Skip to main content

What drives decision making and how this knowledge is important to a successful negotiation outcome


There are several ways in which people are motivated to work harder, be better employees or citizens and make better decisions, which is through incentives.  The first type of incentives one would think of is money. While money can be a powerful motivator, money is not entirely effective as people crave for more than that.
“Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.” – Benjamin Franklin
In order to fill the vacuum people are not only motivated by money. Yes, money is a necessity and we work to pay our bills; we are also motivated for other reasons.
We are motivated by fulfillment of our work, social rewards, social approval and respect. Some might be driven by moral incentives such as doing good by working for a not for profit organisation or an NGO.

In behavioural economy these incentives are categorized in either intrinsic or extrinsic motivations.

Extrinsic motivations are motivations that are triggered from the outside. Our actions are driven from the outside, by other people. I decide to work hard this year in order to get a pay rise or a bonus. This action is driven by the rewards system of my company. I might also be motivated to work hard in order to become the best salesperson of the year. Recognition and social rewards are also extrinsic motivators.
Intrinsic motivations are our attitudes, and internal goals that are not driven by our attitude towards money or recognition. Think of the humble hero who does not give a fuss about being celebrated as a hero, that person is simply doing it out of their own internal goals.
It could be that sense or need of doing good and helping. Think about all the volunteer firefighters in Australia right now who are battling uncontained fires in very dangerous conditions. They are not doing it because they want to be celebrated as heroes, they are doing it because they have the urge to help. It is their sense of duty or their professional pride.
Extrinsic and intrinsic motivations are not independent of each other, in fact intrinsic motivations can make extrinsic motivations insignificant and the other way around. Here are 2 interesting examples:
Experiments have shown that people who were asked to compete a quick market survey, those who were not given a monetary reward put more effort into the survey than those who were given a small monetary reward. Those who were paid for the task did not enjoy it as much as they were more concerned about how small the reward was for their efforts.
The authors of Freakonomics did an experiment at a childcare centre in Israel. The centre closed at 4 pm and by then most parents had picked up their children, apart from a few who arrived later, some not until 4.30pm. The parents relied on a childcare worker’s generosity to stay behind in their own time.
To make parents pick their children up on time they introduced a penalty fee. The results achieved the opposite, more parents arrived late. It has been suggested that the fine was not interpreted as a deterrent it was interpreted as a price.
Instead of having to apologize to the childcare worker for their time to stay back and feeling guilty, it has now become the norm to come later as there is a price attached to it. Before the fine was introduced most parents were intrinsically motivated to be on time; once the fine was introduced the intrinsic motivator got replaced by the extrinsic motivator as the parent can now pay for being late.
In negotiation it is important to understand the motivations of the other party. Why are they talking to you and what is in it for them? Are they purely motivated by money or are there other motivations that you can use to your advantage?
Imagine you are negotiating with a supplier and that person has only just recently started with the company. What would their motivations be? Maybe the person wants to make their mark, show their boss what they can do and that they can save money for the business; in this case getting the best possible deal in terms of getting the most money for the company could be the objective.
It is vital to understand the motivations of the other party. What can you offer that satisfies the extrinsic or intrinsic motivations of the other party? If you are working for an NGO and are looking for a corporate partnership understand why they are talking to you. Have they been in trouble recently and need to mend their reputation? Is it a business whereby the CEO feels the need to partner with an NGO in order to fulfill his or her passion for helping children in need or helping the environment?
This is vital information that will have an impact on the negotiation outcome. It is necessary to ask the right questions to really understand the motivations of the other party so you can devise strategies that will get the deal over the line.


#negotiationskills #negotiationtraining #influencing

  

Comments

Popular posts from this blog

What is Black Friday and why it is not worth it if you are a great negotiator.

All last week was hyped up by ‘Black Friday’ Sales. But what is it and why do we have it in Australia and is it worth it? Black Friday originates from the US and is the Friday after Thanksgiving which is the fourth Friday in November. Thanksgiving is a public holiday in the US. In the 1950s people used the Friday as a sick day and went shopping to get a head start in their Christmas shopping. Eventually in the 1960s this day turned into another paid leave day or shall we say into a paid ‘shopping day’. It has become a made-up event to drive consumerism. Many believe the term ‘Black Friday’ is used for profit making; black numbers in the ledger books; but that is not entirely correct. While this is the meaning today it meant something totally different in the 50s and 60s.  According to Bonnie Taylor Blake, a researcher at the University of North California, the term originated in Philadelphia by the Philadelphia police as they saw the day as a terrible day. The city was fil

Negotiate with compassion in times of COVID 19.We are all in this together.

We live in strange times and our lives have been turned upside down. We need to adjust to new social norms, social distancing. We feel that our freedom has been taken away. We can’t travel, can’t meet with friends and family we can’t even just go to the supermarket and buy staples like flour, toilet paper or canned tomatoes. The way we work has changed; the way we interact with each other has changed.  The way we negotiate should also change in these strange and challenging times. While we negotiate to get the best deal possible and don’t want to leave money on the table; this does not necessarily apply in these circumstances where we are all affected in some way or another. What is important now is that we work together, find solutions together and help each other out. I have seen many acts of kindness lately. It’s these times that bring us together. The same goes when you negotiate. These are extraordinary circumstances, and people still need to make deals but it is not

Conflict and Social Media

Social media has changed the way we interact; we are able to voice our opinion and with-it conflict has increased. With so many social media outlets we can discuss, voice our opinions and shout at each other. We tend to become more courageous and outrageous on social media whilst hiding behind our computers or mobile phones. With this barrier we feel empowered and entitled to speak out on social media, often without understanding the full impact of our actions. When we are enraged, we might type messages in the heat of the moment and post them on social media which we might later regret. Once it is out there it is hard to get back. Social media is certainly not the place to resolve conflict, it is unfortunately a place where conflict is created. Social media is a great platform to voice opinion and communicate instantly across the world it is however important to realise the traps that we can all fall into. Before you post something make sure it is respectful and