Big Sister plays hardball

    I was taught another lesson in business negotiating the other day. It was painful, primarily because I was outwitted by my big sister.
   I didnít think she had it in her. She had always been the most gentle, least aggressive member of the family. Money, business and ruthlessness have never had any allure.
   She even lives in Berkeley Ė and likes it. If only her neighbors knew they were living next to a greedy, heartless capitalist.
   I never knew. She set me up. It took 39 years of careful planning, playing the loving sister, but she got me. I was lucky to escape with my business intact.
   It started a couple of months ago, when I had an opening for a part-time sales position in my very small wholesale division. It didnít require much time or sales ability Ė ideal for my sister, who had little of either.
   It also paid a commission of 15 percent. That was the deal. It had always been that way. There was nothing to negotiate. Or so I thought.
   My sister was thrilled when I asked her to take over the position. As the mother of four young children, it would be excellent supplemental income. As long as her Berkeley neighbors didnít know she had sold out, everything would be fine.
   She immediately charged ahead with the work. She called me after the first week, very enthusiastic.
   "This is the best job I ever had," she said. "I just made $800 in one day. I wanted to thank you again for the opportunity.
   I quickly calculated at 15 percent commission, the amount of sales required to net $800. It was about two monthsí worth. Something was wrong.
   "How did you calculate your income?" I asked, gingerly.
   "I took the price we paid and subtracted that from the price we sold it for," she said.
   My head dropped to the desk, phone still at my ear.
   "My sweet sister, that is the gross profit," I explained. "Thatís what my company makes before all the other overhead costs, like rent."
   She didnít respond.
   "Dear sister, if I paid you the gross profit," I continued, "there would me no company."
   Long pause. Finally, she spoke. "But I made the sales."
   "Thatís right," I said. "And Iím paying you a 15 percent commission."
   "But I did all the work!"
   "I know, but itís my company. I have to make something."
   Another long silence. I wasnít getting through to her. Worse yet, I was beginning to feel guilty.
   "Look, itís not my fault. I explained everything to you when you took over the job."
   She ignored me.
    "If I didnít make $800, how much did I make?" she asked.
   "About $100."
   "Thatís all!" she cried. "But I did all the work. Thatís not fair."
    I was at a loss. She had misunderstood the whole concept. Her first foray into the wicked world of business had been a depressing disaster. The poor woman.
    "Okay," I said, with great resignation. "Iíll raise you to 20 percent commission, but I canít do any better than that."
    She sensed that she wasnít going to get more, and quietly got off the phone.
    I still felt guilty. Somehow she had left me with the impression I was taking advantage of her, despite the raise. It was only then that I realized her brilliance.
    What a negotiating ploy! I had always been taught to put as many cards on the table as possible, to ask for the unreasonable, but few would have the gumption to demand the entire business for nothing.
   By doing so, and then feigning hurt and huge disappointment when it was not forthcoming, she strengthened her bargaining position immensely. Raising her commission from 15 to 20 percent seemed like giving up very little when faced with her demands.
   The woman was ruthless. She even had the nerve to try it again a few weeks later. This time I was ready for her. 
    "Would you mind," she said sweetly, "if I make up some invoices with my name on it and sell to some of the accounts myself. That way I wonít be using your company name."
   I didnít bother asking for the logic. Itíll be another 39 years before I fall for that one.

 

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