by Pamela Meyer
Caitlyn was devastated. How could this have happened? Her market timing was perfect, she had asked for a fair price, and she had been as flexible as possible, focusing only on the three key points she cared about: the price, her consulting contract, and an all-cash deal. She’d been clear from the start about what she hoped to gain from the sale, and the negotiations had gone smoothly due to her reasonable expectations and her willingness to forfeit other deal points for the key three.
Desperate to figure out where the deal had fallen apart, Caitlyn pored over her e-mails, the notes from their phone calls, the lawyer briefings—the entire history of the proceedings, which she had been scrupulous about preserving. Nowhere could she find an indication that the other company had been cash-strapped or was at all uncomfortable paying in cash. In fact, when Caitlyn stated her preference for cash, the CEO had replied genially, “As far as I’m concerned, we’ve practically got a done deal.”
What went wrong?
EVERYTHING IS A NEGOTIATION
Every aspect of business requires some form of negotiation. Actions as simple as agreeing on a deadline or granting a raise involve negotiation; so does selecting the ad agency to launch your new product, closing a deal with your joint-venture partner in Asia, or convincing your top sales manager not to relocate to London—negotiation is woven into the fabric of your daily interactions on the job.
This surely isn’t news to you. But you may not know that when the stakes are high, those who are given a chance to lie will almost always take that chance.1 When you consider the number of negotiations you’ve transacted—and then reevaluate them in light of the high probability that you were deceived somewhere along the way—you may begin to believe you’re not as well prepared to negotiate as you thought.
Let’s break down the statement about lying in negotiations. The data researchers have accumulated on the subject includes these interesting findings:
The larger the potential incentive at stake, the more likely people are to lie and the more they expect others to lie.
People bargain harder and are more tempted to lie when they believe they have significant losses at stake.2
The more untrustworthy a negotiator’s reputation or appearance, the greater the chance that he’ll be lied to—and the less guilt the liar will feel.3
Negotiators who suspect, or are directly informed, that they’re expected to tell the truth (or that their version of the facts will be verified) will behave more honestly throughout a negotiation.4
Many people who lie during negotiations report feeling little or no guilt, justifying their actions as self-defense. Most of these individuals have been lied to in the past.5
Trust can be rebuilt after one side has committed untrustworthy actions, but it takes significantly more time to rebuild a trusting relationship if the action has been accompanied by deception.6
Maurice E. Schweitzer is an associate professor of operations and information management at the Wharton business school. His research focuses on emotions, ethical decision making, and the negotiation process. In Schweitzer’s chapter “Deception in Negotiations” in the book Wharton on Making Decisions, he describes the 1994 negotiations over a labor contract that took place between the company Textron and the United Auto Workers. Textron officials assured the UAW that they had no plans to subcontract jobs to nonunion workers. Once the contract was signed, however, Textron announced that it intended to hire nonunion workers—which, it turned out, they’d been planning to do for some time.
The United Auto Workers sued Textron for negotiating in bad faith—and lost the suit. A court ruled that if the UAW had really cared about the issue of subcontracting, the union should have made sure to add that condition to the contract.7 “We should be on guard against deception,” says Schweitzer. “Legal remedies are not a substitute for our own vigilance.”8
THE TYPES OF LIES YOU WILL HEAR
The first step toward vigilance? Determine what information has been omitted.
Typically, the lies you will hear during a negotiation are lies of omission. In one study, 100 percent of negotiators actively lied about or failed to reveal a problem if no one directly asked them about it.9 Liars are far more comfortable concealing information than falsifying it, because concealment doesn’t require them to concoct, remember, and then tell a story.10 It’s easier to feign confusion or pass the omission off as a mistake should the deception eventually be noticed.11 The liar can claim he was planning to mention the relevant fact but got sidetracked; maybe he didn’t know it was important; he might simply have forgotten to bring it up; and, in any case, it’s all a blur now. He can no longer even remember what was discussed on that particular occasion.
Perhaps lies of omission don’t seem that serious. After all, omitting part of a story is a passive act. If one side of the table doesn’t think to ask about a nonmaterial issue, does the opposing side have an obligation to bring it up? We can leave that debate to ethicists. Good negotiators simply remain alert to the possibility that they are not likely to be told everything they need to know.
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KNOW THE LAW
A lie is considered common law fraud if:
It misrepresents a material fact
The liar knows or believes that the material fact is untrue
The liar intends to induce the victim to make a decision based on the misrepresentation
There is “justifiable reliance” on the victim’s part (he has good reason to believe you and to make a decision based on what you say)
There is damage or injury to the victim12
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Regardless of whether or not a lie of omission is a “real” lie, the fact is that many such falsehoods eventually become lies of commission—outright falsification—once the opposing side does think to inquire about them. Paul Ekman calls lies of omission “concealing lies” and lies of commission “falsifying lies.” According to Ekman, a concealing lie often becomes a falsifying lie when the liar feels that the victim is challenging him.13 This speaks directly to the fact that a good negotiator should not put a liar in a position in which he feels he has no choice but to lie.
EVERYBODY’S DOING IT…WHAT’S THE BIG DEAL?
But isn’t the goal of every negotiation to win something from the other side? Aren’t confrontation and, eventually, victory or loss built into the essential concept of negotiation? Some would say it is naive not to expect deception in this situation. You’re certainly expected to bluff, which is technically a lie; you’re expected to ask for more than you really want; it’s all just part of good strategy. Besides, even if you don’t lie, the opposing party will.
So why not just fight fire with fire? Leaving out the moral implications once again, lying is rarely the best strategy. It’s important to remember that—despite the story about Textron’s lies to the UAW—there can be serious legal consequences for lying. Some negotiators are simply too loose with their distinction between moral and illegal breaches of trust. According to one researcher, “What moralists would often consider merely ‘unethical’ behavior in negotiations turns out to be precisely what the courts consider illegal behavior.”14
Deception can also hurt your bottom line. To study the dynamics of trust, betrayal, and renewed trust, Wharton researchers set up a game in which pairs of players who couldn’t see each other played rounds in which they had to decide whether to pass money on to their unseen partner or keep it. The researchers consistently found that those who deceived their partners into passing them money initially reaped higher profits, yet they earned less and less as the rounds continued. When the rules were changed and the game was played with no option for deceit, both players benefited financially.15
Since negotiations are frequently the starting point for business relationships—sometimes long-term relationships that can impact an entire organization—it’s just plain good business to steer clear of the cycle of distrust and deception that so often entraps participants at the negotiating table.
&n
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NEGOTIATING AND LIESPOTTING FOR WOMEN
As we saw in Chapter 2, men and women lie differently and for different reasons. Women are less likely to lie in negotiations because they are less comfortable with lying in general16 and they experience more guilt, anxiety, and fear than men do when telling serious lies.17 But women are also less comfortable with negotiating, in general, than men are. They’re more anxious and fearful than men when they enter into negotiations, and consequently they reap fewer gains from their negotiations. In their book Women Don’t Ask, Linda Babcock and Sara Laschever include the following disheartening statistics:
In surveys, 2.5 times more women than men said they feel “a great deal of apprehension” about negotiating.
Men initiate negotiations about four times as often as women.
When asked to pick metaphors for the process of negotiating, men chose “winning a ball game” and a “wrestling match,” while women chose “going to the dentist.”
Women are more pessimistic about how much is available when they negotiate, and so they typically ask for and get less—on average, 30 percent less than men.
Twenty percent of adult women (22 million) say they never negotiate at all, though they often recognize that negotiation is appropriate and even necessary.
By not negotiating a first salary, an individual stands to lose more than $500,000 by age sixty—and men are more than four times more likely than women to negotiate a first salary.
Another study calculated that women who consistently negotiate their salary increases earn at least $1 million more during their careers than women who don’t.
Women own about 40 percent of all businesses in the United States but receive only 2.3 percent of the available equity capital needed for growth. Male-owned companies receive the other 97.7 percent.
Women often don’t know the market value of their work: women report salary expectations between 3 and 32 percent lower than those of men for the same jobs. Men expect to earn 13 percent more than women during their first year of full-time work and 32 percent more at their career peaks.18
Their heightened anxiety and lower expectations make women extremely vulnerable to being lied to during a negotiation. And though they may not like it, women are being forced to negotiate more and more:
In 2008, of 121 million women aged sixteen and over, 59.5 percent were working or looking for work.19
The U.S. divorce rate hovers at 50 percent.20
In 2007, women earned 77.5¢ for every $1 earned by men.21
The percentage of births to single mothers (out of all mothers) has risen threefold since 1970.22
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FOUR STEPS TO A LIE-PROOF NEGOTIATION
What makes a good negotiator?
Lots of people will tell you that he’s shrewd, astute, and somehow naturally gifted at wheedling exactly what he wants from a transaction. The facts are otherwise. A good negotiator is willing to do the homework—to put in far more prenegotiation time planning, strategizing, and analyzing than his opponents will know. The real work of a negotiation takes place before anyone comes to the table. If you want to learn the four surefire ways to close a durable, lie-proof deal, you’d better be ready to work hard.
1. Upgrade Your Negotiation Philosophy
Philosophy? Yes.
A negotiation is a signaling system. Let’s say a potential hire signals that he’s also negotiating with the competition for a job. You, in turn, signal suspicion. He ups his attempt to persuade you…you indicate that it’s not working…and the contest continues. This situation has been set up as a win-lose transaction, one in which both negotiating partners struggle to establish dominance. Each tries to grab what he can with little concern for what the opposition wants.
And each participant believes—or hopes—that his intentions are disguised by a charming, accommodating, and reasonable facade. But as you’ve learned, our faces, bodies, and voices constantly leak signals about how we really feel. Even if neither partner at the table is a trained liespotter, each subconsciously picks up signals indicating whether the other is interested in a cooperative or an adversarial negotiation. These signals directly influence trust, and thus how willing each is to deceive the other. As Professor Schweitzer at Wharton found, individuals who approach negotiations with a win-lose philosophy “are more likely to lie, and to lie more egregiously, than when they have a cooperative mind-set.”23
What if, instead, you were to truly believe, and therefore truly signal, that your priority is cooperative negotiation, not adversarial? That you view this transaction as a win-win situation and not a win-lose contest? You would be more motivated to find ways in which you could make concessions without losing sight of your own best interests. You would make sure that both of you ended up satisfied with the transaction.
You may be asking, “But what good will upgrading my philosophy do, if the other side insists on taking a win-lose approach? I can only control my own attitude and behavior, so how can I affect the way another person chooses to negotiate?”
By setting the tone. Once we start breaking through the adversarial standoffs that are too often the starting point for negotiations, we open the door for more creative, productive ways to advance our business interests, and we build stronger professional networks along the way.
Perhaps it’s a cultural problem: a capitalistic society that encourages people to see negotiations as a zero-sum game—my loss is your gain, my gain is your loss—will encourage an inevitably adversarial exchange.24 Yet it doesn’t have to be this way. If we choose to approach every negotiation, whether it’s for a onetime deal or a long-term agreement, in a spirit of win-win, we’ll immediately cut down on the opportunity and temptation for negotiating parties to lie. It’s in everyone’s best interest.
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WIN-WIN TACTICS
In their landmark book Getting to Yes, Roger Fisher, William Ury, and Bruce Patton present four tactics for win-win negotiators: (1) separate people from the problem; (2) focus on interests, not positions; (3) invent options for mutual gain; and (4) insist on objective criteria. Additional tactics for solidifying the win-win outcome can be easily adopted by liespotters:25
Set Your Limits
Not all deceptions are out-and-out lies, and most negotiations can’t take place without including some form of obfuscation,26 however minor. As you work on solidifying your win-win negotiating philosophy, think about how far you’re willing to bend the truth to gain an advantage in a negotiation, and where you’ll draw the line. For example, misrepresentation of facts is illegal, but “puffing”—offering essentially empty praise of a product or a service, is not. A few examples of puffery: “This is such an incredible deal” “A meticulously restored, charming property” “It’s such a famous piece of art, I might just hold on to it myself!” If you’re in sales, how much “puffing” are you willing to engage in? Decide ahead of time how far you can comfortably go.
Avoid False Promises
Think hard about the promises you make. Researchers have found that making false promises is one of the most damaging bargaining tactics negotiators employ.27 Imagine you’ve accepted a job to run a global operation, only to discover your new employers were planning to shutter most of its foreign business. Negotiators known for such false promises suffer significant reputational damage and can have difficulty recovering. Though misleading a partner during negotiations can bestow a short-term advantage on the liar, ultimately it causes so much long-term damage to one’s reputation that it’s not worth it.28
Declare Your Honest Ways
People feel justified in lying when they think they’re dealing with a liar. Therefore, you should take every opportunity to bolster your company’s honest reputation and your own personal reputation when negotiating. Those who might have considered lying, because they think it’s the only way to “win,” will be relieved to know they don’t have to be on guard around you.
When GM introduced Saturn in 1990, the brand won an
immediate following not just because it was a well-priced, well-designed small car, but because people loved the no-haggle sales experience GM had also introduced with the Saturn. Saturn managed to make fair dealing a brand hallmark. If more businesses were to do the same, negotiations of all kinds would become far less stressful.
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2. Prepare, Prepare, Prepare
As with most activities, investing time is what gets the best results. The success of savvy negotiators is a result of the tremendous amount of planning, strategizing, and data analysis—in other words, the hard work—they do before they ever start bargaining.
You’re going to prepare thoroughly, but you’re also going to kick your BASIC training into gear. A lie-proof negotiation, after all, is a high-stakes conversation that requires trust, cooperation, and open conversation—exactly the kind of exchange BASIC is specifically designed to encourage. So, as you set your goals and collect and analyze data, you’ll want to address two questions: (1) How will you present your best case for getting what you want: and (2) How will you structure your information requests so they elicit truthful and thorough answers from your negotiating partner?
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TWO TIME-SAVING PRELIMINARY QUESTIONS
1. Is this deal truly a good fit?
Don’t waste time in a tedious struggle attempting to close an ill-suited deal. Focus your attention on the business relationships that are likely to remain the strongest in the long run.
2. Am I negotiating with the final decision maker?
It would be inefficient to devote much time to “reading” someone who won’t be in charge of deciding whether your deal goes through. If there’s no way to arrange to meet that final decision maker face-to-face, map the opposition’s decision-making process and do your best to negotiate with a decision maker.