Welcome back. We talked about preparation, we talked about bargaining with exchange of information, exchange of offers and now I want to talk about closing. So closing as two key ideas that I want to think about. The first is closing on the deal. How do we gain commitment? How do we make sure that once we think we have a deal, we're really going to bind ourselves to that deal. And often there's some ritual that goes along with it. So we shake hands or we might bow, there's some ritualistic piece to it, maybe we raise a glass of champagne. But we want to think about the accountability that is the signed contract, the written agreement is really important. In some cases we even need a press conference or some public announcement or some exchange of property to really bind ourselves to that deal. But in most Western countries that signed contract trains that'd be quite important where we put a lot of faith in the judicial system. So that contract turns out to be extremely important. Combination of these things, the rituals and accountability and what I want to suggest is that binding ourselves to that deal is important. I want to make sure that we signed the contract, it's really what we thought we got. So you might have been negotiating for that car but now they give you the term sheet and there's some extra destination charge you hadn't anticipated. Or sometimes it even happens in closing on a house. They've changed the terms and you might be in an awkward position, but you want to make sure that hey, the terms of the terms that you thought you were getting. So we want to gain commitment that we're getting the right deal. And their concerns we want to think about one is this the correct deal? Is this what we really agreed on? Is this deal complete, does it include all the pieces that we talked about? We're sometimes people say, well yeah, we talked about those other things but yeah, they're not in the written agreement but don't worry about it. Like well why not put them in the deal, is there a reason they're not written down? Sometimes people will do what's called nibbling, they'll change the deal. So this idea of putting in that destination charge or changing some of the terms where sometimes as you go to close that those deal terms will be a little bit different. And there are cases of people negotiating with subcontractors, they have an elaborate signing ceremony. In that signing ceremony The deal terms were changed. And so the subcontractor like, yeah, I invited my friends and family, my mom's here and this is such a big deal for me. The champagne has been poured. I go to sign and the deal is different than what I had before. Sort of like going to close on the house and the contract is different than what you agreed to. There's a lot of pressure to go along with it and some negotiators use a nibbled deal as a way to extract concessions. I'm going to want to suggest is you want to be careful about this. Think about people's reputations and you want to make sure that you've gotten the contract ahead of time and maybe if there's an elaborate signing ceremony or maybe if you're going to be under time pressure once all of your things are in the truck, you want to do this early. So you have time and patience to push back, insist on the deal that you really got. I'll share two examples. One is I mentioned before, I had my students go out and negotiate for things, they have to go and negotiate and report back. And one of my students was very apprehensive about negotiations but pushed herself to go out and negotiate for a dozen roses and pick the time close to closing to go out and initiate the negotiation. And it's full of apprehension, She went close to closing assuming that these flowers we're really going to decrease in value for the next day and ask for a discount on a dozen roses. Was delighted when after going back and forth a couple of times got a discount on the roses, felt great walking out of the store. I felt great walking home only when she got home and put the roses in a vase and realized she had ten, not a dozen did she realize that she didn't get quite the deal that she thought. It's this idea of like, are we getting the correct deal? Yes, sometimes you have to encounter loses. There's another example want to share. And this is the union, the United Auto Workers negotiate on behalf of the workers at Textron. They were negotiating a new contract and the management team was negotiate with the union leaders. And throughout the negotiation, the union was concerned about subcontracting work, that is was management going to hire non union workers. That was a key issue, they were concerned about it through the negotiation, they asked that question repeatedly. The management team assured them that they weren't going to hire nonunion workers, there are no plans to do that. And they went ahead and signed the contract. Well, a couple months later though and behold Textron management unveils, plans to go out and hire non union workers. And the union leaders were furious about this. They said, look, we clearly asked about this during the negotiation and there are records of the negotiation was clear, they had asked and it was clear that the management team had told them they weren't going to do it. And so they ended up suing Textron management. Here's what I think is interesting about this case. So the union sued management because they had lied to them during the negotiation. And ultimately, the union lost the case and here's why. The judge ruled that, hey, if this issue is so important to you, if you would not have signed the contract without this guarantee, that guarantee should have been part of the contract. So you've got to make sure the contract you sign is complete. It includes all of the key ideas and issues and concerns that you have. So in this case, I think the lesson for us is that want to make sure that when we close on the deal, we're getting the deal that we really think that we're getting. We don't want to just rely on people saying, hey, don't worry about it or I'll have my lawyers write it up. We want to make sure we're looking at that contract and that closing stage sort of gaining commitment is actually really important. Okay, so that's gaining commitment. The next key idea for closing is to think about satisfaction and I've put satisfaction here at the end. We think about closing, but it's really something that pulls through the whole negotiation process. And when I think about is satisfaction, so remember in our opening example, we talked about this ultimatum, the $100 that we could split. And what I was suggesting is that you might not be happy with $10 if you think that your counterparts getting 90. That's going to make us unhappy because we're comparing ourselves to the person across the table and we're constantly comparing ourselves to others. The person across the table who's getting 90 when we're only getting 10 or it could be other people in the same situation. So I got a 3% raise but Bob Down the hall who does the same job, got a 5% raise. That's going to make me feel much worse about 3% raise when I figure that out. So the idea here is we're going to be compare ourselves to others inside the negotiation and outside, we're going to think about what our expectations are. So before it comes time for raises, your boss probably doesn't say wow, this quarter has been amazing we've got piles of cash. I don't know what we're going to do with all this money, probably burn some of it. But hey, now is the time to talk about your salary let's talk about your salary. They don't say that, they say things more like there are opportunities and threats on the horizon. We've got to be careful and cautious or this is a tough quarter. They're saying things that might set your expectations so that when you do get that 3% raise, you might be really happy with it because you expected even less. All right, so setting expectations matters and that's something that happens at the start of the negotiation even though I've put this satisfaction idea here at the end. But part of it is as we're closing, we don't want to gloat over what we got. We don't want to say, man, I would have paid a lot more what I have done this for a lot less. We want to make sure we're managing satisfaction and giving people a sense that they also got a good deal. And this final idea is about voice in the process. People feel so much better if they felt like they were part of the process, they had a chance to make their case and their ideas and input got involved in how we crafted this outcome and giving people credit. Giving them the opportunity to speak to be part of the process is going to increase their satisfaction and commitment to that deal. So those are the key ideas. We care about satisfaction a lot because that's going to influence commitment to the deal and what happens after we saw in the deal and those things can matter profoundly affecting sort of what our ultimate outcome is. So as we're closing, we want to make sure we're getting the deal we really thought we were getting. We want to make sure that we're attending to our counterparts satisfaction and recognize that satisfaction is something that can be really label, it can really change as a function of the information people get. And I'll just close with one example, you think about we've been talking about buying a car, you're not buying a car and you negotiate the deal. And then as you go to the finance person, they tell you, wow this is a great price. Five other people today bought the same car and paid more than you did right there, giving you information that's boosting your satisfaction. What they may not be tongue is that, yeah, and there were 12 that paid less. They don't tell you that part, but they're selectively giving you information because that's going to really impact your satisfaction. All right, so those ideas about preparation, bargaining and closing. Those are the key foundational elements as we think about the negotiation process. The idea of comparisons is really well exemplified by what happens in the Olympics. And there have been a couple of studies looking at Olympic medalists, looking at them right after they finish a competition and then on the medal stand. And in a couple of studies now that have replicated this quite nicely. What you find is of course, the gold medalists are just deliriously happy, they're very likely to smile. But what's really interesting is that the silver medalists are often least happy up there. What's funny is that it's the bronze medalists that consistently look happier than the silver medalists. And this is funny because of course, silver is better than bronze, but you can understand this in part by a comparison story. If you look up and down, the silver medalist is likely to think to themselves, I missed out on gold by just a small amount. And the bronze medalist may look down and say, wow, I could have missed the whole medal stand totally and just been a 4th place finisher, in which case I would have merely been an Olympic athlete. And when I look up well, yeah, I could have been silver, but that's not as big a difference. The sort of metal is looking down the bronze, that's not such a big difference. And these salient contrasts can help you understand why you have, what some scholars have termed the silver medal face. Where you have people up on the stand, the gold medalist looks happy, the bronze most looked happy, but the silver medalists looks perfectly miserable.
