Bargaining for Advantage

1. Effective negotiation starts with understanding your own style and goals

To be good, you must learn to be yourself at the bargaining table.

Know your style. Negotiation styles range from competitive to cooperative, and understanding your natural inclinations is crucial. Competitive negotiators excel at seeing power dynamics and leverage quickly, while cooperative types are skilled at being team players and helping others. Neither style is inherently superior; the key is to recognize your strengths and weaknesses.

Adapt to the situation. Different negotiation scenarios call for different approaches:

• Tacit Coordination: Low conflict, limited future relationship (e.g., two drivers at an intersection)
• Transactions: High stakes, low relationship importance (e.g., buying a used car)
• Relationships: Low stakes, high relationship importance (e.g., family negotiations)
• Balanced Concerns: High stakes, high relationship importance (e.g., business partnerships)

Identify which situation you're in and adjust your strategy accordingly. For example, in a Transaction, be more assertive about your goals, while in a Relationship scenario, focus on maintaining harmony and finding mutually beneficial solutions.

2. Set high expectations and specific goals to achieve better outcomes

What you aim for in negotiations often determines what you get.

Aim high. Research consistently shows that negotiators who set higher goals achieve better outcomes. This is because your goals act as psychological anchors, influencing both your behavior and the other party's perceptions. When you expect more, you're more likely to:

• Ask for more
• Make fewer concessions
• Project confidence

Be specific. Vague goals like "get a good deal" are ineffective. Instead, set clear, measurable objectives. For example:

• "Secure a 10% increase in salary"
• "Reduce delivery time by 5 business days"
• "Obtain exclusive distribution rights for the next 3 years"

Write down your goals and share them with someone you trust. This act of commitment increases your likelihood of following through and achieving your targets.

3. Use authoritative standards and norms to strengthen your position

Negotiations are fertile ground for observing the consistency principle at work.

Leverage consistency. People have a deep psychological need to appear consistent in their words and actions. By invoking widely accepted standards or norms, you can create powerful leverage in negotiations. This "normative leverage" is especially effective when using standards the other party has previously acknowledged or used themselves.

Examples of authoritative standards:

• Industry benchmarks
• Legal precedents
• Expert opinions
• Company policies
• Historical data

Frame your proposals. When presenting your position, frame it within the context of these authoritative standards. For instance, if negotiating a salary, reference industry salary surveys or your company's stated commitment to fair compensation. This makes it harder for the other party to reject your proposal without appearing inconsistent or unreasonable.

Be prepared to counter the other side's standards as well. Research thoroughly and anticipate which norms they might invoke to support their position.

4. Build and leverage relationships for long-term negotiation success

An ounce of well-grounded personal trust in a business partner is worth a thousand pounds of formal contracts and surety bonds.

Invest in relationships. Strong relationships create a foundation of trust that can smooth over many negotiation challenges. They also provide:

• Better information exchange
• More creative problem-solving
• Increased likelihood of future deals

Reciprocity matters. The norm of reciprocity is a powerful force in human behavior. People tend to:

• Return favors
• Repay debts
• Treat others as they have been treated

Leverage this by making small concessions or gestures of goodwill early in negotiations. This often prompts the other party to reciprocate, creating a positive cycle of cooperation.

Balance relationships and transactions. While relationships are crucial, be aware that close personal ties can sometimes hinder effective negotiation. Studies show that friends tend to reach agreements faster but often leave value on the table by avoiding tough discussions. In high-stakes situations, consider using agents or focusing on "working relationships" rather than personal friendships.

5. Understand the other party's interests to create win-win solutions

To become more effective, you need to get beyond simple negotiation ideas such as these.

Look beyond positions. People often state their positions (what they say they want) rather than their underlying interests (why they want it). Skilled negotiators probe to uncover these deeper motivations, which often reveal unexpected areas of common ground.

Techniques for uncovering interests:

• Ask open-ended questions
• Listen actively and empathetically
• Consider their constraints and pressures
• Put yourself in their shoes

Find creative solutions. Once you understand both parties' interests, look for ways to "expand the pie" rather than simply dividing fixed resources. This might involve:

• Trading on differences in priorities
• Creating new options that satisfy both parties' needs
• Bundling multiple issues to create more value

Example: In a salary negotiation, if the company can't offer more money due to budget constraints, explore other valuable options like additional vacation time, flexible working hours, or professional development opportunities.

6. Develop and use leverage to improve your bargaining position

Every reason that the other side wants or needs an agreement is my leverage—provided that I know those reasons.

Understand leverage dynamics. Leverage in negotiation comes from three main sources:

1. Positive leverage: Having something the other party wants
2. Negative leverage: The ability to make the other side worse off
3. Normative leverage: Using standards and norms to your advantage

Assess relative leverage. Ask yourself: Who has the most to lose if no deal is reached? The party with less to lose typically has more leverage. This can shift during negotiations, so continually reassess the balance.

Create leverage. Ways to improve your leverage include:

• Developing attractive alternatives (BATNA)
• Finding or creating competition for the deal
• Imposing credible deadlines
• Building coalitions with other parties
• Enhancing your expertise or unique value

Remember that leverage is often based on perception. If you can convince the other party that you have strong alternatives or that time is on your side, you can gain leverage even if the reality is less favorable.

7. Master the four-step negotiation process for consistent results

Negotiation is a dance that moves through four stages or steps.

Follow the process. Successful negotiations typically progress through four key stages:

1. Preparation: Research, goal-setting, and strategy development
2. Information exchange: Building rapport and exploring interests
3. Bargaining: Making proposals and concessions
4. Commitment: Closing the deal and ensuring follow-through

Adapt to cultural differences. While these stages are universal, their relative importance and duration can vary across cultures:

• Western cultures often move quickly to explicit bargaining
• Relationship-oriented cultures (e.g., many Asian and Middle Eastern countries) spend more time on information exchange and rapport-building

Stay flexible. Be prepared to cycle back to earlier stages if new information emerges or if you reach an impasse. The process is rarely linear in complex negotiations.

8. Employ effective information exchange and communication strategies

Skilled negotiators know that there are too many situational and personal variables for a single strategy to work in all cases.

Choose the right communication channel. Consider the pros and cons of different methods:

• Face-to-face: Highest bandwidth, best for building rapport and reading non-verbal cues
• Video conferencing: Good compromise when in-person isn't possible
• Phone: Allows for tone of voice but loses visual cues
• Email: Convenient but can lead to misunderstandings and depersonalization

Practice active listening. Skilled negotiators spend more time listening than talking. They:

• Ask probing questions
• Summarize and clarify what they've heard
• Pay attention to non-verbal cues

Manage information strategically. While honesty is crucial for building trust, you don't have to reveal everything. Be thoughtful about:

• What information to share
• When to share it
• How to frame the information you provide

Remember that in negotiation, information is power. Gather as much as you can while being judicious about what you disclose.

9. Make strategic concessions to move negotiations forward

Concessions are the language of cooperation.

Plan your concession strategy. Effective concession-making depends on the situation:

• In Transactions: Start high, concede slowly, and make progressively smaller concessions
• In Relationships: Be more accommodating and focus on finding mutually beneficial solutions
• In Balanced Concerns: Use conditional concessions ("If you..., then I...")

Use the reciprocity principle. People tend to reciprocate concessions. Make small concessions early to encourage the other party to do the same. This can create positive momentum.

Avoid common pitfalls:

• Don't make unilateral concessions
• Don't concede too quickly on important issues
• Be wary of "nibbling" (small, last-minute demands)

Remember that how you make concessions is often as important as what you concede. Frame your concessions as responsive to the other party's needs to maximize their impact.

10. Close deals and secure commitments with confidence

Negotiations are not over until the parties have secured commitments to performance.

Recognize closing opportunities. Look for signals that the other party is ready to commit, such as:

• Shifting from general to specific terms
• Increased focus on implementation details
• More frequent summarizing of points of agreement

Use closing techniques wisely. Common methods include:

• Splitting the difference
• Setting deadlines
• Making "final" offers
• Summarizing agreements and next steps

Secure real commitments. An agreement is not the same as a commitment. Ensure follow-through by:

• Putting agreements in writing
• Specifying concrete actions and timelines
• Creating accountability mechanisms
• Building in incentives for compliance

Be prepared for last-minute issues or "deal breakers." Have contingency plans and be ready to walk away if necessary, but also be flexible enough to find creative solutions to unexpected problems.

11. Navigate ethical dilemmas in negotiation with integrity

Effective negotiators take the issue of personal integrity very seriously.

Develop a personal ethical framework. Three common approaches to negotiation ethics:

1. The "Poker School": Anything legal is fair game
2. The "Idealist School": Apply the same ethical standards as in everyday life
3. The "Pragmatist School": Balance ethics with practical concerns

Whichever approach you choose, be consistent and able to defend your choices.

Recognize common ethical pitfalls:

• Misrepresenting material facts
• Making false promises
• Exploiting the other party's mistakes
• Using manipulative tactics (e.g., artificial deadlines)

Protect yourself. While maintaining your own ethical standards, be prepared for others who may not share them:

• Do your due diligence
• Get agreements in writing
• Be wary of deals that seem too good to be true
• Trust your instincts if something feels wrong

Remember that your reputation is a valuable asset in negotiation. Short-term gains from unethical behavior can lead to long-term losses in trust and future opportunities.

Last updated: October 30, 2024