MIT Sloan Professor Finds Money is Not Most Important Factor in Job Offer Negotiations

CAMBRIDGE, Mass., March 9, 2009 — A lot of decisions are affected by money, but when it comes to job offer negotiations, money plays a lesser role. A recent study by a professor at MIT's Sloan School of Management and published in the March issue of the Journal of Applied Psychology found that how someone is made to feel during the job offer negotiation process is more important even than the dollar value of the deal in terms of predicting future job attitudes and whether the employee will remain at the company.

The longitudinal study surveyed MBA graduates when they negotiated their full-time job offers as well as one year later. It addressed several dimensions of what is called “subjective value” or “SV,” including: feelings about the outcome or terms of the deal; feelings about oneself such as losing face versus feeling competent and satisfied that one has behaved appropriately; feelings about the negotiation process such as the perception that one has been heard and treated fairly; and feelings about the relationship among negotiators such as positive impressions, trust, and a solid foundation for working together in the future.

The MBA graduates were surveyed about their subjective negotiation experience and tangible concessions as predictors of their job satisfaction, compensation satisfaction, and intention to remain within their organization one year later.

In “Getting Off on the Right Foot: Subjective Value versus Economic Value in Predicting Longitudinal Job Outcomes from Job Offer Negotiations,” the authors wrote that the “SV that incoming employees achieved during their job offer negotiations significantly predicted compensation satisfaction, job satisfaction, and turnover intention measured over one full year after negotiations had taken place.”

They continued, “During this time, participants were presumably exposed to a wide range of other intervening factors — such as the characteristics of their jobs, their interactions with supervisors and coworkers, and the success of the company — that could have affected their job attitudes. [The] results demonstrate not only the robustness of SV but also its important potential consequences.” By contrast, the study showed that increases in the dollar value of the deal achieved through negotiations had no association with job attitudes or intentions to leave.

Coauthor and MIT Sloan Professor Jared Curhan said, “How you feel during a negotiation is often chalked up to a fleeting emotion, but we show that it isn't fleeting at all. In fact negotiations can be extremely memorable events and we don't forget those feelings for a long time. Moreover, those feelings can have more important implications than the dollars in our pockets. Money is the not the end all. What makes people happy is not just how much money you give them, but how you treat them. People put a lot of value in that.”

So employers seeking to retain workers would be wise to pay close attention to job offer negotiations because what transpires may have lasting implications for the future employee-employer relationship. The authors suggest that employers might benefit more by influencing how the worker feels during the job offer negotiations by treating candidates in a manner that emphasizes the logic and standards behind the job offer, that respects candidates' personal dignity, that gives them a voice and other controls over the process, and that treats them as valued relationship partners.

Curhan said, “Fostering rapport during job offer negotiations won't cost more, but it may help employers and employees get off on the right foot”.

The paper was coauthored by Jared R. Curhan of MIT's Sloan School of Management, and Hillary Anger Elfenbein and Gavin J. Kilduff of the University of California, Berkeley.

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