Make Negotiating Your Superpower

Audio Description

This International Women’s Day, Bernstein’s Women & Wealth Institute brings in an expert for tips on becoming a better negotiator.


This transcript has been generated by an A.I. tool. Please excuse any typos.

00:00 - 00:07

Negotiating is a power. It's a strength that we all need, not just in our professional lives, but in our personal lives.

00:08 - 00:17

Welcome to Women and Wealth. I'm Beata Kirr, Co-head of Investment Strategies at Bernstein and this show aims to educate and inspire women to make the right choices for their wealth.

00:20 - 01:01

Hi, I'm Kim Davis, Managing Director and chair of the Women's Council. This International Women's Day, we're delighted to share a previously recorded event with Kendall Park, an assistant professor at Vanderbilt Graduate School of Management. Bernstein's Women Leadership Council invited Professor Park to lead a skill building session with a group of our female employees. Kendall has a PhD in sociology from Princeton and teaches courses not only in negotiation, but also around women and leadership and social enterprise. Today, we'll share some clips from that session in hopes that women everywhere can benefit from her expertise. Kendall started by leading us through a practice exercise. Here she is in her own words, explaining why.

01:01 - 01:44

One of the best predictors of negotiation success is actually the amount of time you practiced, right? The amount of practice that you have. So we're going to practice negotiating and a space where it's okay to fail, right? This is a very low stakes environment. We also want to try to increase your propensity to negotiate, to help you recognize opportunities for negotiation. Right. To understand that negotiation is something much broader than oftentimes we think of it as. So that you see. Right. New contexts, new opportunities to negotiate everywhere you go. And we want to learn some basic negotiation principles and strategies so that when you do identify those opportunities to negotiate, you have the skills that you need to succeed.

01:44 - 01:57

The practice exercise was really interesting beyond giving us a chance to try negotiating, it really teased out some of the most common biases that people have. For instance, approaching a negotiation with the mindset of winners and losers.

01:57 - 02:50

This is what we call a negotiation, the fixed pie bias. This idea that more for me necessarily means less for you, right? But if you're winning and you're getting what you need, it means I'm losing. And what that means is that we come into negotiations with this fixed idea of what I need, right? We're so focused on what I need and why I need it that we don't listen to our partner. We don't take the time to build trust, right? We don't consider all of our interests, all of our partners interests in the ways that they might overlap, because sometimes these negotiations that feel win lose can actually have some, you know, shared value creation opportunities. We can actually expand the pie rather than dividing up this fixed pie. And so your job is a negotiator is to look beyond your own interests, right? Beyond your own positions, to uncover your partner's interests.

02:50 - 03:14

Okay. So come with an open mind and don't just focus on what you need. Well, that might seem like a generality. Kendall was also quick to point out that all negotiations aren't equal. You have to select your strategy thoughtfully before you even think about how you're going to negotiate. You have to recognize what kind of situation you're in. Let's say you want to be collaborative. How do you figure out what the other side really wants?

03:15 - 03:39

The first way is that we can build trust and share information through small trades. We probably don't want to lay all of our interests out on the line right at the very beginning for fear that we can be exploited, right? That our partner could use it against us. But we give them a little bit of information and then we ask questions in return so we can get a little bit of information from them. And this back and forth is how we really start to build the trust required to uncover their interests.

03:39 - 04:22

We want to ask why or what about questions. This seems so simple, right? But need 3000 oranges? Why? And the more we ask why, the more information we get. Or we present a deal to our negotiation partner and they say that's not going to work for me. Ask them why. If it feels too combative, I really like, “what about,” right? What about that deal doesn't work for you, right? That feels a little bit more accommodating. Give people choices between equivalent deals. Let's say that you're hiring a new employee, right? You know that your new employee wants to be well compensated. They want adequate vacation time and they don't want to travel that much. They want to be around their family. But you don't know which of those issues is the most important to them.

04:22 - 04:43

So what we could do is make multiple offers at once and say, would you rather have, you know, $110,000 salary with three weeks of vacation and 30% travel or make a little bit less, have more vacation and have less travel. And the point here is that we're not saying here are your only two options. Take it or leave it.

04:43 - 05:18

Right. That's a competitive strategy that's playing hardball. What we are doing is saying between these two options, which is most appealing to you, which of these do you like more? And when they answer, you say, “What about that package is appealing to you?” And now all of a sudden we have more information about what's most and least important to them so that we can get to the heart of their interest. And notice we didn't have to ask and also makes our negotiation partners happy. We like to have options. We like to feel like we've been given a choice. And when we make our negotiation partner happy, they're more likely to work with us.

05:18 - 05:28

I love the idea of presenting different options to get to a shared outcome that probably comes naturally for many women, but I'm going to keep it in my hip pocket for the next time I'm in a contentious meeting.

05:29 - 05:40

Next, Kendall teed up a more competitive negotiation where our own outcome is really important to us. Notice how our tactics differ here, starting with making the first offer.

05:40 - 06:35

If we think this is a competitive negotiation, we want to be the one who makes the first offer. We want it to be ambitious. Any time I present this information, I get questions about like, what if it's too ambitious, right? What if it's too high? That is almost never an issue. Typically, especially as women, we bargain ourselves down. We don't anchor high enough. We want to think about what the outcome is. All of our hopes and dreams are the target and shoot a little bit past it. That's how we want to anchor strong. There is one context in which you do not want to be the first person to make an offer, and that is when you have very little information on the item that you're negotiating. So if you're looking to buy an engagement ring and you have never bought a piece of jewelry before, you should not walk into a jewelry store and make the first offer on a diamond ring because your partner has more information than you do. But the number one rule of negotiation that we'll get to in a second is we want to prepare. We want to spend three times as much preparing for the negotiation as we do actually negotiating.

06:35 - 06:49

Spend three times as much, preparing for the negotiation as we do actually negotiating makes total sense. I also appreciated Kendall's next tip, where she talked about making good concessions in competitive situations. Here's what she had to say.

06:49 - 07:23

Good concessions come in small increments, multiple small increments. This gives us the most bargaining room. We can come down multiple times, right, without going too low. It also makes our partners really happy. So lots of studies and behavioral economics would suggest that you would be pretty happy if you walked out and found $20 on the street today. You'd actually be happier if you found $10 today and $10 tomorrow. We like to get our wins in multiple small doses, and if we can do that for our negotiation partner, they're going to be happy sooner. They're going to be willing to reach a deal sooner.

07:23 - 08:06

So if we think we're in a competitive negotiation, we want to make multiple small concessions. We want to be sure that we're labeling our concessions and letting our partner know that what we're offering them is costly, right? Let them know that we're giving something up for them. We also want to define reciprocity. Tell them what we want in exchange. I could do X, but could you do Y? Right? So that they have a sense of what they could give up for you? Make sure that you say your concessions out loud. You mark them as concessions so your partner knows that that's what you're doing and you shouldn't make two concessions in a row, right? You make a concession and then your partner gives something up. Especially if we're in a competitive negotiation. We take one step forward and they take one step forward. We want to see this back and forth.

08:06 - 08:44

Making concessions probably sounds familiar to anyone with teenagers. Now, remember what Kendall said about putting in your work before you even sit down to negotiate? That's great. But what exactly are you doing to prepare? You're writing things down, like your target price, your reservation price, the point at which you'd walk away and you're quote unquote, beta. That's just a fancy term for your fallback plan. If you can't come to an agreement, say you're negotiating for a higher salary, your target might be 100,000, your bottom line might be 80,000 and your fallback or beta is that you're going to start looking elsewhere If you don't get this, raise the key to all of this. According to Kendall, writing it down.

08:44 - 09:32

A long line of research suggests that we perform better in negotiations when we write these down, you are much more likely to stick to it if you've written it down. So preparing for a negotiation, we want to write down our interests, our target and reservation price. You know, psychologically we're more committed to the numbers when we write them down. We want to try to estimate our partners target and reservation. We want to try to strengthen our own patina, and we want to think about what our priorities are, What are the most important issues on the table for us? What are the least important issues on the table for us? And the least important issues are the ones where we can really make concessions, right? So we want to think about what those concessions could look like in advance. This is before we even have the conversation. This is what we do before we even come to the negotiation table so that we're better prepared.

09:32 - 09:45

Next, we pivoted to gender and negotiations. It should come as no surprise that at a high level, gender tends to shape every step of the negotiation process, sometimes to a women's benefit and sometimes not so much.

09:46 - 10:24

Before we even land the negotiation table. We know that women are more concerned about the reputational risks of negotiating. This is not something that tends to occur to men when they think about negotiation. They're not really that thoughtful about their own reputations. And we are. And the reality is, this isn't irrational. It's for good reason. There are reputational risks for negotiating and women are aware of them. Men are more likely to interpret situations as negotiable. So if they hear a decision, they assume that there's some wiggle room. Women tend to hear a decision and think that that decision is set in stone. And so together these two things mean that in some contexts women are less likely to negotiate than men.

10:24 - 11:05

So we know that these gender differences in propensity to negotiate disappear when negotiation is framed as asking, What does this tell us? What does this tell us about women in negotiations that we sometimes require permission to feel like we can negotiate? What it suggests to me is that we have been socialized to feel like we can't negotiate and we're capable of negotiating, but we need to know that it's okay. Right. And I want to be very clear that this is a socialization process, right? It's not necessarily that men are somehow naturally predisposed to be more assertive, but we have been socialized to be less assertive. And so it's only when we're given this kind of permission that we feel like we can negotiate.

11:05 - 11:13

What does this mean for women serving in managerial or leadership roles? How can we encourage our team to negotiate in order to level the playing field?

11:13 - 11:35

If we want everybody to feel equally powerful, right equally able to negotiate, we just have to really make it clear we really have to reduce the ambiguity. We have to say, right, this is negotiable, you can ask for more. And that really helps to level the playing field. So think creating an environment in which everyone knows that it is acceptable and encouraged to negotiate.

11:35 - 12:20

The other thing I always tell women to do is to create their own little brag book on their computer, right? So put a folder, you can call it brag book, you can call it whatever you want. Anytime you perform well, throw data into that folder, write the numbers that you hit. If you get an email from a client or from a boss or from a colleague that tells you did a good job, throw that into the folder. You should constantly be gathering data that demonstrates your worth. So that's the other big piece of advice. Understand the timeline. Different organizations have different timelines for raises. Sometimes money is tighter. So being strategic, you know, teaching the women that we mentor to be strategic about when they ask, but also teaching them to start really accounting, right. For some of those numbers, some of that data, whether it's quantitative or qualitative data about their performance.

12:20 - 12:35

Women's tendency to need permission wasn't the only gender difference. Kendall also pointed out that on average, women and men tend to approach negotiations with different kinds of expectations, and the expectations placed on women and men by society also diverged.

12:35 - 13:08

We know that men set higher aspirations going into negotiations, so when they set those target values that we talked about, they tend to be higher. And both men and women set higher aspirations when they know that their negotiation partner is a woman. And then, of course, there are societal expectations for our behavior, right? Men are socialized and rewarded for being assertive. Women are socialized and rewarded for being agreeable. So it means that we then face this whole set of social expectations when we come to the bargaining table.

13:09 - 13:38

The process of negotiation looks different for men and women. Women tend to be more likely to respond in kind to our partners moves. So if our partner starts to behave more collaboratively, we tend to follow suit. We behave more collaboratively as well. Men are more likely to view negotiation as persuasion. Right? Trying to convince their partner they're right rather than trying to respond to their moves. Men are much more likely to haggle, right? So we're treating negotiation differently, which then means that we have different outcomes, right?

13:38 - 14:13

Men tend to claim more value in these purely competitive negotiations where I want to win at all costs and I'm not worried about the relationship, but men also run greater risk of impasse, of not being able to make a deal at all, if not being able to find a deal that helps both partners. Women tend to perform better in collaborative negotiations, negotiations where we make everyone better off, where we're trying to create value, and women perform better when we're negotiating on behalf of other people. When women come into a negotiation and they say, you know, I really need XYZ for my team, right? They tend to perform better.

14:14 - 14:20

So what do we do about this, knowing that these gender gaps emerge at every step of the way and that they affect our outcomes?

14:20 - 14:44

The traditional advice looks something like this. We want to collaborate. We frame this as a joint problem solving task. We want to connect, really, really emphasize the relationship that you have with your negotiation partner. Focus on building that trust. And again, we want to try to relate our goals to the group that we're a part of. We're negotiating on behalf of the greater good, on behalf of our group.

14:44 - 15:18

This is the advice that women typically get for negotiations. Think it's something that we should have in our toolkit, but also think that the things that we need to do to excel as individual women are sometimes at odds with what we need to do to create the world that we would like to live in, because perhaps we would like to be in an organization, to be in a society in which women don't have to be collaborative to succeed and which women can be assertive to succeed. Right? In which we don't actually have to lean into these gender norms to do well, but that we could all negotiate the same way.

15:18 - 15:49

Because, by the way, men are also punished for negotiating collaboratively, right? They're expected to be assertive. They're rewarded for being assertive. And they aren't. We don't respond quite as well to them when they negotiate collaboratively. Sometimes, you know, the things that we need to do to survive in the world, to succeed in the world, are not the same things we need to do to change it. And sometimes leaning into these gender norms can make it harder for the women who come behind us, right? Who are less able to lean into those gender norms, to succeed, to be their authentic selves, to be as assertive as they need to be.

15:49 - 16:11

And so I did sort of want to leave you all with this as leaders in an organization to start thinking about, right, what do we need to do to create a culture where these gender norms aren't quite so powerful, Right? Where these. Patients aren't quite so powerful and we can negotiate the way that we want and need to negotiate without these sorts of reputational penalties. So I will leave this at that.

16:11 - 16:31

I took away so many things from Kendall session. Be prepared. Earn trust and listen. Call out concessions and use them to improve your position. Be aware of gender norms and keep them in mind when mentoring female colleagues and male colleagues who may be senior leaders. I hope you took something away too, and that you build your negotiating power and use it to your benefit.

16:33 - 16:47

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