Let's take a common life decision, leaving one job for a new one. In our hypothetical case, Jane has a job she's happy with but after exploring the market she identified some other interesting opportunities. After pursuing them she's in final interviews with two other companies (we'll call them A and B) and is doing her homework to negotiate in the event any offers come through.
The first step is to set her "utility currency". This is what you'll use to score each component of your offer. For this exercise we're going to use money, but for someone for whom money wasn't a key motivator that might be the wrong way to go -- you could use generic points instead.
Jane currently has a salary of $100,000 and last year she earned $20K in performance bonuses. She's having a good year this year and expects a bonus closer to $35K and a raise to $110K, so her BATNA has a compensation of around $145K. She'll evaluate competing offers accordingly.
Jane identifies the following criteria as important to her decision:
- Growth potential. Jane's current company is large but it's also a family business. Some non-family members have reached high levels within the organization but Jane is concerned that she may not be able to accomplish as much as she'd like there. Company A offers more normal growth potential and Company B is particularly exciting because she'd be reporting to a woman who was a longtime client and who has an excellent reputation as a career mentor. Jane estimates that the improved growth prospects are equal in value to $20K in salary at Company A and $40K in salary at Company B.
- Commute. Jane's commute currently takes over an hour each way and combined with long work hours has been taking a toll on her outside life. Company A is only ten minutes away; Company B, unfortunately, is almost an hour and a half away. Jane estimates the commute difference as worth $30K in salary at Company A and -$10K in salary at Company B.
- Vacation time. Jane's family has two traditional events each year, both of which take up a week of vacation. Jane is also passionate about travel and really values the five weeks of vacation she has at her current job. The HR representatives at A and B have told her that new employees only get three weeks of vacation. Jane is very concerned about this; she would rate four weeks salary as -$15,000 and three weeks is almost a deal-breaker. She reluctantly puts it as -$50,000.
A real job evaluation would likely consider more -- possibly many more -- factors than this. How many you include depends on personal preference but you should try to include all significant factors. Once you have a list and start scoring them you may decide to drop some. For example, Jane might have included "quality of nearby lunch options" and then realized that this only scored at $500 which would be rounding error compared with other factors.
Jane's scoring matrix now looks like this:
| | Company A | Company B |
| Salary | Offer - $145K | Offer -$145K |
| Growth | $20K | $40K |
| Commute | $30K | -$10K |
| Vacation | -$50K | -$50K |
| Total | Offer - $145K | Offer - $165K |
The total line is how much better (or worse) an offer is than staying put. From this Jane can tell that any offer above $145K from Company A or above $165K from Company B has a positive score and thus seems better than her BATNA of staying where she is. More importantly it's a useful tool for negotiating with her new company and for creative problem-solving on her own.
Let's start with the commute. Once Jane has it down on paper that she'd give up $30K in salary to shorten her commute she might think about moving. There aren't any places she'd like to live that are closer to her current company but there's an attractive neighborhood close to Company B. Rent is likely to be $15,000 a month higher but that's still a net improvement of $15,000 ($30K value of short commute less $15K in higher rent) instead of the negative $10,000 if she were to stay where she is. Thinking through her priorities thus led her to realize that what looked like a drawback could be converted into a positive.
Fully understanding her interests might lead Jane to improve her BATNA as well. Either before or after she gets an offer, Jane may decide to talk to her manager and explain that limited career prospects are playing a significant role in her considering a different firm. It's possible that they'll want to keep her and will find a way to give her confidence that she can advance there.
Then there's vacation. Jane really cares about her travel time; going from three weeks to four is worth the equivalent of $35,000 in salary to her and a fifth week is worth another $15,000! Recognizing that should guide her in her negotiation but it also suggests a possible solution if the three week policy is indeed firm -- her contract could include two weeks of unpaid leave. If her compensation is roughly $3K per week, then taking two weeks of unpaid time costs her $6K compared with her current job, which is much better than $50K.
Assuming Jane gets an offer from Company B, this problem solving suggests a different scoring matrix:
| | Company B (original) | Company B (revised) |
| Salary | Offer - $145K | Offer -$145K |
| Growth | $20K | $40K |
| Commute | $30K | $15K |
| Vacation | -$50K | -$6K (assuming 2 unpaid wks) |
| Total | Offer - $145K | Offer - $84K |
One last point. A scoring matrix is only as accurate as the assumptions used to make it. It should be reviewed and challenged and you should never forget that it's a tool. For example, if Jane gets an offer of $90K her matrix gives that a positive score but such a significant drop in salary might indicate that her new firm sees her playing a less important role than she anticipates.
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