Increased talent competition may have more candidates “bluffing” during negotiations.
Imagine you are in negotiations to hire a new IT manager. You have arrived at a fair deal, but before you can get the agreement in writing, your would-be employee tells you that she has received an offer from another firm. The other offer pays 5% more and allows her greater flexibility to work from home than your package does. She asks what you can do for her.
Your workplace culture may pride itself on transparency, trust and integrity. But this negotiation is an arm’s length process with someone you do not know well who is not yet part of your culture. What to do?
Post-pandemic talent markets are bringing a host of negotiation challenges like these to HR executives. Surveys suggest as many as 40% of workers are actively seeking better pay and more flexible work-from-home policies. In such an environment, you can expect some bluffs about “other offers.”
Below, I explore three ways to respond. Which one suits you and your company best?
Option 1: Get Over It
The first option is to treat negotiations as if they are sporting events with their own set of rules. I call this the “poker player” school of bargaining ethics. Even between close friends, bluffing is part of the game of poker. The same can be true for negotiation.
Sunday New York Times “Work Friend” columnist Roxane Gay recently answered a question from an upset hiring manager (I’ll call her “Beth”) that perfectly summed up this attitude. Beth suspected that “Mary”—a writer being recruited to join her team—had made up a phantom “other offer” to bump up the salary in the package she had been offered. Mary had verbally accepted Beth’s offer. Then she bypassed Beth by approaching the lead HR person in the process with information that she now had another offer paying an additional $10,000. Beth thought this was outrageous, but her team voted in favor of upping the current offer by $5,000. Mary immediately accepted. Beth asked Roxane Gay if she was right to be upset by this sequence of events.
Gay advised Beth to get over it. Gay wrote that Mary would “not be the first nor will she be the last person to manifest an imaginary job offer to negotiate higher compensation.” Gay continued: “It sounds as if [Mary] was savvy, did her homework and shot her shot.” Beth should “move on. You’re still the boss.”
The good news about Option 1: You will not be disappointed about human nature if you accept Gay’s approach. The ancient Greeks had a saying that nicely captures her attitude: “The market is a place where people go to deceive each other.” May the best bluffer win.
The bad news: Once a person demonstrates that they will lie to your face to get what they want, that can be hard to forget. After Mary joins the team, Beth will need to have some heart-to-heart conversations with her about trust and collaboration.
Option 2: Call Their Bluff—Ask to See the Other Offer in Writing (and on Letterhead)
At the Wharton School, where I serve as a senior faculty member, we have a straightforward policy about the “other offer” move. It covers both recruitment and retention cases. If you claim to have another offer, show us the letter. Not an email. Not a recollection of a phone call. A full-fledged, signed letter on the other institution’s letterhead. No letter, no bargaining leverage. This rule has the virtue of de-personalizing what can be an awkward conversation in which one person claims to have another offer and the other person says, in so many words, “I don’t believe you.”
The good news: Once we communicate this policy, it eliminates bluffing about other offers.
The bad news: By forcing the other party to bring a formal offer to the table, you may encourage them to get deeply committed to someone else’s recruiting process. That gives your rival a chance to win them over.
Option 3: Negotiate (Explicitly) About the Ethical Standards You Apply in Your Negotiations
A variation on Option 2 that does not require written proof of another offer is to discuss, early on, your firm’s straightforward approach to employment negotiations. Explain that trust and transparency are key parts of your firm’s culture that guide this process. You can bring up the “other offer” move explicitly and forecast how you plan to handle it. This may sound awkward, but it need not be.
Here is an example of such a pitch.
We will be sending you a formal offer later today. But before we do, I want to share a brief word about who we are as a company and how that connects to the way we negotiate with future employees. We try to apply the “honesty and transparency” value of our Code of Conduct in everything we do, including negotiations. So, you can expect to receive what we believe to be a genuinely fair offer based on the best information we have about the standards in our industry. Once you have a chance to review it, we invite you to flag anything that appears to diverge from industry standards as well as any special items you would like to put on the table. We are wide open to any additional information you can give us about your needs as well as the market.
I do have one request: If you have any other offers in hand or are expecting one in the near future, now would be the best time to tell me about these. We will try to be honest and transparent on our end, and we are relying on you to be the same.
The good news: You reduce the chance of bluffing by explaining your ethical standards, giving them the chance to affirm your approach, and asking up front about other offers. If they have one, you can explore exactly what they are and from whom—but without using the more demanding “show us written evidence” approach.
The bad news: The other party may still try to bluff by throwing a late-breaking offer into the mix. If they do, you can ask why they failed to mention it earlier. If you think they are playing you, you can always revert to Option 2. And if they cannot provide written evidence of the offer, you can explain that this has put a new issue on the table: trust.
Negotiations can be ethical minefields. But they need not be anxiety-provoking if you know what your ethical standards are and how you plan to apply them. The way you negotiate with “outsiders” ought, in my view, to be an extension of how you work with your existing colleagues every day.
Richard Shell is the Thomas Gerrity Professor of Legal Studies, Business Ethics and Management at the Wharton School of the University of Pennsylvania. An expert on negotiation and leadership, his most recent book, The Conscience Code: Lead with Your Values. Advance Your Career (HarperCollins Leadership 2021), tackles the problem of creating and maintaining an ethical culture.