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I was taught another
lesson in business negotiating the other day. It was painful, primarily
because I was outwitted by my big sister.
I didn’t 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 – 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 didn’t require much time or sales ability – 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 didn’t
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
months’ 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. "That’s what my company makes
before all the other overhead costs, like rent."
She didn’t 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."
"That’s right," I said.
"And I’m paying you a 15 percent commission."
"But I did all the work!"
"I know, but it’s my company. I
have to make something."
Another
long silence. I wasn’t getting through to her. Worse yet, I was
beginning to feel guilty.
"Look,
it’s not my fault. I explained everything to you when you took over the
job."
She
ignored me.
"If I didn’t make $800,
how much did I make?" she asked.
"About
$100."
"That’s
all!" she cried. "But I did all the work. That’s 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. "I’ll raise you to 20 percent commission, but I
can’t do any better than that."
She sensed that she wasn’t
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 won’t be using your company
name."
I didn’t bother asking for the logic.
It’ll be another 39 years before I fall for that one.
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