What’s Better in Negotiations: Logic or Emotion?

What’s Better in Negotiations: Logic or Emotion?

Sean: Hey guys, welcome back to the show, Sean here. And for today we have Mr. Mark Herschberg. Guess what? It’s already past midnight in his time because we’re recording it at 1:00 PM here in the Philippines and we’re on a 12-hour differential mark with him. So we are very happy, I’m very grateful that he made time for this.

He’s the author of the book, the ‘Career Toolkit: Essential Skills for Success That No One Taught You.’ It’s out on Amazon. You may want it – you might want to check it out, buy the ebook or buy the hard copy there. Just grab it, if you like the show, if you’ve learned a lot, this episode is just going to be like a piece, a small piece, a small part of that book.

He’s also a fractional CTO, which means he’s a CTO for a lot of companies, which is very. And he’s an MIT instructor and an event speaker, and we’re very grateful and honored to have him on the show today. Mark, thanks for being here.

Mark: Thanks for having me. It’s my pleasure to be here. And I am excited to be speaking with folks in the Philippines.

Sean: Yeah. Awesome. So let me start with the question. What has prompted you to this journey where you think about why don’t I write a book on networking and negotiating?

Mark: Yeah, it was kind of an indirect path. And it began when I graduated from MIT with multiple degrees, I started as a software developer, this was during the .com era. I realized early on, I liked programming, but I wanted to move up. I wanted to be a CTO, chief technology officer. So I looked at what did that mean?

Well, being a CTO, doesn’t just mean you’re the best programmer. In fact, I’m probably a worse programmer today than I was years ago, but there were these other skills that were really necessary; leadership communication, knowing how to hire, having a good network, negotiating. But no one ever taught me these skills.

I had to develop them in myself. And as I began to explore and learn, I realized, these skills aren’t just for executives. They are for all of us. So I wanted my team to have the skills, but they too were not taught these skills from school. So I had to create training programs for them.

Now, shortly after I did this. MIT, which is a wonderful institution – world-class technology, engineering, science education, but they were getting feedback from corporate America saying we are struggling to find people who have these skills, leadership, communication, team building.

And this isn’t an MIT problem. Similar responses, similar feedback to colleges, all across the US these are the skills companies want, but it’s not being taught. So MIT began to put together a program like this. And when I heard about it, I reached out. I said, you know, I’ve been doing this in my company for a while. Can I help? And they said, ‘yes, please.’

So I helped create that program. They invited me to teach, which I’ve been doing for the past 20 years. And having done it now for decades, knowing how important these skills are, knowing how to teach it, knowing what are the salient points. I know these skills are not just for MIT students. They are universal for everyone.

So I want to put it into a book to make it accessible globally.

Sean: That is amazing. And so I want to rewind a little bit, cause I checked your LinkedIn profile and you got a whole slew of different experiences in there. I’m wondering, have you ever been employed full-time?

Mark: Oh, yes. Plenty of times. Sometimes I’ve been full-time as just a contractor, but full-time with one company.

 Other times I’ve been a W2, that’s an accounting term for, I am a full-time employee here in the United States with this employer and I work full-time for them.

Sean:  What allowed you to finally say to yourself, ‘I want to be my own boss, or I don’t want to answer to anyone, or I just want to try this out, and start something for myself.’

Mark: Well here, the fractional CTO consulting has just been, because I knew I wanted the flexibility, so I could go on podcasts like this one and just get out there and talk to people about the book and really leave some time for that.

When you’re full-time with one company, they typically want you, 40 hours a week, even more. So right now I’ve got a little more flexibility, but honestly, I don’t make a distinction because if a company hires me as a full-time CTO, they say, ‘Mark, your job is to be the CTO and you have to do these things. You have to lead these people. You have to come up with these plans. That’s your job.’

If someone hires me as a consultant, they say, ‘Okay, Mark, your job is to lead this project and figure this stuff out.’ Same thing. The only difference really for my taxes is how I’m getting paid. In the US when you are a full-time employee, they withhold some of your taxes. You get certain benefits, they put things into your retirement account, they pay for your healthcare.

When you’re a contractor, they just give you cash and say, that’s all on you, but they supposedly give you more cash. They do give you more cash to make up for it. That’s really just how you want to balance the compensation.

I don’t really see a difference between the two and by the way, when I am a manager and a leader and I hire people, I don’t say, “Oh, we’re going to do this for the employees. And that for the contractors.” I might pay them differently from an accounting standpoint, but I treat them the same on my teams.

Sean: Got it. And so you wrote this book and the first thing that I noticed is the book is about. Networking negotiation, communication, and leading. I mean, it’s in the above, the fold on your website. And one of the things that’s most asked whenever I do my Facebook live or my – we call it Leadership Stack Live.

So, Mark, you went from a full-time job to now being a sort of a consultant. And here in the Philippines, we call ourselves freelancers when we start out that way. How do you negotiate -because when you usually start out as a consultant, especially if you just started out as a consultant, and when companies ask you, oh, do you have a receipt? Are you a freelancer?

You have to say yes because I’m a freelancer – I’m not employed. I don’t have a receipt yet. How do you negotiate for better rates? Because usually when companies hear that you’re a freelancer, they would expect low rates and you’re going to be doing the work for them with a good quality still; even if they’re paying you low. How do you negotiate for better rates when it comes to that?

Mark: When we look at negotiations, we often start out when we teach it with a really basic negotiation. For example, in the book, I used “buying a used car.” And now this is a very straightforward example, and in this example of the classic bizarre example, you go to the bizarre, you’re haggling.

Where are you haggling over the price, whether it’s a used car or a rug in the bizarre? Well, the seller wants a high price. The buyer wants a low price, and all you’re doing is moving back and forth on this one dimension. And we know this is what’s called a zero-sum game because every $1 in your pocket is one less than mine.

Those are actually very boring negotiations. They’re not that interesting. And really there’s not much you can do with just that, other than trying to justify why they should pay you more or less. And you can say, well, I am worth instead of X dollars an hour, I’m worth X plus dollars an hour because of this experience, this education, this whatever.

What you would much rather do is try to make it multi-faceted, try to actually see if you can negotiate on more than one dimension. So obviously the hourly rate or project prices are big, but are there other things you can bring to the table, other things you can offer? For example, if they’re hiring you, they might be hiring other contractors.

And I know if I have to hire five different people, maybe a front-end developer, some backend developers, a graphic designer, a project manager. Okay, there’s a certain rate. But if you came to me and said, here’s a group of us, we’ve actually worked together before we know how to work with each other. We’ve done projects together.

We gotta think, okay you know what? You’re all going to be slightly more efficient. You know how to work together. And if I was going to hire maybe three or four of you just independently, I might as well hire the whole batch of you. So you’re going to be a more effective team and I’m willing to pay a certain premium for that.

You might be able to negotiate time, you know, you can be available at certain hours that other people might not be. You might bring more to the table. You might say I have certain other skills. So for example, when I say, please hire me as a CTO. Well, there are other candidates who are CTOs, but I have a certain experience that they don’t have; one thing I teach at MIT.

I can help you recruit from MIT. That’s a bonus. That’s more value to them. And so that might justify more money for me. Or it might be, I have experience, I know how to build teams, and I know leadership. In fact, I have books on that could justify a higher compensation for me as well.

[00:08:53] Sean: Got it. And would you say negotiation is more of convincing from a logical standpoint whereas you mentioned earlier, I have a team we’ve worked well together and that might justify a higher value for the contract that I’m selling, or would you rather go for a more logical approach where you would say with, with this team that I have, you’re going to be more comfortable.

You’re going to be safe. Because we all know how to work with each other already. Which one would you lean more towards the rational, logical side or the emotional side when negotiating?

Mark: Well, those are both rational arguments. If you say we’re going to be a better team or we connect better or communicate better, that’s a logical argument, even though you’re arguing, there is a better emotional component to it.

Now you can use rational arguments and most of what you should do when you’re a novice negotiator, focus on that. Focus on logical arguments. And it’s always about what you want. It doesn’t matter what I want. I might want a million dollars. I might think I deserve a million dollars, but if you don’t believe that, it doesn’t matter what I want, what I think. I have to convince you. Here’s a reason why a million’s justified based on my experience, the value I bring.

Now, there are times when you do want to get emotional. I don’t talk quite as much about this in the book. There are other books. So Chris Voss, I think has a book on this topic. I haven’t read it.

He was the FBI negotiator, their lead negotiator. So the FBI, the federal bureau of investigations, he’s dealing with some gunmen, who’s taken a hostage, I’m doing business deals. I’m saying, this is why you should pay $50 million for this company. Here’s why it’s going to justify the value. We’re doing this over hours, days, weeks, most likely.

And we know we can walk away from the table. We’ll take this up next week. When you have a hostage negotiator, it is all emotional. There’s no logical appeal. He might bring in a little of that, but he knows you’re playing to their emotions. You do sometimes have that in business.

I was just advising someone on dealing with a co-founder. I said, look, logically, you should be able to do more, but everything you’re telling me about your co-founder. Your co-founder is not going to behave rationally. Your co-founder just views this in a certain way. And he’s going to draw a line in the sand for emotional reasons, and you have to decide, can you live with that or not?

So we do sometimes even businesses have to recognize there may just be an emotional tie, an emotional limit, but I would say for many of us start up just focusing on those logical arguments.

Sean: Got it really good stuff now. And I love Chris Voss. I have read his book, love the stuff there. I do use it a lot in my negotiations.

What if you proposed the value, I’m going to go back and use your example earlier and tell them I have a team I’ll work well with them. You’re going to be a lot safer and a lot more comfortable with that because we have already worked well together. We communicate well, there’s clarity, and that should allow you to rest easier if you get all of us.

There is a premium if want to get all of us here. And what if the person; the negotiation counterpart says ‘no,’ what then?

Mark: Why are they saying no? What is it that is limiting the other side, right? This is key to negotiations. You always want to get to the ‘why.’

In this particular case, is it because that person says, you know, I already have three people lined up. So this whole team, I’m not going to hire them. Okay. Maybe you can do something, saying who are the three you have, let me find two of us who will compliment them. Maybe there’s still some value there. Maybe the negotiator says I don’t want to just hire a team, blind. You seem great, but I don’t know about your friends.

Well, okay. That’s reasonable. Why don’t you meet all my friends? Why don’t you meet my colleague? And see if you like them and then realize if they all pass, you feel they’re all qualified. You can guess altogether. There might be other reasons you want to understand what’s motivating someone.

Sean: What if you have been able to sell this well. And the negotiation counterpart would say, ‘all right, I’m going to get, I’m going to get both of you,’ but I want it for this price. And it’s a pretty low price. It’s a price that’s just going to hit you in the gut. What do you do then?

[00:13:26] Mark: There’s a couple of different approaches. One is you can try to appeal to standards and say, “Well, that price that’s way too low. Look at the market. The market rate for someone with these skills, this experience, this is the rate. Sure you can find someone below market, but you’re going to get below-market quality.’ Realize just how far out market you are. I can buy a car in the US I can go buy a new car for $12,000. I’m sure. But considering the average new car probably sells for about $30,000.

What am I really getting for that 12,000 is probably going to be junk? And if I just need something to drive one mile once a week. You know, maybe, that’s a good value for me, but if I’m really driving, do I really want that low-value car? So you can use an appeal to standards. You can talk about how it’s going to impact my long-term goals.

You can also point out additional value you bring. So here I – this is a hypothetical we have, so I don’t have a lot to go on, but again, in that case where I’m trying to be the CTO, while I in these other candidates, you’ve got three of us and yes, we’re all qualified. We’re all smart. We all know the technology, but I’m the one with connections to MIT for example.

So I’m going to bring you a pipeline of MIT students. Can they do that? That makes me unique. And you weren’t even hiring for that. That certainly wasn’t in the job description. They never said help us get interns, specifically MIT interns, but now I am expanding the scope and doing so in a way that gives me the edge and justifies higher value for me.

Now that only works. If they say yes, we’d love interns. If they say, ‘why would we hire anyone from after college? We don’t hire anyone below the age of 35.’ Okay, well, there goes that leverage, maybe it’s I have connections to the MIT alumni network. Is that valuable to you? So you really want to see, can you creatively expand the pie?

And this is something in negotiations. We want to think, not just about you having that fixed pie and we want to divide it up and I want as big a piece as I can get, and you want the big piece. Can we expand the pie? Can we find other ways that together will create more value for both of us?