Dr. Michael Bisconti
NEGOTIATION PAGE
So how does one negotiate a rate? There are many theories on the subject
but, in practice, there are some things that hold true across the board. For example, larger consulting firms with
an established clientele tend to have more rigid policies. Start-up consulting firms are generally much
more flexible. In addition,
consulting firms almost never volunteer their client pay rates to
consultants. Fundamentally, there are
two questions that need to be answered.
IS THE CONSULTING FIRM CHARGING THE CLIENT A
FAIR RATE? If the consulting firm is not charging the
client a fair rate, their business will eventually fail. In addition, the consulting firm’s rate IS
THE CONSULTING FIRM’S BUSINESS.
Consultants should not concern themselves with this aspect of the rate
picture. IS THE CONSULTANT GETTING PAID A FAIR RATE? This is a harder question to answer. One well-known expert on this question
informs us that your hourly rate should be equal to 1/1000th of
what you would be paid yearly as a full-time employee. For example, if a full-time employee would
be paid $80,000/yr., you should be paid $80/hr. In actuality, the starting point for one’s
thinking has to begin with a “philosophical question”: ARE PEOPLE BASICALLY FAIR OR BASICALLY
UNFAIR? If you adopt the view that people
are basically unfair, you are going to spend much of your life frustrated,
angry, and ill. That alone tells us
that it is better to believe that people are basically fair. With this “fairness doctrine” influencing our
thinking, the next question is: ARE
CONSULTING FIRMS INFORMED ABOUT WHAT CONSTITUTES FAIR RATES? If they are not, their firms will
eventually fail. Your reasonable assumption
must be that consulting firms are informed about what constitutes fair rates. So where does that leave us? We start with the reasonable assumption
that consulting firms are both fair and informed regarding what constitutes
fair, consultant rates. Well, there
are a couple of other factors we need to consider – FUZZY LOGIC and THE
GAMBIT. FUZZY LOGIC In practice, all consulting firms have at
least a minute degree of leeway when it comes to the rates they pay their
consultants. PEOPLE ARE NOT STUPID
(another good principle to live by).
Recruiters are people. In the
process of discussing an employment opportunity with a consultant, they form
some idea of the consultant’s ability.
This idea, this assessment, influences them as to whether they will
pay the consultant a little less or a little more. The main point here is that all of these financial machinations
are going on in the mind of the recruiter. This means they are out of the hands of the consultant. Therefore, consultants should leave the
recruiter’s machinations to the recruiter. THE GAMBIT A “gambit” is “a chess opening in which a player
risks one or more minor pieces to gain an advantage in position.” A recruiter usually asks “What rate are
you looking for?” Whether they know
it or not, they are making a gambit.
If the consultant gives a rate that is too low, the recruiter can make
more money for his firm. The risk for
the recruiter is that the consultant will quote a rate that is too high. In that case, the recruiter will either
make less money for his firm (a negative) or have to tell the consultant that
their rate is too high (another negative). What can the consultant do? Prevent the gambit. Don’t answer the question. Simply respond with: What is your best rate for this contract? If the recruiter does anything but answer this
question or promise to answer this question, THEIR TRAINING IS
INCOMPLETE. You should look for
another recruiter. FURTHER INSTRUCTION The simple principles presented in this
article are enough to handle 90% of the situations that you may face. The other 10% require more
sophistication. You may learn how to
deal with these remaining situations on the following, password-protected
pages: THE
MIDDLE GAME and THE ENDGAME. |