Tactical negotiation

Effective negotiation when the company is allocating budgets, and handling a
stagnant employee. Advice by F E (Pete) Peterson

Q: "We have just concluded our budget season and I came away from
the final meeting with nothing I had asked for. HR had to leave some important
items on the table. How can I negotiate more effectively next time?"

A: There may be larger forces that kept you from obtaining all you
asked for – the weaker economy, the business impact of international tensions,
difficult conditions in your industry. In these times, it is natural in any
company to look at expenses not directly related to customer needs. But if
after considering these factors you still believe you should have done better,
consider these tactics next time:

– Pre-sell the budget proposal. Thoroughly brief your boss and talk to
everyone on the management committee, if that is the approving body. One time I
was able to get to five of six people on the budget committee to familiarise
them with the HR budget – and of course, it was the sixth person I hadn’t
reached who challenged the budget and sent me back to the drawing board to
revise it.

– I found I was more successful if I could position the budget proposal in a
way that made it clear that budgeted items could help managers
recruit/develop/excite talent and make managers’ jobs easier. In contrast,
proposals to increase the productivity and efficiency of HR itself, especially
through IT programmes, usually met with a yawn. Senior management was primarily
interested in an HR budget showing the maximum benefit attainable company-wide.

– Show benchmark data that opens a window on to other companies’ HR profiles
and compares their performances with yours, such as headcount as a percentage
of sales or HR headcount relative to total headcount. What was most helpful in
advancing my HR budgets was if I could show comparable data from companies that
members of our management team were genuinely interested in – companies they
admired, which were known for best practices, and which often were our direct

– Be realistic. In the current economic environment, recommending expensive
software solutions and new benefit programmes might be bad timing. You can do
real long-term damage to your credibility by making unrealistic proposals. The
budget process is, after all, a key opportunity for HR to demonstrate its
ability to be a good business partner.

– If you still come up short, look for fat to trim elsewhere in exchange for
retaining something you regard as vital. And go back to step one – pre-selling
– if you feel that members of your budget committee didn’t have the right
information to make a decision in your favour. They might reconsider.

Q: "I am struggling with how to handle a long-time employee who, to
be honest, has reached his level of competence. He has recently been asking me
about his prospects for promotion. What do you advise?"

A: You have to ask yourself some questions. Is this person seeking
promotional opportunities using your job posting system and continually being
turned down? If you had a higher-level opening in your department, or knew of
one elsewhere, would you consider this person a candidate? And can you and the
organisation live with whatever level of performance at which this employee is

If the answers are yes, no and no, you have to move to a corrective action
plan. This might mean a transfer to a position where the person can be
successful – or it could result in involuntary termination.

However, if you decide the individual’s performance is acceptable, the next
question becomes: Is this a question of ability or motivation? In terms of
ability, consider what your employee has already accomplished to reach his
current level of performance. I usually had more success working with people if
I focused on what they did well rather than what they were unable to do.

For example, take a middle manager who lacks analytical ability, a problem
that reduces his promotability, but who is outstanding in producing employee
commitment. If I can help that manager further develop that asset, and help him
become a role model, that makes more sense for him and for the organisation
than pounding away at his lack of analytical ability.

If it’s a motivational issue, a comment of ‘a job well done’ can often
really excite people. A lot of power can be gained by that, especially with
employees who have levelled off. I believe that managers can do much, much more
in terms of offering informal rewards and recognition. People are more willing
to accept constructive criticism if they also receive appreciation for their

F E (Pete) Peterson is a principal of the Cabot Advisory Group
(www.cabotgrp.com), a US-based company of veteran senior HR executives from
global organisations. Cabot principals have direct experience designing and
implementing creative, practical solutions to today’s leading HR challenges.
Peterson was formerly senior vice-president HR for Hewlett-Packard

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