Tag Archives: alternatives

Renovating a room? Three more reasons to get multiple quotes

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I’ve previously advised you, when hiring a contractor, to obtain several quotes. And I’ve so-advised for a specific reason—a reason that most negotiation instructors would fully endorse: because you’ll then have an alternative, providing leverage over the preferred contractor’s price. But I’m here to suggest some less recognized but no less important reasons to engage with multiple parties—reasons that can easily make your contracting more negotiable.

Consider just three:

  1. You learn about the issue: We’re currently pondering a bathroom renovation and have invited several contractors over to offer their ideas. And simply by talking to several independent parties, I’ve learned all kinds of interesting and esoteric things about bathrooms—from the building codes about medicine cabinets to the standard height of a toe kick (in addition to what a toe kick is). Had I talked to just one party, I would’ve amassed few such nuggets of information—nuggets that will inevitably inform the final decision.
  2. You hear lots of ideas: You’d think: one bathroom, one set of possibilities. But then you’d be wrong. Each contractor has offered an entirely different vision for the same space, multiple layouts with markedly different advantages and disadvantages. Had I talked to just one party, I might’ve been showering in some awfully strange places or paying to move some awfully expensive pipes.
  3. You learn about your own preferences: Talk to a neoclassical economist, and they’ll probably tell you that you understand your own preferences. Talk to me, and I can tell you that, if I had any a priori preferences about a bathroom renovation, I had no idea what they were. But in the process of conversing with multiple contractors, I’ve come to develop some rather refined renovation preferences. Slate floor? Only if it’s smoothed. Oval mirror? Looks awfully nice between some rectangular cabinets. Only by talking to multiple parties did I come to understand myself.

So, talking to multiple parties is not just about driving the price down. It’s also about understanding whatever it is you’re negotiating about—as well as yourself. Without that, no discount will make your bathroom negotiable.

Success as a steadily improving BATNA

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How can you know your life is broadly successful? The question is often asked, but rarely from the perspective of negotiation research. So let me share an answer implicit in that research, an understanding of which can make life negotiable: you can measure success, in part, by the trajectory of your BATNA.

Huh? Let me explain.

BATNA, or best alternative to a negotiated agreement, is your next best alternative to any particular negotiation. Put simply, it’s your plan B. In general, successful people tend to see the number and quality of their BATNAs steadily increasing over time. Just a couple quick examples:

  • Multiple job offers: The most successful people tend to have employers fighting for their services rather than the reverse. In other words, they have many alternatives to any particular job. Thus, they have the luxury of choosing the best option.
  • Multiple life choices: The most successful people have many choices about how to live their life. They can choose to continue working, as most of us must But they can also choose to take some time off, sail the world in a small schooner, or simply take a mental relaxation break. In other words, they have many alternatives to their current way of living.
  • Multiple friends and colleagues: The most successful people have many people, both friends and colleagues, beating a path to their door—whether to have a beer or start a project. In other words, they have many alternatives to the relationships they find less than fully enriching.

Across several definitions of success, then, the common denominator is a consistently improving BATNA. So if you’re looking for a way to measure your success, you might consider the trajectory of your BATNA.

Negotiation success through graduation platitudes

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The graduation season is upon us! Setting aside all of the reasons for joy and celebration, that can only mean one thing: so is the season of the platitude-laced graduation speeches. And while few of us enjoy platitudes, many of us would probably acknowledge that they contain nuggets of wisdom. Why else would wise people keep repeating them?

Thus, in the spirit of the season and in hopes of making life more negotiable, I thought it might be useful to investigate whether the most common platitudes contain any nuggets of wisdom about negotiation. So here are five common platitudes and their implications for negotiation—all of which are surprisingly informative and eerily consistent with negotiation research:

  1. Dream big: With this omnipresent platitude, speakers advise graduates to set their sights high, shoot for the stars, aim for their most cherished objectives. And when the going gets tough, should they quit? No! Double down and try again. Well, that’s exactly what negotiation instructors have advised their students to do for decades: set aggressive targets reflective of ideal goals, then continue to doggedly pursue them—creatively if necessary—without ever giving up or giving in.
  2. Don’t look back: Quickly on the heels of the first platitude, many speakers offer the second, suggesting that graduates should not only dream big and persist, but also resist the temptation to regret “what could’ve been.” In an eerily similar vein, negotiation research suggests that people should focus on their target while bargaining, but then evaluate the agreement against their bottom line, the goal being both a great outcome and a negotiator who doesn’t look back in regret.
  3. Do what makes you happy: This common platitude advises graduates to look beyond the socially sanctioned markers of success (e.g., a big paycheck) in order to pursue their true motivations—the factors that will truly dictate their happiness or lack thereof. In very much the same spirit, Getting to Yes and nearly every negotiation course it inspired advises negotiators to “focus on interests rather than positions.” When negotiating, that is, try to satisfy your true, underlying motivations (your interests) by going beyond surface-level positions—many of which inevitably involve money.
  4. Thank the people who got you here: Speakers often ask graduates to pause their aspirations and thank the people who got them this far. Similarly, I have argued that that life is only negotiable when we occasionally stop negotiating long enough to express gratitude for the people around us.
  5. Always wear sunscreen: Perhaps this one hasn’t quite reached “platitude” status, but it sure got popular a few years back. We could dig pretty deep into the underlying meaning, but let’s just go one level deeper than the words: don’t forget to take simple steps that protect you from bad outcomes. There are lots of ways to go wrong in negotiations, but negotiation research has long shown that negotiators without alternatives almost always get burned.

So the platitudes in those graduation speeches actually turn out to capture numerous nuggets of negotiation wisdom. Something to ponder the third or fourth time you hear a speaker telling you to “dream big.”

I need more money! Five topics to ponder before requesting a raise

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“By failing to prepare, you are preparing to fail.”

–Ben Franklin

 

Despite that supposedly low inflation rate, everyone’s cost of living seems to constantly go up. With rising costs come the need for a rising income. Increasing your income, in turn, often requires you to request a raise.

Asking the boss for more money is tough! But Ben Franklin’s advice makes even the toughest challenges negotiable.

Although Ben’s quote did not appear in one of his negotiation blogs, it might as well have appeared there: preparation is probably the single-biggest predictor of negotiation success and failure, especially in important and complicated negotiations like raise requests. The real question, then, is what to prepare—what things to think about in the heart-pounding moments before the request?

Well, imagine yourself palpitating at your desk, two hours before the raise meeting. Before this or any other important negotiation, always consider the following five issues:

    • Your interests. Why do you want a salary increase? “Because I need more money!” you’re thinking, as well as, “What a stupid question!” Truth-be-told, it’s often far from a stupid question. To see why, force yourself to ask yourself “why” again. Why do you need more money? Are you planning to buy something big? Struggling to pay your bills? Saving up for school? All of these are common reasons to request a raise, but each has very different implications for the types of solutions that might satisfy you. If you’re planning to buy a house next year, an end-of-year bonus might help, but if you can’t pay your electric bill right now, an end-of-year bonus won’t do you much good. If you’re saving for school, your company’s educational reimbursement policy is probably more relevant than your paycheck.
    • Their interests. What’s likely to motivate your boss? When she initially demurs, why? Is this year’s budget already gone? Would paying you more create inequity? Is she just demurring to demur? Again, knowing why means knowing what solutions might work. If she doesn’t have any money right now, maybe she will at the beginning of next fiscal year. If it’s inequity she fears, maybe offering to assume more responsibility would make a raise more palatable. If she’s demurring to demur, maybe you should just justify your request.
    • Your reservation price. What’s the worst outcome you would accept? This of course depends on your best alternative to your current job. If you don’t have one or haven’t thought about what it might be, then you’d have to accept almost anything (or nothing) in the way of a raise. But if you have an attractive, high-paying job offer burning a hole in your personal inbox, you should set an aggressive minimum for your current company and accept nothing less.
    • Their reservation price. What’s the most they’re likely to give? This of course depends on their best alternative to you. If they could step out the front door and sneeze on somebody with your skillset, then they’re sure to act like Scrooge. But if finding another “you” would take months or years of aggressive recruiting, then they’re likely to say yes to anything reasonable you request. Most importantly, if the most they’re willing to give is less than the least you’re willing to accept, you’d better start looking for another job and/or come up with a creative way to satisfy your interests that doesn’t involve a salary increase.
    • Your target. What’s the best salary you could realistically expect? That number should be much closer to their reservation price than yours. And since their reservation price is a number that they would be willing to give, they will not be offended when you focus on it and use it to make a first offer during the negotiation, which is generally what I’d advise you to do.

 

The bottom line: in this and any important negotiation, listen to Ben Franklin. What do you think about while preparing for an important negotiation?

 

PS If you like what you’re reading and would like to learn more, I’m teaching an open-enrollment course on Strategic Negotiations in November. I hope to see you there! http://carey.jhu.edu/academics/executive-education.

How to win your next dispute with the airlines

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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?

How to out-negotiate the car dealer: Cultivating your alternatives

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My last post discussed one of the toughest negotiations—convincing a toddler to comply. This post considers one of the most feared—dealing with a car dealer. Most people would rather extract their teeth through their eyeballs than talk to a car dealer. How can we hope for a decent deal when the guy across the table is continuously snapping his jaws?

This problem is formidable, but negotiable. The key is to recognize that there is not just one guy or one table—that you (like the dealer) have alternatives.

Anytime you negotiate anything, you have a primary negotiation partner and you have a next-best alternative: whatever you would do if the current negotiation fails. Since the landmark book Getting to Yes, this alternative has been called your BATNA: your best alternative to negotiated agreement. As I usually repeat ad nauseam in a negotiation course, BATNAs are your greatest source of power in a negotiation. If you have a good BATNA, you can walk away from the current crocodile. If you don’t, he might as well snap away. So, speaking now to those of us who don’t “like” negotiating, take heart! Being a powerful negotiator doesn’t mean acting like Donald Trump; it means having a viable plan B.

I know of few negotiations where BATNAs are more important than car purchases. As the buyer of a car, you typically have multiple—often many—dealers to choose from. The single-most important thing you can do to get a good deal is to visit enough dealers (by taxi, if you have to) to fall in love with at least two cars—each at a different dealer. As I often remind my students, falling in love with one person is a beautiful and wonderful thing in everyday life. Yet, falling in love with one house, one car, or one job is almost guaranteed to make you a sucker. Why? Because if you’re head-over-heels over one car, for example, you have no choice but to submit to every snap of that crocodile’s jaws. You have to accept whatever terms they offer.

Conversely, what happens if you find yourself swept away by two cars at different dealers? At a minimum, you learn about the market. Quite often, the cars are quite similar, but one is inexplicably cheaper. I recently found the exact same car at two dealers, 10 miles apart, but $3000 different in price. That’s right, a $3000 discount, no “negotiation” in the traditional sense. In addition to learning about the market, cultivating an alternative immediately affords you confidence. With a $3000 discount in hand, I can assure you that I felt much more comfortable pushing back on the original, higher-priced crocodile. As a result, and most importantly, having a good BATNA immediately gets you a better deal. Without revealing the exact amount of the discount to any other dealers (which is a topic for another post), the $3000 discount gave me the confidence to go to a third dealer and get the same discount on the same car with better features (all-wheel drive for those icy mid-Atlantic hills).

In sum, one of the single-most important strategies in any negotiation, especially a consequential purchase, is to cultivate a good alternative, a strong BATNA. Doing that is not only effective; it’s heartening for the non-born negotiator, as it doesn’t require negotiation tactics as much as time. As little of that as we all have, I would advise any serious negotiator, negotiating any serious issue, to find enough time to find a BATNA.

Have you cultivated your alternatives in a past negotiation? How has it worked?