By Amy Gallo (Harvard Business Review)

Most people have been asked that perennial, and somewhat annoying, question: “Where do you see yourself in five years?” Of course it is asked most often in a job interview, but it may also come up in a conversation at a networking event or a cocktail party. Knowing and communicating your career goals is challenging for even the most ambitious and focused person. Can you really know what job you’ll be doing, or even want to be doing, in five years?

What the Experts Say

In today’s work world, careers take numerous twists and turns and the future is often murky. “Five years, in today’s environment, is very hard to predict. Most businesses don’t even know what’s going to be required in two or three years,” says Joseph Weintraub, a professor of management and organizational behavior at Babson College and co-author of the book, The Coaching Manager: Developing Top Talent in Business. While it may be difficult to give a direct and honest response to this question, Weintraub and Timothy Butler, a senior fellow and the director of Career Development Programs at Harvard Business School, agree that you need to be prepared to answer it. And you need to treat any conversation like an interview. “Every person you talk to or meet is a potential contact, now or in the future,” says Weintraub.

The first step is knowing the answer for yourself. “It’s a very profound question. At the heart of it is ‘where does meaning reside for me?’” says Butler. You have to clarify for yourself what you aspire to do with your career before you can communicate it confidently to others.

Be introspective

Figuring out the answer to this question is not an easy task. “The real issue is to do your homework. If you’re thinking this through in the moment, you’re in trouble,” says Butler. In his book Getting Unstuck: A Guide to Discovering Your Next Career Path, Butler cautions that you need to be prepared to do some serious introspection and consider parts of your life that you may not regularly think about. “It starts with a reflection on what you are good at and what you are not good at,” says Weintraub. Far too many people spend time doing things they are not suited for or enjoy. Weintraub suggests you ask yourself three questions:

What are my values?

What are my goals?

What am I willing to do to get there?

This type of contemplation can help you set a professional vision for the next five years. The challenge is then to articulate that vision in various situations: a meeting with your manager, a networking chat, or a job interview.

If you don’t know, admit it

Even the deepest soul-searching may not yield a definitive plan for you. There are many moving parts in people’s career decisions — family, the economy, finances — and you may simply not know what the next five years holds. Some worry that without a polished answer they will appear directionless. This may be true in some situations. “For some people, if you don’t have the ambition, you’re not taken seriously,” says Weintraub. But you shouldn’t fake it or make up an answer to satisfy your audience. This can be especially dangerous in a job interview. Saying you want P&L responsibility in five years when you have no such ambitions may land you the job, but ultimately will you be happy? “Remember the goal is to find the right job, not just a job. You don’t want to get it just because you were a good interviewee,” says Weintraub.

Know what they’re really asking

Butler and Weintraub agree that while the five-year question is not a straightforward one. Butler says that hiring managers rely on it to get at several different pieces of information at once. The interviewer may want to know, Is this person going to be with us in five years? “The cost of turnover is high so one of my biggest concerns as a hiring manager is getting someone who will be around,” says Butler. There is another implied question as well: Is the position functionally well-matched for you? The interviewer wants to know if you’ll enjoy doing the job. Weintraub points to another possibility: “They are trying to understand someone’s goal orientation and aspirational level.” In other words, how ambitious are you? Before responding, consider what the asker wants to know.

Focus on learning and development

You run the risk of coming off as arrogant if you answer this question by saying you hope to take on a specific position in the company, especially if the interviewer is currently in that position. Butler suggests you avoid naming a particular role and answer the question in terms of learning and development: What capabilities will you have wanted to build in five years? For example, “I can’t say exactly what I’m going to be doing in five years, but I hope to have further developed my skills as a strategist and people manager.” This is a safe way to answer regardless of your age or career stage. “You don’t want to ever give the impression that you’re done learning,” says Weintraub.

Reframe the question

Research has shown that it’s less important that you answer the exact question and more important that you provide a polished answer. Enter the interview knowing what three things you want the interviewer to know about you. Use every question, not just this one, to get those messages across. You can also shorten the timeframe of the question by saying something like, “I don’t know where I’ll be in five years, but within a year, I hope to land several high-profile clients.” You can also use the opportunity to express what excites you most about the job in question. “In any competitive environment, the job is going to go to someone who is genuinely interested and can articulate their interest,” says Butler.

Principles to Remember

Do:

First, do the contemplative work to develop a personal answer to the question

Understand what the interviewer is trying to gather from your response

Shorten the timeframe of the question so you can give a more specific and reasonable reply

Don’t:

Make up an answer you don’t believe in

Provide a specific position or title; instead focus on what you hope to learn

Feel limited to answering the narrow question asked — broaden it to communicate what you want the hiring manager to know about you

Case Study #1: Know where you thrive

Bob Halsey found out about the opening of associate dean of Babson’s undergraduate program the same way everyone else at the school did — through an email announcement. He had been on the faculty as a professor of Accounting for 12 years and recently had taken on the role of chair for that department. Prior to his academic career, he had been in the corporate world, holding a CFO position at a retailing and manufacturing company and working as the vice president and manager of the commercial lending division of a large bank.

The associate dean job appealed to him because it was similar to the positions in which he’d thrived in the corporate world. Reflecting on his years of experience, Bob knew he most enjoyed being in a supporting role, rather than the top gun. While an associate dean position is often seen as a stepping-stone for those who eventually want to become dean, Bob wasn’t interested in that. He didn’t want to be the center of attention, now or in the future.

Plus everyone at the school loved the current dean, Dennis Hanno, and Bob knew it would be unpalatable for him to talk with the nominating committee about eventually unseating Dennis. When asked about his future plans, Bob was clear: “I said, ‘I’m not coming in with any designs on becoming dean. And if Dennis leaves, I will keep the train going until we get a new dean. I have always been a terrific number two. I am the person who can make your number one a success.’” Joe Weintraub, the expert from above and a member of the committee, said it was clear that Bob was passionate about the role, and the committee was impressed with his candor. He said that under other circumstances Bob might have appeared to be lacking aspiration, but in this case his response simply told them he was the right person for the job.

“When people really want a job, they tend to overpromise. I figured it doesn’t do me any good to get in under false expectations,” says Bob. “My motivation in taking this job was to work alongside and learn from Dennis.” He has been serving as associate dean for close to a year now and has found the satisfaction he was looking for.

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By Tom McKaskill (SmartCompany.com.au)

Good deals occur where parties are flexible, understand that no one wins if no deal is made and when everyone walk away feeling like they have won.

Good deals usually can be done quickly where both parties see a good result being achieved for both parties. A buyer who feels they have acquired a firm which can provide a good return on the purchase price, is a deal which can later absorb some problems. A seller who knows they achieved a sale which was worth more than the conventional financial value of the firm can also feel rightly proud of the deal. The key is to make everyone happy with the result.

Whether you are approached with an offer or you stimulate an offer by establishing the relationships as described in this process, you will end up negotiating a deal with many dimensions. Generally in this type of process it is important to meet somewhere on the same page and in the same book. If you are on another planet with respect to price and conditions, the time will be entirely wasted and both parties will end up frustrated.

In most cases, most elements of a deal are negotiable. Whatever constraints you have and whatever constraints they have in negotiating a deal should be uncovered as soon as possible. For example, you might decide you wish to retire and staying on for any period other than a short handover is not what you want.

There may be pressing family or personal reasons for your decision but it may be sufficiently important for you not to wish to compromise that part of the deal. It may be important for you to have some guarantees of further employment for some of the staff. The buyer may wish to have a guarantee that certain key staff stay on for some minimum period. Whatever these issues are, they should be set out before the serious process of negotiation begins because they help to determine whether they can be met.

I like to think of a deal as representing a certain target value to the buyer. That value represents their view of the balance between the risks in the deal and what they are prepared to pay for the opportunities it represents to them.

They will have perceptions of risks based on industry and personal experience. Part of the entrepreneur’s negotiating objective is to show how the risks have been minimised or removed and how the buyer can fully exploit the potential.

Imagine the target value as a point on a continuum which moves down with higher risk and up with greater opportunity actualisation. The initial task is to move the point up as high as possible by reducing risk and showing greater potential realisation.

Once the best price which can reasonably be expected is offered, you can start to break that value, the ‘deal value’, up into deal elements. The deal value can then be carved up in any number of ways but, at this point, the pie does not get any bigger.

With this approach, both parties can start to set out where they want the value to be spent.

The deal value may be achieved by the seller at some period in the future based on certain conditions being met. To the extent those conditions can be met, the buyer is normally willing to make available the whole deal value. However, to the extent it cannot be met or is not met, the deal value is reduced by some amount representing the cost of correcting the shortfall or the opportunity cost of not having that advantage.

Some minimum level of performance may not be negotiable. So, for example, if the deal depends on certain key employees staying on after the acquisition, additional incentives may be offered to them to gain such assurance. You should consider this additional incentive as a deduction from the deal value, but perhaps essential to satisfy the buyer. Some period of non-compete may also be required to prevent the key managers and shareholders from joining the competition or setting up a new company in competition. If three years was the desirable period but the sellers want only two, the deal value should be reduced by some amount representing the additional risk faced by the buyer.

This framework can provide a workable method of negotiating elements of the deal. Any reduction in risk moves the final deal value up, although this may appear as an increase in the purchase price to the seller. Any increase in risk or reduction in the ability to exploit the opportunity simply reduces the deal value.

In order to fully achieve the value from the deal, the buyer may wish the seller to complete R&D projects, sign up key customer contracts, cancel or negotiate specific obligations, negotiate redundancies or relocate staff. These could be framed as staged payments, earnout or fixed payments on achievements. In other words, the final acquisition price can be made up of many elements, each of which has a fixed or calculated value, which can be paid out in stages or accumulated to an end point and then paid out in some mixture of shares and cash. The period can be relatively short if it is expected that key objectives can be determined quickly, or it could be over a number of years if it requires a considerable period for the objectives to be achieved.

Elements which may be included in the final deal may include the following:

Base Price:

This should represent the minimum that will be paid for the firm. It may be subject to adjustments through a balance sheet audit which will verify valuations and liabilities. It also may be subject to adjustment through warranties and representations for some specified period of time. The base price may be offered in the form of shares in the acquiring corporation, or cash or some combination of both.

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