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Thursday, August 07, 2008

The Fine Art of Negotiating

I should learn how to do it sometime.

I received a cryptic email the other day: “A director we’ve hired asked for you. Please tell us your rates and fees for a one day corporate project.”

As soon as someone asks me my “rates and fees” I know they haven’t done this very much, so I responded and asked what they had in their budget. The followup email was the same: tell us how much you want. So I responded with my high-end corporate rate. Silence.

A short while later the director emails: “They don’t have a very big budget, and I’d rather work with you than the person they want to hire, so could you cut them some slack?” I’m reasonable, and I like working with this director, so I tell him sure: I’m open to negotiating.

The company calls me up. “Please tell us your lowest rate and fees, please.” My response: “Tell you what: tell me what’s in the budget and I’ll tell you if I can live with it or not.” They said they’d call me back. That was the last I heard from them.

A few days later an email came in from the director that answered a lot of questions. This company (a large internet company) had decided to produce this project in-house to save money, even though they had no idea how to do it. When asked how much the project would cost, the department head spat out a number that turned out to be about half of what the project would cost--something that regularly happens when inexperienced people try to wing budgets under pressure.*** The reason they’d not quoted a line item number to me was that they didn’t have one. They were just calling around and adding numbers up, and as long as the sum was less than their budget they felt they were okay. My rate kept pushing them over the top, and they couldn’t cut the union actors or the director, so…

In the end they hired a producer, who hired a cheap DP without consulting the director. I never had a chance unless I was willing to lowball myself right from the start--something I learned not to do a long time ago. If you compete on the top, you’re competing on ability and predictability: if the company wants a specific and very important look, you’ll provide it. If you compete on the bottom you can only compete on price--and there’s always someone cheaper. Always.

In the end, for negotiation to work, both sides have to have a position to negotiate from. Their side had no position. Hopefully I’ll have better luck with them next time.

***From now on this shall be known as “Adams’ Law of Budgeting.”

Production •

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I’m an IT (Information Technology) project manager and avid video hobbyist (lowercase ‘a’!) and I could have worked for that large Internet company. Your post is very interesting as it underlines two very different ways of addressing work organization. So please allow me to give what could have been the other side’s perspective!

They addressed their need like an IT project: define what tasks you need to accomplish, figure out how many man-days that represent, take a reasonable assumption for the average cost of 1 man-day then add expenses, and you have a budget. Once you have a go, define what resource profiles you need (*) to accomplish the tasks, call up talent houses and screen potential candidates based on previous curriculum (resume) and cost, then finally interview that happy short list and choose. If the person wrote a credible resume with relevant experience, you can easily challenge that in the interview and will usually make up your choice based on personality - do I think the person has what it takes to address this particular challenge in these particular context and constraints. People don’t need so much of a personal network to get hired, that’s what talent houses are in for.

(*) ‘Resource’ = talented professional

This is a fairly open situation, which allows people to learn and grow on every project. I’d say that 40% of people’s success in that industry is linked to proven technical skills, while the remaining 60% is tied to the ability to think right and communicate right. Hire someone who can grow on spot with relevant experience, they may serve your success better than the long-time expert.

You see, cost is a decision factor right from the start, because skills and experience levels are very much comparable among people - this is not a creative industry, it’s a plan-and-deliver industry. That’s another big difference. Very much contrary to the media community, in IT you’re not going to insist very long on hiring a quite experienced and expensive and talented expert on the belief that he/she alone will make an overwhelming difference. Because you once candidly did on another project, and that guru just ended up ruining team morale and client communication.

So how do you save the project? That’s where the 2 industries ultimately concur: when all management keeps talking and talking with no clue what they are talking about and Titanic is heading towards its iceberg, you hire a talented project manager (you would call him/her Producer?) and he/she is going to address the right people mix within budget and schedule. And in the end, this is not going to deliver any better than the project manager’s own abilities and talent, within the budget and schedule constraints that he/she is allowed which ordinarily won’t move.

Sounds familiar?

P.S: I love the blogs at ProVideo Coalition, esp. yours and Adam’s. Thank you so much for all that you share, keep it up.

Posted by Stephan  on  08/07  at  11:22 PM

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In this business we’re not ITs, we’re ETs. Emotional Technicians. Our job is not just to provide you with the info its to make you feel the information and have that change you in some way.

I’ve worked with a lot of large corporations that didn’t understand that and wondered why their communications never worked as well as they should.

A college degree and a good resume is no guarantee of of the ability communicate feelings or ideas.

Posted by davhud  on  08/11  at  10:42 AM

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