Getting (More of) What You Want: How the Secrets of Economics and Psychology Can Help You Negotiate Anything, in Business and in Life

Negotiations are complex, especially in business. Take the example of requesting a pay rise. Not only do we have to deal with practicalities like our company's budget constraints or pay policies, but relationship issues get in the way too. Will my boss still like me if I ask for more money? Will he or she think I'm not dedicated to the company or the team? Or will he respect me more because I know my value? It can be a tough call. That's why we need to understand both the economics of negotiations as well as the psychological biases that can steer us down the wrong path.

That's where this book comes in. "Getting (More of) What You Want" provides a blueprint for effective negotiations. It explains how to plan so we're armed with all the information we need to get the best outcome for us while respecting the other party. It explores how to spot a good deal, when to haggle, and when to walk away. It looks at the differences between negotiating as individuals and as part of a team. And it shows us how to manage our emotions throughout the process.

So who's this book for? "Getting (More of) What You Want" is for anyone who'd like to negotiate better, in business or in life. Maybe you want to lobby for a sabbatical, persuade your children to do their homework, or agree a multi-million dollar merger. Whatever your circumstances, this book will help you come out on top.

The authors offer tips and tricks for people from all walks of life, but we think readers in the corporate world will get the most from this book. Neale and Lys delve deep into behavioral economics and the book is packed with statistics and studies, so it isn't a light or fast read. Some readers will love the authors' evidence-based approach, which lends real authority to their theories, but others will find the book dense in parts.

Both authors are academics with decades of experience in their fields. Margaret Neale is an Adams Distinguished Professor of Management at Stanford University's Graduate School of Business, where she specializes in negotiation and team performance. She's written more than 70 articles on bargaining and negotiation, and has co-authored three books.

Thomas Lys is the Eric L. Kohler Chair in Accounting at the Kellogg School of Management at Northwestern University. His research looks at how stock prices are affected by different financial reporting standards, changes in capital structure and money supply, and corporate disclosures. He's an editor of the Journal of Accounting and Economics, and has worked as a consultant for General Electric and IBM, among other companies.

So keep listening to hear a step-by-step approach to effective negotiation, to learn when to make the first offer, and to hear how to manage your emotions when you're trying to get what you want.

Neale and Lys start out by looking at the reasons why many of us shy away from the negotiating table. We fear we'll be seen as greedy or demanding – someone who seeks special treatment or isn't a team player. We also view negotiations as battles and see our counterparts as adversaries who are determined to thwart our needs. When the idea of negotiating is so loaded, it's not surprising we avoid it.

But if we see negotiating as a collaborative problem-solving exercise, one in which we get what we want in a way that also solves the other person's problem, we might find it easier to open discussions.

It's important to note that the authors want to differentiate their approach from other books on negotiation, particularly those in the mold of the 1981 best-selling classic, "Getting to Yes," by Roger Fisher and William Ury.

"Getting to Yes" and similar books suggest the goal is to create as much value as possible for both parties, resulting in a win-win-solution, the authors say. But Neale and Lys argue that this focus on value creation ignores our ultimate aim: to claim the biggest value for ourselves.

They still advocate bargaining in a way that doesn't harm the other party and, if possible, makes them better off. But their emphasis is on getting what you want above all else. While their focus is certainly more one-sided than previous books, there's still plenty of discussion of joint outcomes.

A bigger differentiator for this book is the huge volume of empirical evidence the authors include. You'll find fewer anecdotes and more in-depth studies than in other books on this topic. All this evidence makes the book a little dry, although Neale and Lys do add examples from their lives and careers, as well as some of their students' experiences, which liven things up a bit.

Let's now take a closer look at some of the authors' tips, starting with the basic infrastructure of negotiation.

Preparation is key to getting what we want and there's a roadmap we can follow to make sure we plan effectively.

The first step involves clarifying our goals. This may seem obvious, but many people make the mistake of not identifying what they want to achieve before they sit down at the negotiating table. They're then surprised when they get caught up in the moment and accept an offer too soon. So before you open discussions, take some time to think about all the possible outcomes of the negotiation and what you're willing to accept.

Let's look at the example of asking for a promotion. One potential outcome of the exchange is the status quo, which wouldn't be great. But do you have any alternatives? Do you have any job offers from other divisions within your company or from other firms? The more alternatives you have, the greater your bargaining power. Of course, your counterpart will have alternatives too, and it's a good idea to try to think about these as well.

Once you've identified your alternatives or your safety net, you can set your "reservation price." This is your bottom line, the lowest offer you'd accept. If you have really great alternatives, you can raise your bottom line.

The other parameter to set is your "aspiration." This is your best outcome, your most optimistic assessment of the negotiation. Aspirations have a powerful impact on your psyche. Your alternatives and reservation price protect you, but having high expectations can lift your mood, boost your morale, and help you perform better in negotiations.

There is a downside here, though. The book quotes studies showing that people who focus on their aspirations achieve better outcomes, but they're less satisfied with their results than those who focused on their alternatives. That's because they had much higher expectations. So you may get the better outcome, but you won't feel so good.

The final stage of planning is to understand what kind of issues you're dealing with. Are they issues on which both parties agree, which the authors call "congruent" issues? For example, a buyer and a seller may both want an early delivery.

Are they issues about which the two parties have strongly held opposing views, called "distributive" issues? Price is the best example of this – the buyer prefers to pay less, and the seller wants more.

Or are they issues about which the two parties have opposing preferences but the costs and benefits aren't equal, known as "integrative" issues? Vacation days could fall into this category – a candidate prefers more vacation days and an employer prefers fewer, but the candidate values each extra day more than the company wants to withhold them. This allows space for the employer to offer more vacation days in return for something it values more.

We like this step-by-step, comprehensive roadmap and think it'll help people do the necessary footwork so they enter negotiations knowing exactly what their goals are, what alternatives they have, and what they're willing to accept.

One of the aspects of negotiations people struggle with is the question of who should make the first offer, with many of us believing it's best to see the other person's cards first. Indeed, some 80 percent of participants in the authors' workshops on negotiation said they preferred to receive the first offer rather than make it, believing that information gave them a competitive advantage.

But Neale and Lys say it isn't always the case and offer guidelines for when to speak first, how to make the first offer, and also how to receive it. So let's take a look at some of these.

The first offer creates an "anchor" – it sets the agenda. For the person who made it, this is their aspiration price, even though it may be above what they realistically expect to get. But even if it is, anchors are powerful. They fix the receiver's mind on a particular figure or outcome, which they then compare to their reservation price or bottom line. Anchors are all the more powerful if the receiver hasn't done their homework.

On the other hand, those who receive the first offer have a number of advantages. They get insight into the other person's priorities and values, and they can identity if there are any congruent issues important to both parties, which can make good bargaining chips.

So when deciding whether to make the first offer or wait, weigh up what's more powerful for you: the anchor effect or getting insight into the other person's priorities.

That's easier said than done, but consider how prepared your negotiating partner is, how much they might know about your position, and what their potential alternatives are before you make your call. If it's unclear, Neale and Lys suggest making the first offer.

Your first offer should be as extreme as you can make it without prompting your counterpart to walk away. If negotiating over figures, use precise numbers rather than rough ones. And make sure you follow up your first offer with a solid justification for it. The more objective that justification is, the better your chances of success.

This is just a flavor of the authors' advice on this topic. They go into much greater detail and provide case studies and research to back up their tips. We think you'll come away with a much clearer idea of when to speak first and when to hold your tongue.

Let's now look at what the authors say about managing our emotions in negotiations. It's likely many of us can recall times when we let our feelings get the better of us, and others when we suppressed our emotions, only to wish we'd shared them. It's important to understand the potential impact of our emotions on our counterpart, a concept the authors call "emotional contagion."

Positive emotions like happiness may put our negotiating partner in a cooperative mood and increase the likelihood of us getting what we want. It's also worth noting that positive emotions often produce good joint outcomes, but can hamper our efforts to create maximum value for ourselves. On the other hand, anger can work in our favor. Studies show that angry negotiators are more competitive and generally claim more value.

We can also manage our emotions by choosing our responses to incoming information. Say your counterpart starts to threaten you. You can respond with similar threats, you can try to suppress your emotions to keep things calm, or you can choose to view those threats as information about what your counterpart values in the negotiation and use that information to adjust any future offers you make.

That's not going to be easy, particularly in the heat of the moment, but we agree it's wise to try to think more strategically about how much of ourselves we give away.

We also agree that our own emotional responses can give us clues about what we truly value in any negotiation. Again, the authors back up their ideas with research papers and case studies, including an example of when Lys got angry with prospective buyers of his house after they tried to knock a chunk of money off the agreed price.

"Getting (More of) What You Want" is peppered with anecdotes like that one, from the lives of the authors, their students, and clients. At the same time, it's heavy on theory and packed with references to research papers, so the average reader needs to concentrate quite hard to understand some of its messages.

But even if you can't take on board everything in this book, we think you'll come away with a clearer idea of how to prepare for your negotiations and how to structure them, so you get more of what you want. You'll feel more confident, more aware of what to look out for, and more in touch with your psychological and emotional triggers after reading this book.

"Getting (More of) What You Want" by Margaret Neale and Thomas Lys is published by Basic Books, a member of the Perseus Books Group.

That's the end of this episode of Book Insights. Thanks for listening.