AKA: Setting the Bar, Comparables
Description: Benchmarking is one of the smartest -but most under-used - tactic on the list. You are establishing how “normal” gets defined by picking the external, objective index or measurement you’ll use to set value. Are your key variables tied to inflation rates, the price of oil, top-line sales, or bottom-line profits? The person who sets the benchmarks - the jointly accepted measures of value — gives himself a huge advantage. And the person who thinks that you don’t need benchmarks put himself or herself at risk.
Sample usage (Alvin and Bob): Alvin and Bob are meeting to discuss the size of Alvin’s compensation package after ClausTech absorbs his company. Alvin set the benchmark as a percentage of the big sale – putting his cut in the $ 0.5-1.5 million range. Bob was using Dice.com, a hiring board for entry-level techs, as his benchmark so he was thinking of $37 an hour range. There was still a long way to go before this negotiation even got started.