It was the phrase of 1997: “Show me the money!” And though the words came from the movie Jerry Maguire, they originated in the world of Leigh Steinberg, agent to the sports élite, who was the model for Tom Cruise’s character and whose office memorabilia doubled as that of the movie’s fictional agent. Steinberg, 49, has been negotiating high-profile, high-stakes contracts for 24 years — ever since he stumbled onto the field of sports law by helping out Steve Bartkowski, a fellow University of California graduate who became the top NFL draft pick in 1975. Bartkowski landed what was then the richest rookie contract ever — $650,000 for four years — and Steinberg began his career as a sports lawyer.
Now Steinberg’s firm, Steinberg & Moorad, represents more than 100 athletes and negotiates multimillion-dollar deals for such clients as Troy Aikman, Steve Young, Drew Bledsoe, Warren Moon, and Ryan Leaf. Sensing the growth of the free-agent market in the business world, Steinberg is now exploring ways to expand his practice to include negotiating on behalf of the talent that companies need to attract. As a lawyer and a businessman, Steinberg is involved in several high-tech ventures, including Interplay Productions Inc. (a video-game publisher), MotionVision Inc. (which sells sports trading cards that show athletes in action via digitized video), and EastSport (which puts sports programming on the Web).
What distinguishes Steinberg’s sports-representation practice, however, is his approach to negotiation. To Steinberg, negotiations are a part of everyday life, and they need to be handled with a clear focus and a principled philosophy: “The goal,” he says, “is not to destroy the other side. The goal is to find the most profitable way to complete a deal that works for both sides.” Steinberg insists that his clients look at their negotiations, and at their athletic careers, not just as tests of talent but as tests of character as well. He also encourages them to “give back” part of their huge paychecks to their community — by establishing foundations or by contributing to causes.
In the recently published Winning with Integrity: Getting What You’re Worth Without Selling Your Soul (Random House, 1998, written with Michael D’Orso), Steinberg lays out his philosophy of business, his approach to negotiating, and his techniques for achieving positive results. To find out how you can get people to show you the money, Fast Company interviewed Steinberg in his office in Newport Beach, California.
Everyone Is a Negotiator
We’re always negotiating, every day of our lives and in every kind of situation — whether it’s a boyfriend and girlfriend deciding which movie to see, a husband and wife deciding which city to live in, a customer looking to buy an automobile, or an employee trying to get a raise. We all negotiate. But many of us still have a fundamental fear of negotiation. That fear can make us act meek and obsequious — which means that we’re likely to end up with our goals unmet. Or it can make us behave aggressively and angrily — which could break down the discussion altogether. Anybody can learn to negotiate. There is no magic. There are no mirrors. What you need is an understanding of human psychology and an open mind. You need to be able to listen and to have respect for the other person in the negotiation. You don’t need to be the stereotypical tough guy. You need to look at negotiations as a process that can be exciting, as an opportunity to improve your condition or to enhance your situation, rather than as a terrifying confrontation.
First, Negotiate with Yourself
The first key step is introspection. You need the clearest possible view of your goals. And you need to be brutally honest with yourself about your priorities. There are no perfect situations in life, so you will need to make choices. If you don’t face that fact, you run the risk of cognitive dissonance: You’ll feel increasingly torn between mutually exclusive alternatives, and you’ll become more and more confused. That confusion leads to stress, and since the human psyche can withstand only so much stress, you’ll be tempted to make a decision — even if it’s the wrong decision — just to relieve that stress.
So you start with a comprehensive personal inventory: What do you value most? Is it short-term gain or long-term security? Is it the ability to live or work in a certain geographic area? Is it the culture of your company or the attitudes of the people you work with? Is it a high degree of autonomy or an opportunity to be creative? Is it something as simple as the hours you work, the amount of vacation time you get, or the size and quality of your office? In this constellation of values, each factor may be important. But the question is, What is most important? Before you enter a negotiation, you need to establish your priorities.
Move from Your Values to Your Value
After you’ve come to terms with your own values, the next step is to understand your value in the world. What are your unique skills and talents? Are you irreplaceable because of those skills and talents, or could anyone fill your slot? To answer these questions, you need to do some research into your own performance — and there are all sorts of tools that you can use. There are internal and external documents that address the issue of employee value, and sometimes you can get actual employee ratings. You can also get important information by talking and listening to other people: What is the market for your services outside your company? What are employees paid at other, comparable companies?
You also need to do research on the person you’ll be negotiating with. What is his agenda? How much authority does he have? Is he attempting to impress his boss? What is his track record? Can you find out about previous negotiations that he has been in? What are his negotiating tendencies?
Next, assemble that information into a document that tells your story. Think of it as equivalent to the storybook that I create for a sports negotiation: My document details, say, a quarterback’s efficiency rating — his completed passes, his touchdowns versus interceptions — as well as his team’s overall performance. Your document could include charts that show how productive you’ve been: This is where sales stood the day I began my job, and this is where they stand today. That’s the story of your personal performance. You could also discuss company goals and performance.
But remember: Make sure that this is a confidential document, particularly if it contains head-to-head comparisons and actual rankings. You don’t want it to create problems with your coworkers. The important thing is to present a theory about why you merit a certain level of compensation or certain work situation. Your story should advance that theory.
Find Out the Other Person’s Agenda — and Embrace It
As you do your research, you must put yourself into the mind of the person you’ll be negotiating with. You need to ask yourself a set of questions about his point of view: What represents a successful result for him? What will constitute a win for him in a negotiation session? How can you make him look better?
Find out the other person’s agenda. And assume that he will be doing the same with you. You must come into a session with your homework done. Otherwise, you’ll be showing the other side a fundamental lack of respect.
Practice Dealing with Fear
Most negotiating is tap dancing on the edge of an abyss. The reality is that this may be the best job for you, this may be the most money you will ever make — and yet, if you allow fear to fill you with anxiety, it can paralyze you. So, in any negotiation, part of your mental preparation must be to deal with fear. Remember that walking away from a negotiation is always an option. You’ve got to ignore the fear that you may find yourself unemployed.
The best analogy is to the fear of death. It’s inevitable that we’re going to die. That’s a fearsome prospect, an inescapable reality. And yet the only way to live well is to come to peace with that fact and not to let it haunt your every moment. Fear comes with the territory of negotiation. But fear needs to be managed, and it needs to be kept in perspective. One way to diffuse your fear is to confront the words that make you afraid, so that they lose some of their sting. Practice saying the words that are hardest for you to hear, or that are hardest for you to say: “If you won’t take this proposal, then I guess we have nothing more to talk about.” “I’m going to have to start looking for someone to replace you.” Or, if you’re trying to get up the courage to walk away: “Obviously this is not the place for me. I’m looking for a new job.” Rid these words of their power to paralyze.
Whose Reality Will Prevail?
Ultimately, negotiating is all about whose concept of reality is going to prevail. You’re facing an amorphous, confusing situation with dozens of variables. Whose vision will prove the most compelling?
In some cases, it’s hard to know whom you’re dealing with. Is an advertising executive simply one person in a big mass of people? Is he an easily replaceable part of a system that’s been in operation for a long time? Or has he pioneered techniques that have opened up new profit centers? Has he changed the company’s bottom line? Those questions reflect competing versions of reality.
Here’s an example from the NFL. I recently finished a negotiation for Warren Moon, the quarterback of the Seattle Seahawks. Now, is Warren Moon a 41-year-old player who is hanging on by a thread and who is lucky to be employed in the first place? Should he be grateful for any money that the team pays him? Or is he a quarterback who was among the league leaders in completions and attempts last year? Is he a team leader who took a previously moribund group of players, united them, helped them have the best record that they’ve had in recent years? Is he a testament to the fact that talent can come at any age?
In our reality, Warren Moon is critical to the resurgence of his team. He makes the players around him better. And off the field, he is instrumental in selling season tickets, in filling the stands, in interacting with advertisers, and in generating ancillary revenue sources for the NFL and for his franchise — in a way that no one else can. That’s our version of reality.
It’s Not Personal — It’s Strictly Business
Negotiations can get emotional. But you need to remind yourself that they’re about business. It’s natural for someone to try to save money, so don’t let that attitude be a startling revelation when you walk in to negotiate. And remember, money doesn’t reflect your worth as a human being, your value, or whether you live an ethical life.
I know this kind of thing as an employer. When it comes time for me to talk to my employees about compensation, the same thing always happens. After I’ve rationally figured out a fair salary for someone, and then added a little more for motivational purposes, I sit down with that employee, and inevitably he starts with a figure far above what I’ve conceptualized. Now, it makes no sense for me to sit there and feel grossly offended. I have to remember that this person’s expectations aren’t grandiose. From his point of view, what he’s asking for probably makes a lot of sense.
That person may not even be saying that he really needs all that money. He may be saying that he needs more recognition. There are all sorts of things that a person may want to say, but those things are usually manifested as demands for more money.
It’s Not about What’s Fair
There are jobs that are so much fun that you would pay your boss to let you do them! But you can’t allow the discussion to turn on your personal circumstances. The real question is, What is the market value of what you do?
I recently negotiated a contract for Ryan Leaf with the San Diego Chargers. As a student last year, Ryan had been living on scholarship money at Washington State University. At a certain point in the negotiation, the Chargers’ general manager turned to Ryan and said, “How can you ask for so much? You’re going to be rich under any circumstances. All we’re talking about is how rich you’re going to be.”
There’s some truth in that. But there’s also truth in the fact that professional football generates tremendous revenue, and that players take enormous risks. I ended up getting Ryan Leaf $11.25 million as a signing bonus. But I could never have done that if the focus had been on how much he liked to play football or on how little money he had made at college — because the truth is, he might play football for nothing. That is a very important truth, but it’s got nothing to do with what’s fair in the world.
Never Split the Difference
There are many ways to negotiate. The reasonable-person theory says that a reasonable person ought to ask for money or conditions that are very close to what he actually wants and that are close to what is fair. The problem is that those two things are often very different. If the market value for a service is $100,000, and the employee asks for $500,000, and the employer offers $95,000, then splitting the difference makes no sense. In a situation like that, if you simply split the difference, you’d end up with a bizarrely unfair result. At that point, the employer has to assume that he’s not dealing with a serious negotiator, because there’s no validity to the $500,000 request.
The Sad Truth of the Inevitable Fudge Factor
In most one-on-one negotiations, in which there are no other parties who might be interested in bidding on your services, my suggestion is that you start by making a proposal that is reasonable — but that has some fudge factor to it. It’s a sad aspect of human nature, but it’s a fact life: We don’t feel satisfied unless we’ve gone through a process that involves bargaining back and forth. All human beings like to feel some sense of achievement. They want to feel that they’ve won something. And they also like to justify the time they spent in the negotiating process. So you’ve got to play the game: Your first proposal needs to be higher than what you would ultimately take.
How to Deal with Deadlock
There is an absolutely predictable point in all negotiations when you appear to be deadlocked. And the question arises: Now what? First, when you’re preparing to negotiate, you should assume that this moment will come sooner or later. When it does, don’t be surprised, and don’t get frustrated. Simply assume that in any negotiation process, a schism, a chasm, a seemingly unsolvable problem will occur. Second, the key to getting through that situation is emotional resilience. You have to face the seemingly impossible deadlock, and then step back — for five minutes, for an hour, or for a couple of days. It could involve simply taking a short break, going for a walk, or moving away from the point that’s produced the deadlock, or it could involve shifting to a new setting and changing the context of the negotiation.
When you and the other party get back together, you’ll both return with new and creative ways to solve the problem. Both sides can use the break to refocus on the value that they offer each other. They can stop focusing on the specific issue that they’re deadlocked over and instead start focusing on the valuable end point of the negotiation: Someone will have a job that he loves, and someone will have an employee whom he will treasure. The goal should be to get back to the original purpose of the negotiation.
It Can Always Get Worse
There’s one last thing to remember about the hard part of negotiating, about that point when the discussion comes to a stop, when you’re thinking that you might do better to walk away than to resolve the deadlock — because, you think, things can’t get any worse. But let me assure you, they can get worse. Unintended consequences occur all the time as a result of botched negotiating sessions. Football players end up being needlessly cut from teams. Careers get cut short before people have really produced their best work.
It is not a victory to play a game of chicken and to let the two cars collide: One car gets totaled, and its driver is lying on the ground in critical condition; the other car has its steering wheel intact, and one of its wheels still works — but let me assure you that its driver is also in critical condition. He did not win. When it comes to negotiating, you can’t let the Neanderthal side of your nature dominate. You need to rise above that.
When You’re Going to Lose, Get Creative
Never push a totally losing argument to the end. When you start to face a deadlock and you know that you can’t win, it’s time to back off. That’s when you push yourself to think of a new way to solve the problem.
Here’s an example. At one point, the negotiation that I just finished on behalf of Warren Moon was breaking down. The Seahawks’ management was concerned that if it paid Warren a signing bonus, and then he retired next year, some portion of that bonus would count against the team’s salary cap — which would limit the amount of money that the team could use to sign someone else. So, for instance, if the Seahawks paid Warren a signing bonus of $3 million on a two-year contract, and Warren played for only one year, the team would be held accountable under the salary cap for $1.5 million in the second year. And since they looked at Warren and saw a player who would then be approaching his 43rd birthday, this was a serious issue — so serious that it produced a deadlock that went on for quite a while. Finally, we decided to try something different. We suggested a new provision: If Warren did retire, he would pay back a portion of the signing bonus.
We treated the team’s concerns as legitimate and came up with a way to get what we wanted: the signing bonus and the two-year contract. Instead of just speechifying, we thought of something that we could live with — something that was less than perfect but still very desirable. Often, when you get into a deadlock, that’s the moment where creativity comes into play.
A Negotiation is Not a Search-and-Destroy Mission
In most cases, a negotiation will not be the last time you interact with the other side. And since you will keep interacting with the other side, either in the workplace or in later negotiations, your goal should be to find the most profitable way to complete a deal that works for both sides. The one sure thing that I know about business is that, if you’ve got your foot on someone else’s neck, at some point in the future, that person will have his foot on your neck.
And you never want to treat any one negotiation as the last opportunity to get a fair result. If you come to what seems like a horrendous confrontation, look for a way to take care of the problem that avoids a monumental blowup. You need to look at the whole picture and at the whole relationship — and especially at your long-term interests — as opposed to obsessing over the current situation. You can’t afford to lose that perspective.
It’s Not Just a Contract — It’s Your Reputation
Let’s say that you agreed to a deal that gives you $100,000 in salary and two weeks of vacation, but the contract you get calls for $105,000 in salary and three weeks of vacation. Do you sign the contract?
The answer is, no, you don’t sign it — because those terms aren’t what you agreed to. It’s possible that, if you bring the discrepancy to the attention of people on the other side, they may feel indebted enough to do something for you. At a minimum, they will know that you’re someone they can trust. I tell the lawyers in our firm, “It’s acceptable if we don’t get every last client or piece of business that we want. It’s never acceptable if you lie to or mislead someone — that’s the one thing that can destroy what we do.”
The Art of Closing a Deal
There are a few things to keep in mind about closing a deal. Most people — especially on the employer side — will have concessions that they’re willing to offer to get the deal done. So the concept of “if it will make the deal” is always worth keeping in mind. One way of doing a deal can be first to agree on a general framework that’s still somewhat sketchy, and then to work out the rest of the deal — because at that point, conflict has been replaced by partnership, and both sides have dropped their defenses.
But you can’t allow the feeling of exultation, or of relief that the process is almost done, to dull your senses. There are critical points at the end that need to be negotiated and documented. That’s when you should draw on your mental discipline: You shouldn’t be concerned with what time the last flight leaves. You shouldn’t start thinking of what it would be like to surprise your wife by being home half a day early. You must remain focused until the very end.
This is another part of negotiating that you need to anticipate: As a deal comes to a close, there will again be seemingly unsolvable problems. One side or the other is very likely to look at some part of the deal and say, “If that’s what you meant, then the whole deal is off.” At that point, it’s important for you to provide motivation. You may need to buck up people on the other side, to encourage them to stay with the process — “Look, we’re almost done. This always happens at this stage” — because at the very last minute, charges of bad faith can surface. You started with wariness, but then you worked through it to achieve what you think is a partnership, and now, as both sides let their guards down, something arises that seems to threaten the whole deal. As hard as it may be, that’s the time for you to stay rational.
Take Time to Celebrate
Once the deal is done, remember to have some kind of a ceremonial function. Take a moment to give yourself a sense of emotional completion. Have a celebration with the other side. Have dinner together. Have a drink together. Give each other a present. Do something that commemorates the moment and makes it special. Symbolism is important.
When I finished the deal for Troy Aikman with Jerry Jones, the owner of the Dallas Cowboys, or the one for Drew Bledsoe with Robert Kraft, the owner of the New England Patriots, we all sat down together to sign footballs and jerseys. We made one memento for each of us, so that everyone had a trophy to celebrate the deal.
Did you really graduate from school if you didn’t go through your graduation ceremony? Yes. But do you have the feeling of completion? Probably not. So when you reach the end of the deal, be sure to celebrate what you’ve accomplished — and to treat it as something that both sides can feel good about.
Alan M. Webber (email@example.com) is a founding editor of Fast Company. You can visit Leigh Steinberg and his firm on the Web (www.leighsteinberg.com).