Dr. Heidi Grant

The Motivational Secret to Great Negotiating

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From my Fast Company blog:

Negotiating well is a powerful skill, and it doesn’t come naturally to most people. That’s because a negotiation is an experience that is rife with conflicting motivations.  When two parties haggle over price, the buyer needs to somehow reconcile his desire to pay the lowest possible price, with the knowledge that if he bids too low, the negotiation may break down and the seller could walk away.

These concerns are equally present when it comes to negotiations over salary – managers want to keep costs down, without losing their best people to better paying jobs.  And employees want to get the highest possible salary, without overplaying their hand and getting canned, or simply humiliated, in the process.

The key to a good outcome in any negotiation is a strong opening bid, since that bid is the jumping off point, as well as the frame of reference, for the negotiation that follows.  You are never going to end up paying less than your initial offer when purchasing a car, or making a bigger salary than you asked for when starting your new job. But a strong opening bid takes a certain amount of gutsiness – you need to overcome all those perfectly rational concerns you may have about taking things too far, only to end up embarrassing yourself and failing completely.

So how can you embrace risk, particularly when risk-taking doesn’t come to you naturally?  The answer is simple:  when you think about an upcoming negotiation, focus only on what you have to gain, and banish all thoughts of what you might lose.

Psychologists call this adopting a promotion focus.  When we think about our goals in terms of potential gains, we automatically (often without realizing it) become more comfortable with risk, and less sensitive to concerns about what could go wrong.  When we adopt a prevention focus, on the other hand, and think about our goals in terms of what we could lose if we don’t succeed, we become much more conservative and risk-averse.

These different ways of looking at the same goal (e.g., to pay the lowest price, to get the biggest raise) have profound effects on the way we approach negotiation.

In one study, psychologist Adam Galinksy and his colleagues divided 54 MBA students into pairs, and asked them to take part in a mock negotiation involving the sale of a pharmaceutical plant.  One student was assigned the role of “seller” and the other “buyer,” and both were given detailed information about the circumstances of the sale, including the fact that the “bargaining zone” would range from $17-25 million dollars.

Galinsky then manipulated the goal focus of the buyers.  Before the negotiation began, half were told to take a couple of minutes and write down “the negotiation behaviors and outcomes you hope to achieve… think about how you could promote these behaviors and outcomes,” giving the buyers a promotion focus.  The other half were told to write down the behaviors and outcomes “you seek to avoid” and how they “could prevent” them, giving those buyers a prevention focus.

Each pair began their negotiation with an opening bid from the buyer.  Promotion-minded buyers opened with a bid an average of nearly $4 million dollars less than prevention-minded buyers.  They were willing to take the greater risk and bid aggressively low, and it paid off in a big way.  In the end, promotion buyers purchased the plant for an average of $21.24 million, while prevention buyers paid $24.07 million.

Why? It turns out that approaching a goal with a promotion mindset helps a negotiator to stay focused on their (ideal) price target.   A prevention mindset, however, leads to too much worrying about a negotiation failure or impasse, leaving the buyer more susceptible to less advantageous agreements.

This is one of those things that’s worth taking a moment to think about – two negotiators, each armed with identical information, facing similar opponents, and yet one overpays by nearly $4 million dollars.  The only difference was that one negotiator was thinking about all that he could gain, while the other focused too much on what he had to lose.

So when you are preparing for your next negotiation, take a few moments to list all the ways in which you will benefit if you are successful.   Repeat them to yourself just before the negotiation begins.  Most importantly, shut out any thoughts about what could go wrong – just refuse to give them your attention.  With practice, this thought-training will become easier, and eventually automatic.  Risk-taking, believe it or not, can become second nature to you, if you think about your goals in the right way.

Longer May Not Be Better, But It Seems That Way

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From my Fast Company Blog:

Thinking about trying to shake things up at work?  Brimming with new ideas and strategies?  Hoping to move your company boldly into the future?  Good for you.  But if you are going to innovate, it might help you to start by understanding what you are up against, psychologically speaking.

It’s not just that people fear change, though they undoubtedly do.  It’s also that they genuinely believe (often on an unconscious level) that when you’ve been doing something a particular way for some time, it must be a good way to do things.  And the longer you’ve been doing it that way, the better it is.

So change isn’t simply about embracing something unknown – it’s about giving up something old (and therefore good) for something new (and therefore not good).

Recent research shows that people have a very reliable and tangible preference for things that have been around longer. In one study, students preferred the course requirement described as the status quo over a new version (regardless of whether the new version meant more or less coursework), and liked it even more when it had been around for 100 years rather than only 10 years.   In another, people who were told that acupuncture had been in existence for 2000 years expressed more favorable attitudes toward it than those who were told it existed for 250 years.

The bottom line is, unconsciously we all believe that longevity = goodness.  There are, admittedly, plenty of instances where this is perfectly rational.  When something has stood the test of time and beaten competitors, it is probably a superior product in at least some respects.

The problem is that longevity and tradition aren’t always accurate predictors of goodness – inertia, habit, marketing prowess, market monopoly, and fear of change can all be the real reasons why we haven’t tried something new.  Also, there are areas of life that really should be unaffected by this sort of bias – in domains like art or cuisine, how long something has been around should have little to do with how aesthetically pleasing or delicious you find it.

And yet, it does.   In one study, people who saw a painting described as having been painted in 1905 found it far more pleasing to look at than people who saw the same painting described as created in 2005.  In another, they admired the appearance of a tree described as being 4500 years old more than did those who thought the same tree just 500 years old.

In my favorite example, study participants were given a piece of European chocolate.  It was described to them as having first been sold in its region either 73 years ago or 3 years ago.  Guess which group rated the chocolate as better-tasting.

It’s not impossible to overcome an unconscious bias, but if you want to succeed you need to start by realizing that it’s there.  Innovation requires that we not only convince others that new can be good, but that we address their (often unconscious) assumption that what’s been around longer looks, works, and tastes better.

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Why Did They Think They’d Get Away With It?

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Tiger Woods, Jesse James, John Edwards, Eliot Spitzer, Mark Sanford, Bill Clinton…. you get where I’m going.   It’s only too obvious what these men have in common.  Each of them cheated on his wife, not once, but (allegedly) many, many times.  And because they are all public figures of one kind or another, each of them was taking a bigger-than-usual risk every time.  The possibility of exposure increases with fame, as do the potential consequences, and no doubt they were all well aware of it.  Whatever you may think of these men – that they are despicable, that they are sex addicts, that their actions might be in some sense justifiable – you really can’t help but wonder how in the world they thought they would get away with it. In the age of 24-hour news, relentless paparazzi, and countless internet gossip sites, it’s gotten awfully hard to keep a secret.   Why did these men think that theirs would be the exception?

The answer, at least in part, may lie in something else that they have in common.  Each man, in his own way, was in a position of significant power when he engaged in his extra-marital shenanigans.  They were all men of influence, whose decisions impacted the lives of many others.  And as we all know, power does funny things to people.  More specifically, feeling powerful can lead someone to engage in riskier behavior than they otherwise would, because power makes you more optimistic about risk.

A series of studies by Cameron Anderson and Adam Galinsky showed that when male and female participants felt powerful, they preferred riskier business plans (with bigger potential rewards) to more conservative plans, divulged more information and were more trusting during negotiations, chose to “hit” more often during a game of black-jack, and were more likely to engage in unprotected sex during a one-night stand (sound familiar?)  This was true whether the participants had a generally higher sense of power (like the aforementioned sports stars and politicians), or were momentarily made to feel powerful in the experiment.

These researchers also found that when in power, people focus more on the potential payoffs of their risky behavior, and much less (if at all) on the possible dangers.  This leads to being overly-optimistic, even about things no one could possibly control (like avoiding turbulence on an airplane, or encountering a dangerous snake while on vacation).

So if power makes you prone to risky behavior, why then do some powerful people seem to be so personally conservative and risk-averse?  After all, not every politician has a weakness for call girls or interns.  Well, it turns out that when being in power is your primary focus, and you believe it’s possible to lose that power, then feelings of power can actually make you more conservative.  Basically, you don’t want to lose the power you’ve worked so hard to attain, so you avoid risks.  If, on the other hand, you feel your power is irrevocable – that no one can take it away from you –  then caution is once again thrown to the wind.

So to those of you in positions of power, I’ve got two pieces of advice.   First, before you make any decision, be sure to give some serious thought to the potential dangers you may encounter.  If things don’t work out as you planned, exactly how bad will that be for you?   Second, remember that in this day and age, no one has irrevocable power.   Make the wrong choices, and you can lose everything.   Is it still worth it?

C. Anderson & A. Galinsky (2006). Power, optimism, and risk-taking. European Journal of Social Psychology, 36, 511-536.

A. Galinsky, D. Gruenfeld, & J. Magee (2003)  From power to action. Journal of Personality and Social Psychology, 85, 453-466.

J. Maner, M. Gailliot, D. Butz, & B.M. Peruche (2007) Power, risk, and the status quo: Does power promote riskier or more conservative decision making. Personality and Social Psychology Bulletin, 33, 451-462.