Range Offers vs Point Offers in Negotiation for Advantageous Settlements

Daniel Ames

Daniel Ames

Many people hesitate to present a negotiation offer as a range due to concerns that only the lower value in the range would be heard due to selective attention by the co-negotiator.
In addition, many negotiators are concerned that the lower end of a range offer signals the “reservation price” or “bottom line.”

Malia F Mason

Malia F Mason

In fact, range offers may lead to stronger outcomes, according to Columbia University’s Daniel R. Ames and Malia F. Mason, who compared range offers with point offers in laboratory studies of negotiations.

First offers can be powerful anchors, despite their risk of bias and marginal accuracy, reported University of Chicago’s Nicholas Epley and Thomas Gilovich of Cornell.

Nicholas Epley

Nicholas Epley

Even more influential aredual anchors,” which signal both a negotiator’s knowledge of value as well as politeness.
Ames and Mason suggested that
negotiator credibility and knowledge of value increases anchor potency coupled with interpersonal relationship “capital” determine settlement outcomes.

Thomas Gilovich

Thomas Gilovich

These findings suggest that range and point opening offers can have varying impacts, depending on perceived preparation, credibility, politeness, and reasonableness of the proposer.

Ames and Mason tested three types of negotiation proposal ranges:

  • Bolstering range includes the target point value as the bottom of the range and an aspirational value as the top of the range, usually yields generous counteroffers and higher settlement prices.
  • Backdown range features the target point value as the upper end of the range and a concession value as the lower offer.
    This approach often leads to accepting the lower value and is generally not recommended.
  • Bracketing range spans the target point offer and tends to have neutral settlement outcomes for the offer-maker.
    Compared with point offer-makers, bracketing range offers provided some relational benefits because they were seen as less aggressive and stubborn.
Martin Schweinsberg

Martin Schweinsberg

Extreme anchors can be seen as aggressive and offensive, and may lead to negotiation breakdown, according to INSEAD’s Martin Schweinsberg with Gillian Ku of London Business School, collaborating with Cynthia S. Wang of University of Michigan, and National University of Singapore’s Madan M. Pillutla.
Somewhat surprisingly, the found that negotiators with little power were more likely to walk away from extreme anchors, though high-power negotiators were equally offended.

Gilliam Ku

Gilliam Ku

Previously, Mason and team showed the benefit of precise single number offers, and the current research shows the value of less precise range offers.

Mason and team argue that point offers and range offers are independent and interactive informational processes with influence on settlement values: “…bolstering-range offers shape the perceived location of the offer-maker’s reservation price, (and) precise first offers shape the perceived credibility of the offer-maker’s price proposal.

  • When do you prefer to present a precise, non-rounded negotiation offers instead of a negotiation range?

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Women’s Businesses as Engine for GDP Growth

Laura Tyson

Laura Tyson

Women and girls have the most potential to produce economic growth, despite also being marginalized in many countries, according to University of California, Berkeley’s Laura Tyson, who served as chair of the US president’s Council of Economic Advisors.
She added that every year that a girl is in school increases her future income level and the country’s GDP.

Katie Drasser

Katie Drasser

Further, women’s increased workforce participation increases general economic prosperity:  Women who work invest an average of 90 percent of their income back into their families, and drive about 70 percent of global consumption, contributing to positive social and economic outcomes, noted The Aspen Institute’s Katie Drasser and Vanessa Martin of Feministing.

However, women’s economic participation and opportunity is about 15-25 percent less than men’s:  Only about half of working-age women are employed, and they earn only about 74 percent of men’s salaries when they have the same educational attainment and work in the same occupation.

Peter Roberts

Peter Roberts

Gender parity in labor-force participation rates would increase GDP by 12 percent in developed countries over the next 20 years – and even more in developing nations, estimated the Organisation for Economic Co-operation and Development (OECD) in its report, Closing the Gender Gap: Act Now .
In addition, the report advocated equal access to financing for female and male entrepreneurs as well as policy support for women-owned enterprises around the world.

However, the ambitious scope of these recommendations was illustrated by the World Economic Forum’s estimate that it will take until after the beginning of the next century – 2200 – to close the economic gender gap and achieve related economic growth, according to its Global Gender Gap Report 2014.

Required changes to realize these economic benefits include:

  • Equal legal rights for women in land ownership and inheritance,
  • Equal access to credit and lending,
  • Equal educational opportunities from early childhood education to basic literacy through postgraduate training,
  • Elimination of discriminatory practices in recruitment, retention, and pay,
  • Elimination of tax disincentives that discourage women’s labor force participation,
  • Quantified and monitored targets for recruiting and retaining women,
  • Tax credits, benefits, and employment protections for low-wage and part-time workers,
  • Widespread access to affordable childcare, parental leave, and flexible work practices integration policies.

As a result, increasing numbers of startups focus on supporting women and girls, and women’s organizations are shifting in their fundraising habits from seeking foundation funding to generating revenue.

Sean Peters

Sean Peters

Paralleling technology accelerators that “jumpstart” new venture, The Girl Effect Accelerator recently launched an effort to assist 10 organizations improve the lives of disadvantaged girls and women.

The Accelerator provided high-profile mentors, strategic financing, and network partners, supported by the Nike Foundation and the Unreasonable Group, to promising social enterprises.
Social entrepreneurs have also received fellowships, training programs, seed funding, and resources from Propeller, Echoing Green, and other organizations.

Ventures included Embrace, which makes infant warmers for premature infants that cost less than 1 percent of the average incubator, and Jayashree Industries, which distributes affordable sanitary pads via 1,500-plus women-led franchises across India.

Saurabh Lall

Saurabh Lall

Emory’s Peter W. Roberts and Sean Peters with Saurabh Lall of Aspen Network of Development Entrepreneurs analyzed companies that participated in Social Impact Accelerator programs and found they have higher revenue generation than enterprises that didn’t receive this additional support, noted in their Impact of Entrepreneurship Database 2014 mid-year report.

One example is Agora Partnerships Impact Accelerator support of Maya Mountain Cacao‘s efforts to fulfill Eleos Foundation’s investment criteria, resulting $200,000 raised from in 20 investors.

Kristin Gilliss

Kristin Gilliss

In contrast, Aspen Network of Development Entrepreneurs (ANDE) and Village Capital reported less positive results of social investment:  Only 31 percent of companies that worked with Social Impact Accelerators became profitable or received a significant investment.

Social Impact Accelerator success rate could be improved by:

  • Connecting investors with entrepreneurs,
  • Consistently adopting tech startup accelerators’ business models, to fulfill rigorous investment criteria, attract investors and raise funding,
  • Measuring and scaling actual impact, as advocated by Kristin Gilliss of the Mulago Foundation.

-*What additional policies and programs could increase the economic success and impact of social entrepreneurs?

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Group “Intelligence” Linked to Social Skills – and Number of Women Members

Anita Wooley Williams

Anita Wooley Williams

A group’s “general collective intelligence factor” is related to social and communication skills, not to the average or maximum individual intelligence of group members, found Carnegie Mellon’s Anita Williams Woolley, Christopher F. Chabris of Union College, with MIT colleagues Alex (“Sandy”) Pentland, Nada Hashmi, and Thomas W. Malone.

Instead, group intelligence was most closely associated with:

Christopher Chabris

Christopher Chabris

The research team analyzed group productivity of more than 695 volunteers in teams of two to five members working on representative workplace tasks including:

  • Logical analysis,
  • Coordination,
  • Planning,
  • Brainstorming,
  • Moral-ethical reasoning.
Alexander Pentland

Alexander Pentland

Each team worked together to complete a series of short tasks, which were selected to represent the varied workplace deliverables and volunteers also completed an individual I.Q. test.
Teams with higher average I.Q.s performed similarly on collective intelligence tasks as teams with lower average I.Q.s.

Simon Baron-Cohen

Simon Baron-Cohen

In addition, each participant completed a measure of empathy based on accuracy of identifying emotional states based on images of people’s eyes with no other clues, developed by University of Cambridge’s Simon Baron-Cohen, Sally Wheelright, Jacqueline Hill, Yogini Raste, and Ian Plumb.

This instrument, Reading the Mind in the Eyes test, evaluates Theory of Mind skills and social reasoning, not just the ability to recognize facial expressions associated with emotions and mental states.

Sally Wheelright

Sally Wheelright

Ability to infer other team members’ concerns and emotional states, measured by Reading the Mind in the Eyes test, correlated with team effectiveness in solving workplace tasks, but not extraversion and reported motivation.

What elements enhance a group’s collective intelligence when working virtually?

David Engel

David Engel

Wooley’s team collaborated with MIT’s David Engel and Lisa X. Jing to assess the impact of interpersonal sensitivity and empathy among 68 in-person or online teams on collective intelligence task performance.

Characteristics of superior-performing “smart” teams, both online and face-to-face echoed previous results favoring social and communication skills:

  • Strong emotion-reading, empathy, and interpersonal sensitivity,
  • Communication volume,
  • Equal participation.
Reading the Mind in the Eyes

Reading the Mind in the Eyes

These teams demonstrated high collective emotional intelligence when they also excelled in inferring others’ feelings and preferences even if conveyed without visual, auditory, or non-verbal cues when interacting online.

Teams may increase task performance when members have well-developed “Emotional Intelligence,” social insight, and communication skills rather than the highest measured IQ.

  • How do you enhance a work group’s collective intelligence in performance tasks?

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Nothing to Lose: Effective Negotiating Even When “Powerless”

Michael Schaerer

Michael Schaerer

Most negotiators prefer to have alternatives as a “fall back position,” but INSEAD’s Michael Schaerer and Roderick Swaab, collaborating with Adam Galinsky of Columbia suggested that having no alternatives and less power than co-negotiators can achieve better deals.

Alternatives enable negotiators to gain concessions from co-negotiators as they capitalize on an advantageous BATNA – Best Alternative To a Negotiated Agreement, defined by Harvard’s Roger Fisher and William Ury.

Roger Fisher

Roger Fisher

When an alternative is weak, it can undermine negotiating outcomes more than no alternative by setting an “anchor point” based on assessment of competing options.

Anchoring is a frequently-observed cognitive bias first theorized by Hebrew University’s Amos Tversky and Daniel Kahneman of Princeton, to describe overvaluing one piece of information – usually quantitative – as a guide in making judgments or decisions.

William Ury

William Ury

Typically, negotiators anchor on the value of their alternatives when making their first offer, so people with weak alternatives generally make lower first offers than those with no alternative.
“Lowball” first offers based on few or poor alternatives usually undermine a negotiator’s final outcome.

Professional athletes and their agents provide many anecdotal examples of negotiating better deals when they have no “back up” offers because they can set ambitious anchor points since they have “nothing to lose.”

Amos Tversky

Amos Tversky

Schaerer and team asked a hundred people whether they would prefer to negotiate a job offer with a weak alternative or without any alternative.
More than 90 percent indicated that they would prefer to enter the negotiation with an unattractive alternative offer, confirming the popular assumption that any alternative is seen as better than no alternative.

To evaluate the accuracy of this belief, Schaerer and colleagues asked volunteers to imagine they were selling a used music CD by The Rolling Stones.
They randomly assigned participants to three groups and gave each group different information about their alternatives, ranging from:

  • No offers (no alternative),
  • One offer at USD $2 (weak alternative),
  • A bid at USD $8 (strong alternative).
Roderick Swaab

Roderick Swaab

Volunteers in each group proposed a first offer, and rated the degree of power they felt.
Not surprisingly, people with the strong alternative felt the most powerful and those with no alternative felt the least powerful.

However, people with a weak alternative felt more powerful than those with no alternative, but they made lower first offers, signaling less confidence than participants with no alternative.
Having alternatives, whether poor or attractive, may make people feel powerful –- but may undermine negotiation performance and final settlement prices.

Schaerer’s team further explored this paradox by pairing participants as a “buyer” and a “seller” who was seeking to market a Starbucks mug during a face-to-face meeting.

Adam Galinsky

Adam Galinsky

Before the meeting, however, the seller received a phone call from “another buyer,” who was actually a confederate.
For half of the “sellers,” the potential buyer either made a low offer or declined to bid.

“Sellers” without an alternative offer said they felt less powerful, but made higher first offers and negotiated a considerably higher sales price than negotiators with a an unattractive alternative.

In another situation, half of the “sellers” concentrated on available alternatives (none, weak, or strong) and the remaining negotiators attended to the target price.

Volunteers with unappealing alternatives negotiated worse deals than those without alternatives when they focused on alternatives, but “sellers” avoided this pitfall by concentrating on the target price.
This is another validation of focusing on the goal when alternatives are weak, and of the power of first-offer anchors –- for better or worse.

Negotiators with non-existent or unappealing alternatives are wise to be cautious about setting modest first offers driven by feeling powerless.
Instead, the situation can be reconstrued as an opportunity to set audacious goals, illustrated in ambitious opening offer.

  • How do you overcome lowball anchoring when you have few negotiation alternatives?

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Four Leadership Behaviors Differentiate Top Performing Organizations

Ralph M. Stogdill

Ralph M. Stogdill

Effective leadership is a critical part of organizational health and growth and an important driver of shareholder returns, according to Ohio State’s Ralph M. Stogdill with McKinsey’s Aaron De Smet, Bill Schaninger, with Matthew Smith.

Bill Schaninger

Bill Schaninger

Consistent with this report, more than 90 percent of CEOs said they plan to increase investment in leadership development because they see it as their single most important human-capital issue, reported McKinsey’s Claudio Feser, Fernanda Mayol, and Ramesh Srinivasan.
However, only 43 percent of CEOs reported confidence that leadership training investments will render an acceptable ROI.

McKinsey Organizational Health Index Top Leadership Qualities

To more accurately target developable leadership behaviors associated with superior organizational performance, McKinsey identified 20 critical leadership traits then surveyed 189,000 people in 81 organizations of varying sizes across industries.

Claudio Feser

Claudio Feser

They segmented organizations by leadership effectiveness measured by McKinsey’s Organizational Health Index, and focused on companies in the top quartile and bottom quartile.

The team reported that four skills closely correlate with effective leadership and explained 89 percent of the variance in leadership effectiveness between top-performing organizations and lowest-performing organizations:

  • Effective problem solving by gathering, analyzing, and considering information before taking a decision,
  • Operating with a strong results orientation, developing and communicating a vision and setting objectives to efficiently achieve results,
  • Seeking different perspectives by monitoring trends affecting organizations and the external environment and by encouraging employees to suggest improvements,
  • Supporting others by demonstrating authenticity and sincere interest in colleagues to build trust and help others manage challenges.
Ramesh Srinivasan

Ramesh Srinivasan

A related post outlines other findings of top leadership competencies required for optimal organizational performance, including “Big Eight Competencies” described by Lominger’s Voices® 360˚ Assessment:

• Dealing with Ambiguity
• Creativity
• Innovation Management
• Strategic Agility
• Planning
• Motivating Others
• Building Effective Teams
• Managing Vision and Purpose.

-*Which leadership behaviors do you find most imperative?

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Positive Thinking, Mental Contrasting Plus WOOP to Improve Performance

Gabriele Oettingen

Gabriele Oettingen

Positive thinking without additional evaluation and implementation strategies is wishful thinking that may lead to poor performance, found NYU’s Gabriele Oettingen.
She advocates coupling an optimistic outlook with considering obstacles and potential ways to manage them, using a mnemonic WOOP:

  • Wish,
  • Outcome
  • Obstacle
  • Plan.
Andreas Kappes

Andreas Kappes

Visualizing good outcomes without considering potential obstacles and a specific plan to achieve the goal led volunteers to become complacent, she noted.

To mitigate reduced motivation triggered by wishful thinking, Oettingen and University of London colleague Andreas Kappas taught volunteers “Mental Contrast” to consider potential obstacles to desired future outcomes, and identify ways to manage these potential challenges.

The team differentiated Mental Contrast from two less effective approaches to goal engagement:

  • Indulging by mentally elaborating only desired future,
  • Dwelling by mentally elaborating only the present reality.

These practices lead to less strong goal commitment than Mental Contrast, even when chances of success appear good across interpersonal relations, academic achievement, professional achievement, health, life management experiences.

Mental Contrast was an effective self-regulatory technique when coupled with Implementation Intentions (MCII) to improve achievement, interpersonal, and health habits.
These trends changed when perceived chances of success were low:  Mentally Contrasting a desired future with present reality led to disengagement from goals, whereas Indulging in the future goal fantasy or Dwelling only in the present reality both maintained goal commitment.

Probability of Success-Mental Contrast-Indulve-Dwelling

However, in another study, volunteers who spent more time imagining working in a “dream job,” but who also had lower expectations of achieving this goal, received fewer job offers and lower starting salaries, found Oettingen and Doris Mayer of University of Hamburg.
They differentiated the motivational impact of:

  • Positive expectations for future success, which predicted high effort and successful performance,
  • Positive fantasies, which didn’t increase effort.

Mental Contrasting helped people disengage from unfeasible goals like rehabilitating an ended relationship or achieving an unattainable professional identity.
When chances of success are low, people Mentally Contrast desired future with present reality to moved on to more feasible goals.

Similarly, Mental Contrasting linked negative thoughts about an undesirable future situation to avoidance goals provided that the probability of successfully avoiding the undesired future is high.
This strategy can be useful for people with difficulty generating positive fantasies about future health domain or reducing prejudice toward members of a minority or “out-group.”

When facing controllable and escapable tasks, people benefitted from Mentally Contrasting fantasy with reality.
However, when facing tasks that cannot be mastered such as terminal illness, Indulging in positive fantasies enabled people to maintain a positive outlook.

Volunteers who held a “silver lining theory” that a negative personal attribute is associated with a positive attribute, increased effortful performance toward the positive attribute when informed that:

  • They were impulsive
  • The silver lining theory states that “impulsivity is associated with creativity.”
Timur Sevincer

Timur Sevincer

These on-line and in-person participants showed greater effort-based creativity than those who were given no information or for whom the silver lining theory was refuted.
The Silver Lining Theory increased performance and enabled people to mitigate a perceived negative attributes by promoting effortful behavior toward a positive attribute linked to the negative attribute.

Mentally Contrasting a desired future (such as excelling in an intelligence test and writing an excellent essay) with a present reality increased physiological energization measured by systolic blood pressure and grip strength to the degree a person expected to attain the desired future.
Mental contrasting may trigger energization that fuels effort to perform an unrelated task, concluded University of Hamburg’s A. Timur Sevincer and P. Daniel Busatta collaborating with Oettingen.

Philip Daniel Busatta

Philip Daniel Busatta

Coupling Mental Contrasting with Implementation Intentions (MCII) helped economically-disadvantaged children convert positive thoughts about future outcomes into effective action, found University of Pennsylvania’s Angela Lee Duckworth, Teri A. Kirby of University of Washington with NYU’s Anton Gollwitzer and and Oettingen.

Teri Kirby

Teri Kirby

Student volunteers learned to compare a desired future with potential obstacles, then developed if–then implementation intentions to expected overcomes.
More than 75 U.S. urban middle school 10 year olds were randomly assigned to learn either MCII or a Positive Thinking strategy as a control comparison.

Those who applied MCII tools to their academic goals significantly improved their report card grades, attendance, and conduct, suggesting the value of Mental Contrasting to enhance goal commitment and realization.

Mental Contrasting can be a powerful tool to increase motivation, particularly when coupled with Implementation Intentions, except when the realistic probability of success in achieving goals is low.
In those cases, Indulging or Dwelling strategies are more effective in maintaining goal motivation.

  • How have you seen Mental Contrasting and considering your probability of success to manage your motivation and performance?

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Do Women Advance in Careers More Slowly than Men?

Herminia Ibarra

Herminia Ibarra

Men received 15% more promotions than women, according to Catalyst’s 2008 Benchmarking Survey, similar numbers of “high potential” women and men  selected for lateral moves to other parts of the business.

Nancy M. Carter

Nancy M. Carter

However, men but not women, received promotions after the career-developing lateral moves.
INSEAD’s Hermina Ibarra with Nancy M. Carter and Christine Silva of Catalyst suggested that women were offered these developmental lateral moves in lieu of advancement.
Similarly, women seem to receive social accounts – or explanations – as substitutes salary increases, noted in a previous blog post.

-*Has this career advancement discrepancy continued?

Virginia Valian

Virginia Valian

More data are required, but unarticulated and often subconscious ideas about gender continue to affect behavior and evaluations of others, as noted in previous blog posts.

Hunter College’s Virginia Valian related this implicit bias to men’s advantage of being consistently overrated while women are underrated by coworkers, bosses and themselves.
Resulting discrepancies in opportunity accrue over time to create large gaps in advancement, she asserted.

In addition, women are typically evaluated in relation to a “masculine” standard of leadership, reported Catalyst’s 2007 research outlining three predicaments that can undermine leadership and advancement opportunities:

  • Extreme Perceptions, in which women are perceived as enacting extreme behaviors, such as “toughness” or “niceness,”
  • High Competence Threshold, when women leaders are held to higher standards and receive lower rewards than men,
  • Competent but Disliked, as women may be perceived either as “competent” or “likeable” but not both.
Phyllis Tharenou

Phyllis Tharenou

Family structure can accelerate or slow career progress in unexpected ways.
For example, both “post traditional” mothers who have employed spouses, and “traditional” fathers whose wives are engaged in childcare only, more rapidly advanced in private sector careers than women and men with other family configurations or those employed in other industry sectors, according to Phyllis Tharenou of Flinders University.
Somewhat surprisingly, non-parent women and men, and unmarried fathers   advanced more slowly in their careers.

Employment disruption, such as maternity leave or layoff, did not impair career advancement for women and men, but the industry sector was associated with differing rates of career advancement.

Alice Eagly

Alice Eagly

In a separate analysis, Tharenou noted that the strongest predictors of advancing in management were managerial aspirations and masculinity.
Women were more likely to advance when they received career encouragement and when organizational hierarchies included both women and men.

To explain career advancement rate discrepancies, University of Massachusetts’ Alice H. Eagly and Linda L. Carli of Wellesley suggested that women encounter a career labyrinth rather than a glass ceiling.

Linda Carli

Linda Carli

Catalyst and Center for Talent Innovation concluded that this difference in career advancement rates may be narrowed by sponsorship rather than mentorship.
Male mentors, however, are unlikely to have experienced some of the differential perceptions facing women so may be less able to provide useful advice.
They may make an important contribution to focusing attention on the challenge and may advocate organizational processes and structures that normalize equivalent competence and assertiveness in women and men.

  • What evidence suggests that women’s rate of career advancement has become similar to men’s?
  • What type of “career encouragement” enable women to advance in careers at a rate similar to men?

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