08 Mar 2010  Sharpening Your Skills

Successful Negotiation

Can you out-negotiate Wal-Mart? Can women overcome gender stereotypes to win equitable pay? Recent research from Harvard Business School looks at important factors to consider before sitting down at the bargaining table.

 

Sharpening Your Skills dives into the HBS Working Knowledge archives to bring together articles on ways to improve your business skills.

Questions to be Answered:

  • How is negotiation evolving?
  • How important are opening talks in determining a negotiation's outcome?
  • Can you win against a non-negotiable partner?
  • How can women negotiate past gender stereotypes?

How is negotiation evolving?

The New Deal: Negotiauctions

Whether negotiating to purchase a company or a house, dealmaking is becoming more complex. Harvard Business School professor Guhan Subramanian sees a new form arising, part negotiation, part auction. Call it the negotiauction. Here's how to play the game. Key concepts include:

  • In a negotiauction, the rules are never perfectly pinned down, which creates both opportunities and challenges.
  • The three common negotiauction moves are set-up, rearranging, and shut-down.
  • Negotiauctions help in the current economic downturn by providing a more nuanced mechanism and better outcome for both parties.

How important are opening talks in determining a negotiation's outcome?

Walking the Talk in Multiparty Bargaining: An Experimental Investigation

At the onset of negotiation in multiparty talks, the dominant logic in discussions—be it fairness or competition—strongly influences the equality of payoffs even in complex, full-information multiparty bargaining. Research in this working paper by HBS professor Kathleen L. McGinn and coauthors Katherine L. Milkman and Markus Nöth add critical insights to our understanding of the role of communication in multiparty bargaining. Key concepts include:

  • In multiparty bargaining, as in two-party bargaining, communication may work in part through social awareness and in part by allowing players to threaten to walk away.
  • Communicating the willingness to walk away, in conjunction with loss aversion by stronger players, may help weaker players convince stronger players to move toward a more equal split of the available surplus, but it also permits strong players to threaten weak players.
  • In a competitive, multiparty game, communication may play a more nuanced role than observed in simpler bargaining contexts.

Can you win against a non-negotiable partner?

HBS Cases: Negotiating with Wal-Mart

What happens when you encounter a company with a great deal of power, like Wal-Mart, that is also the ultimate non-negotiable partner? A series of Harvard Business School cases by James Sebenius and Ellen Knebel explore successful deal-making strategies. From the HBS Alumni Bulletin. Key concepts include:

  • Driving a mutually agreeable deal with a large company such as Wal-Mart means price alone can't be the centerpiece of the interaction.

How can women negotiate past gender stereotypes?

Gender in Job Negotiations: A Two-Level Game

There remains a significant "unexplained" difference in male and female compensation that, according to research in the past several years, cannot be accounted for by gender differences in work commitment, education, and experience, or other considerations such as unionization. In this working paper, Hannah Riley Bowles and Kathleen L. McGinn review two bodies of literature on gender in negotiation. Key concepts include:

  • The traditional division of labor between the sexes—in which women managed the private realm and men the public—continues to have an indirect influence on job negotiation outcomes through gendered stereotypes feeding into gendered pay expectations.
  • The effects of gender on job negotiations are best understood if negotiations at work are viewed as a two-level phenomenon in which candidates' job outcomes are the product of negotiations with domestic partners as well as prospective employers.
  • Taking stock of the practical implications of this literature may help candidates overcome disadvantageous effects of gender on job negotiations and facilitate the creation of greater value for their employers, their domestic partners, and themselves.