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 because they are concerned that co-negotiators will anchor on the lower value in the range as a “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.
They 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” in range offers because they signal a negotiator’s knowledge of value as well as politeness.
Ames and Mason suggested that
negotiator credibility and knowledge of value increase anchor potency. 
Coupled with interpersonal relationship “capital”, these factors determine settlement outcomes.

Thomas Gilovich

Thomas Gilovich

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, 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, and is a recommended approach.
  • 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 offer-makers, 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.
Somewhat surprisingly, they found that negotiators with little power were more likely to walk away from extreme anchors.
Also surprisingly, 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?

RELATED POSTS:

Twitter  @kathrynwelds
Google+
Facebook

©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 on collective intelligence tasks as teams with lower average I.Qs.

Simon Baron-Cohen

Simon Baron-Cohen

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

Sally Wheelright

Sally Wheelright

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

David Engel

David Engel

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

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

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 collaboration with MIT’s David Engel and Lisa X. Jing.

Reading the Mind in the Eyes

Reading the Mind in the Eyes

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?

RELATED POSTS:

Twitter  @kathrynwelds
Google+
Facebook

©Kathryn Welds

Nothing to Lose: Effective Negotiating Even When “Powerless”

Michael Schaerer

Most negotiators prefer to have alternatives as 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 Amos Tversky and Daniel Kahneman of Princeton.

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 and “nothing to lose” because they can set ambitious anchor points.

Amos Tversky

Amos Tversky

In a separate study of job negotiation, 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.

Another of Schaerer’s lab studies 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 can undermine negotiation performance.

Schaerer’s team further explored this paradox by pairing participants as a  “seller” who was offering a Starbucks 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.
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 considerably higher sales prices 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 focused on the target price.

Volunteers with unappealing alternatives negotiated worse deals than those without other options 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.

Negotiators with non-existent or unappealing alternatives benefit from caution in setting modest first offers driven by feeling powerless.
Instead, the situation can be reconstrued as an opportunity to set audacious goals, reflected in an ambitious opening offer.

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

RELATED POSTS:

Twitter  @kathrynwelds
Google+
Facebook

©Kathryn Welds

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

Claude Steele

Claude Steele

Stereotype threat, defined as activating prevailing but often-inaccurate concepts of a group’s typical behavior, was consistently associated with reduced scores on standardized test performance for women and African Americans in numerous studies by Stanford’s Claude Steele and Joshua Aronson now of NYU.

Joshua Aronson

They found that eliciting “reactance” or resistance to these stereotypes improved women’s and African Americans’ performance more than activating a positive shared identity, such as shared membership in a respected group.

Anthony Greenwald

Anthony Greenwald

Stereotypes may be invoked by implicit primes, which led both men and women to confirm gender stereotypes even when they explicitly disavowed stereotypes and associated prejudice, found University of Washington’s Anthony Greenwald and Mahzarin Banaji, then at Yale.
However, when evaluators focused on tasks, including judgment challenges about members of a stereotyped group, judges were less likely to render discriminatory decisions.

Laura Kray

Laura Kray

In contrast, both women and men showed stereotype reactance — the tendency to behave in contrast with the stereotype in negotiation tasks — when stereotypes were elicited with explicit primes, reported University of California, Berkeley’s Laura Kray, Leigh Thompson of Northwestern and Columbia’s Adam Galinsky.

Stereotype threat can be advantageous to men when negotiating with women, who are stereotypically considered less skillful negotiators.
Unlike Steele’s finding, Kray’s team observed performance-equalizing effects of activating a shared identity that transcended gender.

Gordon Moskowitz

Gordon Moskowitz

People can dissociate themselves from prevailing stereotypes with contrast primes, according to Lehigh University’s Gordon B. Moskowitz and Ian W. Skurnik of University of Utah.
They differentiated:

Standard-of-Comparison Prime, which produces greatest contrast by citing an extreme illustration.
This strategy relies on perception and requires less cognitive effort.

-Set–Reset Prime, which typically uses trait descriptions, and produces greatest contrast when moderate rather than extreme.
This approach requires significant mental effort.

Ryan P. Brown

Ryan P. Brown

Even men are not immune to stereotype threat.
Male participants “choked” when performing after a positive male stereotype was activated by University of Oklahoma’s Ryan P. Brown and Robert A. Josephs of University of Texas. 
Similar to women’s performance decrements in response to negative stereotype threat, Brown and Josephs hypothesized that men’s performance was undermined by “pressure to live up to the standard.”

Robert A Josephs

Robert A Josephs

People can manage stereotype threat by explicitly referring to the stereotype to activate reactance.
In addition, it’s valuable to refer to a shared identity that transcends the stigmatized group identity.
Eliciting contrast effects through examples and trait descriptions is another way to diminish the impact of stereotype threat of performance.

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

RELATED POSTS:

Twitter  @kathrynwelds
Google+
Facebook Notes

©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 powerful than “precise” offers in negotiations, found Columbia’s Malia Mason, Alice J. Lee, Elizabeth A. Wiley, and Daniel Ames.
This finding suggests that negotiators can improve their outcomes by specifying offers more precisely, such as $103.

Y Charles Zhang

Y Charles Zhang

Precise first offers more potently anchored the negotiation range than round number proposals, perhaps because those who proposed precise offers were perceived as more confident, credible, and “well-informed” regarding actual value.

Norbert Schwartz

Norbert Schwartz

This finding complements observations by University of Michigan’s Y. Charles Zhang and Norbert Schwarz of University of Southern California that consumers have less confidence in precise estimates when they doubt the communicator and when they engage in less “cooperative conversational conduct norms” during negotiations.

H Paul Grice

H Paul Grice

These norms, defined by Berkeley’s H. Paul Grice in Grice’s maxims, which advocate communicating:

  • Briefly,
  • Clearly,
  • Relevantly,
  • Truthfully,
  • Offering only as much and content as required.

Despite the apparent advantages of more precise offers, these could signal “inflexibility” to some co-negotiators.
As a result, 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, but precise offer.

Martin Schweinsberg

Martin Schweinsberg

Another benefit of precise offers is that they are less likely to offend a co-negotiator by signaling aggression or greed, 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 a negotiation partner to walk away from the discussion, resulting in an impasse or stalled progress toward a final settlement.

Gillian Ku

Gillian Ku

In addition, negotiators who see themselves in a lower-power position are more likely to walk away, even though both low-power and high-power negotiators were equally offended by extreme offers.
Though an extreme offer may result in high rewards, it can be a more risky strategy than offering a more moderate precise offer.

Manoj Thomas

Manoj Thomas

Another advantage of more precise offers is that buyers may not recognize their actual magnitude:  Buyers underestimated the size of precise prices, particularly under uncertain conditions in studies by Cornell’s Manoj Thomas and Vrinda Kadiyali with Daniel H. Simon of Indiana University.

In fact, U.S. homeowner participants in their lab said they would pay a higher price quoted in precise numbers than when stated in round number in the team’s analysis of actual residential real estate transactions in two U.S. markets.
In fact, buyers actually paid more when list prices were precise in experiments by Thomas and team.

Vrinda Kadiyali

Vrinda Kadiyali

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

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

RELATED POSTS:

Twitter  @kathrynwelds
Google+
Facebook

©Kathryn Welds

Women May Undermine Salary Negotiations with Excessive Gratitude

Negotiators and poker players know the value of limiting full self-disclosure in words and non-verbal expressions.

Andreas Leibbrandt

Andreas Leibbrandt

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

John List

John List

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

-*Could this comment be “strategic ingratiation” to effectively influence a negotiation partner?

Edward E. Jones

Edward E. Jones

Consider three methods of ingratiation, outlined by 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).

Although the ingratiator’s intent may be to enhance the future working relationship, this approach may be seen as “overselling” after a sales prospect agrees to a deal – and may lead to undoing the proposal.

In this case, the negotiation partner may question the applicant’s judgment, qualifications, and confidence, and may delay salary increases because the candidate appears satisfied with the offer.

Steven H. Appelbaum

Steven H. Appelbaum

When discerningly applied, ‘strategic ingratiation’ in organizations may result in personal rewards including 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 factors and individual variables 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 when no statement was made about salary negotiation, and 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 they were invited to negotiate.

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?

Follow-share-like http://www.kathrynwelds.com and @kathrynwelds

RELATED POSTS:

Twitter  @kathrynwelds
Blog – Kathryn Welds | Curated Research and Commentary
Google+
Facebook Notes

©Kathryn Welds

When Do Women Talk More than Men?

-*Are women really more talkative than men?
-*Do women in business meetings not claim as much “talk time” as male colleagues?

Kay Deaux

Kay Deaux

More than 25 years ago, NYU’s Kay Deaux and Brenda Major of University of California Santa Barbara proposed that context and expectations of the individual and others determine when females talk more than males.

Brenda Major

Brenda Major

More recently, participants with digital “sociometers” recorded identities of people nearby and talk volume during a work collaboration project, and during lunchtime social conversations in a study by Harvard’s Jukka-Pekka Onnela and Sebastian Schnorf, with David Lazer of Northeastern and MIT colleagues Benjamin N. Waber and Sandy Pentland.

Jukka-Pekka Onnela

Jukka-Pekka Onnela

During the work project women talked significantly more than men, except when groups included seven or more people.
Larger group size suppressed women’s verbal contributions to the project.
In addition, women sat closer to other women in these groups.

Sebastian Schnorf

Sebastian Schnorf

In contrast, during social conversations, women talked the same amount as men, and even more than men when the group was large.
As a result, group size seems to affect women’s verbal participation in groups depending on the task focus vs. social focus.

Matthias Mehl

Matthias Mehl

This finding supports earlier reports of equal verbal participation by women and men by University of Arizona’s Matthias R. Mehl, collaborating with Simine Vazire of Washington University in St. Louis and University of Connecticut’s Nairán Ramírez-Esparza.
Together with Richard B. Slatcher of Wayne State and University of Texas’s James W. Pennebaker, they analyzed voice recordings from more than 390 participants, and concluded that women and men both spoke about 16,000 words per day.

David Lazer

David Lazer

In addition, large group social settings seemed to enhance women’s verbal participation, in contrast to the opposite effect in collaborative work projects, found Onnela’s team.
The strongest difference in gender participation related to relationship strength and group size.

Scott E. Page

Scott E. Page

Contributions from all members of diverse work groups are required to produce the largest number and most innovative solutions, according to Loyola University’s Lu Hong and Scott E. Page.
They found that diverse work groups produce superior solutions compared with homogenous groups, even if groups were composed of uniformly top performers.

In fact, a group’s “general collective intelligence factor” is most closely associated with:

Anita Wooley Williams

Anita Wooley Williams

This “collective intelligence factor” is not related 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 Sandy Pentland, Nada Hashmi, and Thomas W. Malone.

Diverse groups, including women, can most effectively produce innovative solutions when all participants contribute divergent views.
Women who  consciously increase verbal participation establish visibility and professional credibility, while contributing to improved group performance.

-*How do you determine your degree of verbal contribution in work groups?

Follow-share-like www.kathrynwelds.com and @kathrynwelds


RELATED POSTS:

Twitter  @kathrynwelds
Google+
Facebook Notes

©Kathryn Welds