Bargaining for Advantage Read online

  Two studies of negotiator behavior have revealed a more complex and accurate profile of how the average professional conducts himself or herself at the bargaining table. The first study covered American lawyers; the second looked at English labor negotiators and contract managers.

  A study of American lawyer-negotiators reported by Professor Gerald R. Williams revealed that roughly 65 percent of a sample of attorneys from two major U.S. cities exhibited a consistently cooperative style of negotiation, whereas only 24 percent were truly competitive in their orientation (11 percent defied categorization using these two labels). Roughly half of the sample was rated as “effective” negotiators by their peers. Most interesting, more than 75 percent of the “effective” group were cooperative types and only 12 percent were competitive. The remaining effective negotiators came from the pool of mixed strategy negotiators.

  In contrast to the stereotypes, this study suggests that a cooperative orientation is more common than a competitive orientation within at least one sample of professional negotiators in the United States. Moreover, it appears to be easier to gain a reputation for being effective (at least as rated by peers) by using a cooperative approach rather than using a competitive one.

  The second study was conducted over a period of nine years by Neil Rackham and John Carlisle in England. Rackham and Carlisle observed the behavior of forty-nine professional labor and contract negotiators in real transactions. Some of the results of their work will be discussed in Chapters 5 and 8 later in this book. The point I want to make here relates to the styles exhibited by these professionals. The most effective of them displayed distinctly cooperative traits.

  For example, the study examined the use of what the researchers called irritators at the negotiating table. Irritators are such things as self-serving descriptions of one’s offer, gratuitous insults, and direct attacks on the other side’s proposal—typical competitive tactics. The average negotiator used 10.8 irritators per hour of negotiating time; the more skilled negotiators used an average of only 2.3 irritators per hour.

  In addition, skilled negotiators avoided what the researchers called defend/attack spirals, cycles of emotion-laden comments assigning blame or disclaiming fault. Only 1.9 percent of the skilled negotiators’ comments at the table fell into this category, whereas the average negotiators triggered or gave momentum to defend/attack spirals with 6.3 percent of their comments. The profile of the effective negotiator that emerges from this study seems to reflect a distinct set of cooperative, as opposed to stereotypically competitive, traits.

  The conclusion from both studies? Contrary to popular belief, perfectly reasonable, cooperative people appear to have a strong potential to become extremely effective negotiators.

  Gender and Culture

  Bargaining style preferences originate from deep psychological sources, including conflict resolution patterns with parents, early experiences with siblings and playmates, and lessons we learn at the outset of our careers. And these early, formative experiences sometimes derive from two even more basic aspects of our social identities: our gender and culture. These two topics are controversial because intelligent discussion can rapidly slip into destructive (and misleading) stereotypes. But researchers have identified some reliable truths about these variables, so they are well worth addressing.

  THE GENDER DIFFERENCE IN NEGOTIATION

  Studies indicate that men and women can differ in the ways they communicate—especially in work settings. Georgetown linguistics professor Deborah Tannen has demonstrated in books such as You Just Don’t Understand: Men and Women in Conversation and Talking from 9 to 5: Women and Men at Work that men tend to be more assertive, more likely to interrupt their counterpart, and more oriented toward affirming their status. Women, meanwhile, listen more than men do and pay greater attention to emotional rapport and taking turns when speaking. Although you probably know plenty of emotionally oriented men and status-oriented women, the statistics support Tannen’s overall findings. The question then becomes how these various behavioral tendencies can be used or adapted so they are sources of strength rather than weakness in particular professional contexts.

  Research on American women suggests that there are two main ways that gender differences affect negotiations. First, there is solid empirical evidence that women—including professionals in high-stakes business careers—choose to negotiate somewhat less often than do men in such important areas as salary and promotion. In negotiation style terms, women behave, on average, a bit more cooperatively than men. In a study conducted at Carnegie Mellon University’s business school, Professor Linda Babcock discovered that the difference between the starting salaries women MBA graduates were getting and the salaries men were offered (roughly a $4,000 difference in favor of the men) could be accounted for by one single behavioral fact: 57 percent of the men asked for more money after receiving an initial offer whereas only 7 percent of women asked for more. Those who negotiated—both women and men—received an average of $4,053 more than those who did not. Babcock’s research, summarized in her book, Women Don’t Ask, confirms this tendency across a number of studies and contexts. Students in my negotiation classes have added another item to the list of practices women tend to follow more than men: they rely heavily on “fairness” arguments, assuming their counterparts will be responsive to their reasoned, relationship-friendly methods. These tactics can pay off, of course, but only when other parties are tuned to the same relationship wavelength.

  The experience of one of my students, Marci, vividly illustrates exactly how the gender factor can subtly work its way into the bargaining process. Prior to starting her MBA studies, Marci worked for a midsized computer services firm and was the only female in her unit. Consistent with Babcock’s research, Marci had not negotiated her offer when she received it from her new employer. In fact, she was simply delighted to get the job. After a couple of years of exemplary work, she gradually became responsible for business representing 30 percent of the company’s revenue—while two better-paid male counterparts who started work with her were handling projects worth only 1 percent of revenues each. She thought she deserved a raise.

  Her method of introducing the raise issue was characteristically indirect, however. She went to her boss and requested a performance review. “I thought it was a great way to get my superiors to notice my success without blowing my own horn,” she told me during class. “I did not want to appear pushy.” Her tactic did not work. The boss could not find the time to review her.

  Many women might stop here, but Marci was persistent. She went to the president of the company and boldly asked for a 20 percent raise, arguing that her male coworkers were getting 20 percent more pay but managing fewer people and projects. Thus, a 20 percent raise was “fair.” This, too, failed. As she described it, “I kept repeating, ‘This is not fair.’ In retrospect, fairness required even more than a 20 percent salary increase based on my contribution, but I was not confident enough to ask. No doubt, this insecurity shined forth.” In addition, as she put it, “given that I was working such late hours, seemed so committed to my position, and appeared to have no inclination to look for another job, there was no urgent necessity to listen to me.”

  In the end, Marci got her raise—just in time for her to turn it down. When the company discovered that she had been accepted into Wharton’s MBA program and intended to go, it offered her a 35 percent raise. But by this time, Marci was already out the door. As she told her fellow students, “Being afraid to ask is the most self-defeating trait a woman can have. Don’t be afraid to look pushy.”

  The second gender-based research finding I find persuasive has to do with stereotypes. Because women appear, on average, to be somewhat more cooperative than men, both men and women bring stereotypes to the bargaining table that exaggerate this difference, creating self-fulfilling prophecies and blinding them to what is really going on. This can work either to women’s disadvantage or advantage, depending on the experience of th
e negotiator.

  For example, studies have shown that women bargain less effectively when they are reminded of a negative, women-are-wimps gender stereotype just prior to a transaction. It seems that fear of being stereotyped as a passive female can sabotage a woman’s confidence and hence her ability to effectively use her own style, whatever that style may be. Even attempts to prove the stereotype wrong seem to backfire, leading to overly aggressive behavior and less-than-stellar results. This psychological process is reversed if women are given a positive, women-are-collaborative stereotype just prior to negotiating. Now the self-fulfilling prophecy creates a good bargaining experience and better results. But because the actual stereotype in the world is more often negative than positive, women sometimes suffer from what scholars call “stereotype threat.”

  On the other hand, skilled manipulation of others’ stereotypes regarding women can give a female negotiator a significant advantage if she plays her cards right. This ability to turn the tables on opponents seems to come with experience. A top-ranked woman negotiator once spoke to our class about her adventures representing distressed companies in “work-out” situations. These hard-nosed negotiations take place between creditors and companies that cannot pay their bills. Potential bankruptcy forms the backdrop to the bargaining. Few women make this their professional calling, and our speaker reported that her femininity was almost always an asset in this tough arena. “For example,” she said, “whenever a guy on the other side of the table attacks me personally, I never speak up to defend myself. I wait for a man on the other team to come to my defense—one always does—and then I have gained an ally and divided their group. It’s an advantage.” Another speaker, a petite woman who was head of mergers and acquisitions for a major pharmaceutical company, reported that she liked to play with stereotypes of all kinds. She was born in Poland but moved to Israel as a child. “Before a negotiation,” she explained, “I always find a way to make it known that I was once an Israeli military officer. I create the impression that I am going to be tough as nails, and then I go in and melt their hearts. They are so relieved—and they work with me. Of course, I can always fall back on that first impression if I need to.”

  Gender does not have to become an issue in negotiations. But smart negotiators try to anticipate every aspect of their own and their counterparts’ behavior as part of a good preparation. They also need to be aware of their own assumptions. Gender differences are therefore well worth considering as part of a complete style analysis.

  A WORLD OF DIFFERENT CULTURES

  If gender can complicate the negotiation process, cross-cultural issues can be showstoppers. At the Wharton School, we used to have a small, specialized program in “international business.” Now the entire MBA program focuses on global business problems. And in doing global deals, sensitivity to issues of language, customs, social expectations, and religion can mean the difference between a successful long-term business relationship and a short-lived, unprofitable transaction.

  Consider the following examples:

  A British CEO once told me about his first negotiation in Lebanon. He started the negotiation well, but every time he made a concession, the other parties escalated rather than reduced their demands. After several rounds of this over a couple of months, he quit, telling his counterparts that he was thoroughly disgusted with their tactics and that he wanted nothing to do with them. A few days later, they called, saying that they now had “serious” proposals to put to him. He rejected the overture. A week later, they called again, making several concessions they had previously said were absolutely impossible. He reiterated that he had no interest in further dealings. At this point in his story, he looked at me ruefully. “The whole thing was really my own fault,” he said. “I later learned that walking away from the table is a very common way to show you are serious in that part of the world. If I had walked out two months sooner, they would have behaved better and I probably could have closed the deal.”

  Culture can also affect decisions about who should be at the table. For example, different cultures have different sensitivities regarding the status of people at the bargaining table. Some formal cultures require participation by people of equal rank. Other, less formal cultures use functional knowledge and decision authority as criteria for picking negotiators. Such differences can lead to serious breakdowns and misunderstandings.

  A female attorney working for a prestigious New York law firm once accompanied the male CEO of a major client to Latin America to negotiate a complex deal. Soon after they arrived, the head of the prospective Latin American partner suggested that he and the CEO go off together to discuss business—while his wife and the lawyer go shopping. The lawyer was outraged, assuming this to be a blatant example of Latin American gender bias. Before voicing her objections, however, she called a colleague back in New York, who told her that he, too, had been excluded from preliminary talks during his last negotiation in that country. The Latin American executive was just looking for a diplomatic way to get her out of the picture as a lawyer, not as a woman. It was the local practice, the colleague suggested, for lawyers to negotiate only with other lawyers, not with the businesspeople. Had the woman attorney insisted on participating, she would have soured the deal and destroyed her credibility.

  These and countless examples like them confirm that culture presents a veritable minefield of stylistic differences in negotiation. The Arusha people gathering under their shade trees in Africa may engage in a process similar to the one business moguls use in New York, but the tone, pacing, signals, cues, and underlying assumptions about relationships can be radically different. Because our global economy depends on bridging these cultural divides, entire books (some of which I list in the bibliography) detail the pitfalls, opportunities, and customs that characterize negotiating in every commercially important region in the world.

  I will be referring to a variety of different cultural practices throughout the book, especially in the chapters dealing with relationships, exchanging information, and bargaining. For now, I simply want to flag two important points.

  First, cultural issues usually have more to do with form than substance. That is, they add complexity and potential misunderstanding to the way people communicate with one another, but money, control, and risk are still likely to be the most important issues on the table regardless of what country you are in. And the best way to avoid miscommunication is to do your homework on the culture in question, hire skilled interpreters, and use cultural liaisons to help you avoid cross-cultural meltdowns.

  Second, the single most important difference in cross-cultural negotiations—other than the obvious problems of language and custom—is the way the parties perceive the relationship factor. As I will detail in the chapter on information exchange, North Americans and northern Europeans tend to focus more quickly on the transactional aspects of the deal, whereas most Asian, Indian, Middle Eastern, African, and Latin American cultures focus more intently on social, relational aspects. As a Japanese MBA student of mine once put it, “Japanese people tend to think of negotiation as a process leading up to an ‘arranged marriage.’ And they behave as if they really are in such a situation.” Western negotiators doing business in Japan or other relationship-based cultures do well to approach preliminary social events in this spirit. Cultures may vary in the degree of formality they associate with prewedding festivities, but families in all cultures use these events to thoroughly size up and woo their new, would-be relations. If you want to be successful negotiating in a relationship culture, therefore, be patient and realize that the contract (if one comes) is just one part of a much bigger picture.

  Beyond Style—to Effectiveness

  People bring many personal differences to the bargaining table, but the overriding goal for each of us remains constant: How can we become as effective as possible using our unique combination of traits and talents? Many attributes go into making a skillful negotiator, including such things as having a good memory
, being “quick” verbally, and handling stress well. But effectiveness is as much a matter of attitude as it is of ability. The best negotiators exhibit four key habits of thought that everyone, regardless of their style, gender, or culture, can adopt to improve their negotiation results. They are: • A willingness to prepare

  • High expectations

  • The patience to listen

  • A commitment to personal integrity

  These practices will serve as themes throughout the book. Let’s look briefly at each of them.

  A WILLINGNESS TO PREPARE

  The research on the importance of preparation is extensive. Nearly every research study on negotiation has confirmed its importance. Here is an illustration.

  Several years ago, a colleague and I were investigating the use of computer networks as a method for negotiation. We designed a network computer system to help parties reach better agreements and then set out to test it. We gave the same four-issue, buy-sell exercise to hundreds of MBA students. Students playing the “buyer” role were paired with others playing the “seller” role. We instructed half the pairs to read the problem and negotiate whenever they thought they were ready—some face-to-face, others using e-mail. They usually took about ten to fifteen minutes to prepare, then they negotiated.

  We required the other groups to go through a structured, individual preparation process on the computer that usually took about thirty to forty minutes. Some students then negotiated the buy-sell exercise using our computer network system while others bargained face-to-face.

  We were surprised by the results. Our fancy, computerized method of negotiation did not matter much. But the preparation process did. The students who used the formal preparation system reached better agreements in both the face-to-face and the computer network conditions—not just for themselves, but for both sides.