Managing Status in Negotiation

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Concerns about status will arise in any negotiation. How can you deal with them, both in yourself and in others?

The following six guidelines can help in virtually any context:

1. Choose the right reference group.

Too often, negotiators make implicit comparisons with others and then fail to understand why the other side finds certain demands offensive. Before and during your negotiation, think about who you’ve chosen as a reference group. How useful is your reference group? Did you select the group purely to enhance your own status, or did you try to make a more appropriate comparison? Be honest with yourself. Are you reaching for the stars, making agreement virtually impossible, or are you accurately assessing your odds of having an offer or demand accepted?

In times of economic decline, we’re all especially vulnerable to making unrealistic social comparisons. If past housing slumps are any indication, the U.S. real estate market is likely to become the next case study for this phenomenon

2. Determine which group your counterpart chose.

It’s also important to consider who or what your negotiating opponent has chosen as a reference group. In all likelihood, she chose favorable comparisons, which may cause her to be overly optimistic about what she can achieve. If so, try to help her adjust her aspirations and work with her to agree on reasonable comparisons.

It often helps to have a “middle man” who can provide negotiators with accurate comparisons. This is one of the important roles that agents play in negotiations. While home sellers’ agents tend to choose somewhat pricier comparable properties than do buyers’ agents, they usually have enough experience to know that an overly optimistic assessment will not help a client reach a satisfactory deal. In the same manner, to secure any publishing deal at all, literary agents must often encourage their author clients to modify their expectations of high advances and royalties.

3. Use concerns about status strategically.

When preparing for a negotiation, take status into account as a critical interest underlying your counterpart’s motives. For instance, you may find that you’re able to offer your counterpart more status in exchange for less money.

As you prepare to make an offer to a job candidate, try to figure out what will satisfy the candidate’s needs for greater status. Is the candidate tempted by the promise of a larger office, the prospect of being named “employee of the month,” or the opportunity to lead corporate strategies?

4. Seek out objective standards.

When reference groups are less clearly defined, you’ll be tempted to compare yourself with groups that favor your positions. Unfortunately, such overly high standards often lead to impasse. But if an obvious solution to a clear standard applies in a negotiation, both sides will rely less on social comparisons. When you and your counterpart agree on appropriate comparisons, you improve your chances of a mutually beneficial agreement.

For example, in teacher contract negotiations in Pennsylvania, Linda Babcock and George Loewenstein of Carnegie Mellon University found that, when it came to choosing school districts for contract comparisons, union representatives selected districts with higher average salaries relative to the districts chosen by the school board. This discrepancy likely increased the likelihood of a strike.

However, Craig Olson of the University of Illinois at Urbana-Champaign and Barbara Rau at the University of Wisconsin – Oshkosh studied data from teacher negotiations that took place in Wisconsin from 1977 to 1986. In these instances, if the parties were unable to reach a negotiated agreement, arbitrators would make the final decisions about the teacher contract disputes. The school boards and unions were aware of the standards that the arbitrators were likely to use – namely, comparisons with other districts in the same area. Because they understood that these relatively objective standards would be applied in the event of impasse, the negotiators could factor these variables into their strategy rather than choosing comparison groups on their own. As a result, social comparisons had little effect on the outcome of their disputes.

5. Identify relevant social norms.

If a clear social norm or prevalent standard exists regarding appropriate behavior, social comparisons hardly matter in negotiation. In many negotiations, the social norm often isn’t clear, yet standards are established quickly through comparisons, whether appropriate or inappropriate. In 1999, when the United Airlines pilots’ union, learned that Delta Air Lines pilots had received a salary increase 20% above industry-leading rates, it immediately increased its demand of a 14.5% raise to 28%.

Where can you find appropriate social norms?

These days, consumer websites offer vast quantities of information on comparable deals for the purchase of just about any product or service. By dramatically decreasing the information asymmetry that typically exists between buyers and sellers, such sources can be a big help in establishing reasonable reference levels. Sellers can no longer simply toss out a number and expect to anchor buyers’ expectations. Rather, offers must be “reasonable” – or buyers will take their business elsewhere.

6. Find new role models.

Finally, before and during negotiation, seek out other who have achieved favorable outcomes in similar situations. The author hoping for a publishing deal would be wise to consult with other writers who have sold books in her field. In turn, the author or her agent can use success stories when pitching the book to publishers.

No deal is perfect, but your odds of reaching a satisfying agreement improve when you feel confident that your goals match outcomes earned by others in similar circumstances.

When you download the New Conflict Management: Effective Conflict Resolution Strategies to Avoid Litigation you will learn how wise negotiators extract unexpected value using an indirect approach to conflict management.

Related Article: Men, Women, and Status in Negotiations

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