Full Text – Margaret Neale on Negotiation – Getting What You Want at Stanford
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Margaret Neale – Professor of Management, Stanford GSB
You’ve got a job offer and now you have a choice: negotiate or not. If you decide not to, and your buddy who got the same offer negotiates and gets a $7,000 increase. By the end of 30 years, your buddy will be making $100,000 more a year than you. Think about that.
My husband is a trained chef. Do you know that chefs don’t have recipes for all those sauces. They know the structure of the sauce, and so regardless of the ingredients that they have, they can make a great sauce. And that’s what I want for you. I’m not going to give you a recipe for a particular negotiation. Rather, what I want to do is give you the structure of a negotiation, so that you can be successful, regardless of what you face.
I want to propose a new way of thinking about negotiation, and what you’re trying to achieve in that negotiation. And then what I want to do is give you four steps to help you be more effective in getting what you want. Folks typically see negotiation as an adversarial process, and are uncomfortable because they’re concerned that other folks will think of them as too demanding, too greedy, not nice, or socially awkward. What I want to do today is get you to change the frame of how you think about negotiation. Moving it from an adversarial process to one that is problem solving. And, problem solving is collaborative. I want to solve our problem in a way that’s good for you, but also gives me more of what it is I want.
When we negotiate most of us view the goal of a negotiation as to get an agreement. This is wrong. The goal of a negotiation is not to get a deal. The goal of a negotiation is to get a good deal. We need to be able to separate what a good deal is from what a bad deal is. So, that means we need at least 3 pieces of information. The first thing we need to know is, what is our alternative? What happens to us if this negotiation fails? What are we left with? What’s the status quo, or what alternatives exist for us? And, the research is very clear. He or she with a better alternative does better.
Secondly, we need to know what our reservation price is. What’s the point at which we are indifferent between saying yes, and invoking our alternative. And when you negotiate, it’s critical that you understand where that reservation price is, because that’s that point at which you are indifferent, where a no looks as good as a yes.
And the third point, which is really important, and one that people often overlook, is that not only do we have to think about our alternative, and our reservation price, we also need to think about our aspiration. What is an optimistic assessment of what it is we can achieve in this negotiation?
So how do you get more of what you want? Let me suggest that four steps will help you. The first step is to assess the situation. Is this a situation where I can have influence on the outcome? To change that outcome in a way that makes me better off? And, I need to weigh the potential benefits from negotiating with the potential costs for negotiating. And, will the benefits outweigh the costs?
The second step is, I need to prepare. And, they’re really two aspects of this step. Number one, I need to understand what my interests are. What I’m really trying to achieve in this negotiation. And, the second component is I need to understand the interests and preferences of my counterpart. Many of us may understand what our interests are, but few of us actually understand at a deep level what the preferences and interests are of our counterparts.
Third, now comes the ask. Engage with your counterpart. Look at these disputed, social situations as opportunities to negotiate. You have information that your counterparts don’t have. And, this is what you bring to the table. If they knew all your information, if they knew your perspective, they don’t need you. Because you have unique information, and because they have unique information, that’s where the value is created.
Fourth, you need to package. Now what do I mean by that? Most of us when we negotiate, negotiate issue by issue. This is a really bad strategy, because when you negotiate issue by issue, every issue is adversarial. You either win or lose. When you’re packaging issues you now have the opportunity to trade among the issues. So, think about proposing solutions. Alternative solutions to your counterpart, in packages. And to help you out, because your counter part will probably want to negotiate issue by issue, think about using if then language. If I give you this, then I get that. What you’re doing is you’re yoking various issues together into a package.
To get more of what you want there are four steps. Assess, prepare, ask, package. To give you an example, my dean recently sent me an email indicating that I would have to be going from five courses a year to six courses a year. Because he had received information from the Provost that we needed to be consistent in the amount of contact hours, and course credit. I was not happy about that email. So, my response was, I think I need to talk to my dean. Let’s negotiate. But, before I started a negotiation, I thought hard about why was he doing this? What was in his interest? His interest was probably, to make sure the provost was happy. What was my interest? Not to move from five classes to six classes. And it turns out I teach two different types of classes. MBA electives, and then some specialty classes. There are lots of folks who teach MBA electives. There are very few folks who teach specialty classes. So, I thought I should focus on the specialty classes.
So, then I went for the ask. I set up a meeting, and part of that meeting was to verify the information that I had gathered in my planning session. And, it did turn out to be true. He was interested in making the provost happy, so then came the proposal that packaged our interests. He said he wanted consistency between contact hours and credit. So, what he did is he changed the credit to match the contact hours. I suggested, why not change the contact hours to match the credit? Because it turns out that in my courses, in my specialty courses, we always went over. So, while they were three hours, it was common that we would go for 3 and a half to 4 hours. So, let’s make them 4 hour courses. And, keep me at 5 rather than move me to 6.
He said to me, I never even thought of that, and why didn’t he? It wasn’t that weird. Because he didn’t have the information that I had, that my classes routinely ran over. And, so when I gave him that information, it created a solution that made him as well off as he was, and made me a whole lot better. By the way, I was the only faculty member to get an exception. And why did I get an exception, because everybody else had the same email? For two reasons. One, I decided to negotiate. And, number two, I provided him with a solution that made us both better off.
So, what are the unique opportunities and challenges that women face when they negotiate? Let’s start off with an example that’s pretty far away from what most of us think about as negotiations. In 2006, the U.S. Tennis Open’s Grand Slam Tournament got some new technology. And, for the first time, they were able to replay the calls. And, so they allowed the players to challenge the calls of the referees. Now it turns out, that over the course of the entire tournament, about one third of the challenged calls were given to the player. But interestingly, if you divided up the number of challenges by gender, it turns out the men challenged 73 calls, while the women challenged 28. Now, we can come up with all sorts of stories about why men’s tennis is different from women’s tennis. Men’s tennis is faster. Maybe the judges make more mistakes. Maybe the judges are paying more attention to the women. Maybe. But three times difference in the number of challenges? Women are simply uncomfortable with asking. Expectations drive behavior. If we expect to do poorly, we will behave in ways that ensure a poor performance. This was demonstrated in a piece of research that I think is very telling.