In July 2012, Google executive Marissa Mayer, a top contender for the position of CEO of Yahoo, had a dazzling interview with the struggling Internet company’s board of directors. Mayer presented a detailed, impressive plan to lead each sector of Yahoo’s business, and she skillfully reassured board members about her perceived weaknesses, reports Bethany McLean in a Vanity Fair profile of Mayer.
The job was Mayer’s for the taking. The board offered her a hefty annual salary of $1 million with a potential bonus of up to $2 million, plus $56 million in restricted stock and options. Interestingly, Mayer reportedly could have purchased more Yahoo stock in exchange for a lower salary, an opportunity that would have “increased her upside dramatically,” according to McLean. But Mayer declined to do so, according to one insider. Why? Because she allegedly wanted to ensure that filings regarding her hiring would show that she would be earning more at Yahoo than she had at Google. A stock purchase might have jeopardized that perception.
“Some CEOs care about money, some care about metrics, some care about toys,” said McLean’s source. “[Mayer] cares about public perception.” Mayer, who had been demoted and marginalized at Google in recent years, may have had a strong desire to convey that she was moving to greener pastures.
Mayer’s calculations illustrate two important truisms about negotiation. First, negotiators are often motivated by more than just objective financial outcomes; factors such as status and fairness concerns can be powerful drivers. (The sidebar on page 2 describes the various factors that affect our satisfaction in negotiation.) Second, as the anonymous source suggested about CEOs, individual negotiators care about very different things, from salary to staffing to prestige. Complicating matters, we bring not only different motivations to the bargaining table but also different abilities and backgrounds.
How do our differences affect our outcomes and satisfaction in negotiation, if at all? To what extent should we try to “correct” our natural tendencies, if that’s even possible? Negotiation researchers have begun to answer these questions, as professor Hillary Anger Elfenbein of Washington University describes in a chapter of the Handbook of Research on Negotiation (Edward Elgar, 2013).
When one size doesn’t fit all
Obviously, negotiation advice isn’t “one size fits all,” though human beings do make similar mistakes as a result of widespread biases such as overconfidence. Some scholars have argued that it’s pointless to study how individual differences affect negotiation outcomes because people may have little, if any, capacity to change enduring facts about themselves, such as their cultural heritage or level of extroversion.
Although some past reviews of negotiation research have concluded that individual differences do not play a significant role in our outcomes and satisfaction, Elfenbein and her colleagues are finding evidence to the contrary. In a study aimed at determining whether people have a personal negotiating style, they had sets of five participants negotiate “round-robin” style, each bargaining with the other four in turn. Individual differences, including personality, accounted for an impressive 49% of the variance in negotiators’ performance and satisfaction. And evidence increasingly suggests that we do have the ability to compensate for at least some of the traits that could be holding us back.
Elfenbein identifies several categories of individual differences and how they affect the objective terms of our deals and our subjective satisfaction. In recent issues of Negotiation Briefings, we have discussed broad-scale differences among negotiators, such as gender, culture, and race. Here we look at three other categories of differences (and a fourth in the sidebar at right) that have been shown to affect how we negotiate.
1. Personality differences
Our tendency to act the same way in similar situations over time—that is, our personality—can be broken down into various components, some of which influence our negotiation outcomes and satisfaction, research finds.
Extroversion, or one’s levels of sociability, assertiveness, and optimism, can be a liability when negotiators are haggling over a single issue such as price, writes Elfenbein. To understand why, imagine an outgoing negotiator spilling the beans about his bottom line or enthusing too much about a product he just has to have. By contrast, extroversion is generally an asset in more complex negotiations, where parties can work together to create value—thanks, presumably, to sociable negotiators’ ability to draw out the other side’s interests in conversation.
Nothing more than feelings?
Our satisfaction with our negotiation outcomes depends on much more than dollars and cents, Hillary Elfenbein’s research with Jared R. Curhan and Heng Xu of the Massachusetts Institute of Technology has determined. Interestingly, it is our subjective feelings about a completed negotiation—not our actual outcomes—that affect whether we want to work with our counterpart again in the future.
- Feelings about measurable outcomes, such as whether we “beat” our counterpart and whether the agreement seems fair.
- Feelings about ourselves, including our competence and ethical behavior during the negotiation.
- Feelings about the negotiation process, such as whether the other party cooperated and negotiated fairly, and the degree of overall difficulty.
- Feelings about the relationship, namely whether we built trust and worked well with our counterpart.
Neuroticism, or a person’s overall level of anxiety, depression, worry, and insecurity, has not been linked to differences in negotiators’ economic outcomes, but, not surprisingly, those who score high in neuroticism tend to react more negatively to negotiation. On a related note, negotiators who are in a good mood perform especially well thanks to their tendency to use cooperative strategies, set higher goals, and exchange information more effectively than others. By contrast, those in a bad mood have difficulty reading their counterparts and are prone to rejecting offers that would benefit them. Interestingly, moody negotiators may be especially focused and vigilant in negotiation—a possible positive side effect of a negative trait.
Openness, a measure of one’s imaginative thinking, broad-mindedness, and intellectual curiosity, is associated with higher gains for both parties in multi-issue negotiations. Negotiators who score high in openness are skilled at identifying solutions that benefit both themselves and their counterparts.
Finally, the sense of satisfaction that comes with high self-esteem may lead negotiators to end talks prematurely, believing that they’ve performed as well as they can. Those high in self-esteem also tend to be more pleased with their outcomes than those who are less self-assured.
2. Intelligence and other abilities
Perhaps the thorniest question related to individual differences and negotiation is the extent to which various measures of intelligence affect our outcomes and satisfaction at the table. Oddly, little research has looked at whether cognitive intelligence, or general mental ability, improves outcomes, though some studies suggest that it helps negotiators create value.
Other abilities have been more closely studied. Cognitive complexity, or the ability to recognize and integrate multiple perspectives, is one measure of intelligence that is correlated with negotiation success. Individuals who score high in cognitive complexity approach negotiation in a sophisticated manner, seeking out a broad array of information, generating various alternatives, and making accurate predictions. Thus they are well positioned to reach mutually beneficial agreements in complex negotiations.
Emotional intelligence—the ability to appraise, express, regulate, and use emotions—has received little attention from negotiation researchers, but work in other realms suggests that emotionally intelligent negotiators are likely to benefit from this ability. For example, they may be skilled at deciphering their counterparts’ feelings, controlling their own emotions, and defusing tensions, writes Elfenbein.
Creativity, a common individual difference, has been linked to better problem solving in negotiation and “win-win” agreements, though not to better financial outcomes. Finally, negotiators who score high in cultural intelligence, or the capacity to adapt to culturally diverse situations, are particularly skilled at facilitating information sharing and, as a result, reach more integrative agreements than others.
3. Motivational differences
As Vanity Fair’s account of Marissa Mayer’s salary negotiation with Yahoo suggests, our goals and motives affect how we behave at the bargaining table as much as what we see and hear does. Though individuals approach negotiations with varying goals and motives, we do have overarching drives and needs that guide our behavior from one situation to the next, according to Elfenbein.
One broad motivational difference among people is the degree to which we are generally concerned for ourselves versus others, a difference that has striking implications for how we negotiate. More specifically, negotiators can be categorized as (1) pro-social, or concerned about both sides’ gains; (2) competitive, or focused on outperforming the other party; or (3) individualistic, or self-focused and indifferent to a counterpart’s outcomes. Pro-social negotiators have been found to reach better outcomes for both parties than the other groups, but only when they set ambitious goals. At the far end of the pro-social spectrum, individuals high in “unmitigated communion” are so concerned about others that they set low goals and ask for little for fear of damaging the relationship.
A time to change?
We’ve looked at various individual differences that can improve or worsen your negotiation outcomes and satisfaction. Perhaps you’ve identified traits that may have helped you in your career and personal life, whether you knew it or not. And you may also have spotted some qualities that could be keeping you from performing at your best.
To what degree can you alter aspects of your personality, motives, and other traits to improve your negotiation results? It can be quite difficult for negotiators to change their natural tendencies, but with proper guidance, practice, and discipline, it often can be done. For example, highly competitive negotiators often reap the benefits of pro-social behavior after learning about the potential upside of working to expand the pie of resources for all.
Women negotiators often overcome a common reluctance to negotiate for a higher salary when they discover how much money they could be passing up over the course of their careers. And a painfully shy individual may be able to reduce his anxiety about negotiation by engaging in the practices recommended by our Negotiation Coach for this month, Alison Wood Brooks. (See page 8.)
To what extent should we even want to change certain aspects of ourselves, if we could? Returning to Marissa Mayer’s job negotiation, her reported desire to enhance her status in the eyes of others might have cost her millions of dollars. To some that would be a foolish choice, but given Mayer’s wealth, she might have viewed it as an acceptable tradeoff.
This leads us back to the anonymous quote about CEOs wanting different things. We can all benefit from thinking about how our various traits and quirks could be keeping us from achieving as much as others do. In the end, though, we must carefully analyze what we truly value and then pursue it wholeheartedly, even if it seems illogical in the eyes of others.
3 keys to learning from differences
1. Individual differences on numerous dimensions affect both our objective outcomes and our relative satisfaction in negotiation.
2. A pro-social, competitive, or individualistic approach to negotiation leads people to reach very different results in negotiation.
3. It’s wise to make room for your unique preferences when setting goals for your negotiations.