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Good Day Living. Mickey's Weather Kids. Heal the Heartland. Open for Business. Heart Gallery Alabama. Absolutely Alabama. What is the practical effect of having your bottom line become your dominant reference point in negotiations? Over a lifetime of negotiating, your results will tend to hover at a point just above this minimum acceptable level. For most reasonable people, the bottom line is the most natural focal point. Disappointment arises if we cannot get the other side to agree to meet our minimum requirements usually established by our available alternatives or our needs away from the table , and satisfaction arises just above that level.
Meanwhile, someone else who is more skilled at orienting himself toward ambitious goals will do much better. Not surprisingly, research shows that parties with higher but still realistic goals outperform those with more modest ones, all else being equal. To avoid falling into the trap of letting your bottom line become your reference point, be aware of your absolute limits, but do not dwell on them.
Instead, prepare your bottom line, then set it aside while you work energetically on formulating your goals. Then, if you must, gradually reorient toward your bottom line as that becomes necessary to close the deal. With experience, you should be able to keep both your goal and your bottom line in view at the same time without losing your goal focus. Research suggests that the best negotiators have this ability.
If setting goals is so vital to effective preparation, how should you do it? Use the following simple steps: 1. Think carefully about what you really want—and remember that money is often a means, not an end. Set an optimistic—but justifiable—target. Be specific. Get committed. Write down your goal and, if possible, discuss the goal with someone else. Carry your goal with you into the negotiation.
What Do You Really Want? Begin your preparation for negotiation by considering your own underlying needs and interests. But it is easy to forget that price is often a means to an end, not an end in itself.
The goal is to achieve more value or profit, not a victory on the price term. This is not as paradoxical as it sounds. If you are on the buy side, you want to make sure that you get a specified level of quality for the money you spend, not just a low price.
And sellers need to be careful that their sales create the conditions for future business. Canceled orders and one-time sales do not make for a profitable enterprise, even if the price achieved on any given sale looks good. The founder of CBS, William Paley, was having a hard time making money in the radio broadcast marketplace in its early days.
He was negotiating with local stations over prices for CBS shows the local stations would run, and the stations had all the power. They did not have to buy and often did not. Paley revolutionized radio and created the modern network by realizing that the price for his shows was a means, not an end in itself.
The strategy earned him millions. Later, in the s, Paley took the U. Experienced negotiators often report that price can be a relatively easy term to resolve compared with less obvious but more explosive issues such as control, turf, ego, and reputation. So when you formulate your goals, consider carefully what really matters to you.
Sure, money is important. But identify your underlying interests and needs clearly. Once negotiations start, it is all too easy to become preoccupied with competitive issues such as price and forget what you are really trying to accomplish. Set an Optimistic, Justifiable Target When you set goals, think boldly and optimistically about what you would like to see happen.
In one classic study, psychologists Sydney Siegel and Lawrence Fouraker set up a simple buy-sell negotiation experiment. In other words, Siegel and Fouraker gave their subjects both concrete incentives for hitting a certain specified level of performance and, perhaps unintentionally, a hint that the assigned target levels were realistically attainable why else would subjects be told about the bonus round?
Both sides had the same bottom line: They could not accept any deal that involved a loss. In our experiment, unlike the one Siegel and Fouraker conducted, negotiation subjects set their own bargaining goals. The result was the same, however. Negotiators who reported higher prenegotiation expectations achieved more than those who entered the negotiation with more modest goals. Why are we tempted to set modest bargaining goals when we can achieve more by raising our sights?
There are several possible reasons. First, many people set modest goals to protect their self-esteem. Modest goals thus help us avoid unpleasant feelings of failure and regret. This usually means we have failed to prepare well enough. Third, we may lack desire. If the other person wants money, control, or power more urgently than we do, we are unlikely to set a high goal for ourselves.
Why look for conflict and trouble over things we care little about? Research suggests that the self-esteem factor plays a more important role in low goal setting than many of us would care to admit. I see further evidence of this in negotiation classes. As students and executives in negotiation workshops start setting more ambitious goals for themselves and strive to improve, they often report feeling more dissatisfied and discouraged regarding their performance—even as their objective results get better and better.
That way you can maintain your enthusiasm for negotiation as you learn. Research shows that people who succeed in achieving new goals are more likely to raise their goals the next time.
Those who fail, however, tend to become discouraged and lower their targets. Once you have thought about what an optimistic, challenging goal would look like, spend a few minutes permitting realism to dampen your expectations. Optimistic goals are effective only if they are feasible; that is, only if you believe in them and they can be justified according to some standard or norm.
As I discuss more fully in Chapter 3, negotiation positions must usually be supported by some standard, benchmark, or precedent, or they lose their credibility. No amount of mental goal setting will make your five-year-old car worth more than a brand-new version of the same model. You should also adjust your goal to reflect appropriate relationship concerns, a subject I address in Chapter 4.
With the preliminary work done, you are ready to enter the negotiation process and encounter the values and priorities the other side is bringing to the deal. Until you know for sure what the other side has for goals and what the other side thinks is realistic, you should keep your eyes firmly on your own defendable target. Be Specific The literature on negotiation goal setting counsels us to be as specific as possible.
Clarity drives out fuzziness in negotiations as in many other endeavors. With a definite target, you will begin working on a host of psychological levels to get the job done. Your specific goal will start you thinking about other, comparable jobs that pay your target salary, and you will begin to notice a variety of market standards that support a salary of that amount.
But effective negotiators do not let these feelings get in the way of setting specific goals. There are several simple things you can do that will increase your level of psychological attachment to your goal. First, as I suggested above, you should make sure it is justified and supported by solid arguments.
You must believe in your goal to be committed to it. Second, it helps if you spend just a few moments vividly imagining the way it would look or feel to achieve your goal. Visualization helps engage our mind more fully in the achievement process and also raises our level of self-confidence and commitment.
He then kept that picture over his desk for several years as he directed all his professional energies toward gaining admission. After being turned down once, he was finally admitted. When he arrived on campus, he had another picture taken of himself in the same building, and he now displays the two pictures together with great satisfaction. He credits the visual image of his goal with keeping him on track toward its achievement.
The same visualization techniques work for negotiation goals. To commit yourself even further to your goal, tell another person about it and show him or her your written goal. If other people know about the goal, you begin to feel subtly accountable to them, and research indicates that negotiators bargain harder when they must explain to someone why they failed to achieve a goal. Labor, sports, and political negotiators go to extreme lengths to mobilize this power: They sometimes announce their bargaining goals to the press, thereby putting everyone including their constituents and the other side on notice as to what they want to achieve.
This sort of public commitment is a powerful way of binding yourself to your goals. Of course, as in all other aspects of negotiation, one should use judgment in committing to goals.
If both parties engage in dramatic forms of public commitment, with press conferences and do-or-die statements to their respective audiences, they can paint themselves into a corner from which it is impossible to escape. Labor strikes, political showdowns, and wars are examples of failed negotiations, not successes. Finally, any type of material investment you can make in the goal that would be lost if you fail to achieve it will add greatly to your commitment.
A major airline recently announced that it had signed a deal to acquire as many as four hundred new planes to expand and upgrade its fleet. It went on to state that the airline would be forced to cancel that order if it failed to reach a favorable wage agreement with its pilots before the deadline for closing the purchase. With that one move, the airline secured three negotiation advantages: a public commitment to its stated wage target, a credible deadline for concluding negotiations with its pilots, and, most important, a vision of what it and the pilots would lose if the airline failed to achieve its wage goals.
The negotiations ultimately closed by the deadline and within the wage constraints the airline had set. It therefore pays to carry your goals with you and, if you feel yourself getting swept away, take a break and review them before going forward. I find it sometimes helps to literally carry a short summary of my goals in my pocket or wallet.
Even if you just carry it in your head, however, the point is not to lose sight of your goals in the confusion of actual negotiation. Barry Diller, the successful television executive and entrepreneur, learned this lesson the hard way when he got caught up in bidding for the rights to the first television showing of the movie The Poseidon Adventure in the early s. The reason Diller paid so much? He agreed to participate in the first and, for him, the last open-bid auction for TV rights to a movie.
It usually does not take long for regret to set in after such a victory, teaching the winners that it is not enough to prepare goals—you must remember them during the negotiation.
Clarity of purpose and optimism are key attitudes to bring to the goal-setting process. First, a concrete, challenging goal will motivate you. You will become more focused, persistent, and achievement-oriented, and you will be more likely to come up with good arguments and new ideas about how to get what you want.
You will also avoid the common trap of becoming focused on your bottom line too early. Second, your clarity will communicate confidence and resolve to the other party. You will convey the message that you have high expectations for both yourself and the deal. And perhaps no other personal variable makes such a difference in negotiation as the quiet feeling of confidence, self-esteem, and commitment that emanates from people who know what they want and why they ought to get it.
The Third Foundation of Effective Negotiation directs attention to this psychological drive. Barton told a story about tribal people in the Philippines with whom he lived for many years. Barton reported that a man of the Ifugao people the name of the tribe once borrowed two pigs from his neighbor.
Two years later, the man who loaned the pigs asked for the debt to be repaid. His son was getting married, and he needed pigs to give as presents at the wedding. The two men then fell into a dispute over how many pigs were owed. There was general agreement that a two-year loan of two pigs called for a repayment of four—double the original number.
That was the standard. The problem was implementing it. The lender, an ambitious man who wanted to make a lavish wedding display, insisted that the borrower owed him a total of six pigs. He argued that slightly more than two years had passed and that one of the pigs had been of a special, larger breed that should draw a higher rate of interest.
The borrower angrily replied that everyone knew the right number was four. The natural rate of increase on that chicken, he said, equaled roughly one pig. So he reduced his offer from four pigs to three—to account for the chicken debt. The lender responded that he would accept five pigs, but not one less. After much haggling and many insults, the two families engaged the services of a respected elder to act as a go-between.
That brought the whole negotiation process to an abrupt halt. Now the wives got involved. Both women told their men to stop arguing and settle the matter.
The elder finally put together a deal. First, the lender promised to restore the gong. Next, the borrower promised to cancel the chicken debt and pay the five pigs demanded by the lender. But there was a twist: The elder passed along to the lender only three of the five pigs paid by the borrower, keeping the other two for himself as his fee.
Few of us today are busy borrowing and lending pigs. Yet like people in every culture, we are inclined to negotiate on the basis of authoritative standards and norms.
And when parties deviate too widely from these norms, they risk irritating others and causing trouble for themselves. They are seen as being unreasonable. Standards very similar to the Ifugao natural rate of increase for borrowed animals play equally important roles in our more modern world. Global financial markets set interest rates for borrowing money.
Such fancy terms and complex analyses are nothing more or less than techniques that help buyers and sellers form opinions about the right price.
These standards, like the one in the two pigs story, bracket the bargaining zone and permit all participants to talk about their preferred end of the range without appearing, at least in their own eyes, to be unreasonable. Nor are market standards such as interest rates and comparable sales the only examples of normative arguments and formulae that carry weight in negotiations. You have something to talk about beyond your self-serving assessment of what you want.
This in turn gives you a fair basis on which to be an energetic advocate for your goal. And you had better be ready to respond to arguments the other side will advance. If the accepted standards lend themselves to a variety of interpretations and most do , the other party will come prepared to argue the interpretation that most favors him or her. In short, as part of your preparation, you must become an advocate for your goals using the most persuasive standards you can find.
Which standards might those be? As my opening quotation from Samuel Coleridge suggests, the arguments the other party accepts as legitimate or has used to his or her own advantage in the past are usually the most effective. A Psychological Fact: We All Want to Appear Reasonable Why are standards and norms—particularly standards the other side has adopted —such an important part of bargaining?
Because, all else being equal, people like to be seen as consistent and rational in the way they make decisions. Psychologists have a name for this need-to-appear-reasonable phenomenon. Because we like to keep these webs intact, we rationalize our actions so they appear at least in our own eyes to be consistent with our prior beliefs. We are also more open to persuasion when we see a proposed course of action as being consistent with a course we have already adopted.
Negotiations are fertile ground for observing the consistency principle at work. Whether we are aware of it or not, we sometimes feel a tug to agree with the other party when the standards or norms he or she articulates are consistent with prior statements and positions we ourselves have taken. We also feel uncomfortable though we may keep this to ourselves when the other side correctly points out that we have been inconsistent in one of our positions or arguments. In short, standards and norms are—or can be—more than just intellectual pawns in bargaining debates.
They can be strong, motivating factors in the way negotiations proceed. Normative leverage is the skillful use of standards, norms, and coherent positioning to gain advantage or protect a position. If you set up your own needs, standards, and entitlement as the only rational approaches to a negotiation, you will not inspire agreement. If you cannot do this, prepare to argue for a special exception to his standard based on the special facts of your case. Attack his standard only as a last resort.
Suppose you are involved in a budget negotiation in a hospital system. The administrators will then feel constrained by their prior policy statements to make a decision consistent with their policy.
Your best move will be to show how a quality nursing staff attracts more and better physicians than do lavish offices.
Here is another, harder case. Suppose you are a corporate division chief faced with a downsizing mandate. Each division must slash 10 percent of its staff. You study the situation and determine that, with a 10 percent cut, there will simply not be enough people to do the work. Your initial instinct may be to go to your boss, show her you cannot do your job with the proposed cuts, and request permission to retain staff.
Will this be persuasive? Probably not. Everyone is going to say the same thing, and she will not make her downsizing target if everyone retains staff. How can you gain better normative leverage for your request? If she likes to think about ways to be more efficient, give her arguments based on efficiency. Tell her you have evaluated the assortment of tasks your department is doing and have determined that your group is superbly efficient at tasks 1, 2, and 3 but is ill equipped to perform tasks 4 and 5.
Even after a 10 percent cut, you could do considerably more of tasks 1, 2, and 3 if the boss would assign tasks 4 and 5 to other groups better equipped to handle them. Alternatively, you might try to demonstrate how, by retaining more of your staff and cutting more heavily elsewhere in the organization, you could sharply reduce the time and cost of an entire business process spanning several divisions.
That would save the firm money—which is the underlying point of downsizing—while improving an area on which the boss herself is evaluated. Will such arguments carry the day each time you use them?
But they have a better chance of advancing your goals than arguments based strictly on your own point of view. In fact, none of the Six Foundations alone guarantees success in bargaining. But attention to each one improves your chances incrementally. Effective negotiators move step by step.
By positioning your needs within the normative framework the other party uses to make decisions, you show him respect and, as a result, gain his attention and sympathy. Because the difference between success and failure in negotiation is often very small, anything that systematically improves your chances of getting agreement to your terms will pay off in the long run. The goal of a consistency trap is to precommit you to a seemingly innocent standard and then confront you with the logical implications of the standard in a particular case—implications that actually turn out to run against your interests.
This is a form of intellectual coercion, and you should be ready to defend against it. Collection agencies, credit card companies, and high-pressure sales companies routinely use consistency traps as part of the scripts they give telemarketing people to read on the telephone when they call you at dinnertime.
You can learn to see a consistency trap coming if you know what to look for. The trap closes. How about starting to save right now? At the bargaining table, consistency traps are a favorite of aggressive, competitive negotiators.
The pattern is the same as that used by telemarketers. How can you defend against consistency traps? By being alert to them. When the person you are negotiating with begins asking leading questions before you know where he is going, slow the pace. Turn the tables on the trapper. Elicit as much information as possible about why these questions are important before committing to anything. If you are nevertheless pressed into agreeing to a standard, qualify it or phrase it in your own words and use the broadest possible terms, leaving ample room for interpretation later.
You have to be alert to every move he makes. If you are caught in an inconsistency, you have two choices. Either you can adjust your position to conform to the standard that you have admitted applies or you can hold your ground, admitting that you made a mistake when you agreed to the standard. This latter move will cause you to lose some face, but that may be less costly than a bad bargain.
But suppose they cannot. You can try, but chances are the other party will cling to his beliefs. In these difficult cases, you will need to resort to explicit leverage and search for an ally—a third party to whom your bargaining counterpart is answerable and who is sympathetic to your norms. Allies serve as audiences or witnesses to guarantee the application of standards that ought, in fairness, to apply. Mahatma Gandhi Rides First-class One way of understanding how audiences can help in asserting standards in negotiations is through example.
This one comes from the life of Mahatma Gandhi, the father of modern India. Gandhi had earned a law degree in England. He arrived in South Africa ready to use his knowledge of both English law and English social norms to help in the cause of Indian civil rights.
Soon after arriving in South Africa, Gandhi learned firsthand about this rule when he was thrown off a train for trying to ride in a first-class car. What is less well known is that Gandhi immediately looked for a second opportunity to challenge the rule on a train ride from Durban to Pretoria.
This time he succeeded. He did so by skillfully using an audience to outflank a negotiation opponent. Gandhi wrote that he was a barrister who was accustomed to traveling first-class. He wanted to impress the stationmaster with a basic fact—that the stationmaster and Gandhi were from the same social class, even if they were of different races. I must reach Pretoria today.
I appreciate your feelings, and you have my sympathy. Gandhi agreed, although this eliminated an authoritative ally who could have proven useful later.
Gandhi had to figure out how to persuade the conductor, who would not be from his own social class and who would be a Transvaaler, to let him stay in the first-class car.
Gandhi walked along the corridor in the first-class car until he found just the audience he was looking for: an Englishman sitting in a first-class compartment by himself, without any South African whites present.
Gandhi sat down, holding his first-class ticket and waiting for the conductor to arrive. When the conductor came, he immediately saw that Gandhi was Indian and angrily demanded that he move to third-class.
Gandhi showed him his first-class ticket. I do not mind in the least his traveling with me. The conductor retreated, and Gandhi completed his trip in first-class. Gandhi used his Englishman as an audience to temporarily overcome the unjust standards of South African law.
Standards and Norms in Markets Standards and norms rely on the consistency principle for their power in negotiation. But some standards and norms are more powerful than others, especially in market transactions.
The strongest market standards act as anchors or focal points in bargaining. The natural rate of increase standard for borrowing animals in the Philippines had this quality.
It provided a single, definitive solution to an otherwise negotiable issue. Most market standards are not so preemptive.
Instead, they serve as range finders, bargaining devices that bracket the bargaining zone within which parties can haggle to settle an issue. Examples of standard terms and formulas that serve as preemptive norms for negotiations can be found everywhere in modern business.
For instance, the practice in the residential real estate industry in the United States is for real estate agents to receive a fixed percentage 6 percent of the selling price of a home. In the literary and entertainment industries, agents receive a standard percentage of royalties and fees usually 15 percent earned by their clients.
Authors of hardcover books typically collect a 15 percent royalty on U. These standards are completely arbitrary from a financial point of view. Long Larry I Unity 3D. SpaceSnake Unity 3D.
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