Location, Location, Confidence

Since this is our annual Salary Survey issue, it seems appropriate to address an issue many fear: how to negotiate a raise.

One tip: try to avoid discussing a raise with the boss in his or her office.

“Parties who negotiate on their home field can be expected to claim between 60 percent and 160 percent more value than the visiting party,” says Markus Baer, PhD, assistant professor of organizational behavior at Olin Business School at Washington University in St. Louis.

Baer’s study, “Location in Negotiation: Is There a Home Field Advantage?” appeared in the March edition of the journal Organizational Behavior and Human Decision Processes. Baer and his research partner, Graham Brown, PhD, of the University of British Columbia, set out to test the theory that a home-field advantage exists, not only in sports but also in business negotiations. They found that it does, but that the confidence of the person entering the negotiation as visitor can go a long way in evening the playing field.

They set up three experiments. In the first, students assumed the status of “resident” and were given 20 minutes to make a private office their own. They were told they would be negotiating with a student over the price of a pound of coffee. Participants playing the “visitor” were told that they would be negotiating with a student who had a permanent claim to the office because he or she worked for a professor. Residents clearly outperformed visitors.

The second experiment examined the role of confidence in explaining why the home turf advantage arises. It was designed exactly as the first, however before the negotiation, participants took a questionnaire designed to measure confidence. This experiment showed that the advantage of residents over visitors can at least partly be explained by the different levels of confidence residents and visitors are likely to have from knowing they will be negotiating on their home field or on someone else’s territory.

In the final experiment, visitors’ confidence levels were manipulated by telling students that based on an assessment, their negotiating skills were quite high. The results showed boosting visitor’s confidence levels can help to eliminate the home field advantage.

Baer says his research shows that location is an important factor and should be incorporated into approaches to negotiation. However, there is one way of overcoming home-field advantage if the location cannot be changed. “Confidence plays a critical role in any negotiation, regardless of where it takes place,” Baer says. “Anything a person entering a negotiation can do to boost his or her confidence is a good thing.”

He says participating in negotiation training may help minimize the disadvantage of negotiating on someone else’s home turf. Now, how do you get the boss to pay for the negotiating training?