Two HUGE mistakes made by negotiators


I’ve been training people in how to negotiate for nearly 15 years now, and I have a confession to make.  I now know that I may have been doling out some poor advice.

No, that is not me.

No, that is not me.

I can easily blame this on other people, since most of what I learnt as a trainer in my early days was acquired from other trainers.  But that would be lazy, and a poor excuse for failing to read and research more thoroughly.

Here’s the HUGE negotiation mistake I have been encouraging people to make.  I have suggested that when it comes to getting into the numbers and asserting our positions in the negotiation it always makes sense to get the other party to go first.  That way you can find out what you are dealing with, and adjust your response upwards or downwards as necessary.  I’ve suggested using Steven Covey‘s immortal words as the basic approach:

“Seek first to understand, then to be understood.”

I can think of numerous times when this approach has stood me in good stead, and I still think it has a great deal of merit.

But I now realise I have been discounting the opposite approach, which is of course to GO FIRST.  Influence the size, shape and indeed location of the playing field (it’s sometimes called anchoring) by an AGGRESSIVE OPENING BID, and you will in fact get even better results.

Adam Grant

Adam Grant

Only yesterday I read a great article on negotiation, which references research done at Vanderbilt University Law School to show that, to quote the author Adam Grant:

“…..every dollar higher in the first offer translates into about 50 cents more in the final agreement.”

How scary is that?  Grant goes on to describe an experiment which supports his point.

In one clever experiment, Greg Northcraft and Maggie Neale invited experienced real estate agents to inspect a house from top to bottom, and then asked them to estimate the independent appraisal value of the house. Unbeknownst to the agents, they were randomly assigned to see one of two different listing prices. Half of the agents saw a listing price of $119,900, and they estimated that the house would appraise for just over $114,000. The other half of the agents saw a listing price of $149,900, and they predicted that the house would appraise for over $128,000. The listing price should have been irrelevant; the agents had seen the house, so who cares what list price the seller chose? But the agents couldn’t escape the pull of the anchor.”

He goes on to make the point that of course our opening bid needs to be based on reality of some sort, otherwise we lose credibility as negotiators.  So prepare your arguments to justify the position (give 2 or 3, not 10 reasons), and remember that these days most people are able to research more easily than they ever could what something should cost them.

Conflict Accommodators like me don’t like the idea of the Aggressive Opening Bid, as it feels a bit rude.  Maybe that’s why I have been so comfortable promoting the Seek First to Understand approach all these years.  But when you look at the facts they appear to speak for themselves.  The very least I can do is make people aware of both approaches (as indeed I am now doing in this article.)

HUGE mistake number two, again mentioned in Adam’s article, is that many people seem to think that good negotiation as about keeping your cards close to your chest.  On this aspect I am on much more comfortable turf, as I have always said that if you want a Win/Win outcome  you will need to build Trust, and to build Trust you need to display Openness.  This can be done by disclosing information that does not weaken your position but shows that you are willing to open up.  What will often then happen is that the other party reciprocates with a piece of their information, and you can then match this.  Gradually, layer by layer, we strip off the outer protection, and end with much more authentic and honest discussion.

Grant gives detail of another experiment which supports this:

” In one experiment, Stanford and Kellogg students negotiated over email. When they only exchanged their names and email addresses, they reached deals less than 40% of the time. When they shared information that was irrelevant to the negotiation, schmoozing about their hobbies or hometowns, 59% reached agreement. When you open up about something personal, you send a signal that you’re trustworthy, and your counterparts will be motivated to reciprocate, matching your disclosure with one of their own.”

You can in fact plan what you can disclose that does not weaken your position.  I call this “Controlled Disclosure.”  It might be personal information or something relevant to the detail (“I see this contract review as a good opportunity to develop some new approaches”).

How often do you see these two mistakes being made?  Is it just me or are far too many of us falling into these traps?

Do please add your comments.  It’s really helpful to hear your perspectives and any counter suggestions you may have.  And if you found this article helpful, do spread the word using the sharing buttons below.

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About Michael Brown Training

I'm a business skills trainer, facilitator and coach. I've been helping people to learn for 16 years, working all around the world on topics such as Negotiation, Conflict Handling, Sales, Leadership, Consulting and Personal Effectiveness. I'm an ENFP, constantly looking for new and inspiring things to do. I love my job for its variety and the stimulation I get from it, and spend most of my time seeing how far we can go with the subjects we work on in the training room. I've recently started a new venture in making video on how NOT to do things, which you can find at www.hownot2.com
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6 Responses to Two HUGE mistakes made by negotiators

  1. Tony Combellack says:

    Hi Mike,

    I disagree too, and since you learned from me I’m not accepting that you diss your wonderful mentors!
    I think the example quoted is a simple haggle over price as witnessed in the souks along the length and breadth of this land. ( or am I thinking of somewhere else?)
    Covey’s principles work, but let’s be clear for Guy- Covey did not invent these principles, just packaged them neatly and then exhorted people to share them with all they come into contact with.
    Ok and I’m not moving either!! 🙂

    Like

  2. Pingback: Two HUGE mistakes made by negotiators | The Extra MILE Community Blog

  3. These principles seem to apply to all sorts of negotiations, not only big business. Good food for thought.

    Like

  4. Guy Arnold says:

    Sorry Mike : I can’t agree (after all I’m a licensed Covey associate!).

    Win/.win is all about LONG TERM

    ‘Aggressive opening bid’ is all about short term or ‘one-off’.

    And, by the way, the Estate agent should have been listening and understanding first! Any house can sell at different prices, but there are other factors that need dealing with (it’s NOT just about money): like personal circumstances and speed of sale.

    The research you quote seems to me to be very short sighted and very shallow. (After all, we can all find ways of proving anything!)

    Also ‘controlled disclosure’ only works when you know what the OTHER person is interested in (if I’m a Man U fan, then it’s probably not helpful to disclose this to a Man C supporter for example!)

    Covey’s rule stands: as it’s foundational, principle drive bloody obvious common sense!

    Like

    • Hi Guy

      Might have known I could rely on you for a comment on this one! Your loyalty to Covey principles is admirable. I agree that that the aggressive opening bid approach might lead towards more Win/Lose outcomes, in which case perhaps it’s a case of selecting the right one for the right outcome.

      I don’t discard the research outright, as I don’t know enough about how it was conducted. If we discard all research because it can all be used to prove anything, we would never do research, which might inhibit progress somewhat! It seems to me to be enough to raise the question of which is the right approach, and that there is indeed more than one way to go about these things. If the article helped people to see that, it did its job, I think.

      Thanks for disagreeing, I really do welcome another perspective.

      Like

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