Organizational Behavior:

1/10/13

* Real life decision making is not rational * “Sunk cost bias” – violates economic assumption of reality * ex: $20 auction * Escalation * Influences of Escalation * Project features encourage it * Psychological factors encourage it * Social factors encourage it * Structural factors encourage it * ex: Vietnam war – committed large number of troops to combat * Reduce escalation of commitment * Separate initial decision-makers from decision evaluators * banks making problem loans * get a fresh set of eyes to evaluate * Shift focus of attention * think about others, pro-social view * hopes and aspirations, growth * Hold people accountable for decision processes, not only outcomes * Maximizers vs. Satisficers * Maximizers – 20% higher salary * Maximizers less successful * less satisfied with outcomes * more negative emotions during search * Maximizers tend to do better but feel worse than satisficers * ex: Silver medal in Olympics * Maximizers at greater risk of escalating commitment * Irrationality * Often can not articulate why we make decisions * ex: Predicting double faults * when asked to justify, they do not really know but may give an answer * Irrationality is unconscious * people’s decisions are also shaped by factors outside of their conscious awareness * Role of priming * requests – providing a reason gives greater compliance * the word “because” has an automatic reaction * ex: copier * annoyance with apology has same results as no annoyance * phone call interruption example with $5 * we think we are aware of why we make decisions, but this is often not the case * Bounded Rationality

1/15/13
Emotions at Work

* Emotions were seen as irrational and got in the way of our ability to be productive * It is not possible to separate emotions from our thinking * Emotions drive thinking * No emotions -> no preferences ->no decisions * ex: guy with rod in his head, smart but could not handle simple every day decisions * Two paths of processing information * High vs. low road, fast vs. slow thinking * High – more time to think * Low – immediate reactions * ex: getting out of possible car accident * two path ways work together – emotional and cognitive * Emotions motivate * getting “psyched” up * inspiring followers * ex: MLK, JFK * Role of negative emotions * quite prevalent in the work place * fear at work * Emotions communicate * large amounts of information * your own preferences * others’ reactions * ex: pissed of Bill Cowher * Affect: broad range of feelings that people experience. Includes both emotions and moods * Emotions: caused by specific events, brief in duration, specific in nature, accompanied by specific facial expressions, action-oriented in nature * Moods: cause is often general or unclear, last for hours or days, more general in nature, not accompanied by distinct facial expressions, cognitive in nature * Emotions and moods influence one another * Different events and things influence why we have certain emotions * Personality, day and time of the week, stress, activities, gender, age, weather * * Dispositional Affect – personality trait referring to a person’s tendency to experience emotions * Trait positive affect – tendency to be in a good mood, happy, excited * Trait negative affect – likely to react to events in a negative way, experience more negative emotions * Moods * Positive affect * Negative affect * Emotion Circumplex * Two dimensions of emotion * Valence (pleasant/unpleasant): Positive/Negative * Activation: High/Low * Fear makes us more defensive and more focused against a specific threat * may cause you to remain silent, narrow focus on task * Anger is a sign of a blocked goal * may motivate you to work harder, could weaken your performance * Happiness is a signal of cooperation, enjoyment, achievement * Each emotion has unique adaptive value * Fear vs. Anger * Impact on investment decisions? * Fear – more cautious about decisions, safer decisions * Anger – more aggressive and more risky, more higher and lower returns * How do Emotions influence Behavior at work * Performance * positive mood, more favorable outcomes (performance evaluation and higher pay) * Customer service * emotions affect service quality delivered to customers which affects customer relationships * Emotional Contagion: “catching” emotions from others * Motivation * positive mood affects expectations of success * Decision making * positive emotios can lead to better decisions * more efficient cognitive processing * Creativity * positive mood increases flexibility, openness, and creativity * Negative emotions (frustration, anger) can aid innovation * Negotiation * Depends on type of negotiation (Distributive vs. Integrative) * Positive emotions lead to better outcomes in integrative * Negative emotions can lead to successful outcomes in distributive negotiations – using anger inappropriately can backfire * Emotional Intelligence (EI) * a person’s ability to * be self-aware, recognizing own emotions when experienced * detect emotions in others * manage emotional cues and information * EI plays a role in job performance * EI is controversial * Case for EI – intuitive appeal; predicts criteria that matter; biologically-based * Case against EI – too vague a concept; can’t be measured; its validity is suspect * Step 1: Perceive and express emotions * Step 2: Understanding emotions * Step 3: Managing emotions * Ability to regulate emotions in both ourselves and others * Influences leadership behaviors * Understand own emotions, emotions of others, and use emotions to motivate behavior * People prefer to be with managers who can read their moods and judge those people as better managers * Emails leave misinterpretations

1/17/13

Motivation * What Motivates employees? * Good wages, job security, promotion opportunities: according to managers * Appreciation, Feeling “in” on things, understanding attitude: according to employees * The Extrinsic Reward Bias * Leaders and managers underestimate the impact of intrinsic motivators * autonomy * mastery * purpose * What is Motivation? * Psychological forces that cause people to invest effort in action * Direction (what should I do?) * Intensity (how hard should I work?) * Persistence (how long should I work?) * when people are motivated, they have a desire to act and expend effort * Outcomes of higher performance and quality of work produced * * EffortPerformanceOutcome * If I put forth effort, will I succeed? E-P * If I perform, will I get rewarded? P-O * Do I value the outcome? Rewards-Personal Goals * If a link is broken, motivation is reduced * Expectancy Theory of Motivation * How do employees decide what to do? * Employees evaluate different outcomes, look to see how others are rewarded * Choose the action that will produce the most desirable outcome * Employees are highly motivated when they believe that * EffortPerformance: Expectancy * PerformanceOutcome: Instrumentality * Outcomes are valuable: Valence * Motivation = Expectancy*Instrumentality*Valence * if any one =0, motivation = 0 * Hausser Foods * Decreased sales, increased competition * Florida sales team only cares about themselves * will not share with Brenda and the rest of the company * Brenda fears losing job because corporate wants higher sales * Expectancy Theory at Hausser * EP Link (expectancy) * Have to make sales * Come up with new ideas – expects this but not getting it * A lot of Paperwork – gets in the way, reduces expectancy * PO Link (Instrumentality) * Ideas * Increased sales Increases target quota causing employees to have to work harder * “Ratchet system” – treadmill that doesn’t stop * higher quota target each year * Perform sales, earn commission – hit target sales * commission motivates * Outcomes valued? (Valence) * Base pay/salary (low) * Commission – THEY WANT THIS * New ideas ($500) – NOT VALUED, an insult * new ideas raise quota making them work harder and they get very little benefit * What changes would you make? * percentage of commission from new idea * increase trust of employees * create more opportunities to move up in the company * increase base pay so that they do not rely heavily on commission * Have a different set of employees doing paper work in exchange for sales team coming up with more ideas and more sales * In maturity/decline state. Change relative weight of salary and commission. Raise base salary * What do employees value? * Maslow’s Hierarchy of Needs – no empirical evidence to support this * Meet basic needs first, then motivation moves you up the pyramid * McClelland’s Theory of Needs – argued that these needs are subconscious * Need for achievement (nACH) * Need for power (nPow) * Need for affiliation (nAff) * Job Orientation * see work as a means to the ends of leisure time and supporting self/family * Career Orientation * see work as an opportunity advancement, status, challenge, and recognition * Calling Orientation * see work as a source of meaning, enjoyment and fulfillment

1/22/13

Motivation: * Goal: cognitive representation of a target for behavior * increase motivation by * direct attention * energize effort * sustain effort * promote discovery of task-relevant knowledge, skills, strategies * Effective when they are * Specific (NOT “do your best”) * easier to form plans and judge process * Difficult (Stretch goals) * energizes people to put forth effort * captures attention and focus * can help increase knowledge and skills * Accepted * participation in, or understanding of, goal-setting process * should be something that they want to achieve * SMART Goals * specific * measurable * achievable * results-based * time-specific * Specific difficult goals work when: * Self-efficacy: The confidence, knowledge, skills, and abilities to achieve the goal * High goal commitment * Action plans that link goals to specific behavioral steps * Self-efficacy: link between effort and performance * if I put in the effort, will I succeed? * Goal Commitment: specific difficult goals have no effect if the individual is not committed to them * to enhance commitment * make the goal public * provide a clear statement of why the goal is important * provide supportive supervision * provide feedback on progress * remove obstacles and distractions * The importance of Action Plans: * people are more likely to attain goals when they are linked to specific action plans * help to break meaningful goals into manageable pieces * create opportunities for “small wins” * highlight potential roadblocks and obstacles * Can foresee problems down the road * Small wins: concrete, complete accomplishments of moderate importance * a small win favors another small win * increased confidence and support * breaking down problems reducing cognitive limitations * small changes preferred to large changes * reduction in stress/anxiety via: * increase in control and predictability * ex: 2004 Red Sox * Forming an Action Plan * 3-5 important goals * ask “how: * keep asking “how?” until you identify a set of concrete behavior steps that you’ll take to achieve each goal * Gym: Be more fit * block out time in schedule * create a set of exercises to complete before each session * School: Get straight A’s * keep track of all assignments and exams * complete work each day as my first priority before I do anything else * Jobs: Get an internship * set appointments with career services * follow up * build network * mock interview * The Dark side of Goal Setting * Tunnel vision * distracts attention from alternative goals * be careful about how the goals you set interfere with other important goals * ex: Basketball passes and Gorilla man * Decreased helping and cooperation * individualistic, competitive focus * Increased unethical behavior * “Ends justify means” thinking * Sears: go in for oil change, they tell you that you need other things done, like breaks need to be fixed * Sears was over charging by $235 for repairs that were not needed * Green Giant: employees placed bugs in food to get incentive dollars for finding insects * Intrinsic vs. Extrinsic Rewards * rewards, like goals narrow our focus of attention * rewards are powerful motivators * When do they work best? * The candle problem * light candle, attach to wall and prevent wax from falling on the table * people that were offered incentives, did worse and took longer to solve the problem * people without incentives solved the problem quicker * Reward tarnishes creativity * have to overcome how the problem is set up * tacks in the box, take out and attach to the wall * tacks out of box – answer is right in front of you * people with incentives did better * people saw tacks and box as separate * Extrinsic Rewards * work best: * on mechanistic, specific, discrete tasks * Incentive system Increased quantity of output by 44% for Safelite AutoGlass * Tasks where there are clear rules or when there is a single solution (a “right way” of doing things) * Risks * Extrinsic rewards narrow attention on the reward * If reward only quantity, then there may be reduction in quality * at Safelite, number of needed repairs increased * set specific goal for quality, making workers responsible for repairs * Risk #1: Threatening autonomy * incentives/extrinsic rewards can undermine feelings of autonomy * lead people to feel their behavior is externally controlled rather than freely chosen * lead people to feel manipulated and insulted * Need to be delivered in a supportive and flexible, rather than controlling, fashion * Risk #2: Undermining Intrinsic Motivation * Study: participants played fun games * experimenters started giving rewards for success * Took away rewards participants stopped playing * “Overjustification effect”: justified effort in terms of extrinsic rewards rather than intrinsic interest * decided they were paying only for rewards * Rewards can lead people to focus only on extrinsic incentives * Intrinsic Motivators * Self-determination theory * Autonomy: people prefer to feel they have control over their actions * Mastery: people are driven to achieve competence * Purpose: People are driven to do work that has a positive impact on others * Do not nee all 3 of these to be Intrinsically motivated * All about values – what do you care about? * To motivate employees and yourselves.. * identify values * select jobs, tasks, and goals to match these values * Look at your goals * for each goal ask: “Why do I care?” * keep asking until your answer is “Because this is important to me” or “Because this is who I am: * You’ve reached an important value make sure your goals are linked to it * Risk #3: Inequity * perceived unfairness or a lack of justice as to how rewards are distributed reduces motivation and effort

1/24/13

Motivation:

* Risk #3 of Extrinsic Rewards: Causing Inequity * Incentive compensation Inequity * creates pay dispersion (large disparities in compensation between employees) * leads to jealousy, competition, frustration, lack of cooperation * Harmful effects at work * Pay dispersion manager & employee turnover * Pay dispersion in top management teams lower average market-to-book value and shareholder returns, especially in high-tech industries (where collaboration is crucial) * Harmful effects in baseball * players on teams with high pay dispersion perform worse * fewer runs scored and higher ERA’s lose more * Equity Theory * Focuses on people’s perceptions of fairness of outcomes in proportion to inputs * Inputs: What I invest in the job (effort, skills, time, loyalty) * Outputs: What I get from the job (pay, bonuses, recognition, security, benefits, etc.) * O/I ratio: comparison of outputs to inputs * Is a theory of distributive justice * Am I rewarded fairly? * Equity exists when a person perceives their outcome/input ratio to be equal to a referent’s ratio * A relative comparison * Who is the referent? Who do employees compare themselves to? * Other-inside: Compare O/I to someone else in the same organization * Other-outside: Compare O/I to someone else in another organization * Self-comparisons: compare your O/I to your previous experience in the same or another organization * Reactions to Inequity – 6 ways * change their inputs(underpayment: work less, Overapyment: work harder) * Change their outcomes (underpayment: ask for raise, promotions) * Turnover (Underpayment: leave job) * Choose a different referent (Overpayment: adjust to someone higher status in the organization * Adjust/distort ratio perceptions * Of Self (Overpayment: ‘I worked hard-I deserve it’ * Of Others (Underpayment: Maybe Jane worked harder than I thought) * 3 Profile types of equity responses * Benevolent: aim to give more than you get * Entitled: aim to get more than you give * Equity Sensitive: aim to match inputs to outputs

1/29/13

Personality

* Personality trait * habitual pattern of cognition, affect (emotion), behavior * each trait lies on a continuum * most people fall in the middle * judgements are relative * * Big Five Personality Traits * Openness to experience * Conscientiousness * Extraversion * Agreeableness * Neuroticism (emotional reactivity) * “OCEAN” * Best representation of core dimensions of personality * childhood traits are highly predictive of adulthood traits * relatively stable across lifespan * explained by genes * ex: twins * empirically validated across cultures * Extraversion: attention-seeking and sensitivity to stimulation * sociability * gregariousness * assertiveness * activity level * excitement-seeking * enthusiastic * Patterns for Extraversion * Strengths * Leading assertively * Breadth of network * Social status in groups * Motivated by rewards * Challenges * Leading proactive employees * Impulsivity and reliance on external stimulation * Impact on introverts * Agreeableness * Prosocial orientation * trust * morality * altruism * cooperation * modesty * sympathy * Patterns of Agreeableness * Strengths * getting along with others * depth of relationships * reputation and motivation to help others * Challenges * being taken advantage of * compromising values * Conscientiousness * Dependability and work ethic * competence * orderliness * dutifulness * achievement striving * self-discipline * cautiousness * Patterns of Conscientiousness * Strengths * Setting, pursuing, and achieving goals * Greater attention, dedication, vigilance * Challenges * Losing the forest in the trees (being too detail-oriented) * Blindly following rules * Lack of flexibility * Emotional Reactivity * Tendency toward negative emotion under stress or pressure * Note: often referred to as its converse, emotional stability * Facets * Anxiety * Anger * Depression * Self-consciousness * Vulnerability * Patterns of Emotional Reactivity * Strengths * Critical thinking * Preparation * Challenges * Consistency of behavior * overreacting, performance under pressure * Openness: * Broad-mindedness (openness to experience) * Imagination * Artistic interest * Adventurousness * Intellectual curiosity * Liberalism * Patterns of Openness * Strengths * Originality, creativity * Diversity of interests * Breadth of experiences * Challenges * Lack of focus * Lack of self-awareness * Personality and Personnel Selection * Which Big 5 Traits are best for these Jobs * Marketing Brand Manager * extravert * openness * Entrepreneur * extravert * openness * conscientiousness * Auditor * introvert * conscientiousness * Person-Job Fit * Matching personality types to the tasks of a job * Assumption: There is a “right” person for the job * Person-Organization Fit * Matching personality types to the culture of an organization * Assumption: That an employee can be trained to do a job * Personality at Work: Big 5 and Performance * Conscientiousness is a strong predictor of Performance in organizations * especially in complex jobs * Other traits predict performance in certain occupations * Extraversion: For sales jobs, managers * Openness: jobs where creativity is important * Extraversion and conscientiousness predict leadership Emergence * Extraversion, low emotional reactivity, and openness predict leadership Effectiveness * Overview of Selection Methods * Personality Tests * good predictors of performance * Wall Street Journal 9/20/12 * “Algorithms Run the Workplace” * ex: Google’s way of collecting info to predict performance * Additional techniques * work samples * simulations * structured interviews * * * * Myers-Briggs * most widely used personality inventory in the world * Dimensions * Extraverted (E) vs. Introverted (I) * Sensing (S) vs. Intuitive (N) * Thinking (T) vs. Feeling (F) * Judging (J) vs. Perceiving (P) * Problems * Invented based on armchair philosophy, not rigorous, systematic empirical research * Flawed typology * Captures only a subset of the major dimensions of personality and cognitive style * Some “types” are highly correlated, suggesting that they are part of the same broader personality trait, rather than distinct types * The MBTI assumes a bimodal distribution, but traits are actually normally distributed (think bell curve) in a continuous rather than categorical fashion * Why personality tests are valid * Applicants don’t agree on which traits are good and desirable * Applicants want to set realistic expectations * Applicants aren’t very good liars * Work Samples: Past examples of actual work completed * Why they predict performance * Objective evidence * Past behavior future behavior * Simulations: Live, hands-on approximations of tasks involved in the job * Direct observation of personality expression (and knowledge, skill, ability) * Often used for team-oriented jobs * Standard Interviews * very weak predictors of performance * irrelevant questions, obtaining useless information * Different questions to each applicant, making it impossible to compare responses * Structured interviews * relevant questions designed in advance

1/31/13

Personality and Feedback

* The Purpose of Performance Appraisals * Evaluation and Feedback * Provide accurate assessment of current performance, future opportunities and challenges * Motivation and Development * change or reinforce behaviors/outputs * provide support and action plan for improvement * Set goals for future * Rewards * inform of bonuses, raises; provide advice for improvement * Feedback and Performance * In organizations, over 1/3 of feedback interventions actually decrease, rather than increase, performance * Negative feedback is often threatening, reducing motivation and focusing attention unproductively on the self rather than on the specific task and specific behaviors * Positive feedback often leads to complacency, reducing learning, motivation and planning * Giving Feedback to Increase Performance * Comment on specific tasks & behaviors, not the person * Negative feedback * “Here are the specific behaviors that prevented you from being more effective in this task, and here is what you can do to improve” * not “Here is why you are a bad employee” * Focuses attention on the task and behaviors instead of the self, increasing learning and motivation * Positive feedback * “Here are the specific behaviors that led you to succeed in this task” not “here is why you are a great employee” * Focuses attention on learning to repeat effective behavior * General praise actually has a negative effect on performance * The Allure of the Feedback Sandwich * Criticism between positive comments * 1. Lead with positive feedback on specific effective behaviors in the task * 2. Give constructive criticism on how to improve specific behaviors * 3. Close with a few affirming comments * Risks: * Positive feedback * leads negative feedback to feel incongruent * leads receivers to ignore or discount negative feedback * Overcoming the risks * Positive feedback in one domain, negative in another * Open’s recipient’s mind to improving * What makes feedback difficult * Argue only about conclusions * The Ladder of Inference * we jump to conclusions based on assumptions and ambiguous information * We fail to verify and test those assumptions * To avoid jumping the ladder * Make your thinking visible – don’t rely on assumptions * “Here are my conclusions/assumptions” * Ask others to test your views * “Do you have different data/perspectives?” * “Bad” is stronger than “good” * we tend to focus on the negative more than the positive * Feedback from Managers: * over-emphasis on weaknesses and improving performance “gaps” * rather than emphasizing strengths * Receiving feedback as an employee * getting defensive about areas for improvement

2/5/13

Individual Performance and Career Success

* What makes for a successful career? * money, happiness, motivation, benefits, location, leader position, responsibility, job security, challenge, achieve goals, passion * Talent (ability) * People make judgments of others on two dimensions * Competence – intelligence, skill, creativity * Warmth – helpfulness, trustworthiness, friendliness * We make judgments about other people’s warmth before judging competence * Competence * Knowledge, skills, and abilities (KSA’s) * what recruiters/Human Resource managers are looking for during personnel selecition * Think: Person-job fit * Do you have the right skills for the job? * Personality * Conscientiousness p ability across tasks * Openness to experience (for innovative or creative tasks) * Warmth * At work, important for developing stron relationships with others * seeking and giving help * Emotional Intelligence * Person’s ability to be self-aware, manage emotional cues, and detect emotions in others * Personality * Agreeableness * Extraversion (except for assertive aspect) * Preparation * Putting in the effort * The “10,000 hour rule” * Motivation * By the task or job * Autonomy, mastery, purpose Intrinsic motivation * Meaning at work * By goals * Action-plans (goal setting theory) * Value of mentors, coaches, leaders * Development of skills, feedback seeking, seeking help * Chris Langan (from Outliers) * Brilliant, but no help along the way * No one succeeds alone * Need advice, support, guidance, to learn the ‘rules of the game’, to make connections with others * No One Achieves Success Alone * ex: indcutees to the Baseball Hall of Fame * Hall of Famers generally have wide networks that help them throughout their career * First-ballot inductees had larger, more diverse developmental networks than later-ballot inductees * These networks help players develop specific skill, challenge and inspire them, and also provide career advice and social support * Opportunity – the Value of Networks * Your personal connections can be valuable resources * Provide advice, help, and support * Warmth * Provide expertise, knowledge, and information * Competence * Types of Network Ties * Strong Ties * Trust, shared perspective * Weak Ties * Acquaintances, Efficiency, novelty * Dormant Ties * The best of both worlds: the value of reconnecting, have not connected with in years * The Power of Networks * One of the best predictors of finding a job is the number of “weak ties” or acquaintances in your network * Weak ties provide new info for job leads while strong ties provide redundant information * People are surprisingly willing to use their networks to help others * Even when not asked by their professors * Self-Assessment * Mapping your personal network * What are you contributing to whom? * What are you receiving from whom? * * “Give” – you give more than you receive * “Take” – you receive more than you give * “Match” – equal balance between the two

2/7/13

Career Success II – Heidi Roizen Case

2/12/13

Decision Making

* Heuristics = shortcuts to make decisions * We make judgments based on perceptions and assumptions rather than factual info * Heuristics * we often use cognitive shortcuts or mental “rules of thumb” to make decisions * “Experts are usually correct” * “Price signals quality” * “More is better”(maximizers) vs. “good enough” (satisficers * Can be adaptive and functional * used to simplify complex social world * The Availability Bias * a tendency to base judgments on readily available info * affected by vividness, primacy, or recent events * Ex: * investment decisions (financial crisis) * performance appraisals: managers giving more weight to recent employee behaviors * Correcting for availability * use documentation and evidence over recall * be sure to look for- and pay attention to – less available evidence * Anchoring Bias * tendency to fixate on initial info and failure to adjust for subsequent info * initial estimates can provide anchors that are difficult to deviate from * anchors affect subsequent judgments even when we know the anchors are meaningless * Managerial ex: * sales targets, budgets, salaries: start with last year’s numbers * Marketing: pricing based on similar products * ex: selling a car on craigslist * Real Estate: show house first that is out of price range, raises buyers expectations. Then they will show you home of lesser value * Expertise is NO cure * real estate agents, all inspected a house * 10-page info packet: features… * LOOK AT SLIDE * Confirmation Bias * Tendency to seek only confirming evidence when evaluating our hypotheses, while failing to seek disconfirming evidence * we see what we expect to see * And AVOID information that contradicts it * Also affects how we interpret information * too much weight given to supportive evidence * Too little weight given to unsupportive evidence * football example – you see the game differently based on who you root for * ex: Making political judgments * Romney campaign “shellshocked” after lost election * Israelis and Palestinians evaluate their country’s peace plan less favorably when told it was offered by the “other side” * Jim Harbaugh in the Super Bowl * Implications and solutions: * Managerial cahllenges * escalation of commitment * decisions become self-fulfilling prophecies * learning from success is difficult * Avoiding confirmation bias * have someone come up with a different point of view * Devil’s advocate role * Don’t ask leading questions * The “Five Whys” * Framing Heuristic * tendency to evaluate risk differently depending on how decision is presented (framed) * glass half full or half empty? * When framed as a loss, we are risk-seeking * Sure loss= risk seeking, gamble * When framed as a gain, we are risk-averse (referred to as risk aversion in text) * Sure gain= risk-averse, take the gain * Find neutral point * Correcting: * use multiple frames (gains and losses) * assign individuals to gain or loss frames * consult uninvolved 3rd parties

2/19/13

Negotiation (Bargaining) * A process in which two or more parties decide how to allocate scarce resources (exchange goods or services)

Negotiation myths * Good negotiators are born * Good negotiators take risks * Good negotiators rely on their gut

Steps to Negotiating 1. Prepare, prepare, prepare 2. Clarification and Justification 3. Bargaining and problem solving 4. Closure and implementation

Preparation Step 1: Understanding Your BATNA

* Best Alternative To a Negotiated Agreement (BATNA) * Your BATNA is your preferred course of action to an agreement * Your BATNA drives the “bottom line

* Analyze others’ BATNA with equal care to your own * Important to understand where the other side is coming from and when they might walk away. * Invest in improving your BATNA * Example: Receiving more job offers, getting multiple quotes/ estimates for a purchase
Preparation Step 2: “The Numbers” * Reservation price (resistance point) * Worst offer you’re willing to accept * Target Price Preparation Step 3: parties and Interests * Parties: Who are you negotiating with? -Who is the person calling the shots? -Who are all of the parties involved? -Using agents?