneself into a corner. Sometimes we do our best with our backs against the wall, but that doesn't mean we should seek to put ourselves in that position.

Amadou• 13 years ago

Here's my personal anecdote:

When I was working as a consultant I literally doubled my rates in the space of two years by simply not caring if I lost any gigs because of it and that was staring with a hourly rate of 3 figures.

At the time I was following the advice I had picked up from other consultants - never leave money on the table. I had enough money in the bank to retire indefinitely, but instead of simply walking away my aim was take as big a cut of the pile as I could get it.

Five years later I was sick as hell of the work, so I did walk away but the opportunities in that niche were rapidly fading by that point. There was probably less than a year's worth of work left anyway.

agibsonccc• 13 years ago

This forced me to get over my "let's engineer this new feature today!" and caused me to multitask on sales better. You have a fair point about having a winning hand so I actually sat somewhere in the middle of: I have no choice but to do this OR fall back to this within x period of time.

I think there's an advantage to this though.

peter_l_downs• 13 years ago

    > I’ve done plenty of business with friends. In fact, the 
    > majority of my business has been with friends or 
    > acquaintances. Some of those friends even stopped using 
    > me when I raised rates over the years and they’re still 
    > my friends. I’m having drinks with one of them tonight, 
    > in fact.

I'm happy that doing business with your friends worked out in this case, but in general I'd tend to stay away from it. Nothing can ruin a great friendship like money.

mikitamikado• 13 years ago

It is hard to build sales and marketing channels when you're just starting up. That is why majority of us start with closest circles - friends, family, friends of friends and friends of family... In many cases doing business with friends is inevitably.

ivv• 13 years ago

Why should conversations about compensation be uncomfortable at all? You are not begging for a handout, and are likely not imposing any undue hardship on the other side. It might be personal for you; for them, it might be just a line item.

switch007• 13 years ago

Because many employers, from the moment they hire you, endeavour to create the illusion they are giving you a hand-out, that they are oh-so-generous and that you're lucky to have a job. When I tell colleagues that it's a fair and equal exchange of their compensation and your labour, I get blank stares.

Having Uncomfortable Conversations About Money

Related Stories