Having Uncomfortable Conversations About Money

Having Uncomfortable Conversations About Money(blog.quoteroller.com)

55 points by trcull 12 years ago | 12 comments

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).

NovemberWest 12 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.

Amadou 12 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.

jonnathanson 12 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.

agibsonccc 12 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.

chatman 12 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.

peter_l_downs 12 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 12 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 12 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 12 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.

msacca 12 years ago |

Some really good reminders in here - thanks for posting

> 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.