After you’ve read the section on negotiating a higher salary, select a student friend or peer at your college who has been on at least one paid internship with an outside company. Ask them if they negotiated for a higher hourly wage. Talk with them about why they did or did not and how it turned out. Summarize their experience and your honest reaction to it.

A common way that parties deal with conflict is via negotiation. Negotiation is
a process whereby two or more parties work toward an agreement. There are
five phases of negotiation, which are described below. The Five Phases of Negotiation
Phase 1: Investigation
Figure 10.6 The Five Phases of Negotiation The first step in negotiation is the investigation, or information gathering
stage. This is a key stage that is often ignored. Surprisingly, the first place to
begin is with yourself: What are your goals for the negotiation? What do you
want to achieve? What would you concede? What would you absolutely not
concede?
During the negotiation, you’ll inevitably be faced with making choices. It’s best
to know what you want, so that in the heat of the moment you’re able to make
the best decision. For example, if you’ll be negotiating for a new job, ask
yourself, “What do I value most? Is it the salary level? Working with coworkers
whom I like? Working at a prestigious company? Working in a certain
geographic area? Do I want a company that will groom me for future positions
or do I want to change jobs often in pursuit of new challenges?” Phase 2: Determine Your BATNA
If you don’t know where you’re going, you will probably end up somewhere
else.
Lawrence J. Peter
One important part of the investigation and planning phase is to determine
your BATNA, which is an acronym that stands for the “best alternative to a
negotiated agreement.” Roger Fisher and William Ury coined this phrase in
their book Getting to Yes: Negotiating without Giving In.
Thinking through your BATNA is important to helping you decide whether to
accept an offer you receive during the negotiation. You need to know what your
alternatives are. If you have various alternatives, you can look at the proposed
deal more critically. Your BATNA is an important indicator of how much power
you have in the negotiation. Could you get a better outcome than the proposed
deal? Your BATNA will help you reject an unfavorable deal. On the other hand,
if the deal is better than another outcome you could get (that is, better than
your BATNA), then you should accept it.
Think about it in common sense terms: When you know your opponent is
desperate for a deal, you can demand much more. If it looks like they have a lot of other options outside the negotiation, you’ll be more likely to make
concessions.
As Fisher and Ury said, “The reason you negotiate is to produce something
better than the results you can obtain without negotiating. What are those
results? What is that alternative? What is your BATNA—your Best Alternative
To a Negotiated Agreement? That is the standard against which any proposed
agreement should be measured.” The party with the best BATNA has the best
negotiating position, so try to improve your BATNA whenever possible by
exploring possible alternatives.
Going back to the example of your new job negotiation, consider your options
to the offer you receive. If your pay is lower than what you want, what
alternatives do you have? A job with another company? Looking for another
job? Going back to school? While you’re thinking about your BATNA, take some
time to think about the other party’s BATNA. Do they have an employee who
could readily replace you?
Once you’ve gotten a clear understanding of your own goals, investigate the
person you’ll be negotiating with. What does that person (or company) want?
Put yourself in the other party’s shoes. What alternatives could they have? For
example, in the job negotiations, the other side wants a good employee at a fair
price. That may lead you to do research on salary levels: What is the pay rate
for the position you’re seeking? What is the culture of the company?
Greenpeace’s goals are to safeguard the environment by getting large
companies and organizations to adopt more environmentally friendly practices
such as using fewer plastic components. Part of the background research
Greenpeace engages in involves uncovering facts. For instance, medical device
makers are using harmful PVCs as a tubing material because PVCs are
inexpensive. But are there alternatives to PVCs that are also cost-effective?
Greenpeace’s research found that yes, there are. Knowing this lets Greenpeace counter those arguments and puts Greenpeace in a stronger
position to achieve its goals. OB Toolbox: Best BATNA Practices © Thinkstock 1. Brainstorm a list of alternatives that you might conceivably take if the
negotiation doesn’t lead to a favorable outcome for you. 2. Improve on some of the more promising ideas and convert them into
actionable alternatives. 3. Identify the most beneficial alternative to be kept in reserve as a fallback during the negotiation. 4. Remember that your BATNA may evolve over time, so keep revising it to
make sure it is still accurate. 5. Don’t reveal your BATNA to the other party. If your BATNA turns out to
be worse than what the other party expected, their offer may go down, as
PointCast learned in the opening case.
Sources: Adapted from information in Spangler, B. (2003, June). Best
Alternative to a Negotiated Agreement (BATNA). Retrieved July 19, 2014, from
http://www.beyondintractability.org/essay/batna/; Conflict Research
Consortium, University of Colorado. (1998). Limits to agreement: Better
alternatives. Retrieved July 19, 2014, from
http://www.colorado.edu/conflict/peace/problem/batna.htm; Venter, D. (2003).
What is a BATNA? Retrieved July 19, 2014, from
http://www.negotiationeurope.com/articles/batna.html. Phase 3: Presentation
Figure 10.7 All phases of the negotiation process are important. The presentation is the
one that normally receives the most attention, but the work done before that
point is equally important.
© Thinkstock The third phase of negotiation is presentation. In this phase, you assemble the
information you’ve gathered in a way that supports your position. In a job
hiring or salary negotiation situation, for instance, you can present facts that
show what you’ve contributed to the organization in the past (or in a previous
position), which in turn demonstrates your value. Perhaps you created a blog
that brought attention to your company or got donations or funding for a
charity. Perhaps you’re a team player who brings out the best in a group. Phase 4: Bargaining
During the bargaining phase, each party discusses their goals and seeks to get
an agreement. A natural part of this process is making concessions, namely,
giving up one thing to get something else in return. Making a concession is not
a sign of weakness—parties expect to give up some of their goals. Rather,
concessions demonstrate cooperativeness and help move the negotiation
toward its conclusion. Making concessions is particularly important in tense
union-management disputes, which can get bogged down by old issues. Making
a concession shows forward movement and process, and it allays concerns
about rigidity or closed-mindedness. What would a typical concession be?
Concessions are often in the areas of money, time, resources, responsibilities,
or autonomy. When negotiating for the purchase of products, for example, you
might agree to pay a higher price in exchange for getting the products sooner.
Alternatively, you could ask to pay a lower price in exchange for giving the
manufacturer more time or flexibility in when they deliver the product.
One key to the bargaining phase is to ask questions. Don’t simply take a
statement such as “we can’t do that” at face value. Rather, try to find out why
the party has that constraint. For example, when negotiating with a
manufacturer, the retailer may realize that what drives the price up is the
shipping costs, which may result in the retailer using their own contacts to reduce the shipping costs. Without asking questions to understand the other
party’s viewpoint, such outcomes are unlikely.
Figure 10.8 Human beings have a tendency to react well to concessions due to strong
norms for reciprocity. In his book titled Influence, Robert Cialdini tells the story
of being approached by a boy scout to sell him a $5 ticket to an event. When
Dr. Cialdini reluctantly declines, the scout then inquires whether he is
interested in buying cookies for $1 instead and makes the sale. What do you
think happened?
© Thinkstock Phase 5: Closure
Closure is an important part of negotiations. At the close of a negotiation, you
and the other party have either come to an agreement on the terms, or one
party has decided that the final offer is unacceptable and therefore must be
walked away from. Most negotiators assume that if their best offer has been
rejected, there’s nothing left to do. You made your best offer and that’s the best
you can do. The savviest of negotiators, however, see the rejection as an
opportunity to learn. “What would it have taken for us to reach an agreement?”
Recently, a CEO had been in negotiations with a customer. After learning the
customer decided to go with the competition, the CEO decided to inquire as to
why negotiations had fallen through. With nothing left to lose, the CEO placed
a call to the prospect’s vice president and asked why the offer had been
rejected, explaining that the answer would help improve future offerings.
Surprisingly, the VP explained the deal was given to the competitor because,
despite charging more, the competitor offered after-sales service on the
product. The CEO was taken by surprise, originally assuming that the VP was
most interested in obtaining the lowest price possible. In order to
accommodate a very low price, various extras such as after-sales service had
been cut from the offer. Having learned that the VP was seeking service, not
the lowest cost, the CEO said, “Knowing what I know now, I’m confident that I
could have beaten the competitor’s bid. Would you accept a revised offer?” The
VP agreed, and a week later the CEO had a signed contract. Sometimes at the end of negotiations, it’s clear why a deal was not reached.
But if you’re confused about why a deal did not happen, consider making a
follow-up call. Even though you may not win the deal back in the end, you might learn something that’s useful for future negotiations. What’s more, the
other party may be more willing to disclose the information if they don’t think
you’re in a “selling” mode.
Figure 10.9 Avoiding Common Mistakes in Negotiations © Thinkstock, content source based on research contained in the following articles:
Babcock, L., & Lascheve, S. (2003). Women don’t ask: Negotiation and the gender divide.
Princeton, NJ: Princeton University Press; Brett, J. M., Olekalns, M., Friedman, R., Goates,
N., Anderson, C., & Lisco, C. C. (2007). Sticks and stones: Language, face, and online
dispute resolution. Academy of Management Journal, 50, 85–99; Stevens, C. K., Bavetta, A.
G., & Gist, M. E. (1993). Gender differences in the acquisition of salary negotiation skills:
The role of goals, self-efficacy, and perceived control. Journal of Applied Psychology, 78,
723–735; Rothenberger, C. (2008, September 11). Negotiation 201: Refine your skills. Fast
Company. Retrieved July 13, 2013, from
http://www.fastcompany.com/articles/team/prob_podziba.html; Kopelman, S., Rosette, A. S.,
& Thompson, L. (2006). The three faces of Eve: An examination of the strategic display of
positive, negative, and neutral emotions in negotiations. Organizational behavior and
human decision processes, 99, 81–101; Friedman, R., Anderson, C., Brett, J., Olekalns, M.,
Goates, N., & Lisco, C. C. (2004). The positive and negative effects of anger on dispute
resolution: Evidence from electronically mediated disputes. Journal of Applied Psychology,
89, 369–376; Van Kleef, G. A., & Cote, S. (2007). Expressing anger in conflict: When it helps
and when it hurts. Journal of Applied Psychology, 92, 1557–1569; Friedman, R., Anderson,
C., Brett, J., Olekalns, M., Goates, N., & Lisco, C. C. (2004). The positive and negative
effects of anger on dispute resolution: Evidence from electronically mediated disputes.
Journal of Applied Psychology, 89, 369–376; O’Connor, K. M., Arnold, J. A., & Burris, E. R.
(2005). Negotiators’ bargaining histories and their effects on future negotiation
performance. Journal of Applied Psychology, 90, 350–362. Should You Negotiate for a Higher Salary?
Yes! According to a survey conducted by CareerBuilder.com, 58% of hiring
managers say they leave some negotiating room when extending initial job
offers. The survey also found that many of the hiring managers agree to a
candidate’s request for a higher salary. “Salary negotiation has become a
growing opportunity in the job acquisition process,” says Bill Hawkins,
president and CEO of The Hawkins Company, a full-service executive search
firm. “Candidates who fail to make a counteroffer could forfeit significant
income.” This holds for everyone but it is especially something to consider for
women. You may have heard that women typically make less money than men.
Researchers have established that about one-third of the gender differences
observed in the salaries of men and women can be traced back to differences in
starting salaries, with women making less, on average, when they start their
jobs. Some people are taught to feel that negotiation is a conflict situation, and
these individuals may tend to avoid negotiations to avoid conflict. Research
shows that this negotiation avoidance is especially prevalent among women.
For example, one study looked at students from Carnegie-Mellon who were
getting their first job after earning a master’s degree. The study found that only 7% of the women negotiated their offer, while men negotiated 57% of the
time. The result had profound consequences over the course of a person’s
career.
Sources: Partially adapted from information contained in CNN. (2003, August
21). Interview with Linda Babcock. Retrieved July 19, 2014, from
http://transcripts.cnn.com/TRANSCRIPTS/0308/21/se.04.html; Gerhart, B.
(1990). Gender differences in current and starting salaries: The role of
performance, college major, and job title. Industrial and Labor Relations
Review, 43, 418–433; Reed-Woodard, M. (2007, April). Taking money off the
table. Black Enterprise, 37(9), 60–61. Negotiation Strategies
Distributive Approach
The distributive view of negotiation is the traditional fixed-pie approach. That
is, negotiators see the situation as a pie that they have to divide between them.
Each tries to get more of the pie and “win.” For example, managers may
compete over shares of a budget. If marketing gets a 10% increase in its
budget, another department such as R&D will need to decrease its budget by
10% to offset the marketing increase. Focusing on a fixed pie is a common
mistake in negotiation, because this view limits the creative solutions possible. Integrative Approach
A newer, more creative approach to negotiation is called the integrative
approach. In this approach, both parties look for ways to integrate their goals
under a larger umbrella. That is, they look for ways to expand the pie, so that
each party gets more. This is also called a win–win approach. The first step of
the integrative approach is to enter the negotiation from a cooperative rather
than an adversarial stance. The second step is all about listening. Listening
develops trust as each party learns what the other wants and everyone involved
arrives at a mutual understanding. Then, all parties can explore ways to
achieve the individual goals. The general idea is, “If we put our heads together,
we can find a solution that addresses everybody’s needs.” Unfortunately, integrative outcomes are not the norm. A summary of thirty-two experiments
on negotiations found that although they could have resulted in integrated
outcomes, only 20% did so. One key factor related to finding integrated
solutions is the experience of the negotiators who were able to reach them. OB Toolbox: Seven Steps to Negotiating a Higher Salary © Thinkstock Step 1: Overcome your fear. Many people don’t even begin a salary negotiation. We may be
afraid of angering the boss or think that because we are doing a good job, we’ll
automatically be rewarded. But, just because you’re doing a good job doesn’t
mean you’ll automatically get a raise. Why? If you don’t ask for one, the boss
may believe you’re satisfied with what you’re getting. So why should they pay
you more? Imagine going into a car dealership and being absolutely delighted
with a car choice. The sticker price is $29,000. Would you pay the dealer
$33,000 just because you really like the car? Of course not. You probably
wouldn’t even offer $29,000. That’s what salary negotiation is like. Your boss may be thrilled
with you but at the same time is running a business. There’s no reason to pay
an employee more if you seem satisfied with your current salary offer that was
low.
Step 2: Get the facts. Before you enter into the negotiation, do some background
research. What are other companies paying people in your position? Check
sites such as Payscale.com, salary.com, and salaryexpert.com to get a feel for
the market. Look at surveys conducted by your professional organization.
Step 3: Build your case.
How important are your skills to the organization? How have you
contributed? Perhaps you contributed by increasing sales, winning over angry
customers, getting feuding team members to cooperate, and so on. Make a list
of your contributions. Be sure to focus on the contributions that your boss
values most. Is it getting recognition for the department? Easing workload? If
another employer has shown interest in you, mention that as a fact. However,
don’t use this as a threat unless you’re prepared to take the other offer.
Mentioning interest from another employer gets the boss to think, “If I don’t
give this raise, I may lose the employee.” (By the way, if you don’t feel you have
a strong case for your raise, perhaps this isn’t the time to ask for one.)
Step 4: Know what you want.
Set your target salary goal based on your research and the norms
of what your organization will pay. Now ask yourself, if you don’t get this
figure, would you quit? If not, are there other alternatives besides a salary
increase that you’d consider? For example, would you accept a higher title?
More vacation time? Paid training to learn a new skill? Flexible hours? Step 5: Begin assertively.
Start the discussion on a strong but friendly tone. “I think I’m
worth more than I’m being paid.” List the ways you’ve contributed to the
company.
Step 6: Don’t make the first offer. Let your boss name a specific offer. You can do this by asking,
“How much of a raise could you approve?” However, if the boss insists that you
name a figure, ask for the most that you can reasonably expect to get. You want
to be reasonable, but you need to allow room to make a concession. Your boss
will assume your opening number was high and will offer you less, so asking for
the actual figure you want may leave you feeling disappointed. If the boss opens with, “The salary range for this position is
$66,000 to 78,000,” ask for the high end. If your goal was higher than that
range, challenge the range by explaining how you are an exception and why
you deserve more.
Step 7: Listen more than talk. You will learn more by listening rather than talking. The more you
listen, the better the boss will feel about you—people tend to like and trust
people who listen to them. If you can’t get a raise now, get your boss to agree to one in a few
months if you meet agreed-upon objectives.
Sources: Partially adapted from information in Brodow, E. (2006). Negotiation
boot camp. New York: Currency/Doubleday; Nemko, M. (2007, December 31).
The general way to get a raise. U.S. News & World Report, 57, Smith, J. (2013).
14 tips for getting a raise when they’re not handing them out. Forbes.
Retrieved July 19, 2014 from
http://www.forbes.com/sites/jacquelynsmith/2013/09/30/14-tips-for-getting-araise-when-theyre-not-handing-them-out/. Tips for Negotiation Success Focus on agreement first. If you reach an impasse during negotiations,
sometimes the best recourse is to agree that you disagree on those topics and
then focus only on the ones that you can reach an agreement on. Summarize
what you’ve agreed on, so that everyone feels like they’re agreeing, and leave out the points you don’t agree on. Then take up those issues again in a different
context, such as over dinner or coffee. Dealing with those issues separately
may help the negotiation process. Be patient. If you don’t have a deadline by which an agreement needs to
be reached, use that flexibility to your advantage. The other party may be
forced by circumstances to agree to your terms, so if you can be patient you
may be able to get the best deal. Whose reality? During negotiations, each side is presenting their case—
their version of reality. Whose version of reality will prevail? Leigh Steinberg
offers this example from the NFL, when he was negotiating the salary of
Warren Moon. Moon was 41 years old. That was a fact. Did that mean he was
hanging on by a thread and lucky to be employed in the first place? “Should he
be grateful for any money that the team pays him?” Steinberg posed, “Or is he
a quarterback who was among the league leaders in completions and attempts
last year? Is he a team leader who took a previously moribund group of players,
united them, and helped them have the best record that they’ve had in recent
years?” All those facts are true, and negotiation brings the relevant facts to the
forefront and argues their merit. Deadlines. Research shows that negotiators are more likely to strike a
deal by making more concessions and thinking more creatively as deadlines
loom than at any other time in the negotiation process. Be comfortable with silence. After you have made an offer, allow the
other party to respond. Many people become uncomfortable with silence and
feel they need to say something. Wait and listen instead.
Sources: Adapted from information in Stuhlmacher, A. F., Gillespie, T. L., &
Champagne, M. V. (1998). The impact of time pressure in negotiation: A metaanalysis. International Journal of Conflict Management, 9, 97–116; Webber, A.
(1998, October). How to get them to show you the money. Fast Company.
Retrieved July 19, 2014 from
http://www.fastcompany.com/magazine/19/showmoney.html. When All Else Fails: Third­Party Negotiations
Alternative Dispute Resolution
Alternative Dispute Resolution (ADR) includes mediation, arbitration, and other
ways of resolving conflicts with the help of a specially trained, neutral third party without the need for a formal trial or hearing. Many companies find this
effective in dealing with challenging problems. Mediation
In mediation, an outside third party (the mediator) enters the situation with the
goal of assisting the parties in reaching an agreement. The mediator can
facilitate, suggest, and recommend. The mediator works with both parties to
reach a solution but does not represent either side. Rather, the mediator’s role
is to help the parties share feelings, air and verify facts, exchange perceptions,
and work toward agreements. Susan Podziba, a mediation expert, has helped
get groups that sometimes have a hard time seeing the other side’s point of
view to open up and talk to one another. Her work includes such groups as prochoice and pro-life advocates, individuals from Israel and Palestine, as well as
fishermen and environmentalists. According to the U.S. Equal Employment
Opportunity Commission, “Mediation gives the parties the opportunity to
discuss the issues raised in the charge, clear up misunderstandings, determine
the underlying interests or concerns, find areas of agreement and, ultimately,
to incorporate those areas of agreements into resolutions. A mediator does not
resolve the charge or impose a decision on the parties. Instead, the mediator
helps the parties to agree on a mutually acceptable resolution. The mediation
process is strictly confidential.” One of the advantages of mediation is that the
mediator helps the parties design their own solutions, including resolving
issues that are important to both parties, not just the ones under specific
dispute. Interestingly, sometimes mediation solves a conflict even if no
resolution is reached. Here’s a quote from Avis Ridley-Thomas, the founder and
administrator of the Los Angeles City Attorney’s Dispute Resolution Program,
who explains, “Even if there is no agreement reached in mediation, people are
happy that they engaged in the process. It often opens up the possibility for
resolution in ways that people had not anticipated.” An independent survey
showed 96% of all respondents and 91% of all charging parties who used
mediation would use it again if offered. You Know It’s Time for a Mediator When… The parties are unable to find a solution themselves. Personal differences are standing in the way of a successful solution. The parties have stopped talking with one anot...

 

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