Category Archives: Business Communication

Business Communication

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 of values, assuming that co-negotiators will anchor on the lower value in the range as a “reservation price.” 

This is based on the power of first offers as negotiation anchors, demonstrated in research by University of Chicago’s Nicholas Epley and Thomas Gilovich of Cornell.

Malia F Mason

Malia F Mason

Contrary to this expectation, range offers actually led to stronger outcomes in controlled studies by Columbia University’s Daniel R. Ames and Malia F. Mason. These researchers suggested that range offers provide “dual anchors” that signal a negotiator’s knowledge of value as well as politeness.

Nicholas Epley

Nicholas Eple

In addition, negotiator credibility, interpersonal style, and value awareness increase an anchor potency’s to influence settlement outcomes.

Thomas Gilovich

Thomas Gilovich

Range and point opening offers have varying impacts, depending on the proposer’s perceived preparation, credibility, politeness, and reasonableness.

Ames and Mason tested three types of negotiation proposal ranges:

  • Bolstering range, which includes the target point value as the bottom of the range and an aspirational value as the top of the range.
    This strategy usually yields generous counteroffers and higher settlement prices.
    This approach is recommended based on this research.
  • Backdown range, which 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, which spans the target point offer and tends to have neutral settlement outcomes for the offer-maker.
    Compared with point offers, bracketing range offers provided some relational benefits because they were seen as less aggressive.
Martin Schweinsberg

Martin Schweinsberg

Extreme anchors can be seen as 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.
In fact, even negotiators with little power in their studies were more likely to walk away from extreme anchors.
Likewise, high-power negotiators said they were offended by extreme anchors.

Gilliam Ku

Gilliam Ku

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

Mason and team argued 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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©Kathryn Welds

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

More than 695 volunteers completed an individual I.Q. test, then collaborated in teams to complete workplace tasks including:

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

Alexander Pentland

Teams with higher average I.Qs performed similarly to teams with lower average I.Qs on collective intelligence tasks.

Simon Baron-Cohen

Simon Baron-Cohen

Each participant also completed a measure of empathy  and social reasoning based on identifying emotional states portrayed in images of people’s eyes.

This instrument, Reading the Mind in the Eyes , was developed by University of Cambridge’s Simon Baron-Cohen, Sally Wheelright, JacquelineHill, Yogini Raste, and Ian Plumb.

Reading the Mind in the Eyes

Sally Wheelright

This ability to infer other team members’ emotional states correlated with team effectiveness in solving workplace tasks, but not with extraversion and reported motivation.

Teams that performed best in online and face-to-face situations, also demonstrated stronger social and communication skills:

  • Accurate emotion-reading, empathy, and interpersonal sensitivity,
  • Communication volume,
  • Equal participation.

David Engel

High-performing teams excelled in inferring others’ feelings even if conveyed without visual, auditory, or non-verbal cues while interacting online in a study by Wooley’s team collaborating with MIT’s David Engel and Lisa X. Jing.

These studies demonstrate that 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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©Kathryn Welds

Nothing to Lose: Effective Negotiating Even When “Powerless”

Michael Schaerer

Most negotiators prefer to have a “fall back position.”
However, having no alternatives and less power than co-negotiators can improve outcomes, found INSEAD’s Michael Schaerer and Roderick Swaab with Adam Galinsky of Columbia.

Alternatives enable negotiators to gain concessions from co-negotiators because they have a 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 having no alternative because it establishes an “anchor point” based on competing options.

Anchoring is a frequent cognitive bias characterized by overvaluing one piece of information, according to Hebrew University’s late Amos Tversky and Daniel Kahneman of Princeton.

William Ury

William Ury

Negotiators usually anchor on the value of alternatives when making a first offer, and 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 examples of negotiating better deals when they have no “back up” offers and “nothing to lose,” so they can set ambitious anchor points.

Amos Tversky

Amos Tversky

In a separate study, 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 of participants preferred an unattractive alternative offer, confirming the popular assumption that any alternative is  better than no alternative.

Another of Schaerer’s lab studies asked volunteers to imagine selling a used music CD by The Rolling Stones.
Participants were randomly assigned to three groups which received different information about their negotiation situations:

  • 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 any alternative can help people feel powerful but can undermine negotiation performance.

Schaerer’s team explored this paradox by pairing a  “seller,” who offered a coffee mug during a face-to-face meeting, and a potential “buyer.”

Adam Galinsky

Adam Galinsky

Before the meeting, the seller received a phone call from “another buyer,” who was actually a confederate of the researchers.
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 received significantly higher sales prices than negotiators with an unattractive alternative.

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

Volunteers with unappealing alternatives negotiated worse deals than those with no options when they focused on alternatives.
“Sellers” avoided this pitfall by concentrating on the target price.
These findings support the benefit of focusing on the goal when alternatives are weak, and the power of first-offer anchors.

Negotiators with non-existent or unappealing alternatives can beware of making cautious first offers when they feel powerless.
Instead, negotiators can set audacious goals and make an ambitious opening offer because they have the benefit of “nothing to lose.”

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

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©Kathryn Welds

Activate Women’s, Minorities’ Stereotype Threat Reactance to Enhance Performance

Claude Steele

Claude Steele

Stereotype threat occurs when expectations of a group’s typical behavior are activated among group members, resulting in reduced scores on standardized test performance for women and African Americans.

Joshua Aronson

When Stanford’s Claude Steele and Joshua Aronson now of NYU, helped women and African Americans participants resist these stereotypes, participants’ performance improved more than when the researchers activated a positive shared identity.

Anthony Greenwald

Stereotypes can be invoked by “implicit primes” even when people explicitly disavowed stereotypes, found University of Washington’s Anthony Greenwald and Mahzarin Banaji, then at Yale.
However, when volunteers focused on tasks, including judgment challenges about members of a stereotyped group, participants were less likely to render discriminatory decisions.

Laura Kray

Laura Kray

Both women and men showed resisted stereotypic behavior in negotiations when stereotypes were elicited with explicit primes, reported University of California, Berkeley’s Laura Kray, Leigh Thompson of Northwestern and Columbia’s Adam Galinsky.
In this case,  activating a shared identity helped participants resist gender stereotypic expectations in negotiation performance.

Gordon Moskowitz

Gordon Moskowitz

People can separate themselves from prevailing stereotypes with contrast primes, by providing examples that contradict a stereotype, found Lehigh University’s Gordon B. Moskowitz and Ian W. Skurnik of University of Utah.

Ryan P. Brown

Ryan P. Brown

Men from majority groups also can experience stereotype threat, found University of Oklahoma’s Ryan P. Brown and Robert A. Josephs of University of Texas. 
Male participants performed less effectively after a positive male stereotype was activated as a comparison criterion.
Men’s performance was also undermined by “pressure to live up to the standard.”

Robert A Josephs

Robert A Josephs

People can manage stereotype threat by explicitly mentioning the stereotype to activate resistance.
In addition, people can focus on a shared identity that transcends the stigmatized group identity, and identifying examples that contradict the stereotype.

  • How do you manage stereotype threat for yourself and others?
  • How effective have you found activating stereotype reactance?

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©Kathryn Welds

“Precise” Offers Provide Negotiation Advantage

Malia F Mason

Malia F Mason

Opening negotiation offers typically “anchor” the discussion and shape settlement values.
Many people make opening offers in “round” numbers like $10 instead of “precise” numbers like $9.
However, “round number offers” were less effective than “precise” offers in negotiations, found Columbia’s Malia Mason, Alice J. Lee, Elizabeth A. Wiley, and Daniel Ames.

Y Charles Zhang

Y Charles Zhang

Negotiators can improve their outcomes by specifying offers in precise values.
Precise first offers more potently anchored the negotiation range than round number proposals, and people who proposed precise offers were perceived as more confident, credible, and “well-informed” regarding actual value.

Norbert Schwartz

Norbert Schwartz

Similarly, consumers have less confidence in precise estimates when they doubt the communicator, found University of Michigan’s Y. Charles Zhang and Norbert Schwarz of University of Southern California.

A drawback of precise offers is that some co-negotiators perceive them as “inflexible.
Despite this risk, people who received precise offers generally made more conciliatory counter-offers, leading to smaller adjustments and more favorable final settlements.
Precise offers also led to better final deals even when the negotiator opened with a less ambitious precise offer.

Martin Schweinsberg

Martin Schweinsberg

Another benefit of precise offers is that they are less likely to be seen as aggressive or greedy by a co-negotiator, according to INSEAD’s Martin Schweinsberg collaborating with Gillian Ku and Madan M. Pillutla of London Business School’s and Cynthia S. Wang of Oklahoma State University.
Ambitious first offers may lead an impasse or stalled progress toward settlement if a negotiation partner takes offense or walks away from talks.

Gillian Ku

Gillian Ku

This risk of stalled negotiation increases if negotiators see themselves in a lower-power position and receive an extreme offer.
These negotiators can be more willing to end negotiations,

Manoj Thomas

Manoj Thomas

Precise offers may obscure their actual value, found Cornell’s Manoj Thomas and Vrinda Kadiyali with Daniel H. Simon of Indiana University.
Buyers underestimated the size of precise prices, particularly under uncertain conditions:  U.S. homebuyers paid more when list prices were precise, and volunteers said they would follow this strategy in buying a home.

Vrinda Kadiyali

Vrinda Kadiyali

Precise offers provide some of the benefits of favorably anchoring negotiation discussions while reducing risks of “offensive” extreme offers.

-*How effective have you found “precise” opening offers in achieving your negotiation goals?

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©Kathryn Welds

Women May Undermine Salary Negotiations with Excessive Gratitude

Andreas Leibbrandt

Full, candid self-disclosure can hamper outcomes for poker players and negotiators.

This idea was confirmed in an experiment by Monash University’s Andreas Leibbrandt and John A. List of the University of Chicago, when women undermined their salary negotiations by revealing their gratitude for a salary that exceeded their expectations.

John List

John List

Participants were women applying for administrative assistant jobs with a posted wage of USD $17.60 per hour.

Researchers told some volunteers that the wages were “negotiable,” and these women negotiated their pay upward by a ratio of more than 3 to 1.
This result echoes previous findings that women frequently do not negotiate unless given explicit permission, and consequently, have lower salary offers than those who negotiate.

Leibbrandt and List tested this hypothesis by not mentioning negotiation to the remaining participants, and these women typically provided “too much information” by remarking that the posted wage “exceeds my expectations. I am willing to work for a minimum of $12.”

Edward E. Jones

Edward E. Jones

Though this approach likely leads to lower salary, it could be considered strategic ingratiation.
This negotiation approach that can take several forms, according to Duke University’s Edward E. Jones:

-Self-presentation (self-enhancement or “one-down” humility, providing favors or gifts),

-Flattery (“other-enhancement” either directly or ensuring word-or-mouth report of positive yet credible comments),

-Agreement (opinion-conformity, non-verbal matching-mimicry).

The ingratiator’s intent may have been to enhance the future working relationship, but could cause the negotiation partner to question the applicant’s judgment, qualifications, and confidence.
The longer term impact in workplace settings is to delay salary increases because the candidate appeared satisfied with the original offer.

Steven H. Appelbaum

Steven H. Appelbaum

However, “strategic ingratiation” may result in promotion or pay increase, according to Concordia University’s Steven H. Appelbaum and Brent Hughes.

They found that effective use of “strategic ingratiation” was influenced  by situational and individual factors including:

  • Machiavellianism,
  • Locus of control,
  • Work task uniqueness.
Jeffrey Flory

Jeffrey Flory

In another of Leibbrandt and List’s randomized field studies, collaborating with Concordia colleague Jeffrey Flory, they found that among nearly 2,500 job-seekers, men did not wait for permission to negotiate when no statement was made about salary discussions.

In fact, male participants said they prefer ambiguous salary negotiation norms.
Despite women’s general hesitance to negotiate without an invitation, women advocated for more favorable salaries at about the same rate as men when invited.

The team extended these findings by analyzing nearly 7,000 job-seekers with varying compensation plans.
In “competitive work settings,” salary negotiation was typically expected, and men stated a preference for these work environments.

Leibbrandt, List, and Flory concluded that women accept “competitive” workplaces provided “the job task is female-oriented” and the local labor market leaves few alternatives.

Women looking for better salary outcomes benefit from proposing their “aspirational salaries” rather than waiting for permission to negotiate.
In addition, women negotiators can achieve better outcomes when they offer moderate expressions of gratitude and avoid revealing their “reserve” salary figure.

-*In what work situations have you benefitted from applying ‘strategic ingratiation’?

-*To what extent have expressions of gratitude in negotiation undermined bargaining outcomes?

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©Kathryn Welds

Performance Excellence linked to Preventing Failures, Corrective Coaching

Atul Gawande

Simple behavior changes, such as following a structured checklist, can prevent medical care mistakes and increase care quality, found Harvard’s Atul Gawande.

People who recognized fallibility in organizational processes, and took proactive steps to remedy these shortcomings, more effectively improved their performance.

Three elements of better performance can be applied to fields outside of medicine:

  • Diligence – Attending to details can prevent errors and overcome obstacles.
    Gawande’s The Checklist Manifesto: How to Get Things Right suggests best ways to structure these memory aids,
  • Doing Right –Ensuring that skill, will, and incentives are aligned to drive excellent performance,
  • IngenuityDeliberately monitoring potential failures, continuously seeking innovative ways to improve performance and solutions.

These elements can be improved with attentive observation and feedback to prevent errors of omission when people don’t:

  • Know enough (ignorance),
  • Make proper use of what they know (ineptitude).

Ignorance occurs less frequently than ineptitude because relevant information is widely available, Gawande noted.
He argued that both types of omission errors can be improved by systematic analysis and disciplined use of tools like checklists.

Geoffrey Smart

Checklist-based analysis was also linked to Internal Rate of Return (IRR) in Geoffrey Smart’s study of investments by Venture Capital (VC) firms,

He found a correlation between IRR and leadership effectiveness in new investment ventures.
Selecting capable leaders is critical to business outcomes, so Smart also evaluated VC firms’ typical approach to assessing potential leaders:

  • The Art Critic is the most frequent approach in which the VC assesses leadership talent at a glance, intuitively, based on extensive experience,
  • The Sponge conducts extensive due diligence, then decides based on intuition,
  • The Prosecutor interrogates the candidate, tests with challenging questions and hypothetical situations,
  • The Suitor woos the candidate instead of analyzing capabilities and fit,
  • The Terminator eliminates the evaluation because the venture firm replaces the company’s originators,
  • The Infiltrator becomes a “participant-observer” in an immersive, time-consuming experientially-based assessment,
  • The Airline Captain uses a formal checklist to prevent past mistakes.
    This last approach was linked to the highest average Internal Rate of Return (IRR) for the new ventures.
    In addition, this strategy was significantly less likely to result in later terminating senior managers.

Venture Capitalists in these studies reported that two of their most significant mistakes were:

  • Investing insufficient time in talent analysis,
  • Being influenced by “halo effect” in evaluating candidates.

Systematic reminders to execute all elements required for expert performance can prevent failure and signal potential failure points.

-*How do you improve performance?
-*What value do you find in expert coaching?

Related Post:
Developing a SMARTER Mindset for Resilience, Emotional Intelligence – Part 2

©Kathryn Welds