Negotiating with the world around us can be intimidating—until you get your bearings. I learned this firsthand one autumn day at a state park in Australia. I was with a small group of fellow graduate students, and we had all signed up to go “canyoning,” which I understood to be a modified hiking adventure. So I laced up my hiking boots and jumped into the rented van along with everyone else that morning.
Hours later I found myself midway up a canyon wall, clinging to the frail, craggy rock. Any subtle movement caused the thin outer layers of rock to break off and race toward the canyon floor. The hot sun was beating down, and I was completely alone. I was terrified, dehydrated, and suffering from a complete lack of experience. I was in trouble. Where were my fellow hikers? It turns out that they were experienced canyoneers who had scaled the side of the cliff with ease and continued to the next stage of the trek. It was nothing personal; they were simply enjoying their own experiences, oblivious to my predicament.
I knew that this was a defining moment. I had to get my emotions under control, take an objective look at the situation, and then figure out a way to negotiate the terrain. Calming myself down was the biggest challenge. Once I did that, the rest was just creating a plan and putting it into action.
That experience taught me so much about myself and about negotiating the terrain in the world around me. After all, no matter what the situation, successful negotiation begins with remaining calm, keeping your eyes on the prize, and taking action appropriate to the situation at hand. Although hanging from the side of that cliff was a stressful experience, negotiating the terms of your employment doesn’t have to be. In fact, you may even come to see it as an exciting challenge once you have a little practice (and a few victories) under your belt. It’s time to negotiate—everything!
Negotiating is the name of the game when you’re a Patchworker. Whereas 9-to-5ers generally are able to negotiate only their salary, you have the ability to negotiate everything: time, rate, location, and more. This negotiation process is the opportunity to shape your work in order to create the lifestyle you have in mind. Know your priorities as you go into a negotiation, not just the money but also the other factors that are critical to you. For example, if you want to spend the month of July backpacking through Europe, then negotiating that time off would be critical to you. Alternatively, if you want to make some fast cash in order to purchase a new car, then getting the best rate possible would be your top priority. If you have young children at home, then perhaps working from home is at the top of your list.
The negotiation is your chance to carve out work and terms that fit your Lifestyle Design, but keep in mind that negotiation is a two-way street. Be sure to listen to the potential employer’s needs as well to ensure that everyone walks away satisfied. And don’t forget to sell, sell, sell the skills that you bring to the table during this very important conversation. If you’re like me, negotiation sparks an adrenaline rush that can turn you into a freelance junkie.
Stepping into a negotiation process can be a little bit like competing in the Olympics—okay, that may be a slight over-dramatization, but in some ways it is true. Both in a job negotiation and in Olympic competition, all parties step onto the playing field ready to throw it all down and go for the gold. The gold in this case is what each party defines as “getting everything they wanted” from the deal. For example, perhaps you go into a negotiation wanting a specific dollar figure and the freedom to complete the project within a flexible timeframe. If you walked away from the table with a deal that gave you both of those things, wouldn’t it feel like it was a winner-take-all situation? Okay, so these are the things that dreams are made of the night before a big negotiation.
But did you know that Olympic bronze-medal winners, on average, are happier with their finishes than silver medalists after the competition is said and done? It’s true! Researchers say, “Take silver and you tend to fixate on the near miss. Score bronze and you are thankful you were not shut out altogether.”1 Going for the gold and falling short both in the Olympics and within the context of business negotiation doesn’t have to result in winning gold (getting absolutely everything you wanted from the process).
Simply being a finalist has its payoffs, which in a business context includes
As you begin to think about negotiating your time, rate, title, location, and other freedoms, be sure to remember that the best outcome is one where everyone walks away feeling like a winner. Although driving a hard bargain may result in you getting what you want, it may leave a negative and lasting impression on the decision maker, who may hesitate to contact you in the future. From a business perspective, it is best to negotiate fervently for those factors most critical to you and to allow the decision maker to “win” on other points in order to strike a balance that satisfies both parties.
Time is the most valuable commodity in the world. Managing your time wisely allows you to cultivate new experiences and maximize profits. Study after study shows that time is the one thing that people will gladly accept in lieu of money, and as a Patchworker you are in a position to negotiate for both!
When it comes to negotiating your time with a potential employer, it can be useful to think about the negotiation process like a game of chess:
Negotiating for time, just like chess, requires two worthy opponents to sort out how to use the space on the calendar. The more experience you have with mapping out your own schedule, the easier this exercise becomes. You will become familiar with the schedule configurations that are to your greatest advantage both economically and personally. Some configurations allow you to maximize your profits, such as scheduling work with multiple employers in a single day, whereas others allow you to maximize your free time, such as working for concentrated periods in the morning, which gives you an afternoon of leisure time. Knowing what your goals are before you go into any negotiation about your time is the key to feeling satisfied with the outcome.
If you were to head in to a negotiation at this moment, what would your goals be? Consider the following options and then write about your goals in the space that follows:
The goal of the negotiation process is to honor your Lifestyle Design by striking the balance you seek between work and the rest of your life. Negotiate with a win-win solution in mind to help both you and your potential boss feel good about the outcome, which can be critical to the health of your new business relationship.
Years ago I was floating around the Cho nôi Cái Răng, the most famous floating market in Cân Thó, Vietnam—in the whole Mekong Delta, for that matter. Local merchants were gathered in a variety of makeshift boats with their wares in tow, ready to deal. They were selling mostly what we Americans would consider exotic fruits, such as mangoes, durian, and pomelos. Those fruits are plentiful in that region, and the prices reflected how common they were at mere pennies on the dollar compared to what I paid back home in the snowy Midwest, where these fruits were rare and impossible to grow. Therefore, I was more than willing to pay an inflated rate (by Vietnam’s standards) that merchants offered upon seeing an obvious tourist.
But my guide was not about to let that happen. He was a seemingly fierce negotiator, although for me much of it was lost in translation. He would flail his hands around, shake his head, sit in silence for moments, and paddle away from the merchant as if the deal was off—all in the name of getting the best rate possible on whatever it was that I wanted to buy. This guy was shrewd! He was negotiating the best rate possible out there on the open market. The price associated with these items or any other product or service on the open market, be it in Cân Thó or in your own city, is a reflection of its quality, its uniqueness (or lack thereof), and the marketing pitch of the seller. Let’s put this in perspective relative to negotiating a rate for your own skills and services out on the open market.
How do you determine a reasonable amount to ask the would-be employer to pay you for your skills and services? What is your time worth? Are you uniquely available, flexible, and risk-free? Yes, you are! Can you close the sale with a great sales pitch? Yes, you can, because you give that speech often, and practice makes perfect! Let’s answer each of these important questions. To get you started, here are two unscientific but key considerations for developing a price you would like to pitch during the negotiation:
As you can see from the preceding points, determining the value of your skill set requires a combination of practicality and emotion. Armed with that information, you are ready to develop a pricing strategy.
Figuring out how to price your skill set is daunting for some people. Some will price themselves too low; others will overprice. The key is to figure out what is reasonable and then adjust your pitches based on the situation. For example, in the case of an emergency situation where the employer needs your specialized skills that same day or week, perhaps you charge a premium, whereas when it’s a normal hiring situation you charge your standard rate. But how do you figure out that standard base rate? There are a few commonly used frameworks:2
A classic example of project-based pricing comes from Niels Bohr, a Nobel Prize–winning physicist. He priced out a project years ago in a way that has become the stuff of legends. When asked to help fix a client’s machine, he went into the business, drew an X on the side of the machine, and then proceeded to hit the X with a hammer. That caused the machine to come to life and begin working properly. He promptly mailed the client an invoice for $10,000. Upon receipt of the invoice, the client was outraged and protested the charge. In response, Bohr sent an itemized invoice that read, “Drawing an X on the side of your machine: $1. Knowing where to put the X: $9,999.”3 The moral of the story is, sometimes a project-based pricing strategy is your best bet!
Choosing the most suitable framework in each employment opportunity that arises will become easier over time. Experience will guide you and make the decision effortless.
When I begin negotiating, I always like to break the ice with conversation that includes something along the lines of, “What is it like to work for you?” The answer and the nonverbal cues tell me a lot about how much money I need to work for that person. I like to fall silent during that part of the conversation because people tend to fill the silence with nervous chatter that can reveal more about the topic than a long line of formal questioning ever could. This moment is usually when the potential employer will make a series of off-the-cuff remarks that he or she will later regret because of revealing too much information. It’s marvelous and gives you some amazing leverage in an instant. Try it; it works!
As you sit down to negotiate your rate, there are five cardinal rules that you must keep in mind:
During the negotiation process, remember to really sell what you have to offer, including not only your skill set but also your unique Patchworker advantages such as immediacy and a simplified employment situation that is at will, with no strings attached. Most importantly, negotiate for a price that makes you feel good about working for the organization. Be willing to walk away from the table if the organization’s offer is unreasonable. Know your absolute bottom line number going in; do your best to negotiate for that number or better and be willing to walk away if the negotiation process does not yield the rate of pay you need in order to work happy.
Billy Joel had it right when he sang, “Just like a boxer in a title fight, you got to walk in that ring all alone.” When it comes time to negotiate for your title, you have to walk into the room ready to go to the mat for the designation that serves you best. The negotiation doesn’t necessarily need to be a contentious situation, but sometimes it can be.
Because a Patchworker is a nontraditional employee, the title that fits the work being done is not always a foregone conclusion. In my own experience, there often comes a moment when the would-be employer looks at me and asks, “Would you like to be classified as an employee, an independent contractor, or a consultant?” In some instances this is because the boss doesn’t care which title I choose; in other cases it is because he or she has no idea how to categorize the anticipated work.
The first few times I was asked this question, “Which title?” I looked back at the decision makers with a blank expression. Over time, however, I learned that answering that question one way or the other has definite advantages, with each employment situation being unique. Today, I deliberately research the pros and cons in advance and bring the topic up in conversation if necessary. The questions I research ahead of time cover the following topics:
Beyond these talking points, it is important to understand the fundamental differences between the three classifications: employee, independent contractor, and consultant. Let’s take a look at the pros and cons of each.
Being an employee is the classification with which we’re all most familiar so I will gloss over the description, but I will mention that holding this status as a Patchworker has these major pros and cons:
Pro: You are on the payroll and get paid like clockwork each pay cycle. This classification eliminates the need for invoicing (billing), which is heavenly.
Pro: You may qualify for limited benefits from the organization if you meet the minimum thresholds. These benefits are the equivalent of cash-in-hand compensation.
Pro: The organization calculates your tax deductions and withholds them from your check automatically. This saves you from the rigmarole of having to set aside a predetermined amount of cash in savings and ante it up during quarterly tax periods.
Pro: You reap the benefits of being affiliated with the organization if there are sporting events, health clubs, or other community vendors that provide discounts for employees.
Pro: You may enjoy some additional “buy in” from co-workers who see you as a part of their team.
Con: You likely will not be paid as well as you would be under the other two titles. Job classification standards likely set the boundaries for the upper range of pay allowable.
Con: This classification requires you to fill out a mountain of internal forms and walk through other administrative procedures those first few days or weeks on the job.
Con: The title implies a long-term commitment to a specific job, which may not be your intention as a Patchworker.
If a long-term, ongoing commitment is not a good fit for your Lifestyle Design, then consider working as an independent contractor.
An independent contractor is hired to perform a specific function in an at-will capacity. In other words, the contractor is someone who is hired for a purpose with no strings attached; the job can end at any time for any reason if either party walks away. There are no benefits offered and no liability is in play. In my experience this title is the most common among those positions you find advertised in job search engines and at freelance sites. It’s a generic term that means “we need short-term help.”
Although the title itself is lackluster and the position does have drawbacks, it also affords you some unique opportunities. Let’s take a look at them.
Pro: The position may pay higher than the typical employee rate for the same work. This classification is not constrained by a pay range, like an employee position would be.
Pro: The position allows you to sample the organization and learn about the culture and key players.
Pro: The position may lead to other opportunities within the organization if your boss and other decision makers like you.
Pro: Unlike the other two classifications, employees within the organization are unlikely to feel at all threatened by the title and, therefore, may be more welcoming and cooperative.
Pro: You can write off your expenses for tax purposes.
Con: You alone are responsible for setting aside required tax contributions from each payment you receive. Failure to pay these contributions at quarterly tax deadlines will result in hefty fines from the Internal Revenue Service.
Con: You are responsible for pursuing funds from organizations that do not pay on time or at the agreed-upon rate.
Last but not least is the classification of consultant. At some organizations hiring a consultant is commonplace, whereas at others it is unheard of. Consultants are often seen as temporary, project specific, and having little impact on the standard departmental budget because funds traditionally come out of special budget lines such as endowments, gifts, or grant money. I love those organizations; I seek them out! Those organizations typically pay consultants generously and hire them quickly. Additionally, these organizations usually hire teams of consultants repeatedly over many years.
In my own life, these short stints often last for a few months and pay me at a rate that is equivalent to working my old 9-to-5 job for the entire year! When they call, I always find time on my schedule, even if it means postponing work with another organization. Consulting work that pays well and comes around consistently is like finding the pot at the end of the rainbow, and it can evaporate just as quickly if you have limited availability. When I am on the job as a consultant, I do my best work, deliver on time, and am enthusiastic and pleasant at all times to all people, no matter what the circumstances.
I am the dream employee on purpose. But please note that I am officially not an employee; I am a consultant!
You can think about a consultant as you would an independent contractor; you won’t receive benefits such as paid vacation leave as you would if you were an employee. However, one tangible benefit that you do enjoy is operating outside of the politics and everyday drama of the workplace. Even if you physically work on the premises, you are happily insulated from some of the workplace dynamics that affect traditional employees.
For example, for several years I worked for a small organization. For some of those years my formal status was “consultant,” and for a few years it was “employee.” I negotiated each classification for various reasons that were meaningful to me. Throughout my entire tenure with that organization, with little exception, I worked in isolation from my colleagues. I don’t mean that I ran into my office and shut the door during my office hours, but after socializing a bit, I could get to work and not be subject to the standard staff meetings, performance reviews, and budget meetings. It was fantastic!
Being a consultant also affords you a higher status in many organizations because you are hired based on some specialized skill that no one else has in the organization. You are a rock star and enjoy a little fame (and fortune!) while on the job. Also, consultants that do well are often traded like playing cards, where one department will hire you when your assignment in another department ends. Consequently, you can have a lengthy assignment within an organization if you “play well with others,” as they say.
Also worthy of mention is the fact that executive-level managers sometimes share the name of an excellent consultant with their colleagues. This word-of-mouth referral can result in the Patchworker receiving unsolicited calls from organizations that are ready to hire immediately and pay top dollar. What’s not to love?
Although you can attribute many positives to being a consultant, you must contend with some negatives as well. Not all that glimmers is gold, after all. Here are some considerations worthy of note:
Pro: The rate of pay should be fabulous. Negotiate and make it so.
Pro: The emotional payoff is great; you get to be a rock star within the organization.
Pro: You can write off your expenses for tax purposes.
Pro: You can flaunt your consulting history to future employers as evidence of your known expertise in the field.
Con: People expect to get what they pay for, and sometimes they experience buyer’s remorse; therefore, you must dress, act, and perform like a superstar at all times. This can be a bit costly, in terms of wardrobe expenses, for example, and more tiring than working in the capacity of an independent contractor.
Con: Others within the organization may become resentful of your pay rate, which in some organizations is public knowledge. This higher compensation can cause tension between you and those regular employees.
Con: The work can be demanding because the employer may want to be sure to get his or her money’s worth by giving you little downtime during your work schedule. The expectations are also high, which requires you to constantly perform and churn out stellar work.
The “consultant” is the most coveted of job titles because of the accompanying prestige and generous rate of pay. As a result, the title places great expectations on your ability to perform at exceptional levels, so your boss and your co-workers may carefully scrutinize your performance. Consultants usually garner the highest rate of pay among the three titles, making it the most attractive for many. You need to decide if the consultant title is a good fit for you and advocate for yourself when it’s time to sit down and start negotiating your title.
Whichever title you choose, it is to your benefit to become educated about the pros and cons of holding the title of employee, independent contractor, or consultant ahead of the meeting with your potential employer. Most businesses have a Web site that outlines any benefits extended to part-time workers with “employee” status, along with a definition of what qualifies as a part-time employee for each perk. If the organization you are courting does not have this information available online, simply contact the human resources office and make a blind inquiry. It is time well spent.
If you have been working “down on the farm,” out of a 6′ by 6′ office cubicle for most of your life, the idea of being what cubicle dwellers refer to as free range is highly attractive. Imagine if you could work from home in your pajamas (people do that!). Or work from a remote location, such as a white sand beach in Thailand (people do that, too!). Or maybe it’s something altogether different from these two simple scenarios. Whatever your aspirations, negotiating the terms of your location is an important component of the overall compensation package. Let me share a real-life example that illustrates just how important the location factor can be:
For two years I worked as an independent contractor at a nearby college. Going in, I negotiated the terms of my location, namely that I wanted to work from home via the Internet. The supervisor was pleased to agree to these terms; it was an easy sell. I regularly enjoyed taking my laptop outdoors to work in the sunshine while I basked in the sun and tanned or to a coffee shop where I could sip a latte and listen to jazz. It was wonderful, and it made me more productive; I looked forward to the hours that I spent working on that project.
My colleague, however, did not enjoy the same location luxury. He had to report to the office during his assigned hours in a windowless office where the temperature gauge was set to “freezing” year round. While he was stuck in the office doing work that was quite similar to mine, I enjoyed working from home. Fortunately for me, he was a nice guy who was never resentful, and the arrangement was a great success for several years.
Negotiating where you work is worth the time and effort. It’s a key component to living your lifestyle by design. What did you map out in the Lifestyle Design section (refer to Chapter 6) as your ideal location scenario? Keep that picture at the front of your mind when you head in to negotiate the terms with a would-be employer. The boss may be eager and willing to make a concession about location in lieu of being able to offer you other perks or a rate of pay that would normally be expected to recruit you. This can result in a win-win situation that is good for all involved.
There are many miscellaneous freedoms that are worth rolling in to the negotiation process, when applicable. These can add value to the work experience and be the equivalent of an increase in pay, in some cases. In other cases, some factor may be worth (dare I say it) even more to you than the money. Let’s look at a few examples to get you thinking about what the “extras” are that you may wish to bring in on your mental list of demands to a future negotiation for a Patchwork position:
The idea is to cultivate professional development programs for yourself at their expense. In most cases the training programs, for example, are run by salaried personnel from within the organization, which means that the organization bears no additional costs for allowing you to attend. Therefore, the boss sitting across the table from you during the negotiation will probably not even flinch at the idea, because it doesn’t cost him a cent. However, for you the retail cost of attending the training from an outside vendor may be significant and makes this opportunity one that may even be worth taking a slight reduction in pay if it means closing the deal. Learning while you earn can be your key to staying current at an affordable price.
Negotiation is the fine art of blending what you want and what the boss wants into a finished product: the terms of your employment. Each person has an ideal in mind. However, despite the letter i before the word deal, the end game is to reach a “deal” where neither person’s goals are alone fulfilled but instead both parties are satisfied in some respects and mildly disappointed in others. The goal is reaching a deal where everyone walks away a winner to some extent.
This wraps up the “Make It Happen” section of the book, which spells out in practical terms what you would need to do to make your dream a concrete reality. You have a lot to think about and even more to do to get started, but before you do, let’s take a moment to think it through. The next section provides an opportunity for you to reflect on the demands of being a Patchworker before you make the big leap and start setting up shop.
1 Steve Wieberg, “Analysts: Bronze Medal Leads to More Happiness Than Silver,” USA Today, February 2, 2010, www.usatoday.com/sports/olympics/vancouver/2010-02-22-bronze-vs-silver_N.htm (accessed August 20, 2010).
2 Retire and Consult, “Setting Consultant Rates,” http://retireandconsult.com/cm/consultant-center/setting-consulting-fees.html, (accessed April 5, 2010).
3 Consultant Journal, “Consulting Fee Rates,” Trustmode Marketing, May 26, 2006, www.consultantjournal.com/blog/setting-consulting-fee-rates (accessed August 2, 2010).