Monthly Archives: July 2015

Doing your fair share in the workplace: How to respond to someone else’s first offer

Posted on by
3

At some point or another, by choice or by assignment, most of us will start a work project with someone we don’t really know. Having launched such a project, a perennial question quickly blooms: “Who will do what?”

Making sure you do your fair share—no more, no less—is far from easy. But it’s negotiable!

For the purpose of today’s example, suppose you work in an organization (it doesn’t really matter what kind), and your boss has asked you to complete a big, difficult, time-consuming project (again, it doesn’t really matter what kind) with a peer named Sally from another part of the organization. You’ve just met Sally, exchanged some pleasantries, and scoped out the project. Now, the perennial question is blooming, the crickets are chirping, and both of you are looking at each other deciding whether to make a suggestion.

If you read the previous post on toddlers, you already know that the best response is probably to offer a suggestion in the form of a first offer. But you won’t always have that luxury. At least some Sallies will move first. Today’s post will discuss what to do if you have to move second—that is, how to respond to a first offer, particularly if:

  1. It sounds really good, or
  2. It sounds really bad.

So what do you think? What if Sally proposes a division of labor that seems embarrassingly easy for you and uncomfortably hard for her to accomplish? Stupid question, right? Shouldn’t you just say “absolutely” and call it a day?

Not so fast. My coauthor Adam Galinsky and his colleagues have shown that immediately accepting an advantageous offer is not such a good strategy. Why? Well, put yourself in Sallie’s shoes. What does she think if you—with a gleaming smile, even before the words have entirely left her mouth—enthusiastically agree to her division of labor on this big, difficult, time-consuming project? She thinks: “&$%#@*.” A bit more scientifically, she has what’s called a counterfactual thought: “I must’ve really made a stupid offer if you were so happy about it and eager to accept it.” Amazingly, Galinsky and colleagues’ research shows that you can not only make Sally happier by negotiating with her (and thus allotting even more work to her); you can also do better for yourself.

Now, please don’t get carried away with this strategy. If you think Sally actually made a mistake in her proposal, you should instead try to correct it. You still have to work with her, and you still work in the same organization after all. Or, if you think it would be greedy and unethical to push her harder, then don’t—just make it look like you’re putting up a fight. But, whatever you do, the research suggests that it’s a bad idea to accept someone’s advantageous offer gleefully and rapidly.

Now on to #2: What if Sally proposes a division of labor that seems uncomfortably difficult for you and embarrassingly easy for her? Well, here, your intuition may be a slightly better guide. The best advice I can offer is a two-step process:

  1.  Chuckle or laugh, making a not-necessarily-funny joke to cut through the tension. In the summer, for example, I often joke that the owner of the building where the negotiation is unfolding must have forgotten to pay an electricity bill, as “It’s getting warm in here.” Not particularly funny, but effective for signaling the inappropriateness of the offer.
  2. Make the exact same offer you were going to make if you were able to make it first. Seriously, try to actually ignore the offer that was just made, attaching your own original offer to the end of the corny joke. Only by ignoring their first offer can you have any psychological hope of avoiding its influence.

Bottom line: when you get a first offer, whatever it is, don’t just say yes. Whether your Sally gives you an offer you love or an offer you hate, keep talking to her—knowing that you can do better or at least make her happier. Don’t get carried away and don’t take advantage of hapless Sallies. If she’s really made a mistake, tell her so and move forward under the auspices of honesty. But whatever you do, avoid the temptation to call it a day immediately after Sally speaks. That will only make Sally feel hapless, and hapless-feeling Sallies are not good—for her, you, or the project.

Have you ever made an offer that was accepted too quickly?

How to win your next dispute with the airlines

Posted on by
6

Summer is the season of vacations and thunderstorms. With both come the possibility, or perhaps the absolute certainty of unpleasant airline experiences. With unpleasant airline experiences come the opportunity to make the airlines aware of those experiences, seeking recognition or—better yet—redress.

Disputing with the airlines may be (and usually is) uncomfortable. But by describing what to reveal in the course of the dispute, this post will try to show you that even airline problems are negotiable. In particular, we’ll consider what to reveal about your alternatives (BATNA) and bottom line (reservation price).

To start the discussion, imagine the following situation (which definitely did not happen to me in May 2014, on a carrier we will disguise as Reunited Airlines).

You’re scheduled to depart lovely O’Hare Airport for Baltimore at 5 pm on Sunday afternoon. At 5, the departure time becomes 6. At 6, it becomes 7. At 7, it becomes…you get the picture. Each time it moves back an hour, it also becomes a different gate that is literally at the other end of O’Hare’s B-Concourse (which, by the way, is approximately as far as Baltimore). Feeling fatigued from your seven strolls across the airport, you can only imagine what the sweet but increasingly irritated elderly couple is thinking. Well after 1 am, you finally board the flight. Settling in to enjoy a well-deserved snooze en route to Baltimore, you discover that your crew is no longer permitted to fly, per FAA regulations. Well, isn’t that convenient. Waiting for the jetway to walk yourself back into the airport, you then learn that it’s broken. Yep, there it is, 3 feet from the plane. No worries, half an hour later, Reunited has found someone to fix it. Well after 2 am now, the airline tells you a specific gate where an agent will meet you to book a hotel room. One problem: there is no agent at that gate, or any gate, anywhere in the airport, it seems. Having literally cornered an agent who was apparently on her way home, you finally obtain a crummy hotel room on the wrong side of the tracks. Arriving at said room, it’s now about 3:30 am, by which time you could have driven to Baltimore.

Not that I’ve actually had that exact experience on Reunited in May 2014. But imagine that you did. And imagine, as so often happens, that you later get on the phone with a helpful Reunited agent in order to communicate your plight and receive some redress in the form of Reunited miles. Imagine, finally, that you’re a frequent flier on Reunited but are seriously considering switching to Outwest Airlines, which just happens to have a lot more flights from Baltimore. Unless Reunited gives you 5,000 frequent flier miles, you’ve decided that you’ve simply had it. Sounds like a reservation price (5,000 miles) and BATNA (Outwest). If you’ve been reading the previous posts, maybe you’ve also developed a goal (target); let’s call it 25,000 miles.

The question of the day is: what do you tell the Reunited agent about your reservation price and BATNA? In terms of your reservation price, do you tell them that that you won’t accept a mile less than 5,000? What happens when you do? They may well say no, as you’ve already demonstrated your unwavering loyalty through your frequent flying. But if they do say yes, chances are it will sound like this: “We are very sorry about your experience, which does not meet our exacting customer service standards. In recognition of this experience, we are prepared to offer you…wait for it…5,000 miles.” Surprise! Their offer exactly matches your reservation price. They know your bottom line; why would they offer anything more? So no, revealing your reservation price is generally a poor practice, as it gives the other side the green light to extend an offer that barely meets your minimal standards.

But what about your BATNA? Should you tell Reunited that you’re seriously considering abandoning the friendly skies in favor of the generally non-annoying, non-delayed, non-gate-changed, non-clocked-out, non-broken, non-misinformed skies? Well, if you’re seriously considering doing that, then the answer is yes. If your alternative is favorable enough that you would actually exercise it, then it’s probably a good idea to let your counterpart know—politely, of course. Indeed, the real question is not whether to reveal your BATNA, but how. I generally offer three pieces of advice:

  • Wait until the end. If you can achieve a favorable outcome without threatening to leave, that’s usually better and more pleasant for everyone involved.
  • State your BATNA indirectly. If you tell your counterpart everything there is to know about your BATNA (like the fact that you have never flown on Outwest because of Reunited’s excellent mileage program), they will be able to take a good guess at your reservation price.
  • Couple your BATNA with your target. At the same time you indirectly indicate that Baltimore is located in the metropolitan Washington area, serviced by all of the major airlines and then some, offer to take your BATNA off the table if they are able to award you, say, 25,000 miles.

So the message is this: never reveal your reservation price. It lets the other party swipe at your Achilles heel by making an offer that just kind of / sort of / barely / minimally / maybe exceeds your bottom line. But if you have a credible and strong BATNA, let them know—eventually, indirectly, and in combination with your target.

Have you ever tried anything similar with the airlines? What happened?

Four strategies to win any negotiation (especially with the car dealer)

Posted on by
2

A few posts ago, I talked about how to out-negotiate the car dealer: by cultivating your alternatives. We’ve also tried to out-negotiate toddlers (with first offers), employers (with reservation prices), and cable companies (with targets).

In all of these areas, life’s negotiable!

Yet, at this point, I need to introduce an important wrinkle: To REALLY win any negotiation, you need more than a single, simple strategy. Although each strategy will give you a great start on each problem introduced so far, life rarely lends itself to simple solutions. Ultimately, what you need is the negotiation Jedi’s ability to wield all four strategies at the same time!

Does that sound daunting? Today, you’ll see that it’s not—that all four strategies actually fit together naturally once you know how. To illustrate the connections without introducing new complexity, today’s post will reopen a problem we’ve already seen—the car dealer—briefly applying each of the four strategies to this particular problem but focusing on the overall process. The upside of brevity and reiteration is that you’ll not only learn how to master ANY negotiation; you’ll develop particular prowess at taming the car-dealing crocodile.

So, for today’s example, imagine that you’re in the market for a lovely Ford Taurus. You’ve found a stunning red model at the local dealer, priced at an attractive $25,000. What to do now? Here’s a four-step process that I would recommend for nearly any negotiation, including this one:

1. Define and try to improve your BATNA (best alternative).

As discussed in the original post on car dealers (which you should feel free to see for more information), one of the easiest and most important ways to avoid succumbing to the crocodile is to find another Taurus at a different dealer that you could buy in place of the red beauty. Better yet, find another Taurus at a different dealer that you could LOVE like the red beauty—ideally one with a similar or lower price. For example, suppose you search high and dry, finding another Taurus that—though blue—is competitively priced at $23,000. If the red Taurus is still tugging just a little bit harder at your heartstrings, the blue Taurus is your BATNA—and it sounds like a pretty good one.

2. Use your BATNA to define your reservation price (bottom line)

As discussed in the post on jobs, knowing and growing your BATNA is not quite enough: you also need to have a clear idea of what to do with your BATNA. Specifically, you need to translate your BATNA into a numerical bottom line (i.e., a reservation price) for your primary negotiation over the red Taurus. If you’d be willing to pay $1000 more for the ecstasy of red than blue, you might say to yourself: “Self, I won’t pay a penny more than $24,000 for the red Taurus.” Sounds like a reservation price for the red Taurus.

3. Define your target (goal)

As discussed in the post on cable companies, determining a bottom line is still not enough: if that’s the only number in your head, you run the risk of accepting a deal that’s kind of / sort of / barely / minimally acceptable, maybe. To avoid that kind of deal, you need to know what you really want! In other words, you need to set a target. But how to do it? In this case, the $23,000 price of the blue Taurus seems like a good place to start. Make that number your goal for the RED Taurus; think about it and focus on it instead of the $24,000 you’re actually willing to pay. Only remember the $24,000 figure at the end—to decide what to do and determine how well you’ve done.

4. Use your target to make a first offer

As discussed in the post on toddlers, your job is still unbelievably not done. Why? Because YOU know your target but your counterpart still has no idea what it might be. Unless your counterpart starts thinking about YOUR target, they’ll probably think about theirs. Luckily, there’s an easy way to bring the crocodile around to your way of thinking: by making the first offer. Before he can even snap his jaws, you should make an offer—and one that clearly communicates your target. If your real target is $23,000, you might offer something slightly more aggressive in hopes of eventually landing at your target: perhaps $22,000.

So you see that the four concepts discussed in the context of four separate problems actually apply to all four problems—and to many other problems you’ll probably face throughout life. Future posts will discuss new problems and strategies, but these four will always remain at the core.

What do you think of the four-step process?

Bring down that cable bill! Setting a target

Posted on by
15

Should I really pay that much to watch five channels? Many of us wonder with each cable bill, or at least when our contract comes up for renewal. Although few of us probably act on that thought, many of us probably should.

If we’re truly paying too much, the cable bill is negotiable!

Let’s focus on what happens when the cable contract comes up for renewal, and let’s imagine that you’re currently with Comcast. When that happens, you have a basic choice. It’s not: should I negotiate or accept it? It is: should I stay with Comcast or go with another option (Verizon, Netflix, rabbit ears)? Even if you don’t really want to go with another option, Comcast doesn’t know that. All they know is that you can. In short, and in the terminology of the post on car dealers, you have a BATNA (alternative). And Comcast knows it.

Suppose you realize you don’t really want to switch (too much of a pain), but you’re willing to switch if Comcast plays hardball. With that decision in hand, now’s a good time to determine your reservation price (bottom line; see the post on job negotiations) for the upcoming negotiations with Comcast. But it’s also a good time to determine your target: the best possible outcome you could realistically hope to achieve with Comcast. Note that this number is very different than your reservation price—it’s what you really want, not the minimum you’re willing to accept.

How do you come up with a target? One way is to identify your BATNA and “mark it up.” So try exploring what an alternative company has to offer. Oftentimes what they’re offering is a great deal! Switch to Verizon, and pay $19.99 per month for the first year! Take that number and ignore the part about the first year; make your target with Comcast $19.99 per month for the whole two-year contract.

Note again that this is not your bottom line; you’re probably willing to pay more. Also note that this perfectly ethical. You’re not misrepresenting the Verizon deal to Comcast (they already know what it is); you’re simply focusing on the Verizon deal and trying to do even better with Comcast.

Targets are stretch goals, but they’re not pipe dreams. They’re also critically important because they focus our attention on what we really want, instead of what is kind of / maybe / possibly ok. Finally, they motivate us to keep trying when the inevitable stumbling blocks arise.

So take that $19.99 target into your negotiation with Comcast, and just ask for it! Of course, they will say no, but here’s the most critical point about a target: keep thinking about it, and keep asking for it until you’re absolutely sure you can’t get it, or at least until Comcast gives you a counteroffer that’s better than your bottom line. What if they don’t? You can switch to Verizon—and you should if they haven’t done better than your reservation price. What if they clear your reservation price but don’t meet your target? You’ve already done better for yourself, and if you don’t think you’ve done well enough, you can end the call by politely indicating that you’ll “think about it.”

So next time you’re fed up with the “deals” being offered by cable companies (cell phone companies, insurance companies, car dealers), try to define an aggressive but realistic target, even while you understand your bottom line. When negotiating, forget your bottom line and focus on your target. At the end of the negotiation, recall your bottom line to determine whether the new deal is acceptable, and to bask in the glory of how much better you’ve done.