How to negotiate your compensation (with a French angle)

Jan 27, 2015
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win-loseAs a new year begins, the time is appropriate to prepare for an annual professional assessment. This should involve an introspective self-assessment, to reflect on one’s professional ambitions and career trajectory (a process I strongly endorse, at least one a year). For salaried workers in France at all levels, the yearly assessment usually also involves an annual performance review with one’s employer (annual bonus periods in French companies typically occur in around January or May, depending on which bonus calendar the company follows).

In the case of the latter, this is the appropriate time to enter another compensation negotiation.

I chose those words deliberately: compensation, because I do not necessarily mean a monetary raise; and negotiation, because I am not referring to throwing a tantrum or going on strike to demand higher pay.

Negotiation is often misused, I submit. Often the term good negotiator is attributed (or self-attributed) to someone who is tough and wily, who approaches a discussion around compensation as adversarial, with a goal of getting the most for himself while granting his adversary the bare minimum. The self-styled tough negotiator will exploit his dominant power position, leverage information assymmetry to overcomplicate things, make vague promises that are easily watered down, wear down the other party through time and attrition (an old KGB tactic), or other techniques. In the case of a compensation discussion, the employer usually holds the power position, but this scenario can also apply to negotiating terms of a VC investment, where the investor usually holds the power over a startup with a burn rate and a finite cash runway.

Heads I win / Tails you lose…

However, I would argue that the scenario I just described is not negotiation. It’s a heads-I-win/tails-you-lose approach to a business transaction that only makes sense in one specific case: if the business exchange is a one-off deal and neither party will ever interact again afterward.

On the other hand, in cases where the ongoing relationship between the parties matters — where the game is repeatable as game theorists would say — smart, rational actors will realize that only a constructive negotiation in the true sense of the word serves their mutual best interests. I would argue that a venture capital investment falls into this zone, as it lays the foundation for an ongoing partnership between the investor and company management. The employer/employee relationship is also a repeatable game, as after the employment contract signing, the two parties will remain linked in some way professionally. Performance reviews and the ensuing compensation discussions may occur annually, but every business day of the following year the two parties will continue to work together. Bosses exploiting their power position in these discussions short-sightedly fail to acknowledge the hidden costs of creating an unmotivated workforce.

When I first moved to France 14 years ago, the stark contrast in management styles relative to anglo-saxon workplaces represented one of the many aspects of culture shock. I recall once naively suggesting the implementation of a 360-degree feedback review concept only to be condemned for blasphemy. Fortunately, I’ve evolved (as has the accepted thinking on management techniques in France). In the second part of this post, I’ll attempt to synthesize my learnings into a handful of concrete, actionable suggestions which are hopefully beneficial to employees and job-seekers at many levels. To be continued…