Many American workers don’t get raises or promotions because they don’t know how to negotiate for them. We talk to two negotiation specialists about how to approach a salary increase request, get some psychological advice on how to gain the upper hand and find out why women are good at negotiating for others, but not for themselves.
Host: Gary Price. Guests: Margaret Neale, Adams Dist. Prof. of Management at the Graduate School of Business, Stanford University. Thomas Lys, Eric L. Kohler Chair in Accounting at the Kellogg School of Management, Northwestern University. Both are co-authors of the book, Getting More of What You Want: How the secrets of economics and psychology can help you negotiate anything, in business and in life.
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Getting More of What You Want in Negotiations
Gary Price: Negotiating a good deal isn’t easy. No matter if you’re trying to get the best price on some home improvements, or convince your boss you deserve a raise, there’s always a measure of trepidation when you’re face-to-face with your adversary. Our guests say that a negotiation shouldn’t be something you dread. Rather, it should be seen as an opportunity. Margaret Neale is the Adams Distinguished Professor of Management at the Graduate School of Business at Stanford University. Thomas Lys is the Eric L. Kohler Chair in Accounting at Kellogg School of Management at Northwestern University. Together they’re authors of the book, Getting More of What You Want: How the secrets of economics and psychology can help you negotiate anything, in business and in life. To understand how to negotiate well, Neale says you need to understand what a negotiation really is…
Margaret Neale: Negotiation is influence, and we should do it because we oftentimes have better outcomes in mind than the ones we’re being offered. One of the things I think for most people is, they don’t see negotiation as an opportunity for influence, they see it as an opportunity for a battle. So it makes them a little more reticent about negotiating, but if you reconceptualize how you think about negotiation and move from this battle mentality to one of “let’s find a solution to you, my counterpart’s, problems — but a solution that makes me better off. Then the notion of being a battle isn’t so sustainable.
Price: Lys says that we often think of negotiating as getting what you want, and the heck with the adversary. This attitude usually doesn’t get you very far…
Thomas Lys: So rather than seeing, like, you want to buy a car and you want to get it as cheaply as possible, the problem is really that you want to buy a car and the dealer wants to sell a car, and how can you find a solution to this problem that satisfies the dealer’s objective and satisfies yours as well.
Price: Once you realize that it’s not just about you, Lys says it’s time to prepare. That means figuring out what the other party wants to get out of the negotiation…
Lys: Is there some common ground that could make us better off and particularly what are the issues that are very important to me and possibly of lesser importance to them and vice versa? And that will allow you to kind of maneuver a package that ultimately makes both you and them better off. Now your goal is not to make them better off. Your goal is to have them voluntarily accept your proposal. And of course they’re only going to do that if, in fact, it is in their best interests to do so. You have to understand what it is that they want, what are there limitations, what is their walk-away point and what is their aspiration. What would be a really great deal for them?
Price: Your preparation also includes your own requirements, limits and expectations. That last point can set the tone for the entire meeting, and Neale says you don’t want to sabotage yourself at the outset by selling yourself short…
Neale: There are a lot of things that psychology can help us understand, but one of the really big effects is that expectations drive our behavior. If we expect little, we get little. Now you may not get everything you expect but if you raise your expectations, on average you’ll get more. And that’s one of the real important points that we talk about in the book is how powerful expectations are to drive your behavior. Oftentimes one of the challenges people face is they don’t really have an expectation or they don’t have a plan about what they should do in the negotiation, what they should ask for. What would be a good deal for them?
Price: Lys says that your plan should include deciding on the worst deal you will accept. Don’t focus on it, but have it in your back pocket as you figure out how to negotiate your best deal….
Lys: From then on, only focus on that aspiration that you have. When you’ve negotiated and gotten the best deal you possibly can, then compare it to that reservation price, that walk-away point. And if it’s more than that, take it. If it’s less than that well, too bad, you wasted a lot of time but still walk.
Price: When you go into the meeting, who should make the first offer? Neale says that there two effects to consider in making the first offer or receiving it…
Neale: So if I make the offer, the big effect I get is that I get to anchor my counterpart. So I get to set the first position and then if they counter that offer, they are doing so in reaction to the offer I gave. So I actually have the first move or benefit. However, if I receive the first offer, then I can get information from my counterpart. Information which may be very useful to me strategically. Like, for example, they may value the issue over which we’re negotiating in a very different way that I do and that way might be beneficial to me. Let’s say, for example, you’re making me an offer for employment and you make the first offer to me, and I am stunned by the positive nature of the salary you’re offering me. It’s like way more than I would have expected. Well, if I’d made a first offer there I might have made a more conservative request which would have ended up with my getting less.
Price: And if that first offer is much better than you anticipated, should you jump at it and accept immediately?
Lys: Logically, of course you should just take it and run. The problem is that you’re going to create a lot of regret on their side. Because if they make the first offer and you simply accept it they’re going to think, “Oh, I was such an idiot. I should have offered less.” So actually, the paradoxical situation is that actually countering it somewhat and having them respond might actually make them happier and get you more of what you want. It’s the strange psychology that is at work here.
Price: If you don’t get the dollar amount that you’re asking for then maybe there are other perks that can offset the lower salary…
Lys: Value could be that I’m negotiating with my dean to get some time off. That’s value too. It is important to me to achieve that goal and when you have a negotiation, when you try to find a solution to a problem, what you’re trying to do is come up with as big a list as possible of issues that could be solved at once and allow you to just trade. And when doing so you need to find some common metric: How do I trade off time for salary? Or time for a better office or things of that nature. And so oftentimes we use dollars as a measure of value, but that’s not necessarily true.
Price: What about showing emotions? Is there crying in negotiations?
Neale: A lot of people believe that the way they should go into a negotiation is completely without emotion, that all emotion should get out of negotiation because let’s just be reasonable. Let’s just go in there. And if you make me angry, I’m not going to show it. Our emotions are actually very useful to us and to our counterparts because people convey information through their emotional responses. For example, if I’m angry you’re going to sort of take what I say in a different way than if I’m just pokerfaced. Because anger may help you figure out what I care about.
Price: Lys and Neale say that suppressing emotions takes a lot of energy away from negotiating for what you want, and it’s not very productive. In fact, showing emotions can often help your cause if you do it at the right moment…
Neale: Emotions like surprise and anger, sadness, all those things can be used strategically. And that’s another point that I think people underestimate is that I might appear angry specifically to influence you in a particular direction. My anger may be expressed but not experienced, so I just act angry. Because we do know that negotiators actually concede more, they report that they will and they in fact do, when faced with an angry negotiator.
Price: Who are the best negotiators – men or women? Neale says that when they negotiate for themselves, women end up getting less…
Neale: One of the beliefs is that our culture certainly holds is that the role of women is to make people feel good. And, by the way, both men and women believe this. This is not something than men believe and women don’t, we all believe this. If people think about negotiations as an adversarial process that certainly doesn’t make anybody feel good so we’re a little less willing to engage in such an adversarial interaction. But even more than our hesitancy, women actually get penalized for attempting to negotiate in ways that men do not. If I try to negotiate, now I use a set of words, and then I have a male colleague, Thomas for example, who uses exactly those same set of words in exactly the same situation, I’m going to be perceived as being greedy or demanding or not nice, and he doesn’t get those negative attributions. That’s point number one. But, if point number two is women typically have lower expectations on average. So if you think about this, I’m facing a harder uphill battle and I expect to get less, why bother?
Price: Interestingly, though, when women negotiate for others the tables are turned…
Neale: It turns out that if women are asked to negotiate for others, they outperform their male counterparts between 14 and 22 percent. They’re much better at negotiating for others because we don’t have that social pressure, because I’m not being greedy, demanding and not nice if I’m negotiating for my team or for my organization.
Price: So you’ve tried your best, and the deal you wanted wasn’t as good as you expected or the talks completely fell through. What is the best way to leave the meeting?
Lys: Leave that room to create the best position you can have for the next negotiation. So, for example, if you came to an agreement – it’s not a perfect, but it is an acceptable agreement – shake hands, tell them how tough and skillful a negotiator they were, and leave. If you didn’t come to an agreement say, “I’m sorry we couldn’t come to an agreement, maybe we can do so at another time.” But don’t burn any bridges.
Price: Leaving in a friendly way is especially good, Neale says, if you are in a situation where there is an ongoing relationship between you and the adversary, such as a manager and employee. If you are going to stay at the company despite not getting the deal you wanted, keep the lines of communication open and work on getting a better deal next time. For many more strategies and tactics for negotiating in business, with sales people and with your own family, you can pick up Margaret Neale’s and Thomas Lys’s book Getting More of What You Want, available in stores and online. To find out more about all of our guests visit our website at Viewpointsonline.net. You can find archives of past programs there and on iTunes and Stitcher. I’m Gary Price.