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Asking for It
The negotiating trick that has
saved students millions
By Mike Agresta
Many of the most successful
people in business are
assertive negotiators. But
among the general population,
they are the exception rather than
the rule, says Doug Dierking, senior lecturer
of management.
“It’s very common for people to feel
reluctant to ask for things, even things
they really are entitled to,” Dierking
says. “If something is a mistake or an
inconvenience, people just accept the
inconvenience.”
To combat this timidity, Dierking and
other teachers of the popular “Art and Science
of Negotiation” class at McCombs
have developed an assignment that
encourages students to start negotiating—
in the real world.
The ASK assignment, as it’s known,
requires students to ask for something,
large or small, that they wouldn’t otherwise
request—an upgrade at a hotel or on
a plane, free cookies at a sandwich shop,
or a beneficial change to an important
contract. Students have about two weeks
to complete the assignment, and they
each must turn in a short paper explaining
the circumstances of the ask and their
negotiation approach.
Taken together, these small asks can
add up. In one Houston MBA class, the
total reached a stratospheric $5.16 million,
mostly due to students in the energy
industry who negotiated small changes to
enormous oil and gas contracts. Back on
earth, one evening MBA class averaged
$1,000 of negotiated benefits per person.
The assignment’s main lesson is one
that holds power long after a student
leaves the classroom: the most important
step to successful negotiating is to ask.
According to Dierking, a great negotiator
regards everyday situations as opportunities
for negotiation.
“We tend to only think about negotiating
in certain circumstances where it’s
thought of as okay, such as purchasing a
house or a car, or at a flea market,” he
says. “But in other cultures, people negotiate
for everything. I tell my students that
they can negotiate at Home Depot or even
the grocery store sometimes.”
The two keys to negotiation success,
Dierking says, are confidence and perspective-taking.
“Most of the time, when people look at
negotiation they only consider their own
perspective,” he says. “They only think
about what I want. People who are very
successful are good at putting themselves
in the other sides’ shoes.”
For instance: “Picking the right time is
important. If you’re at a store and there’s a
long line, and the ask would inconvenience
the person or make their job more difficult,
then it’s probably not the right time.”
Equally important, Dierking says, is to
ask for something reasonable, something
the requestee can conceivably grant. “If
you’re at a Lowe’s or Home Depot, you
have to get a store manager or assistant
manager,” he says. This principle also
extends to higher-stakes negotiations over
salary or contracts.
The ASK assignment discourages students
from offering requestees anything
in return.
“We’re building a specific skill that will
be part of a toolbox of negotiating skills,”
Dierking says. When askers feel trepidation
about completing the assignment, he
advises that they ask for something lowrisk,
such as free shipping.
According to Dierking, inexperienced
negotiators make three common mistakes:
asking for something that is not reasonable,
making a demand instead of an ask,
and not asking in the first place. The last,
of course, is the most common.
“The worst somebody can do is say no,
but you’ve already got no,” Dierking says.
“You’re working from no.”
thinkstock
ASKS
LARGE
AND
SMALL
Real benefits
students
asked for—and
received.
Reduced travel
costs for a volunteer
group heading to New
Orleans. (STRAT-
EGY: Appeal to the
requestee’s desire to
do good.)
Free satellite radio
subscription
A $10,000 raise
Use of expired
coupon
Monthly
reduction for
a cable or phone
bill. (Possibly the
most popular ask
among students,
Dierking says)
Forgiveness of
a $150 late fee
Reduction
in rates from
a consulting firm,
totaling $12,800 over
640 hours
Upgrade to a
suite at a hotel
Upgrade to
business travelers’
lounge and a first
class domestic seat.
(STRATEGY: When
someone, i.e., an
airline counter agent,
takes an interest in
your story—a big
presentation the next
day—it’s a good time
for an ask.
Extra sauce at
a chicken restaurant
where the policy is that
you have to pay for
it. (“A moral victory,”
Dierking says.)
THE BIG QUESTION
How Can the Tax
Code be Fixed
Judging by the wild national debate, taxes might need to join politics and
religion as a topic one should not discuss in polite company. But having
narrowly escaped the fiscal cliff and still facing a $1 trillion deficit, the
country can’t afford to ignore the issue. Accounting professor Lillian Mills
offers her suggestions for a more rational tax system.
Wh e r e I t h i n k w e n e e d
the fastest reform is on
the entitlement side.
When people hear “entitlements,”
they often think “welfare” in
a negative way. But Social Security and
Medicare are promises to all our elderly—
not just to the poor elderly. And our promises
exceed our capacity.
That’s partly because retirees are living
longer each generation. Remember
that when Social Security became law in
the 1930s, the average life expectancy
was about 65. As the number of retirees
grows, relative to the working populace,
it will not be possible to tax the
working populace sufficiently to fund
those entitlements—even if the majority
of Americans supported higher payroll
and income taxes.
Continuing to increase the full retirement
age for Social Security [it is currently
67, for those born after 1959] will
help some. Increasing the initial eligibility
age beyond 62 would help much
more. Gradually increasing the Medicare
eligibility age would reduce our costs
even more.
The benefit from increasing those ages
is not merely on the cost-containment
side. If a 53-year-old like me works until
age 70, I continue to pay income taxes
and payroll taxes before receiving a Social
Security payment or using Medicare. That
helps our national budgets.
We can’t afford to increase those ages
immediately on near-retirees. They need
to be phased in because we need time for
savings rates and job markets to adapt.
But we can build in larger future increases
now, and we should.
We also need additional tax revenues.
Our deficits and public debt show that our
current revenues are not sufficient to pay
for our current spending.
One way to raise taxes without raising
rates is through cutting “tax expenditures”—
the tax savings generated from deductions
and credits, or from making certain types
of income taxable that used to be exempt.
The largest tax expenditures include
the nontaxable compensation we enjoy
from employers: pension and 401(k)
contributions and healthcare. In addition,
many Americans receive substantial
deductions of mortgage interest and
property taxes, both of which make housing
less costly.
One proposal is to cap itemized deductions,
other than charitable contributions.
Limiting deductions to a fixed amount
would still permit low- and middleincome
taxpayers to fully enjoy subsidies
to housing like the mortgage interest
deduction—while limiting subsidies for
the most expensive housing.
Making an exception for charitable contributions
would still permit major gifts
that benefit recipients like universities. So
gifts to UT could still be deducted, subject
to the standard limit of 50 percent of
adjusted gross income.
On tax expenditures, Republicans and
Democrats may be able to find bipartisan
support. By curtailing them, Republicans
can keep promises not to raise explicit
tax rates, and Democrats can reduce the
impact on low-income taxpayers.
Unfortunately, many tax expenditures
have huge popular support, and the medical,
retirement, and real estate lobbies are
all-powerful. President Obama needs to
engage the country in this conversation
in a less political way, the way President
Reagan persuaded the country that we
needed a broader tax base to be able to
reduce some tax rates. Any tax reform will
require leadership from the top.
Department Chair Lillian Mills is the Wilton
E. and Catherine A. Thomas Professor
of Accounting. She researches tax compliance,
accounting for income taxes and
effective tax rates, and international taxation.
Mills was previously a senior manager
in taxation for Price Waterhouse
and is a former president of the American
Taxation Assocation.
Startup
The State of BBAs
Almost a third of
undergraduates,
31%
spend 21-30
hours per week on
homework, and
56%
plan on applying
to graduate
school, according
to a spring 2012
survey of students
that sought
to assess the
BBA program.
Students also said
they want more
international
business and
entrepreneurial
skills included in
the curriculum and
better connection
to recruiters
for smaller and
nontraditional
companies.
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OPEN SPRING 2013
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