Five negotiation tips for SMMEs to ensure optimal salary reviews

As operational costs continue to spiral, managers of small businesses will be facing tough times when it comes negotiating salary increases this year. Negotiation specialist, Derek Pead outlines five points to help ensure an optimal outcome.


The almost daily loadshedding and discussions of new electricity hikes has left many SMMEs carefully weighing up their operating costs. A weakening currency, rising fuel prices and of course, the costs of labour are adding to the burden.


But it is not only business who is affected. Those fortunate enough to have a job are facing a similar increase in living costs, with many supporting family who are unemployed.


This makes for an uncomfortable tension and managers and business owners are gearing up for some of the most robust salary discussion in years.


Make it about the facts


Without stating the obvious, preparation is key.


Understanding what you have to bargain with is a good place to start. Many companies are not relying on operational data when entering negotiations. This despite the fact that our law calls for data to be used to prove a company or sector’s position. Unfortunately, far too many of our salary negotiations are currently based on emotion rather than empirical evidence.  Having realistic and accessible financial data available for all to share can bring the conversation back to reality.


Have a range of options


Take some time to speak to your employees. Get a sense of what they are most concerned with – is it really just about a number? What can you give and what will they be prepared to take?


Many negotiators (and that includes your staff) cannot separate their interests from their positions in a negotiation. Managers should not only be asking themselves “what do they want?” but also “why do they want it?”


By having more bargaining chips on the table, the ability to give and take and compromise makes the win-win solution infinitely more possible. Managers should move into negotiations with an arsenal of options which can aid the bargaining process. This can include benefits, working hours, overtime pay or incentive opportunities etc.


Work on scenarios before the time


Plan a number of shutdown moves. We’ve all been subjected to these at some time. The most common one is probably “That’s my final offer, take it or leave it!”

This is a typical shutdown move. It’s a tactic commonly used by difficult people, or by hard bargainers and is a staple when it comes to negotiations involving money.


Scenario plan ahead of meetings. Think through what an employee’s shutdown move will be and what yours could possibly be. Have a strategy to counteract these moves where possible.


You’re not talking to a cyborg


Don’t forget the softer skills. This isn’t all about playing hardball. Remember that there are people across the table from you.


Showing empathy and being assertive seem to be in conflict with each other. Many people perceive that you can’t be both, and that therefore you have to strike a balance between the two, to be an effective negotiator.

They’re wrong, it’s not a question of balance. You have to be 100 percent of both.


Empathy, in this case, does not mean feeling sorry for someone. It means fully understanding the position of another party. This is essential. The best negotiators are the best listeners.


The skilled negotiator is aware of both body language and verbal language. Negotiators need to accept that their words will be understood through an agenda filter. They need to be familiar with their language and the language of the other party.


Good managers pick great teams

Finally, good outcomes depend on choosing the negotiation team with care. Some of the best negotiators are not the ones front and centre. They take a backseat in proceedings and are able to survey and analyse the nuances of the bargaining – both from the behavior of the participants as well as the substance of the discussions.


Adversarial bargaining and opening with a list of demands has become so ingrained in our militant style of negotiations that any other way seems both foreign and even alarming to many.


This is one of the greatest proof points in favour of negotiation training and the use of facilitators. South Africans have a calcified preconception of how negotiations are meant to go – there is a winner and a loser.


Unfortunately this has been at the root of so many of the failed negotiations of late. We have become so accustomed to adversarial engagements between employer and employee that both managers and staff enter the bargaining room with the battle already half lost.


The economic reality is that SMMEs are facing a tough operational climate, but every employee carries those same worries home with them. Finding a solution which secures the future of both the organisation and the employee is the best outcome. And that depends on managers and business owners taking the time and care to fully explore what that means ahead of any negotiation.


About the author: Derek Pead is senior partner at Derek Pead and Associates, a Cape Town-based negotiation and mediation consultancy and training provider. Derek attended Harvard Law School’s prestigious Programme on Negotiation and completed their Advanced Negotiation Masterclass in 2014.

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