Bargaining for Advantage
Table of Contents
Title Page
Copyright Page
Dedication
Preface to the Second Edition
Acknowledgements
Introduction
PART I - THE SIX FOUNDATIONS OF EFFECTIVE NEGOTIATION
Chapter 1 - The First Foundation: Your Bargaining Style
Chapter 2 - The Second Foundation: Your Goals and Expectations
Chapter 3 - The Third Foundation: Authoritative Standards and Norms
Chapter 4 - The Fourth Foundation: Relationships
Chapter 5 - The Fifth Foundation: The Other Party’s Interests
Chapter 6 - The Sixth Foundation: Leverage
PART II - THE NEGOTIATION PROCESS
Chapter 7 - Step 1: Preparing Your Strategy
Chapter 8 - Step 2: Exchanging Information
Chapter 9 - Step 3: Opening and Making Concessions
Chapter 10 - Step 4: Closing and Gaining Commitment
Chapter 11 - Bargaining with the Devil Without Losing Your Soul: Ethics in Negotiation
Chapter 12 - Conclusion: On Becoming an Effective Negotiator
Appendix A: - Bargaining Styles Assessment Tool
Appendix B: - Information-Based Bargaining Plan
Notes
Selected Bibliography
For Further Information
Index
FOR THE BEST IN PAPERBACKS, LOOK FOR THE
Praise for Bargaining for Advantage
“Readers interested in developing or refining their negotiation skills should run, not walk, to the nearest bookstore for a copy of Bargaining for Advantage. . . . It belongs on any list of required reading for practitioners or educators in the field of negotiation and is also highly recommended to the general public.”
—Alternative Dispute Resolution Report
“Not only is Professor Shell’s book one that no business man or woman should overlook, it is also very readable and enjoyable ... regardless of what business you’re in, this is one of those invaluable tools to make use of over and over again.”
—The Update
“Whether you’re buying a car, trying to get the kids into bed, or brokering a major business deal, Bargaining for Advantage teaches you to think on your feet and discover imaginative ways to come to terms with anyone.”
—Laurie Calkhoven, editorial director, The Money Book Club
“Articulate, well-researched and tightly organized.... A smart, readable, helpful and nicely different take on negotiations.”
—The Pennsylvania Gazette
“A new book that could really shift your sensibilities about the art of negotiation—taking out the mystery and replacing it with a success ‘toolbox’ ... A volume that gives direct and practical fundamentals to becoming an effective bargainer in any situation.”
—Business Digest
“When it comes to negotiation, Richard Shell at Wharton is the best. His book and workshop show how to play the game without giving up your self-respect or threatening the other party’s self-esteem. Bargaining for Advantage is a must for everyone who wants to feel more comfortable and effective at the bargaining table.”
—Max J. Garelick, president and CEO, Perry Ellis International
“Packed with well-selected examples of negotiating strategies from the business world and fascinating cultural observations, Bargaining for Advantage details every aspect of the fine art of negotiating. Should be required reading for anyone who is about to make a deal.”
—Ann McLaughlin, chairman, The Aspen Institute
“Wise, persuasive, and entirely readable, Bargaining for Advantage provides practical step-by-step advice for negotiators who want to bargain effectively without compromising themselves or their values.” —Michael Wheeler, Harvard Business School, coeditor of The
Negotiation Journal
“Tightly written, entertaining, and smart, Richard Shell’s Bargaining for Advantage is a must read for anyone seeking greater insight into the art and science of negotiation.”
—Judith Rodin, president, University of Pennsylvania, professor of psychology, psychiatry, and medicine
“Richard Shell’s book is the first step toward going into a negotiation with confidence. His logical and specific advice is extremely helpful for any businesswoman trying to succeed in a negotiation with both skill and grace.”
—Hilary B. Rosen, president and CEO, Recording Industry Association of America
“Bargaining for Advantage delivers just the sort of real world tools we are constantly looking for at Compaq to help our managers negotiate and form alliances more effectively. Research-based but highly accessible, Richard Shell’s work will become a cornerstone in our negotiation training efforts.”
—Myles A. Owens, director, Strategic Alliances and Partnership, Compaq Computer Corporation
“Richard Shell is known to be a star teacher of negotiation. His expertise comes through in this book ... a wonderful integration of practical advice that will be useful to all readers.”
—Max H. Bazerman, Gerber professor of dispute resolution and organization, Kellogg School of Management at Northwestern University
“Shell’s insights as a scholar, and his years of experience as a negotiation teacher at one of the world’s leading business schools, come together on every page of this very readable book. The writing is clear; the ideas are sound; and the narrative is crisp and compelling. The book is rich in cogent observations and vivid examples that help connect academic bargaining concepts to the real-world arenas in which they play out.”
—Stanford University Professor Roderick M. Kramer in The Negotiation Journal
PENGUIN BOOKS
BARGAINING FOR ADVANTAGE
G. Richard Shell is the Thomas Gerrity Professor at the Wharton School of the University of Pennsylvania, where he is academic director of the Wharton Executive Negotiation Workshop. BusinessWeek’s biannual “Guide to the Best Business Schools” named him three times as one of the nation’s top business school professors. He consults widely and trains business executives, nonprofit leaders, and government officials from all over the world to be more effective negotiators. He lives with his wife and two sons near Philadelphia in Wynnewood, Pennsylvania.
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First published in the United States of America by Viking Penguin,
a member of Penguin Putnam Inc. 1999
Published in Penguin Books 2000
This edition published 2006
Copyright © G. Richard Shell, 2006 All rights reserved
Grateful acknowledgment is made for permission to use the following selections, w
hich have been adapted for this book: “When Is It Legal to Lie in Negotiations?” by G. Richard Shell, Sloan Management Review; “Bargaining Styles and Negotiation: The Thomas-Kilmann Conflict Mode Instrument in Negotiation Training,” by G. Richard Shell, Negotiation Journal.
PUBLISHER’S NOTE
eISBN : 978-1-101-22137-2
1. Negotiation. 2. Persuasion (Psychology). I. Title.
BF637.N4S44 2006
302.3—dc22 2005056636
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For Robbie, Ben, and Ned,
who have taught me so much.
Preface to the Second Edition
It is with real pleasure that I offer this second edition of Bargaining for Advantage. I wrote this book in the late 1990s because I was dissatisfied with the existing set of works for serious students and practitioners of this fascinating process we call negotiation. I wanted a book that would explore the immense variety of real-world negotiations, provide both historical context and a social science foundation for dealmaking, and be fun to read. The appearance of this new edition and the many foreign translations of this work (more than ten at last count) suggest the book hit its mark.
So why improve on something that works? Four reasons. First and foremost, a new edition gives me a chance to share with readers a new Bargaining Styles Assessment Tool, which can be found in Appendix A. I believe that many negotiators have distinctive talents, strengths, and weaknesses rooted in personality. These traits are not set in concrete, but they generate biases and preferences that strongly affect how they behave at the bargaining table. I designed this bargaining styles assessment instrument to probe such negotiation instincts. By including my new test here, along with a standardized grid for evaluating your results in comparison with those of more than 1,500 executives from all over the world, I hope readers can come away from the book with a deeper understanding of the kind of negotiator they are when they are at their best.
The second reason for a new edition has to do with advancing communication technology. At the time I was writing Bargaining for Advantage, the world had not yet become as dependent as it is now on Internet-enabled electronic communication systems such as e-mail and instant messaging. This second edition gives me a chance to directly address the perils and promise of electronic negotiations, which I do in Chapter 7. This same chapter also features a new section on using agents in the bargaining process, an important topic I neglected earlier.
Third, I have become more aware since publishing the first edition of the importance of gender and culture as negotiation variables. I therefore address these topics in Chapter 1 in more detail than before. The publication in 2003 of Linda Babcock’s and Sara Laschever’s Women Don’t Ask: Negotiation and the Gender Divide helped clarify the gender issue in a particularly helpful way.
Finally, this edition gives me a chance to edit and supplement a variety of stories, research studies, and topics that will keep the work fresh. Close readers of the first edition will notice a number of such changes and updates. Throughout, however, my intention has been to leave what has worked well largely intact.
A number of readers and fellow negotiation teachers who use the book in classes kindly offered suggestions for this edition. Some of my colleagues at the Wharton School, especially professors Maurice Schweitzer, Rachel Croson, Ken Shropshire, and Jennifer Beer, offered ideas and perspectives. Professor Alice Stuhlmacher of DePaul University generously shared both her ideas and her research on the controversial issue of gender and negotiation. I am also grateful for suggestions from the negotiations teaching faculty at the Stanford Law School. Silicon Valley lawyer (and friend) Ralph Pais was especially helpful. Special thanks go to Chris Guthrie, a law professor at Northwestern University, whose influential book review of Bargaining for Advantage introduced it to law school audiences. I could not give legal negotiation the treatment it deserves without distorting the focus of this book, but I invite readers seeking more specialized knowledge in this area to consult the excellent Beyond Winning: Negotiating to Create Value in Deals and Disputes by law school professors Robert H. Mnookin, Scott R. Peppet, and Andrew S. Tulumello.
With that said, I present this new edition. I sincerely hope it guides you on one of the most interesting (and potentially profitable) journeys that life has to offer—the journey toward effectiveness in all of your negotiations.
—G. RICHARD SHELL
Acknowledgments
A book like this cannot be written without help from many people. Three in particular played key roles. First and foremost, I want to thank my wife, Robbie, for her patient and thorough job of editing. A journalist and editor by profession, she steered me reliably toward clarity and vividness—and away from academic jargon and dry explanation. Second, I am indebted to my agent, Michael Snell, for his encouragement, upbeat attitude, and careful tutoring as we moved this project from concept to finished product. He was a knowledgeable guide to the mysteries of trade book publishing. Finally, I want to recognize my editor at Viking Penguin, Jane von Mehren, for believing in Bargaining for Advantage, improving it with her editorial direction, and providing a cheerful, professional hand throughout. Her sense of humor reminded me to keep mine.
During the manuscript phase, a number of friends and colleagues gave generously of their time to read and comment in detail on drafts. Special thanks go to Simon Auster, Peter Cappelli, Eric Orts, Maurice Schweitzer, and Michael Wheeler. In addition, Larry Susskind, James J. White, Robert Cialdini, Tom Dunfee, Alan Strudler, Stuart Diamond, Howard Kunreuther, Bob Mittelstaedt, Michael Stein, Leslie Goode, and Tod Ibrahim also read all or parts of the manuscript and made useful suggestions. Wharton MBA students in my fall 1997 and spring 1998 negotiation courses, as well as executives in the Wharton Executive Negotiation Workshop during the same and earlier periods, gave me comments and provided memorable stories to include as illustrations. Jon A. Bjornson assisted on graphic design elements of the book.
Two members of the Wharton Legal Studies Department office team—our business administrator, Tamara English, and my administrative assistant, Andrea King—tirelessly and patiently typed, proofread, and assembled drafts as the manuscript took shape. My thanks for their cheerful help. Jeremy Bagai, Bernadette Spina, Tracy Denton, and Brian Okay contributed outstanding research assistance.
Bargaining for Advantage reflects an intellectual journey as well as a writing project. I owe a particular debt to Professor Robert B. Cialdini, whose book Influence: The Psychology of Persuasion opened my eyes to lines of social psychological research that turned out to be especially relevant to negotiation. Cialdini’s book also provided a model for making social science research both readable and entertaining. In addition, my colleague Stuart Diamond, with whom I teach in the Wharton Executive Negotiation Workshop, is always challenging my perspectives on the subject. His insistence on the importance of daily practice, personality styles, and standards led me to investigate these aspects of negotiation training and effectiveness more deeply than I might otherwise have done.
Finally, I have benefited over the past decade from many professional associations with leaders in the negotiation and conflict resolution fields. I had a particularly interesting academic experience as a Visiting Scholar at the Harvard Program on Negotiation in the 1993-1994 academic year. I also want to give special thanks to Larry Susskind (MIT), Len Greenhalgh (Dartmouth), Howard Raiffa (Harvard Business School), Max Bazerman (Kellogg School at Northwestern University), and Roy Lewicki (Ohio State University). These scholars introduced me to the subject of negotiation in its academic setting, generously shared teaching materials with me in the early going, and pointed me towar
d the intellectual and practical questions that make the field so interesting.
—G. RICHARD SHELL
Introduction:
It’s Your Move
At the Wharton School, I teach negotiation to some of the best and brightest business people in the world—both students and executives. I also serve as the academic director for a week-long negotiation program for senior managers called the “Wharton Executive Negotiation Workshop: Bargaining for Advantage.” But despite these credentials, I have to admit that bargaining can make me a little anxious. In fact, sometimes I do not even realize I am negotiating at all—until it is too late.
For example, not long ago, I was sitting at the dinner table with my family when the telephone rang. I answered. It was a neighbor’s teenage daughter, Emily.
“I’m raising money for our school softball team so we can take a trip this winter to play in a tournament,” she explained. “We’re selling citrus fruits like oranges and grapefruits. Would you like to buy some?”
We are friends with Emily’s family and have known her since she was four. Naturally, I wanted to help out.
“Tell me about it,” I said.
She explained the various packages and prices: $11 for the small sampler, $20 for a package with more grapefruit, $35 for the grand collection. I found myself wondering where we were going to store $35 worth of citrus fruit.