Much of the material with the tag gty comes from Getting To Yes.
Does Positional Bargaining Ever Make Sense
Principled negotiation is expensive (if only mentally). Should you ever resort to positional bargaining? Ask yourself:
- How important is it to avoid an arbitrary outcome?
- How complex are the issues?
- Do you need to maintain a good working relationship?
What If The Other Side Believes in a Different Standard of Fairness?
The parties need to agree on external standards, but may have trouble doing so.
Figure out why there are conflicting standards. Did the market change and one party is using “old” market values? You do not need to agree on one standard for all items. You can use a standard for some items (that both agree upon), and use other techniques (e.g. arbitration) for the rest.
Should I Be Fair If I Don’t Need to Be?
If you are in a position where you feel you can gain much by being unfair, consider first if you are overlooking something. Is the other party so blind? Or are the gains you are seeing not as large as you think. Don’t assume you are clever and they are not.
Consider if it may change your relationship in the future.
If the other party reneges on the deal because he found out your were unfair, what is the cost of enforcing agreement (e.g. court or arbitration)? Is it worth it?
Finally, will you be able to sleep at night?
What Do I Do If the People Are The Problem?
Separating the people from the problem does not mean ignoring people problems.
Build a working relationship (preferably before you need one). Very important when dealing with disagreement. You cannot attain this by making concessions or by ignoring disagreements. Appeasement does not usually work. If you make a concession for this reason, do not assume you have been “nicer” and assume it is “their turn” to concede. Assume your concession was free or wasted.
Do not try to force a concession from the other side that damages the relationship (“Either you agree or we are through”).
|Terms||Balance of Emotion and Reason|
|Conditions||Ease of Communication|
|Prices||Degree of trust and reliability|
|Dates||Attitude of acceptance (or rejection)|
|Numbers||Relative emphasis on persuasion (or coercion)|
|Liabilities||Degree of mutual understanding|
Separate the above categories and negotiate separately on them. If there are relationship problems impeding an agreement on something else, have a separate negotiation on those problems.
Do not assume a tradeoff between substantive and relationship issues.
If you do make a concession to preserve the relationship, ensure the other party realizes it.
Negotiate the relationship: Explain the issues you are having, etc. Inquire into theirs. Decline to give into pressure tactics. Always look forward, not back. Assume the other side is not intentionally being difficult. Ensure you have a BATNA.
Restrain from reciprocating bad behavior.
Don’t merely be “rational”. Explore their irrational emotions.
Should I Negotiate With Terrorists? When Should I Not Negotiate?
There is never a circumstance where you should not negotiate. It is merely a question of how.
Even if you refuse to negotiate, you are negotiating. “We do not deal with terrorists” is responding to them.
You are always more likely to influence the other if a communications channel is open.
The only time when you should not negotiate is when your BATNA is better than what negotiation can give you. But put thought into confirming it and consider the other party’s BATNA.
How Should I Adjust My Approach to Account For Differences In Personality, Gender, Culture, etc?
Get in “step” with the other side:
- Pacing: Fast or slow?
- Formality: High or low?
- Proximity while talking: Close or distant?
- Oral or written agreements: Which are more binding?
- Bluntness of Communication: Direct or indirect?
- Time frame: Short or long?
- Scope of relationship: Business only or all-encompassing?
- Who negotiates? Equals in status or the most competent people?
- Rigidity of commitments: Written in stone or flexible?
Respect the other party’s culture, but don’t stereotype. Just because Eastern cultures are indirect doesn’t mean the principal is that way too.
How Do I Decide? Where Should We Meet? How Should We Communicate? Who Should Make The First Offer? How High Should I Start?
Where to meet? Let the details of the situation dictate.
How should we communicate? Face to face vs phone vs email makes a huge difference. Sellers are less likely to lie in person. Buyers are generally cautious over emails. Hence sellers lie on the phone but the buyer trusts - the latter is at a disadvantage.
If the subject involves emotions or relationship issues, talk face to face. If you have to do it on the phone, create a personal connection before diving into substance.
With email, reread and actively try to see how you could be misunderstood. If the response indicates misunderstanding, call the person or meet face to face.
Benefits of email:
- People are more likely to focus on strong arguments than when face to face.
- Gives time for people to respond.
Who makes the first offer? Whoever it is, try not to have one made without a proper discussion of the issues, etc.
Try to “anchor” the discussion early on to one more favorable to you.
How high should I start? Do not fall into the trap of measuring success by how far one party has moved from their initial offer.
Start with the highest justifiable offer. Assume you are trying to convince a neutral third party that your offer is fair. Before proposing the offer, explain the justification.
Do not advance it as a firm position. The firmer you suggest it in the beginning, the lower your credibility as you move further away from it.
How Do I Move From Inventing Options to Making Commitments?
Think about closure from the beginning. Have a clear idea of what interests of yours should be met.
Consider crafting a framework agreement (e.g. like that of a real estate agent - they have standard purchase contracts).
Move toward commitment gradually. It is a good idea to agree explicitly that all commitments are tentative. Do not firmly commit yourself to anything until you see the final package.
Realize you may have to revisit issues already agreed upon several times.
If your proposal is challenged, show how it meets your interests. Ask if the other side can better meet them, as well as their own. Stick to your analysis unless persuaded.
Don’t quarrel. Wherever there is disagreement that that is not being resolved, agree on what is being disagreed.
At some point, make an offer - even if agreement on all items has not been reached. But it should be “natural” and not a surprise to the other side.
If there are still opens, look for a fair way to close on them. Do not split the difference on arbitrary figures. But if each figure has a good rationale behind it, consider splitting it.
Consider 3rd party help in closing the remaining items.
Be generous at the end: When close to an agreement, consider giving something that the other side values (without invalidating the logic of your proposal). Make clear this is a final gesture and not a sign of further concessions. This can break the final gridlock. Also, you want to end with both parties feeling happy.
How Do I Try Out These Ideas Without Taking Too Much Risk?
Experiment in places where:
- Stakes are small
- You have a good BATNA
- Favorable objective standards are available
- Other party is amenable
As you gain experience, slowly raise the stakes.
Review your performance.
Learn how to build and maintain working relationships.
Can The Way I Negotiate Really Make a Difference If The Other Side is More Powerful? How Do I Enhance My Negotiating Power?
Distinguish between resources and negotiating power.
Do not overly concern yourself with who is more powerful.
Do not become defeatist or hopeless. You often can gain by negotiating. Try to be optimistic. Studies support a correlation between aspirations and result.
There are many sources of negotiating power:
- Objective criteria
- Power of commitment
- Power of effective communication
If the other side is stronger in some, try to be stronger in others.
If you are very strong in one of them, do not use only it and disregard the others. A multi-pronged approach is effective.
Cannot emphasize enough the power of a good working relationship. You will often benefit from the other side’s increased ability to influence you.
Effective communication is critical - including the ability to listen. Showing you have heard the other side increases your ability to persuade them.
Aside: Keep in mind the sealed-bid stamp auction.
Power of commitment: A firm offer is a strong signal of commitment. It is a “If you accept these terms, I will agree now.” It still leaves the door open to negotiations if they don’t agree. However, it shows you are willing to commit. This is powerful.
It is OK to put expiration dates on an offer.
A “take it or leave it” offer is usually bad, but may be OK after having explored all interests, done due diligence, and built a working relationship.