The Intelligent Negotiator (15 page)

If specific offers are met with wholly unreceptive replies, use your questioning skills to direct the attention of your opponents back to their underlying needs and interests, and don’t hesitate to divulge some of the facts concerning your own goals. The following exchange between a book publisher and a literary agent indicates the
way in which cooperative and innovative bargainers can use probing questions to modify the negative mind-sets of adversarial counterparts.

C
OOPERATIVE
P
ARTY:
I gather that you are dissatisfied with our marketing plan?

A
DVERSARIAL
P
ARTY:
You’re damn right I am!

C
OOPERATIVE
P
ARTY:
Please tell me. You are most concerned about the fact my offer doesn’t go far enough with respect to promoting your book?

A
DVERSARIAL
P
ARTY:
That’s right. If there is going to be an agreement, you must be willing to make me whole on the issue of national print advertising. You guaranteed it in our contract.

C
OOPERATIVE
P
ARTY:
I assume that if we cannot get space in the Sunday
New York Times Book Review,
you might be able to live with an alternative, such as ads in the
Wall Street Journal?

A
DVERSARIAL
P
ARTY:
That is something I could seriously consider.

C
OOPERATIVE
P
ARTY:
I think I could make that happen. How about if I were to run ads for a whole week in the
Journal?

A
DVERSARIAL
P
ARTY:
That would be a real improvement over where we began this conversation. Now, is there some way you might be able to address the issue of tour bookings?

Through the use of such non-confrontational inquiries, Cooperators and Innovators can induce Adversaries to replace their unreceptive attitudes with problem-solving views. This transformation contributes greatly to the negotiation process.

On some occasions, despite their best efforts, negotiators approach a stalemate. Before you break off talks and give up, try to explore several other options. If you have been focusing too intently on items causing the impasse, you might shift your discussion to other less conflicted terms that may be amicably resolved. By looking for areas of agreement, you may be able to diminish the significance of your areas of disagreement. You should step back and try to explore unconsidered alternatives that may prove mutually beneficial.

When discussions become tense and heated, it can be productive for the participants to take a short time-out. Recess the talks briefly to reconsider your respective positions, or just change the focus of your discussions for a few minutes to allow everyone to calm down. Talk about local news, sports, mutual acquaintances, or other extraneous topics. Recounting a humorous story can be a good tension reliever, but only if the storyteller has a good sense of humor. If someone lacking a sense of humor tries to lighten things up with a funny story, it may backfire and have the opposite impact.

After several tries, you and your counterparts may still be unable to agree upon the specific issues to be resolved. Perhaps each side still defines the issues in a onesided manner. Try to step back and look for new ways to present the issues. If the other side has stated a particular issue in an emotionally biased way, try to reframe that issue in a less emotional fashion that you find more
acceptable. For example, if someone asks, “How much are you going to pay me for the way you destroyed my storefront?” you can reframe this to “How can I compensate you for the damage I accidentally caused to your storefront?”

You may need to modify your negotiating environment. Try rearranging the furniture into a less confrontational and more pleasant configuration. Or relocate, either to another room in the present building or to another venue entirely. Sometimes the personalities of certain people become a problem. If the participants reach this conclusion, consider bringing in replacements for the remainder of the negotiations.

On some occasions, the best course of action may be to recess talks to allow the parties to calm down and reevaluate their current positions. Before you conclude your present discussions, however, you should agree upon a future meeting date to ensure a continuation of the bargaining process. This will prevent the process from breaking down entirely because of anyone’s hesitance to contact the other once talks have broken off.

A
UCTION
F
EVER

When I teach my Negotiation course or make presentations on negotiating to lawyers or businesspeople, I auction off a $1.00 bill—but I have a critical rule that differs from usual auctions. While the highest bidder gets the dollar in exchange for their bid, the second highest bidder does not get the dollar but must still pay me their last bid! I initially elicit a bid of $0.50. Offers are thereafter
made in rapid succession of $0.60, $0.70, $0.80, and even $0.90. Someone always bids $0.95, thinking that no rational participant would offer more. What this bidder forgets is that the second highest bidder is required to pay me their last bid even though they don’t get any money. When the second highest bidder hears the $0.95 bid, they can easily be coaxed into a bid of $1.00 to guarantee a break-even result.

Once the $1.00 bid has been made, the auction comes to a temporary halt. The bidders and the observers are shocked by the developments that have occurred. I then remind the person at $0.95 that he or she can reduce the overall loss to $0.05 with a bid of $1.05. I always generate a $1.05 bid. The person who thought they had prevailed at $1.00 usually bids $1.10 and the bidding continues to $1.50, $1.75, or $2.00. At this point, one of the bidders is likely to recognize the losing venture in which they are involved, and stop bidding. Nonetheless, on several occasions I have generated bids of $2.50 to $3.00. Once, in my Negotiation class, I got a final bid of $20.00! I was shocked by the fact the $20.00 bidder thought he had “won.”

The purpose of this seemingly frivolous “dollar auction” is to demonstrate how easily bidders can become
psychologically entrapped
by the process itself. Bidders initially think they will make some easy money. They quickly discover, however, that they must accept a loss. They are especially unhappy with the fact the other bidder is going to “beat” them, thus they continue beyond any rational stopping point. While they know they are going to lose money, it now becomes important to be certain they don’t “lose” to the other bidder. They would prefer to pay me more money than to have the other party “prevail.”

Know When to Walk Away

The entrapment factor at auctions is generated by the bidding frenzy and the fact that each bidder wants to “win” by outbidding the others. Less reputable auction houses may even have shills bidding on items in an effort to drive up the prices. If you are a serious auction-goer, you do your homework ahead of time and determine what you would have to pay elsewhere for the items being offered. When the bidding gets too high, intelligent bidders withdraw. On the other hand, entrapped bidders continue until they experience “winner’s curse” by obtaining items at prices well above their actual value.

Don’t ever allow yourself to become so caught up in the bargaining “game” that you find yourself compelled to achieve final deals no matter the cost. You must learn to recognize when you have become involved in losing efforts and to know how to minimize your losses. How? Know your non-settlement options before entering the negotiation. What are the best terms you could obtain if you failed to reach an agreement with your counterpart? If you have established this, you will know when to walk away and accept your non-settlement alternatives.

The psychological entrapment experienced by negotiators is generated by the substantial amount of time and effort they have put into the bargaining process. Careless participants are afraid to allow these efforts to be wasted through negotiation “failures,” and they continue to seek deals that are objectively worse than their non-settlement alternatives. Your negotiation efforts rarely are in vain. You had to negotiate to ascertain whether this course would produce results preferable to your non-settlement options. You now have important information that you should accept your external alternatives. Had you not engaged in the
bargaining process, you would not be confident that you should choose your non-settlement options.

When you prepare for negotiations, carefully examine your non-settlement alternatives. Know what you could accomplish through other avenues. When it becomes clear that you can’t achieve preferable terms through the bargaining process, politely terminate the interaction. When you calmly explain to your opponents that you can achieve better results through other avenues, they may decide to offer you more generous terms. If they fail to do so, you can confidently choose your non-settlement options.

Never continue the bargaining encounter merely because of the amount of time and effort you have already expended. Never attempt to “beat” your opponents by increasing your offers above the actual value of the items being exchanged. Never be afraid to accept the consequences associated with non-settlements, when those consequences are clearly preferable to what you can achieve through the negotiation process. If you continue to negotiate once you realize that you are involved in a losing effort, you will regret the final results.

Classic examples of bargaining entrapment occur when individuals look for new houses, new jobs, and even new romantic partners. Individuals make offers on several houses they would like to purchase, only to have those bids rejected. After they have lost several houses they desire, they bid on a house they don’t particularly like. Their offer is accepted, and they are stuck with a dwelling they don’t really want. After losing several preferable houses, they wanted to obtain a “win.” To accomplish this goal, they made an offer on a less desirable property and got stuck with it.

Individuals seeking different employment opportunities or new romantic partners often experience similar entrapment. They are rejected by several business firms or desirable mates. They become tired of losing, and they seek a “victory” when they locate a less desirable position or a person they don’t love. Next thing they know, they have accepted the less preferable employment situation or have moved in with this new dating partner. This is why people who have recently lost good jobs or have broken up with significant others must be careful not to seize the next employment opportunity or fall for someone else on the rebound. Ask yourselves what employment opportunities you really desire and what individuals you would truly like to be with. If no one or nothing suitable becomes available in the immediate future, be patient. If you fail to recognize the psychological entrapment you fall into, you are almost certain to experience the dreaded “winner’s curse.”

P
OWER
B
ARGAINING
T
ACTICS

Despite faithful use of principled positions, objective criteria, and carefully applied concession strategy, you may need to use bargaining tactics to help things along. During your preparation, determine what tactics would be most effective against your particular counterparts in light of the specific issues involved. Use them in isolation or in combination, and try to vary your approaches to keep counterparts off balance. Adopt only the techniques that suit your own personality. The most important ones to have in your repertoire are factual, economic, and emotional arguments.

Factual, Economic, and Emotional Arguments

At some point during almost every negotiation, the participants argue for their preferred positions. Some make detached analytical arguments, while others make emotional appeals. Each can be effective, depending on the individuals and circumstances involved.

If analytical arguments of a factual or economic nature are to be persuasive, they must be presented in a sufficiently neutral manner that they are taken seriously. Wholly one-sided presentations are too easily dismissed as self-serving. In addition, persuasive arguments go beyond the expected, forcing opponents to reconsider their own assumptions and positions in a way that works to the benefit of those articulating the arguments.

For instance, when the underlying facts militate in favor of the claims you are advancing, focus on the most relevant factual circumstances. Compel your opponents to grasp the importance of this information. If you present these details effectively, by the time you have laid them out, your counterparts will be predisposed toward your claims. For example, if I am representing an individual who has been injured in an automobile accident, I might go over the actual injuries and necessary medical treatment in great detail. I want the listener to “feel” the pain my client experienced. I want them to appreciate the medical expenses my client has incurred. This makes it difficult for them to deny the significance of my client’s injuries and enhances the likelihood they will make a realistic opening offer to compensate my client for the pain and suffering involved.

The same can be said of good economic assertions. When the economic circumstances favor your situation,
describe these pieces of information in a detached and detailed manner. Make it difficult for opponents to refute your contentions. If you are buying or selling a house or car, it helps immeasurably to obtain objective information you can use to guide the discussions. What have similar houses in the area sold for over the past few months? What is the retail value of vehicles in comparison to the one being bought or sold? If you are the prospective owner, focus on the lower price range for houses or cars; if you are the prospective seller, focus on the upper range.