On ZOPA and striking first in negotiations

Meandering through the internet on a long cross-country flight yesterday, and I came across a piece on the Harvard Law blog from 2011 (I know, in internet years that sounds like 1924, but hang with me on this), about the concept of anchors in negotitations and something called the ZOPA, or the Zone of Possible Agreement.

You should check out the piece from 2011, as it really does a great job of debunking a pretty common perception when it comes to power dynamics in negotiations: namely that the person who puts the first offer on the table puts him/herself in a position of weakness. Obviously I have not read ALL the terabytes of salary negotiation advice that has been written, but I feel like the wide majority of said advice for the candidate counsels them to avoid putting an actual salary number on the table, as it reduces their further negotiating power. Once they set a number like, "I would like $89,000 in salary", then the only place the negotiation can proceed is down (in terms of that number). 

But as the Harvard piece points out, that starting number (whomever puts it out there), sets an effective anchor on the rest of the negotiation. Here is the gist of the argument around anchors and the ZOPA from the piece:

It is desirable to anchor first in many negotiations, for several reasons. In negotiation, you are trying to both learn about the zone of possible agreement(ZOPA) and influence the other side’s perception of the ZOPA. While advance research can help you reduce your uncertainty about the ZOPA, you typically will have more to learn about the ZOPA once talks begin. As such, you will be vulnerable to being anchored. Therefore, anchoring first in price-oriented negotiations can be both good offense and good defense.

An overly aggressive offer, however, risks derailing negotiations if it causes the other side to question your credibility or to wonder whether agreement is even possible. Because it is hard to know what your counterpart will view as absurd, anchoring with a relatively inflexible, extreme offer increases the probability of reaching a stalemate. Anchoring instead with a flexible but extreme offer gives you a lower-risk opportunity to favorably shape your counterpart’s perceptions of the ZOPA.

Additional research done by Adam Galinksy at Northwestern University backs up the Harvard findings. According to Galinsky:

My own research also shows that the probability of making a first offer is related to one's confidence and sense of control at the bargaining table. Those who lack power, either due to a negotiation's structure or a lack of available alternatives, are less inclined to make a first offer. Power and confidence result in better outcomes because they lead negotiators to make the first offer. In addition, the amount of the first offer affects the outcome, with more aggressive or extreme first offers leading to a better outcome for the person who made the offer. Initial offers better predict final settlement prices than subsequent concessionary behaviors do.

So it seems pretty clear, if you find yourself in a salary/bonus/some other type of compensation negotiation with your employer, seizing the upper hand by putting the first, aggressive number on the table is likely to lead to the best outcome from your perspective.

It almost seems similar to the advantage the serving player has in a tennis point - every subsequent shot of the rally is influenced and impacted by that first serve. 

And it seems in salary negotiations, as in tennis, it's better to be the one serving.

Have a great week!

Ebook: The 8 Man Rotation - The 2013 Season

It's here!

It's finally here!

No, not summer and sunshine and three months spent slacking off while half of the office is nowhere to be found, I mean the next installment of the world-famous free Ebook on Sports and HR - The 8 Man Rotation - The 2013 Season.

What is The 8 Man Rotation?

It is a group of your HR pals, Lance Haun, Tim Sackett, Kris Dunn, Steve Boese, and Matt Stollak who made it a habit throughout the year serving up the HR/Talent version of the 'hot sports take', helping you to see and then exploit what happens in the sports world in your HR shop.

Whether its breaking down what the NBA draft means for your recruiting efforts, explaining why hiring lower division college athletes always makes sense for your organization, or learning from the greatest sports teams and players about setting performance goals, and lots more - chances are high that if there is a way to connect sports and HR/Talent, you will find it in the 2013 Ebook.

Compiled and edited by mighty Matt 'akaBruno' Stollak, the 2013 Season is (probably, I can't be bothered to check), the longest, and most comprehensive of all the 8 Man Rotation editions, coming in at a ridiculous 165 pages, all about the intersection of HR, Talent Management, Recruiting, Leadership and sports. And in 2013, we have a great introduction from HR pro and noted New Orleans Saints fan, Robin Schooling.

Of course you don't have to read all 165 pages (you should), you can bounce from topic to topic, and article to article, as Matt did a great job organizing a year's worth of sports takes into a coherent volume.

So please check out The 8 Man Rotation - The 2013 Season here, and I will even embed the Ebook below in case you don't want to click away from your favorite blog.

The 8 Man Rotation: The 2013 Season from The 8 Man Rotation

Thanks again to Matt for all the work (good job, good effort) and to the guys for keeping up the 8 Man tradition.

Have a great weekend!

CHART OF THE DAY: The U.S. Uninsured Rate

With all the news and talk and debate about the ever evolving and complex set of requirements on organizations (and individuals) from the Affordable Care Act, it seems to me that one (fairly important) macro statistic often goes underreported, namely the percentage of people in the U.S. who still lack medical insurance.

If you had to guess, (don't peek at the chart below), what would you guess the percentage of U.S. adults uninsured to be?

It feels like it should be kind of high, right? Maybe 25% or 30%? 

But you'd also guess that with the opening of the ACA exchanges late in 2013 and with all the news and attention surrounding getting folks to navigate the buggy Healthcare.gov website and actually getting them enrolled in Medical coverage, that the uninsured rate should be dropping I would bet.

So what's the actual/estimated rate of uninsured adults in the U.S.? Check out the below chart from Gallup from their survey of 14,700 people in April 2014:

So according to the Gallup survey, the uninsured rate among U.S. adults sits at 13.4% and does show a gradual decline since the launch of the ACA exchanges. When I first saw the chart and the 13.4% figure, I felt it was kind of low, I am not sure why. It just 'felt' like there would be more uninsured folks than that.

The Gallup survey also breaks down this data into age/income groups, (click here for those details), but essentially they reflect what you'd expect - older, wealthier people are much less likely to be uninsured than younger and poorer people. But the trends in getting more people insured are improving across all age cohorts, which seems like a good thing.

I suppose I don't have any big lesson/takeaway from all this, just thought it was interesting.

Happy Thursday.

The Juergen Bomb: Three reasons why a new leader makes a strategic firing

A couple of weeks back I riffed on NBA Commissioner Adam Silver's decision to crack down amazingly tough on (disgraced, probably racist), soon-to-be former Los Angeles Clippers owner Donald Sterling following the release of audio tapes that revealed once and for all time how horrible a person is Mr. Sterling.

Commissioner Silver went full nuclear on Sterling - fining him the maximum allowable amount according to league policy, banning him for life from the Clippers and all NBA matters, and moving (along with the 29 other league owners), to force a sale of the Clippers by Sterling. You can check out my piece linked above for the full take, but essentially I think Silver's response to this first real leadership test was spot-on, and in particular, because it set a decisive tone for his leadership style and approach moving forward.

Fast forward to last week, and we have another pretty high profile leadership (this one mixed in with some tasty talent management) situation from the world of sports - specifically from the United States Men's National Soccer team. In case you missed it, US coach Juergen Klinsmann made news when he dropped US soccer star (and the National team's all time leading scorer), Landon Donovan from the squad of 23 players that will compete in the upcoming World Cup. While Silver's handling of the Sterling mess has been universally lauded and wildly popular, Klinsmann's decision to essentially fire Donovan from the National team has been met with plenty of second-guessing, and is certainly not popular with several of the remaining (and influential) team members. This was a tough managerial decision around talent, and since my job as part of the 8 Man Rotation crew is to help you break down the connections between sports and your job as an HR/talent pro, here are three reasons I can think of why it makes sense for a new leader to make a strategic fire a la Klinsmann:

1. The obvious one - dropping a veteran, established talent that seemed 'safe' by just about every stretch of the imagination signals out to the rest of the team (sports or otherwise), that the new leader is really in charge, and more importantly, has the security and management support to make tough decisions. Much speculation about Klinsmann's decision to drop Donovan from the World Cup squad was that the coach wanted to use that spot to give a younger, less experienced player a great developmental opportunity for what seems to be Klinsmann's true goal - mounting a serious challenge in the next World Cup in 2018, a competition which the then 36 year old Donovan would certainly not factor.  

2. A strategic fire can often shake up a content workplace. The US team has been sort of running in place for the last few World Cup cycles. Sure, they have the occasional moments of success and games that make you think they are finally going to be serious contenders at elite competitions. But then they inexplicably fall to some lesser opponents, fail to seriously compete when facing the world's top teams, and generally seem comfortable just qualifying for the World Cup. Klinsmann does not want to reward that kind of status quo, that decade of mediocrity. The remaining players simply need to play better, or Klinsmann will find replacements. Dropping a former star, who still may be able to contribute, signals that performance standards across the entire organization are going up. The other players might think, "Crap, if he was willing to cut Landon, he definitely will drop me if I don't start scoring goals."

3. The leader takes ownership of overall team results - especially if the results are poor. The primary reason in sports that coaches like to 'play it safe' and 'go by the book' is that they don't want to accept blame for failure, since they 'went by the book', whether it is in player selection or game strategy and tactics. In American football, the vast majority of coaches will punt the ball away on 4th down when the data clearly show that running an offensive play to try and keep possession of the ball is almost always the better statistical move. But if the coach plays it safe, and the team loses, he/she can usually shift blame to the players or some other external circumstance. Make 'risky' decisions like unexpectedly cutting a star player like Donovan and have them not pan out? All the blame, or at least a large part of the blame, will land on Klinsmann's shoulders. And I think that is a good thing, more coaches/leaders need to be willing to claim responsibility for failure (and accept the consequences too).

Ok, that's it - I'm out.

Go USA. Try not to lose to any country with less than 1% of our population this time.

PODCAST - #HRHappyHour 184 - Work and the Next Generation Leader

HR Happy Hour 184 - Work and the Next Generation Leader

Recorded Thursday May 22, 2014

Host: Steve Boese

Guest: Lindsey Pollak

This week on the HR Happy Hour Show, Steve caught up with bestselling author, and expert on Millennials in the workplace, Lindsey Pollak to talk about some of the most important developments and trends that are defining and impacting work and the workplace.

The next generation of workers are already here - and increasingly these members of the millennial generation are assuming important and leadership roles in organizations. The smartest and most successful organizations are embracing these shifts in workplace composition and creating environments where millennial employees and leaders can make their mark in the workplace.

Lindsey also had some great information to share about her work with The Hartford on how to better understand and plan for millennial leadership and also shared some observations and recommendations for HR and talent leaders on how to best navigate these workforce changes.

You can listen to the show on the show page here, or using the widget player below:

More Business Podcasts at Blog Talk Radio with Steve Boese and Trish McFarlane on BlogTalkRadio

Additionally, you can subscribe to the HR Happy Hour Show on iTunes, or for Android device users, from a free app called Stitcher Radio. In both cases just search for 'HR Happy Hour' and add the show to your podcast subscription list. 

This was a fun and interesting conversation and many thanks to Lindsey and the folks at The Hartford for making the show so much fun.