The road to regrettable yet avoidable workplace mistakes is littered with the absence of three small words: what’s my alternative? A failure to ask this simple question, I submit, can account for a major portion of our worst workplace decisions. To avoid such decisions and make our lives more negotiable, let’s look at a few of the perils associated with failing to consider our alternatives, along with some simple examples of each.
- Walking away from a good deal. Perhaps the most pernicious consequence of failing to consider our alternatives is the risk of walking away from a positive situation. Why would anyone do that? Often because of a flurry of emotions. Consider the many regrettable instances when people mouth off to their superiors or become embroiled in workplace conflicts, thinking they can easily find another job if they have to. But can they? Unfortunately, the labor market is rarely so obliging.
- Accepting a bad deal. Quite the opposite, failing to consider our alternatives can lead us to stick with an inferior option. Consider the huge proportion of Americans who consider themselves locked in a dead-end job. Many of them certainly are, given a host of economic and social challenges beyond their control. But at least some of them are not: At least some of the people who consider themselves trapped in a dead-end job could in fact pursue a less stressful or less demanding job, or even found a viable business, if only they entertained such alternatives seriously.
- Wasting time deliberating. Many people spend a great deal of time pondering what to do when there is realistically only one thing they can do. Should I accept my boss’s offer to lead that important project? If I really have the option to decline, it’s worth the careful thought. But if my career implicitly depends on my acceptance, then it’s better to confront a lack of alternatives than to pointlessly give myself an ulcer.
- Becoming complacent. People and firms often rest on their laurels—failing to innovate or experiment with new ways of working or doing—because they overestimate the costs of failed experiments or underestimate the costs of continuing down a well-trodden path. In other words, they fail to carefully consider the alternatives to doing nothing, so nothing is often what they do.
- Submitting to whatever someone says. Many individuals and firms have their favorite vendor or preferred service provider. Look to no one else for service X or product Y! While this approach might make everyone feel good, it’s not particularly likely to produce a favorable agreement. Think about it: even if the preferred vendor is benevolent, how motivated will they be to offer an amazing deal if they know that you’ll accept their terms regardless? Not very. So it’s good to have friends, but when you are bidding for business, it’s also good to have alternatives.
In sum, this negotiation professor believes that a major swathe of our most regrettable yet avoidable decisions can in fact be avoided by considering our alternatives carefully. The next time you make that major decision? Consider considering your alternatives first.
We’ve all been there: We’ve seen something BIG—and I mean BIG—start to break in the house. A roof, a furnace, a major piece of plumbing: the feeling of dread is the same. So is the need to get several bids, lest you expose yourself to outrageous bids from unscrupulous repairmen.
But what to do with the multiple bids as they arrive? It’s not obvious, but it’s negotiable. This post will discuss three traps to avoid when soliciting multiple bids for a major repair. Since you should really entertain multiple offers in any negotiation, though, these traps are truly universal.
So imagine the dreaded day has arrived: your ailing roof now needs replacement. You’ve set a budget ($30,000 or less), solicited three bids, and just begun to receive them (gulp). Here are three traps to avoid as the bids roll in, each grounded in a particular psychological state and each likely to produce a particular type of poor agreement:
- Satisficing: Grounded in laziness, satisficing involves accepting the first offer that satisfies your minimum requirements. Supposing that the initial bid was $31,000 and the next was $28,000, satisficing would involve accepting the second bid before waiting for the third or continuing the discussion with the first two companies. Why would anyone do that? Because it’s easy (and easy to justify). Instead, wait for all three bids, then continue the discussion with the best two (at least), in order to see which can fulfill your fundamental interests best. Note that those interests might have nothing to do with price (e.g., the timeline for the work).
- Hubris: Grounded in anger, hubris involves walking away from a negotiation even though it serves your interests better than the alternatives. Suppose that the third bid came in at $27,000, which made you so angry at the initial $31,000 bid that you tore up their offer and shot off an email chastising their greediness. But oops! Reading the fine print on the remaining two offers, you now see that both are offering to complete the work in six weeks. You seem to recall that the first bid promised immediate repairs, which sounds a lot better in light of the impending rainstorm. So hubris involves rejecting a better offer. Why would anyone do that? Because it feels good to voice our irritation. Instead, try to retain and compare all offers against your fundamental interests (e.g., preventing the drowning of your daughter’s stuffed animals), staying at the table with the parties that meet them best—even if certain aspects of their offer, well, make you displeased.
- Agreement Bias: Grounded in fear, agreement bias is pretty much the opposite of hubris. It involves staying in a negotiation and actually reaching an agreement that serves your interests less well than the alternatives. Having ripped up the first bid, imagine you’re now negotiating with the second company ($28,000 bid). You’ve since learned that their offer is essentially identical to the third, except for the additional $1,000, which they refuse to remove. But there is the salesman from the second company—sitting across the table, smiling sweetly, and pushing the contract in your direction. Agreement bias involves signing it even though you know the third offer is better. Why would anyone do that? Because it feels uncomfortable to say no to somebody’s face—many of us are actually afraid of it. Instead, and again, try to stay focused on your interests, one of which must be saving $1,000. If that’s too hard, now would be a good time to try ratification.
Bottom line: When comparing multiple bids, it’s all about staying focused on what you really want and need. That sounds unbelievably obvious, but decades of research show people falling into these traps, then struggling to climb out solvent and satisfied.
Have you or someone you know ever fallen for one of the traps?