This is a negotiation for a job offer. You are playing the role of the job...

 

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This is a negotiation for a job offer. You are playing the role of the job candidate about to graduate from IEN School of Business. Your studies have been focused on finance and marketing. You have had 4 interviews, but the position you are most interested in is a role at McKinley Consulting, a prominent international consulting firm. You are especially interested in this firm because you see an opportunity to utilize your recent experiences in healthcare, as they have a division devoted to this industry. Your preliminary interviews went well and they have sent you an offer. It mentions the starting salary ($90,000), start date (Sept 1), a generous benefits package and signing bonus (no details on the last two). It says nothing about moving expenses, PTO, location, or the division you will be assigned to. You have an offer from another consulting firm for $93,000, which you think is too low, especially given the meager benefits (retirement matching at 1:1, capped at 5% of annual salary) and PTO (only 1 week off). The other offer is also for a job in Boston, which is far from your family, but they did offer to cover 100% of your moving expenses. You are prepared to accept a position with McKinley Consulting, contingent on your ability to reach agreement on these eight issues (discussed below). On your "Candidate's Payoff Schedule" the 8 issues to be negotiated are listed separately. Along the left side under each issue are five different types of agreements, which could be reached. The number of points you will receive for each type of agreement is given on the right. You should note that each issue has a different degree of importance to you, as indicated by the magnitude of the number of points you could obtain. Although using points in a negotiation may seem somewhat artificial to you, there are a number of reasons for doing so. First, it helps you weigh the issues relative to one another and to see the potential trade-offs among them. Second, having a point system allows you to have objective criteria for evaluating how you are doing in the negotiation. That is, you could set a target in terms of how many points you would like to achieve in the negotiation, you could set a reservation price (RP) in terms of the lowest number of points you would be willing to accept before you declare an impasse and seek agreement with some other firm. The goal for you in this negotiation is to achieve as many points as possible. The assumption underlying this goal is that an agreement that maximizes your point total would have the highest subjective utility to you. On the other hand, negotiation assumes give and take and your aspirations should be reasonable (i.e., assuming you could reach 100 points - the maximum possible for you - is unrealistic). After all you WANT this firm to hire you and you WANT to have a positive working relationship after the negotiations are over. Being overly aggressive or intractable in your positions would not be in your best interest. Some underlying reasoning for why you value the different issues and options within the issues as you do is provided on the next page. However, in role-playing negotiations, it is not possible to provide all the potential information or reasoning that you may require. Thus, you may have to improvise and embellish in the course of the negotiation. This is permissible, but please do not change the basic structure of the negotiation (like saying you have another firm who will pay you $300,000 to start). The issues in order of importance to you 1. Salary: This issue is most important to you. You have been in school the past 4 years and have some loans to repay. Also, you are aware that the salary you accept here sets a benchmark for the rest of your career. You have information from other students in your program that consulting jobs like this usually start between $100,000 and $125,000 and given your GPA and your experience, you see no reason why you should accept less than $115,000. 2. Signing Bonus: Signing bonuses are commonplace in the consulting industry. For the reasons mentioned above it is important that your bonus be high, particularly if you are not able to negotiate the salary you would like. You have also heard that a candidate's signing bonus serves as a benchmark for later performance bonuses, which makes this even more important if you plan to stay at this firm in the long term. 3. Job Assignment: McKinley has 5 divisions in their company. Each handles a different type of client. Division A is the health care division (hospitals, insurance and pharmaceutical companies). Division B is the retail division (chain stores, online retailers). Division C is the international division (all foreign clients, mostly in Asia). Division D is the tech division (games and other software development) Division E is the hospitality division (hotels, restaurants, attractions). Before you went back to school to finish your BA, you worked for Kaiser Permanente for 6 years and you think this experience would be valuable as a consultant. Given your background and credentials it would be disadvantageous to you to be anywhere but Division A. 4. Moving Expenses: With a consulting firm of this size and reputation you expect nothing less than 100% of moving expenses to be paid. 5. Starting Date: Of the five dates suggested the one most preferred by you is July 1. You graduate in May and the sooner you can start generating cash the better. Even though a summer vacation would be nice, you simply can't afford to not be working this coming summer. 6. Paid Time Off (Vacation, Sick, Personal): Five weeks of paid time off would be great. You know that it is unlikely that you will start with this many days but you certainly want to try for it. 7. Location: Of all the locations you could be offered, San Francisco is the most preferred. Atlanta might be okay too if you were going to be traveling to Europe a lot. You definitely want to avoid the Midwest. 8. Benefits: The five different levels of benefit packages McKinley provides from most to least attractive to you are listed below. You realize that plans A and B are usually reserved for senior people who have been with the firm some time. And even though you'd like to get the most benefits you can, right now you are young and this issue is of least importance to you. Plan A: Retirement plan matching at 3:1; Stock purchase matching at 2:1 Plan B: Retirement plan matching at 2:1; Stock purchase matching at 1:1 Plan C: Retirement plan matching at 2:1; Stock options vested after 6 months Plan D: Retirement plan matching at 1.5:1; Stock options vested after 1 year Plan E: Retirement plan matching at 1:1; Stock options vested after 2 years Please become very familiar with the payoff schedule below. The highest number of total points you can obtain from this negotiation is 100 and the lowest number is 35. DO NOT AT ANY TIME TELL THE OTHER PERSON HOW MANY POINTS YOU ARE GETTING. ALSO, DO NOT LET THE OTHER NEGOTIATOR SEE YOUR POINT SCHEDULE. THIS INFORMATION IS FOR YOU ONLY. Salary $110,000 $105,000 $100,000 $95,000 $90,000 Signing Bonus 10% 8% 6% 4% 2% Assignment Division A Division B Division C Division D Division E Moving expenses 100% 90% 80% 70% 60% Candidate's Payoff Schedule Points 25 23 21 19 17 Points 18 15 12 9 6 Points N963 o 12 Points un85 3 14 11 Start Date 1-Jul 15-Jul 1-Aug 15-Aug 1-Sep Paid Time Off 25 days 20 days 15 days 10 days 5 days Location Seattle Atlanta Denver Chicago Minneapolis Benefits Package Plan A Plan B Plan C Plan D Plan E Points 10 8 6 4 2 Points 876 10 5 4 Points 7 6 3 P N W 2 1 Points 6543 N 2 This is a negotiation for a job offer. You are playing the role of the job candidate about to graduate from IEN School of Business. Your studies have been focused on finance and marketing. You have had 4 interviews, but the position you are most interested in is a role at McKinley Consulting, a prominent international consulting firm. You are especially interested in this firm because you see an opportunity to utilize your recent experiences in healthcare, as they have a division devoted to this industry. Your preliminary interviews went well and they have sent you an offer. It mentions the starting salary ($90,000), start date (Sept 1), a generous benefits package and signing bonus (no details on the last two). It says nothing about moving expenses, PTO, location, or the division you will be assigned to. You have an offer from another consulting firm for $93,000, which you think is too low, especially given the meager benefits (retirement matching at 1:1, capped at 5% of annual salary) and PTO (only 1 week off). The other offer is also for a job in Boston, which is far from your family, but they did offer to cover 100% of your moving expenses. You are prepared to accept a position with McKinley Consulting, contingent on your ability to reach agreement on these eight issues (discussed below). On your "Candidate's Payoff Schedule" the 8 issues to be negotiated are listed separately. Along the left side under each issue are five different types of agreements, which could be reached. The number of points you will receive for each type of agreement is given on the right. You should note that each issue has a different degree of importance to you, as indicated by the magnitude of the number of points you could obtain. Although using points in a negotiation may seem somewhat artificial to you, there are a number of reasons for doing so. First, it helps you weigh the issues relative to one another and to see the potential trade-offs among them. Second, having a point system allows you to have objective criteria for evaluating how you are doing in the negotiation. That is, you could set a target in terms of how many points you would like to achieve in the negotiation, you could set a reservation price (RP) in terms of the lowest number of points you would be willing to accept before you declare an impasse and seek agreement with some other firm. The goal for you in this negotiation is to achieve as many points as possible. The assumption underlying this goal is that an agreement that maximizes your point total would have the highest subjective utility to you. On the other hand, negotiation assumes give and take and your aspirations should be reasonable (i.e., assuming you could reach 100 points - the maximum possible for you - is unrealistic). After all you WANT this firm to hire you and you WANT to have a positive working relationship after the negotiations are over. Being overly aggressive or intractable in your positions would not be in your best interest. Some underlying reasoning for why you value the different issues and options within the issues as you do is provided on the next page. However, in role-playing negotiations, it is not possible to provide all the potential information or reasoning that you may require. Thus, you may have to improvise and embellish in the course of the negotiation. This is permissible, but please do not change the basic structure of the negotiation (like saying you have another firm who will pay you $300,000 to start). The issues in order of importance to you 1. Salary: This issue is most important to you. You have been in school the past 4 years and have some loans to repay. Also, you are aware that the salary you accept here sets a benchmark for the rest of your career. You have information from other students in your program that consulting jobs like this usually start between $100,000 and $125,000 and given your GPA and your experience, you see no reason why you should accept less than $115,000. 2. Signing Bonus: Signing bonuses are commonplace in the consulting industry. For the reasons mentioned above it is important that your bonus be high, particularly if you are not able to negotiate the salary you would like. You have also heard that a candidate's signing bonus serves as a benchmark for later performance bonuses, which makes this even more important if you plan to stay at this firm in the long term. 3. Job Assignment: McKinley has 5 divisions in their company. Each handles a different type of client. Division A is the health care division (hospitals, insurance and pharmaceutical companies). Division B is the retail division (chain stores, online retailers). Division C is the international division (all foreign clients, mostly in Asia). Division D is the tech division (games and other software development) Division E is the hospitality division (hotels, restaurants, attractions). Before you went back to school to finish your BA, you worked for Kaiser Permanente for 6 years and you think this experience would be valuable as a consultant. Given your background and credentials it would be disadvantageous to you to be anywhere but Division A. 4. Moving Expenses: With a consulting firm of this size and reputation you expect nothing less than 100% of moving expenses to be paid. 5. Starting Date: Of the five dates suggested the one most preferred by you is July 1. You graduate in May and the sooner you can start generating cash the better. Even though a summer vacation would be nice, you simply can't afford to not be working this coming summer. 6. Paid Time Off (Vacation, Sick, Personal): Five weeks of paid time off would be great. You know that it is unlikely that you will start with this many days but you certainly want to try for it. 7. Location: Of all the locations you could be offered, San Francisco is the most preferred. Atlanta might be okay too if you were going to be traveling to Europe a lot. You definitely want to avoid the Midwest. 8. Benefits: The five different levels of benefit packages McKinley provides from most to least attractive to you are listed below. You realize that plans A and B are usually reserved for senior people who have been with the firm some time. And even though you'd like to get the most benefits you can, right now you are young and this issue is of least importance to you. Plan A: Retirement plan matching at 3:1; Stock purchase matching at 2:1 Plan B: Retirement plan matching at 2:1; Stock purchase matching at 1:1 Plan C: Retirement plan matching at 2:1; Stock options vested after 6 months Plan D: Retirement plan matching at 1.5:1; Stock options vested after 1 year Plan E: Retirement plan matching at 1:1; Stock options vested after 2 years Please become very familiar with the payoff schedule below. The highest number of total points you can obtain from this negotiation is 100 and the lowest number is 35. DO NOT AT ANY TIME TELL THE OTHER PERSON HOW MANY POINTS YOU ARE GETTING. ALSO, DO NOT LET THE OTHER NEGOTIATOR SEE YOUR POINT SCHEDULE. THIS INFORMATION IS FOR YOU ONLY. Salary $110,000 $105,000 $100,000 $95,000 $90,000 Signing Bonus 10% 8% 6% 4% 2% Assignment Division A Division B Division C Division D Division E Moving expenses 100% 90% 80% 70% 60% Candidate's Payoff Schedule Points 25 23 21 19 17 Points 18 15 12 9 6 Points N963 o 12 Points un85 3 14 11 Start Date 1-Jul 15-Jul 1-Aug 15-Aug 1-Sep Paid Time Off 25 days 20 days 15 days 10 days 5 days Location Seattle Atlanta Denver Chicago Minneapolis Benefits Package Plan A Plan B Plan C Plan D Plan E Points 10 8 6 4 2 Points 876 10 5 4 Points 7 6 3 P N W 2 1 Points 6543 N 2

Answer rating: 100% (QA)

Issue 1 Salary Preferred Outcome 115000 Acceptable Outcome 110000 Reservation Price 105000 Issue 2 Signing Bonus Preferred Outcome 15000 Acceptable Outcome 12000 Reservation Price 10000 Issue 3 Job As... View the full answer