It is natural to defend yourself when attacked, and maybe even launch a counterattack against the other side. These attacks and counterattacks can spiral out of control and cause emotions to flare and egos to bruise. They make an agreement less likely.
The best negotiators do not launch personal attacks, nor do they respond to such attacks in kind. If you do find yourself in an emotionally charged spiral of escalating attacks, try to defuse it. The simple act of apologizing can do wonders. An apology followed by a question shows concern for the other party and allows him the opportunity to be heard. For example:
“I’m sorry, I didn’t mean to seem unreasonable. Is there anything else you would like to add?”
And don’t forget the magic question discussed earlier: “Did I say anything to upset you?” If they say yes, apologize and deal with it; if they say no they will have little choice but to calm down.
HARSH OR CONDESCENDING COMMENTS
It never pays to use harsh, bitter, sarcastic, or belittling comments during a negotiation. This makes you look unprofessional at best and unhinged at worst. You might think that provoking your counterpart might be a good strategy, the way Tom Cruise’s prosecutor character did with Jack Nicholson’s Marine Colonel Jessup in A Few Good Men (“You can’t handle the truth!”), but a negotiation isn’t a trial or a movie. There is always a better way to get what you want without rolling in the gutter, ruining a relationship, and building resentment towards you.
In addition, do not make patronizing or value-laden comments about how fair you are being to your counterpart. Suggesting the other party would be unreasonable not to agree with you is alienating. For example, a seemingly reassuring comment such as “I believe you will find our offer to be most generous” sounds like a perfectly reasonable way to encourage the other party to accept your offer. However, the other party is likely to interpret it like this: “I’m doing you a huge favor and you’d be a fool to reject it!”
Think about the ways in which your counterpart can take your comments. Do not use language that may be insulting, such as:
• “That’s ridiculous!”
• “Are you out of your mind?”
• “Don’t be such a cheapskate.”
Needless to say, you must avoid obscenity, ethnic slurs, and other offensive language.
MANAGING EXPECTATIONS—KEEPING THEM HAPPY
Perception is a big part of negotiating. It isn’t always whether you win or lose that matters, it’s whether you feel you’ve won or lost. The subjective outcome is more important than any objective measure of the outcome. People need to feel good about the process and the outcome, regardless of how well they actually fare substantively. We have to meet expectations.
In addition, the negotiation process must appear to be fair. People have a powerfully strong sense of fairness—it’s hard-wired into our brains. If you or the process seems unfair, your counterpart will resent you and your relationship will suffer.
A popular activity in negotiation classes illustrates the point. Students are paired up, and one student (the offeror) is given $100 to share with his partner (the offeree) according to an allocation dictated by the offeror. However, the offeree has the right to accept the offer and share the money according to the proposed allocation, or reject it, in which case no one gets any money. A 50:50 offer is invariably accepted. Often the offeror will feel entitled to a larger share and offer a 60:40 split, or a 75:25 split. Some of these will be accepted, but the more unequal the proposed split, the more likely it is that the offeree will play the spoiler and reject the offer. A truly rational person would accept an extreme offer of even $1, as he would still be better off monetarily—$1 is better than nothing. But people aren’t rational—they are emotional, and they have a strong sense of fairness. They may choose a lose-lose outcome rather than stand for what they perceive to be unfair treatment.
People can be extremely emotional and irrational when they feel they are not being treated fairly or with due respect. Take pains to be fair and respectful throughout the negotiation. Make sure the negotiation process itself is also fair and impartial.
BIASES
Irrationality may also take the form of biases. Even when our emotions are in check, our thinking processes are often corrupted by biases we are not even aware of. Psychologists have catalogued them by the dozens; a quick scan on Wikipedia turns up almost two hundred. Some of them are mental shortcuts that help us cope with a complex world, but they can get us into trouble. It pays to be on guard against them. Here are some of the more relevant ones for negotiators to watch out for.
Stereotyping
Stereotyping refers to the politically incorrect but still human tendency to assume certain attributes in another based on their membership in a demographic group. The group can be defined by race, religion, gender, culture, occupation, etc. We often resort to stereotyping as a way of getting to “know” more about our counterpart in a shorter period of time. The problem is (aside from political correctness!) twofold: people belong to multiple groups, and people are also individuals.
Don’t play in to the stereotyping trap. Evaluate each person as the unique individual he is.
Selective perception
We see what we’re looking for and ignore information that doesn’t support our beliefs. This bias can be very costly in many areas of life, whether negotiating, considering investment options, or choosing a mate. Selective perception can magnify the effects of stereotypes (“I knew he would do that, it’s so typical of his kind!”) and the halo effect (“She’s smart, beautiful, witty— perfect in every way!).
To counteract the bias of selective perception, make it a point to play the devil’s advocate. Get a reality check from friends or colleagues. Actively seek information contrary to your initial assessment or preferred outcome.
Projection
Projection refers to our tendency to see in others what we see or feel in ourselves. We often assume others think, feel, and behave like us. If we like something, they will like it too. (And if we don’t trust someone, maybe it’s a sign that we are not so trustworthy ourselves!) This can cause us to misunderstand our counterpart’s intentions. It can also cause us to miss opportunities if we assume our counterpart values something the same way we do. For example, we may value the money, while they may be more motivated by relationship, ego, or some other consideration.
You can help counteract projection by assessing your counterpart objectively and trying to understand her wants and motivations as an individual. Using MESOs* is a good way to zero in on what your counterpart values most.
Mythical fixed-pie
The win-lose, law of the jungle model of negotiating is hardwired into many people, who just can’t accept the notion of win-win, integrative negotiating. Those who have this view assume all negotiations are distributive, and any gain enjoyed by their counterpart must come at their own expense. It’s all about trying to grab the biggest piece of the pie, rather than exploring ways to make the pie bigger for all parties. Old habits die hard, and it may take some time and practice to learn to see things from the principled negotiation perspective.
Be patient as you begin to implement win-win negotiating techniques into your repertoire. Focus on interests, identifying currencies and options, creating value, and the joint problem solving approach. The checklist at the end of this book can be a big help in adopting the win-win framework.
Availability of information
Gathering information takes time and effort, so we rely more on what is readily available. Easily recalled information is not only used more, but may be perceived as more accurate than it actually is simply by virtue of its salience. As a result, the source of the information can have an undue influence on our thinking.
How can you reduce the impact of the availability bias? Question the accuracy and source of the information you encounter. Be especially aware of colorful language and imagery. Is it being used to influence you? Seek out contrary information fro
m other sources and evaluate it objectively.
Law of small numbers
This bias is a form of information availability. Based on a small number of incidents, you make a broad generalization that may be incorrect. For example, surveys based on a small number of responses are suspect because the pool of information may not reflect the wider population.
This danger of erroneous extrapolation from a limited information set applies in many areas of life. Let’s say you buy a Toyonda sports coupe. It breaks down every few weeks. Your friend also buys one and has a similarly awful experience. Does that mean all Toyonda cars are lousy? You can’t reach that conclusion based on two instances. Maybe Toyonda was voted Car of the Year, and the one you got was an outlier.
By now you may have noticed a pattern in the ways to protect yourself against these biases: be aware, do your homework, and get a reality check.
Winner’s curse
Everyone likes to get what they want, but when we get what we want too easily, we may have a nagging concern that we could have done better. We wonder why our counterpart agreed so readily and didn’t put up more of a fight. This is the winner’s curse, a form of buyer’s remorse. It is especially common in auctions, where the bidders are caught up in the excitement and the winner wonders whether he paid too much. The winner thinks to himself: no one else was willing to pay that much—did I overpay? We also see this in the realm of business acquisitions, where the acquiring company pays a premium that more often than not turns out to have been excessive.
The best way to avoid this form of regret is to prepare thoroughly. Make an accurate assessment of the subject of the negotiation, so that you are confident about what a fair price is. Approach the negotiation soberly, understanding and protecting yourself against emotional considerations. You might also negotiate a contingent agreement or guarantee that will allow for an adjustment if things do not turn out as expected. For example, if you are buying a business based on certain representations such as sales projections, you could agree to adjust the final price depending on what the actual numbers prove to be at a future date.
Self-serving biases
In evaluating others, we tend to overstate the role of personal factors over situational ones. We blame our own shortcomings on the situation—it’s never our fault! If you are late for an appointment, it’s because traffic was a mess. If the other guy is late, it’s because he is irresponsible!
We tend to have certain biases in the way we apportion credit and blame. When things turn out favorably for us, we are likely to attribute the results to our own ability. We think “I achieved a good result because I worked hard, I prepared well, I am a great negotiator, I deserve it.” When we don’t do so well, we find external reasons to explain the result: “They got lucky, they deceived me, the economy worked against me, there was nothing I could do about it.” Or we may discount the effects of external or situational factors and assume our counterpart has more skill, expertise, or ability than he really does.
We may think things will turn out better for us than for others. “That could never happen to me; it only happens to other people.” Then again, some people think they always get the lemons in life, and everyone else has it better.
Many people think more highly of themselves than of others: “I am smarter, more skillful, more honest, more open minded, and fairer than him. He is so rigid, irrational, and biased.” Your counterpart probably thinks the same about you! How a particular individual actually interprets these things depends on a host of psychological factors, such as self-esteem, locus of control, and others beyond the scope of this book. Just be aware that we are all subject to these biases and try to understand and minimize the effect they have on you.
An effective negotiator tries to be objective and open to possibilities. She will still be biased, but she will be more willing to accept that she has faults and makes mistakes, and tries to correct for them. When you take responsibility for your shortcomings, you have an opportunity to learn from your mistakes and do better next time.
Endowment effect
In one of my favorite psychology experiments, researchers gave half the members of a group a free gift (coffee mugs, pens, and other items). The lucky recipients were asked to write down how much they would sell their gift for. The ones who didn’t receive the gift were asked to write down how much they would be willing to pay for the item. On average, those who had the gift valued it two to three times more than those who did not receive the gift. A few minutes before, when no one had received the gift, the average value assigned by the group would have been somewhere in between these two figures. The mere fact of possessing something leads those who have it to value it more than the market does. Psychologists call this the “endowment effect.”
Due to the endowment effect, we tend to overvalue what’s ours and undervalue what belongs to others. This often prevents us from recognizing a good deal when it’s right in front of us. It also blinds us to realities.
Let’s say you are putting your house up for sale. You will probably ask for more than it’s worth just because it’s your house. “Ah, the memories! That’s where my daughter took her first step!” Of course you value it highly, but the market doesn’t care about these sentimental considerations, it’s just a house, worth no more or less than any similar house. If you list it for too much, no one will make an offer. After a while, you realize your mistake and lower the price. The bargain hunters take note, sense desperation, and bombard you with lowball offers. Good luck getting a deal now. It would have turned out better if you had priced it more realistically in the first place.
Once again, the prescription is to be aware of the bias, prepare well, and get a reality check by isolating sentimentality and understanding how the market perceives your situation.
Reactive devaluation
Reactive devaluation is a cousin of the endowment effect. We minimize the value of the other party’s ideas, proposals, or concessions simply because it came from them. This is a classic adversarial, win-lose behavior: we are suspicious of what they offer because we believe they are more concerned with their interests than with ours. There is some truth to this, but that doesn’t mean our counterpart can’t have an idea that serves us better than our own idea.
Look critically at what your counterpart advocates, but keep an open mind and try to see the benefits. Be objective, not dismissive. Weigh the pros and cons of every idea without regard to who proposed it. Ask the opinion of a colleague or impartial third party who does not have a stake in the outcome.
A good negotiator recognizes that he and his counterpart both have these biases. He strives to accept the other party as an equal. He understands that by thinking ill of his counterpart, their trust and communication will suffer, as will the likelihood of reaching a win-win outcome.
Overconfidence
Confidence is a double-edged sword. A healthy dose of confidence—especially when it’s the result of solid preparation— is valued in the business world and is an asset to any negotiator. In addition, research has proven that negotiators with higher aspirations going into a negotiation tend to emerge with better outcomes. It’s a form of self-fulfilling prophecy.
On the other hand, overconfidence is dangerous. If you think you have everything all figured out, you are less likely to ask questions, test assumptions, and make a realistic assessment of the situation. Overconfidence can blind you to new information and other options that may have a bearing on the outcome. Be prepared to change your assumptions, strategy, and even your expectations in light of new developments.
The line between confidence and overconfidence is often murky. In American politics, voters like confidence and punish inconsistency. Pity the poor politician who has been branded a waffler or flip-flopper by his opponent. That label is often the kiss of death. Never mind that times change and positions evolve—a candidate who sticks to his guns will be seen more favorably than one who tries to explain why she changed. So it’s easy to see why
confidence, conviction, and certainty are so highly admired, even at the risk of being overconfident.
It’s good to be confident, but not too confident. To guard against overconfidence and the mistakes that follow, try to understand all the elements in play, make a realistic assessment of the situation, and always watch for new information. A famous quote (attributed to various statesmen and economists) is good advice: “When the facts change, I change my mind.” So do the best negotiators.
Argument dilution
Most negotiators offer as many arguments as they can think of to support their position. They think that the more arguments they have, the stronger their cause. In fact, advancing too many arguments dilutes the strength of your main point.
It is better to have one or two strong points in support of your argument than a whole slew of them. When a mix of stronger and weaker arguments is presented, the weaker or less relevant information dilutes the impact of the stronger or more relevant information. If you try to overwhelm your counterpart with an avalanche of points, she will probably focus on the weakest link and dismiss all of the others with it. Don’t make it easy for her to refute you. Focus on your best couple of reasons and forget about the less convincing ones. It’s about quality, not quantity.
Losing focus
Having invested time, money, effort, and ego into a negotiation, you may feel pressure to reach an agreement, even if it is not to your advantage. You may feel that all you have invested will be wasted if you don’t come away with a deal. These outlays are not true investments, they are sunk costs. Whatever you have put into the negotiation is gone. At this point, your task is to decide whether you will be better off with the deal than without it. No deal is better than a bad deal. Focus on your objective, not on what you have already “lost.”
WIN-WIN Page 13