Most business books push a singular narrative around negotiations: Go hard or go home. The advice is tied to the idea that the negotiation table is a place of conflict where one party must best the other. But research conducted by Maurice Schweitzer, Wharton professor of operations, information and decisions, and Einav Hart, Wharton postdoctoral researcher and a data scientist at Uber, suggests that using a softer approach can often yield better long-term outcomes. In their paper, “Getting to Less: When Negotiation Harms Post-Agreement Performance,” the scholars find that more harmonious bargaining, and sometimes not negotiating at all, can yield better long-term results. Schweitzer and Hart spoke to Knowledge@Wharton about what people should keep in mind when they are ready to make a deal.
An edited transcript of the conversation follows.
Knowledge@Wharton: We don’t often connect negotiation with post-agreement performance. We tend to think we’ve negotiated, it’s done, and now we’ll get to work. What led you to consider this connection?
Maurice Schweitzer: The premise of our work is that the negotiation process can influence behavior after the negotiation. When we negotiate, we have some interests that are consonant, that are similar, congruent. And we have some interests that are really opposed to each other. As we negotiate, we’re trying to find common ground and bridge our differences.
Through the negotiation process, we might magnify or focus attention on our differences. And if we end up with the perception that our interests are really in conflict with each other, that can spill over into post-negotiation performance.
If you think about the modern economy, here in the United States, about 80% of the economy is services. What that means is that we might negotiate the price of a service, say a salary, and then after we negotiate, we need to work together. As we’re working together with that house painter or the babysitter or the caterer, we need the negotiation process to have either helped or not harmed our relationship so that we can collaborate effectively.
The whole thesis of our work is that if the negotiations don’t go as well as they might, or if we entered negotiations perhaps when we shouldn’t have, we could end up harming the relationship and ultimately harming what happens next — that post-agreement performance.
Knowledge@Wharton: In your paper, you discuss how there’s an assumption that the economic value of an agreement is equal to the terms of the negotiation. When is that not true?
Einav Hart: We negotiate over job offers, over raises, over who does what. These are quintessential examples of negotiations. In a lot of these cases, the negotiation is only the beginning of our relationship or interaction. We’re meeting people and having to interact with them again and again after the negotiation process. It’s not that when we leave the table everyone forgets what has happened. We remember the price we reached or some agreement we reached, but we also remember how we reached that outcome, and we form perceptions of our counterparts. These relationships can have long-term implications beyond the negotiation table.
This is potentially less important if you negotiate over the price of a sofa on Craigslist. But even in those cases, people can decide when they ship the sofa, how they ship the sofa, and if they include other things. In most cases, the economic value of the negotiation process is not limited to the agreement. Imagine reaching a great price but then getting bad service: That’s not such a great deal, is it?
Schweitzer: I think that’s exactly right. This is the way a lot of the negotiation research has been done, and the negotiation books that have been written focus on everything that happens up until you reach an agreement. Our work is focused on what happens next. In so many cases, where somebody is now going to deliver a service, that relationship really matters. There might be a great reason why you don’t negotiate really hard with your babysitter. You’re worried about creating conflict in a way that might breed resentment and ultimately leave you worse off.
Knowledge@Wharton: What are some typical negotiation strategies that do not take this effect into account and could backfire?
Schweitzer: If you look at many of the negotiation books out there, they are titled things like “Getting More.” So much of the classic negotiation literature and zeitgeist is about being more assertive, being tougher [and] “getting to yes.” Getting to yes has some collaborative elements, but much of the negotiation literature is about how we can somehow “win” or claim more of the pie. Indeed, there are many negotiation strategies that yield favorable negotiated outcomes like being assertive, starting high, conceding slowly and expressing some anger.
If people start with a high anchor and concede slowly, use aggressive tactics, express some anger, they end up achieving favorable negotiated deal terms. But what we’re finding — and this is our central thesis — is that sometimes by being more assertive, by being more aggressive, you might end up with a better negotiated outcome … but ultimately, through that process, create conflict that causes you to end up with worse value overall.
Hart: When we think about negotiation strategies, we tend to think, “Oh, we’re going to negotiate anyway. Let’s see how we navigate that situation.” But in many cases we might be better off not even starting this process — not engaging in negotiation that may end up creating conflict.
There is a lot of negotiation advice which is very general: “You should always lean in and negotiate”; “What’s the harm in asking?” In some cases, there could be harm in asking if you look beyond “getting more” and think about the relationships.
Knowledge@Wharton: What were your main hypotheses going into this study?
Schweitzer: We were thinking about two things. One is, should we enter negotiations or not? Sometimes, just the mere act of entering a negotiation can highlight our points of conflict, and this is counter to the advice you’re going to read in most of the negotiation books out there. Sometimes, it’s actually much better not to enter into negotiation.
The second idea is to think about how the negotiation process might highlight conflict or build rapport. That is, it could be that through the negotiation process we identify underlying common interests. We figure out ways for us both to do better. We end up building collaboration perhaps because we end up engaging in small talk or taking each other to dinner or going to a sporting event through that negotiation process. What’s really important is that we understand that building rapport helps us with the negotiation. But I think our work underscores how important building rapport is for post-agreement behavior, and that the relationship doesn’t end when we’ve just reached an agreement.
Knowledge@Wharton: How did you go about studying this? Could you walk us through a couple of the experiments?
Hart: The participants were assigned to be workers, and they were matched with employers. The employers essentially had a budget from which they paid the workers for their performance on a task in the experiment…. The more work the participant did, the more the employer got paid. The workers themselves didn’t get any benefit from the work, so how much they worked depended on how willing they were to do it and how much they wanted to increase the employer’s payments.
…We had the workers either negotiate their wage with the employer, or receive a non-negotiable wage. Then, they did tasks that created value for the employer after the negotiation. We kept that wage consistent across the conditions so we could look at how the negotiation process itself affects post-negotiation performance.
Six of these experiments, involving approximately 1,200 participants, made it into the paper. It has been a fun ride.
Knowledge@Wharton: What are the key takeaways from these experiments?
Hart: As the paper title indicates, we found that negotiators — workers who discussed their wage with the employer and kind of went back and forth — did substantially less work after that. They did substantially less compared to workers who received a non-negotiable wage. For the same amount of money that goes in their pocket, the negotiators performed the work and produced less value after the negotiation. While employers essentially paid the same, they got less back when they negotiated versus not.
Consistent with our hypothesis about negotiations highlighting points of conflict, we saw that negotiators, compared to those who did not negotiate, were more likely to think of the employer as their competitor and thought more about their conflicting interests – more about being at odds with one another. These perceptions of conflict accounted for much of the difference in performance between negotiators and non-negotiators. Taken together, the negotiation process can, in many cases, highlight conflicting interests, which then leads to worse subsequent post-agreement performance.
Knowledge@Wharton: How does this study change our understanding of the negotiation process? What do people need to consider when they’re entering a negotiation?
Schweitzer: The key idea here is that we can’t assume that when we negotiate, the negotiation process ends with an agreement and we start fresh right after that. Rather, the negotiation process is part of a broader relationship that we have. That means that we should think carefully about whether or not to enter a negotiation.
If our babysitter or the construction worker or the housekeeper proposes a wage, I think we should think about, “Hey, do we want to negotiate that or not?” and be mindful of what this might do for our broader rapport. And when we do negotiate, think about how important it is to manage that relationship and to make sure that it doesn’t highlight conflict but instead helps us build a relationship so that the post-agreement behavior will benefit, rather than suffer, following the negotiation process.
Hart: You can actually get more value in the long term by building this relationship rather than damaging it by essentially trying to get more of the pie now.
Knowledge@Wharton: What else should people keep in mind to help to mitigate the harmful effects of negotiation?
Schweitzer: I think one of the broad implications of our work is that we should really be mindful of the kinds of relationships that we’re cultivating. At the heart of negotiations, there’s the idea that we have some conflicting interests and some congruent interests. One of the key ideas that we need to keep in mind is how we manage this process of interacting with other people so that we don’t highlight the points of conflict and leave our counterpart feeling like their interests fundamentally conflict with ours.
Knowledge@Wharton: What questions does the study raise that could be looked at in future studies?
Schweitzer: First of all, I think the idea of studying post-negotiation behavior is really important. If we look at most of the existing research in negotiations, the dominant paradigms end with a negotiated agreement sheet, so we either reach an impasse or a deal. And in fact, in the vast majority of negotiation studies, that’s exactly where the experiment ends.
Instead, we need to think about a much broader lens and look at what happens after the negotiation. Related to that, we need to think about the distinctions between services and goods, where goods represent a surprisingly small portion of our economy, yet feature prominently in studies of negotiation.
The next idea is to think about how perceptions of conflict and cooperation guide our interactions far more broadly, and how the interactions that we have shape this sense of whether or not we’re collaborating or competing.
Hart: Even if we’re being very self-interested, we need to take that relationship into account. How do we navigate negotiations and negotiate relationships? In different contexts, I think it’s a super-interesting question. And another question is, when do we enter negotiations? How should organizations even structure the job negotiation processes and hiring processes to build relationships and enhance productivity in the longer term, to reduce these potential conflicts that may happen between employers and employees, between employees, and generally in the workplace?
Frontpage November 19, 2017