Stephanie also thinks about her prospective boss’s possible alternatives. What will he do if the two of them don’t reach agreement? Although she may not know what Bradford will do if the agency doesn’t hire her, she tries to identify the likely alternatives. Identifying the other side’s possible alternatives may help Stephanie think through what the upcoming negotiation looks like from Bradford’s point of view. If the company’s BATNA would be to find another candidate outside the firm, how long would the search take? Is there likely to be a candidate as good as Stephanie? What would hiring someone else cost the firm? What would the search itself cost in personnel time and interview expenses? How tight is the labor market?
Box 4
When you have identified your BATNA and thought about the other side’s likely alternatives, you want to begin thinking about how to translate your BATNA into a reservation value at the table. In our car example, which is a very simple case, this is relatively easy. Jim knew that if he didn’t buy Sara’s car he would buy the 1994 Honda, and he knew he preferred that alternative unless he could get Sara’s car for less than $9,000.
Stephanie’s situation is more complex. Assume Ames has offered her a promotion with a salary of $100,000. Stephanie might well prefer the Bradford offer at a lower salary if she were persuaded that there would be long-term benefits to her career. How much she would be prepared to sacrifice might very well turn on things she does not yet know. She may want to find out more about her prospects for promotion at Bradford; what opportunities she might have for foreign travel that she would find exciting; and whom she would be reporting to.
In other words, even when she has a firm sense of her BATNA, translating that into a single reservation value or bottom line does not make sense in a negotiation like this. Stephanie must compare the two possible jobs along a number of dimensions. At the bargaining table, she will still be learning more about the package of terms that Bradford is willing to offer and various advantages and disadvantages of working at Bradford. Because the minimum salary she might accept could be influenced by what she learns about these other elements, picking a single salary figure that represents her walk-away point would be unwise. Instead, because her negotiation involves multiple issues, Stephanie must think about the trade-offs between those issues so that ultimately she can compare her BATNA to what she and Bradford agree to.
Nevertheless, as part of her preparation it is indispensable that she begin thinking about not only her BATNA but how to translate that into a reservation value that she can work with at the table. Ultimately, she will have to decide which position better meets her interests.
ESTABLISH AN AMBITIOUS BUT REALISTIC ASPIRATION LEVEL
It’s not enough simply to think about your reservation value—the least you would accept. In your preparation, it is critical that you aspire to an outcome that serves your interests much better than your best alternative. You generally won’t get what you don’t ask for. Much research has shown that those negotiators with high aspirations on average do better.
We are not saying that you should make outrageous demands that cannot be justified. Instead, as part of your preparation you should marshal in advance the arguments that might in good faith support your aspirations. What salary would Stephanie like to ask for initially? In negotiating with Bradford, for example, she may be able to argue that in light of her talents and current market conditions a base salary of $120,000 with a bonus for strong performance would be reasonable. This does not mean that she should start with an opening demand of $180,000. But Stephanie should think about what salary she will ask for and what arguments she can make about why her initial demand is reasonable.
At the Table
When you are ready to negotiate, how do you proceed? A problem-solving negotiator will try to negotiate a process that allows the negotiators to:
• Identify each other’s interests, resources, and capabilities
• Generate value-creating options
• Treat distributive issues as a shared problem
IDENTIFY INTERESTS, RESOURCES, AND CAPABILITIES
At the table, the joint task for Stephanie and Bradford is to identify each other’s interests, resources, and capabilities—the prerequisite for value-creating trades. How is this done? By asking questions designed to elicit the other side’s interests. The best of these questions are:10
• What is important to you?
• Why?
• Why not?
• What else?
• What would be wrong with ... ?
If Stephanie has prepared well, she will enter her negotiation with a tentative list of the other side’s interests. At the table, she can check her hypotheses to determine which are accurate and which need revision. There are many ways to accomplish this. The simplest way is to ask directly: “Are you concerned about setting a precedent for other employees if you give me three weeks’ vacation?” Stephanie can also put herself in the firm’s shoes and hypothesize about how management might be thinking about the situation: “If I were you, I might be worried about other employees asking you to expand their benefits if you’ve done it for me. Is that right?” Regardless of the way she frames her questions, the purpose is to keep learning what the other side cares about.
Consider the following dialogue between Stephanie and her prospective boss about the amount of vacation she will receive. She has asked for three weeks and has been turned down. She wants to know why the boss will only grant two weeks.
BRADFORD: I’m sorry—I can only offer you two weeks of vacation a year for your first three years.
STEPHANIE: Why is that?
BRADFORD: Well, that’s our standard amount for a position at this level. I have to be sure that your benefits package lines up with others in the company.
STEPHANIE: Having a consistent vacation policy is important to you.
BRADFORD: Exactly.
STEPHANIE: Are there any other reasons that granting more vacation might be a problem?
BRADFORD: Yeah—I’d be concerned about having you gone for two weeks or more at a time.
STEPHANIE: What would be wrong with that, from your perspective?
BRADFORD: Well, given the importance of your new position during this time, I think that might be very disruptive.
STEPHANIE: I see. So if I had three weeks, you’d worry that I’d take one long vacation and my absence would be disruptive.
BRADFORD: Yes.
Stephanie is probing to find out Bradford’s concerns on this issue. She should also share some of her own interests. For example, she might explain that for the last four years she’s had three weeks vacation at Ames and that this is important to her because she likes taking one week off three times a year, to visit her family and to travel. Unfortunately, all too often interests don’t get discussed in negotiations. Consider the following example:
BRADFORD: I’m sorry—I can only offer you two weeks of vacation a year.
STEPHANIE: Why is that?
BRADFORD: Well, that’s our standard amount for a position at this level. I have to be sure that your benefits package lines up with others in the company.
STEPHANIE: But as I understand it, three weeks is standard in the industry for a mid-level manager. Two weeks won’t do it, given my family obligations.
BRADFORD: Well, that’s the best I can do.
What happened? Stephanie started off well by asking why Bradford only wanted to offer two weeks a year. But rather than show understanding of the response and ask more questions to uncover the agency’s interests more fully, she succumbed to the temptation to argue. The implicit message is, “OK, that’s your interest or concern, but it’s wrong.” Or, “I’ve got a competing interest that should be given priority.” If Stephanie takes that approach, she isn’t likely to learn much more about Bradford’s concerns. Instead, they’ll just fight about whose interests are more important.
It takes discipline to stick to your task. At this stage, Stephanie wants to uncov
er as much information as she can about what drives the other side. What concerns underlie his stated demands? What needs is he not expressing but worrying about? These underlying interests are the stuff of which value-creating trades are made.
It may help Stephanie to know that she’ll have an opportunity to assert her own perspective and interests—later. She should clarify up front that her desire to understand Bradford’s interests should not be taken as agreement with or acceptance of those interests. And she should ensure that he recognizes her reciprocal right to have an opportunity to explain her point of view.
GENERATE VALUE-CREATING OPTIONS
Now Stephanie is ready to look for value-creating trades. But this is not as easy as it might appear. Many negotiators jump into a negotiation process that inhibits value creation. One side suggests a solution and the other negotiator shoots it down. The second negotiator proposes an option, only to be told by the first why it can’t work. After a few minutes of this, neither side is willing to propose anything but the most conventional solutions. This method mistakenly conflates two processes that should be engaged in separately: generating options and evaluating them.
It often helps to engage in some sort of brainstorming. The most effective brainstorming requires real freedom—however momentary—from practical constraints. In Stephanie’s negotiation with her prospective boss, she may want to set aside some time simply to generate solutions, not critique them. She might say something like, “Well, I think I have a good sense of your interests, and you seem to understand mine. Now I’m wondering how we can meet those interests. I’d like to take the job if we can work out these remaining issues, and I’ve got some ideas. My suggestion is that we take ten minutes and just try to brainstorm as many possible solutions to this problem as we can think of—even crazy solutions. Then we can decide if any of them make sense.”
In this way, Stephanie is enlisting Bradford’s cooperation in the first ground rule of brainstorming: no evaluation. Premature evaluation inhibits creativity. We are all self-critical enough, and adding to our natural inhibitions only makes matters worse. When brainstorming, avoid the temptation to critique ideas as they are being generated. This includes avoiding even congratulatory comments about how great someone else’s idea is, murmurs of approval, and backslapping. When you signal such approval, you send the implicit message that you’re still judging each idea as it is generated—you’re just keeping the negative comments to yourself. That does not encourage inventiveness. The goal is to liberate those at the table to suggest ideas. One person’s idea may seem crazy, but it may prompt another person to suggest a solution that might otherwise have been overlooked. There will be time enough for evaluation. The idea behind brainstorming is that evaluation should be a separate activity, not mixed with the process of generating ideas.
Box 5
The second ground rule of brainstorming is: no ownership of ideas. Those at the table should feel free to suggest anything they can think of, without fear that their ideas will be attributed to them or used against them. Avoid comments such as: “John, I’m surprised to hear you suggest that; I didn’t think you believed that idea made much sense.” John should be able to suggest an idea without believing in it. Indeed, those at the table should feel free to suggest ideas that are not in their best interests, purely to stimulate discussion, without fear that others at the table will later take those ideas as offers.
In preparing for negotiations, brainstorming is often employed behind the table with colleagues in order to generate ideas. For many negotiators, however, it may feel very dangerous to engage in this activity with someone on the other side. Our own experience suggests, nevertheless, that by negotiating process clearly, brainstorming can also be productive across the table.
How do you convey these ground rules to the other side? You can get the point across without sounding dictatorial or rule-obsessed. Just explain what you’re trying to achieve and then lead by example. Returning to Stephanie’s negotiation with Bradford, she might say, “I understand that the company’s policy is to give new employees two weeks of vacation a year. I’d like to see if we could come up with some creative options to apply to my case that would still serve the company’s interests. In my experience, it often helps to spend a few minutes just listing all of the ideas we can think of—without saying whether we think they’re good or bad or even acceptable.”
Stephanie is inviting Bradford to discuss options with her, and she’s signaling her commitment to the no-evaluation, no-ownership-of-ideas ground rules. Together they may generate a list of possibilities: Stephanie is permitted a third week without pay (perhaps compensated for by an increase in her salary); Bradford gives Stephanie credit for her time working at Ames and brings her in as if she’s been working at the Bradford Agency for three years; or Bradford agrees to modify the policy slightly and extend Stephanie’s vacation from two weeks to three weeks after only one year with the firm.
Similarly, Stephanie and Bradford might come up with a variety of options for resolving their disagreement about who should pay Stephanie’s moving expenses. They could share the cost of the move; the agency could extend Stephanie an interest-free short-term loan to cover her expenses; or Bradford could increase her starting bonus to reflect the moving costs. Generating these possible options may broaden the parties’ thinking about the terms of their negotiated agreement.
Many of these options demonstrate that a negotiator’s interests can often be met in a variety of ways. And often the simplest solution is to compensate one side by adjusting the price term—in Stephanie’s case, her salary—to accommodate the parties’ needs and concerns. Rather than change the company’s vacation policy, for example, Bradford might prefer the option of paying Stephanie a little more and then allowing her to take one week of unpaid leave a year, because that does not set as bad a precedent for other employees. In many deal-making situations, such “side payments” can be an effective way to adjust the distributive consequences of value-creating moves (see Chapter 5).
TREAT DISTRIBUTIVE ISSUES AS A SHARED PROBLEM
Now Stephanie is fairly far along in her negotiation. As she looks at the list of possible options that she and Bradford have created, one thing will stand out: some of the options are better for her than others. And Bradford will be thinking the same thing. No matter how good you are at brainstorming and no matter how carefully you search out value-creating trades, at some point the pie has to be sliced.
What happens to interest-based, collaborative problem-solving when you turn to distributive issues? Some negotiators act as if problem-solving has to be tossed overboard when the going gets tough. We could not disagree more. In our experience, it’s when distributive issues are at the forefront that problem-solving skills are most desperately needed.
Stephanie’s goal at this point is to treat distributive issues as a shared problem. Both sides know that distributive issues exist. She knows that, other things being equal, she’d like to earn more and Bradford would like to pay less. There’s no getting around it. At the same time, however, she doesn’t want to behave in a way that would damage her relationship with Bradford.
Suppose Stephanie knows that she would want to accept Bradford’s offer so long as Bradford pays her what Ames is offering and that she would accept even if Bradford does nothing more with respect to moving expenses or a third week of vacation. In other words, a $100,000 salary is her reservation value. What might Stephanie do to move to closure?
She might say something like the following: “I would very much like to come to work for you, and while salary is not my primary consideration, I obviously care about being compensated fairly. What appeals to me most about Bradford is my long-term opportunity to build my career. Here’s a package I’d be pleased with. I’d like you to consider it.” Stephanie then lays out a package with the following elements: a base salary of $100,000; a bonus of up to $20,000 depending on her ability to deliver new clients; an option to take a third unpaid
week off each year until her fourth year, subject of course to work schedule; and a one-year interest-free loan of $10,000 to cover moving expenses. “I think this respects your firm’s present policies,” Stephanie says, “and I think it’s fair in light of what you’ve paid others with my experience and what I know about compensation packages for account executives at comparable firms.”
Notice what Stephanie has done. She asked for more than the minimum she would accept. But she made no threats, and her proposal was not in the form of a take-it-or-leave-it offer. Her proposal respected Bradford’s concerns about the agency’s policies. She had a reason to justify both the salary and her bonus, and she explained why her proposal was consistent with current market conditions.
In some situations it’s easy to find a salient market norm around which to structure an agreement. Stephanie, for example, may be able to do only a few minutes of research on the Internet and find what comparable salaries would be at other agencies for someone in her position. And her competing offer from the Ames Agency provides one easy standard against which to measure Bradford’s proposal. As Stephanie and Bradford work to reach agreement, she may bring up these norms rather than just arbitrarily demanding something over Bradford’s offer of $95,000.
As it turned out, Bradford accepted Stephanie’s offer, and during her first year she in fact earned the full $20,000 bonus. Is it possible that Stephanie could have demanded and received an even sweeter package than the one that she proposed? She’ll never know. But what she does know is that the deal she struck serves her interests very well while respecting those of her employer. And the agreement with Bradford is better than her BATNA.
Beyond Winning Page 5