Self-Assessment of Skill and Style

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- Sell scooter as is within the bargaining range - $2400 to $2800

- Sell the scoter without additional accessories (storage rack - $61, windscreen - $175). This would lower my bargaining range to $2164 - $2564

- Offer to make payment in installments if the buyer seemed trust-worthy and had genuine concerns/constraints

- Not make a sale

One of the lessons I learnt from this exercise was that it was beneficial to make the first offer of $2800, so that it can act as an anchor point for subsequent discussions. Anchoring is a cognitive bias that describes why the final settlement price tends to be closer to whoever makes the first offer (Gilinsky, 2004). The first buyer lowballed with an opening offer and set the anchor at $1800, which was outside my bargaining range. Based on the buyer’s background and information provided, it seemed unlikely that there was a positive overlap between the parties’ reservation points. Despite my best effort to immediately reanchor backed up by all my research, I could only push the buyer up to $2200 and was hence unable to reach an agreement. In such a situation with negative bargaining zone, Thompson suggests that it is best to not waste time by prolonging the negotiation and rather exercise our best alternatives (Thompson, page 40).

Going into a negotiation, typically each party would like a settlement to be closer to the other party’s reservation point (Thompson, page 41). The second buyer’s first counteroffer was $2200, which was a likely indicator of a possible overlap in bargaining range. The next task was to maximize my share of the bargaining surplus. After making gradual concessions, we had reached a point in the negotiation ($2600 – seller vs $2300 – buyer) where the probability of the deal going through seemed quite likely. Each party co-operated with the other party to ensure that a settlement is reached. Learning about the underlying needs, desires and concerns of the counterparty in great extent (interest based approach) - started law school, moved from out-of-state, need for a scooter, cash strapped and genuinely making every effort to gather money to pay for the scooter, combined with my preference to sell the scooter before I relocated to Portland helped finalize the deal at $2400. Even though this one-time settlement led to a no seller surplus and a buyer surplus of $100, it resulted in positive emotions and great satisfaction.

Another scenario where preparation came handy was when I relocated from Portland, Oregon to Fremont, California within the same organization. There was no business need and the move was actually initiated by me. There was no objection to the move as a small part of my team was present in Fremont but the crucial question was to negotiate a compensation package that was fair and acceptable to me. Moreover, my direct manager was recently hired, so I had to prepare for a discussion with my Director as he had authority to grant the request, had visibility into my work history, and was more likely to approve it. My preparation included:

- Estimating the difference in cost-of-living between the two locations

- Enquire about the average relocation percentage our organization offers between these locations

- Relocation percentage my colleagues (who transferred) were offered in the past

- Average salary (from Glassdoor.com) that a person with my experience and expertise would be offered in my firm and other (mostly competing) firms in the area

- List of all my accomplishments in the past couple years along with business impact

- Job market analysis

Based on all the information collected, I was targeting for 30% raise and was willing to accept no less than 15%. I had made up my mind to look for another job if my Director offered anything lower than my reservation price, so that became my best alternative. I wanted to handle this well as it could potentially create awkwardness in the working relationship that we shared and I didn’t want to come across too demanding and unreasonable.

During the first meeting, my Director stated that the company’s average was 7-10% but he was attempting to work out a better package considering my accomplishments. Not knowing if he had really initiated the process or was looking for a number from me, I decided to declare my aspiration of 30% backed by solid justification. In a couple weeks we touched base again and he offered 15% and mentioned that he had to convince HR to accept this. After mentioning my dis-satisfaction with the current offer, I decided to take a right based approach and said – “I really enjoy my work and the work-life balance at this company but at the same time I deserve a fair pay package. My proposed offer is in line with my grade level (qualification and experience) and what other companies in Bay Area are offering. With the current offer, I’d be forced to look for other opportunities”. A few days later, 22% was proposed with the possibility of pushing HR even further. I didn’t want to sound too selfish and was already starting to feel a little frustrated and outside my comfort zone, so I ended up accepting the offer at 22%.

To conclude, I think that my meticulous preparation before any negotiation process has been my biggest strength while my biggest weakness has been to improvise and adapt creatively to the evolving discussions, without taking too much stress about it. I believe that the stress is largely due to my undue focus on desirable outcome. If instead I paid more attention to the process, I believe that the negotiations would not be as intimidating and also conclude more favorably. At a customer meeting a customer once demanded for a feature within a certain timeframe which was not viable with the R&D resources. Faced with unexpected situations that cannot really be prepared for in advance, used to make me very anxious. I now see it as an opportunity to ask questions and try to understand customer’s intended application of our product and importance of speed, price, quality, or customer support. It is best to create an inviting environment for the customer and utilize the powerful tools of listening, and paraphrasing wherever needed (Mehrmann & Simon, page 73).

References:

Gilinsky, A. (2004, August 8). When to Make the First Offer in Negotiations. Retrieved October 02, 2017, from http://hbswk.hbs.edu/archive/4302.html

Mehrmann,