Post No.: 0501
So your power in a negotiation comes from the strength of your BATNA(s) (‘best alternative to a negotiated agreement’) and the added value you bring to the table relative to others – therefore don’t be shy in stating that you have good alternative options and bring added value. We can underestimate how much power we have and overestimate how much the other party has because we’re generally harsher on ourselves than on others – so recognise your power to make things happen. And if you can also do some practice negotiations under a bit of stress then even better. Woof!
Don’t worry too much if progress during a negotiation seems to be slow because most concessions tend to only get given as the negotiation reaches its deadline – well strategically, why stick or twist before you’ve gathered as much information as you possibly can first? And remember that deadlines that aren’t externally imposed are themselves negotiable too, so even if a deadline seems to have passed and there’s still a stalemate, who says that it’s over if the parties concerned all want to agree that the deadline should be extended? Even when it all seems ‘too late’, you can still ask questions to learn where it went wrong, and ultimately see how you and they can make things right.
So never get angry or leave the table – see breakdowns in talks as opportunities; see exits as entrances to elsewhere. It’s not really over! Even if a negotiation succeeds – again, it’s not really over because you can still try for a ‘post-settlement settlement’ to improve the result. (This is one example amongst many of how real life isn’t like in sports!) If a deal falls apart then don’t walk away exasperated or sour the relationship because the deal could still be revived. Or if a deal doesn’t happen quickly enough for you and then falls through then try to get something else out of it (e.g. the right of first refusal if and when they’re ready to strike a deal in the future) in return for all the furry work you’ve put into trying to make a deal with them.
But do note that having deadlines is useful – a lot of things will be put off indefinitely without deadlines! Sometimes people want to be the last to show their cards so without deadlines no one will ever show their cards. But any deadlines cannot be arbitrary – they must be anchored on some reasoning, even if flimsy. So understand that deadlines are necessary, yet most deadlines can be extended.
Concerning information – things begin before we realise and end beyond when we think it’s over. A negotiation doesn’t just start and end at the table – you can and should do a lot of research on the web, by talking to their people, and by walking around their organisation, for instance. Listening is naturally crucial (e.g. you may notice some hints).
Don’t assume – enquire and follow up on things. Ask general questions as well as specific ones because you might uncover things indirectly. The more information you can get out of them through friendly conversations, the more you can look for ways to expand the pie (e.g. regarding a property sale, if you know they’re moving from a kennel with a garden to a pod in the city then you might offer to take their lawnmower too because they won’t need it).
And it’s not just about getting information but giving some too – you want to set the right expectation level for the other side before you reach the table because satisfaction relates to the distance and direction between one’s expectations and the perceived outcome. Information surrendered before one reaches the formal bargaining stage often seems more credible too (e.g. stating that you’re not that flushed with cash), especially if it seems off-the-record and given to someone who won’t be at the table (but they’ll pass it onto someone who will).
Even after the deadline (which is seldom really a hard deadline), there can be further deals done because most real-world relationships tend to be ongoing rather than one-shot so you’ll want this relationship to remain cordial and they’ll still be reading information from and about you, and you from and about them. In cases of information asymmetries despite your best efforts to find a key piece of information – don’t accept their first offer and maybe say that you must confer with your partner, lawyer, boss, accountant, bank or whoever first. A limited authority gives you a backup position (and car salespeople understand this when they apparently must ‘speak to their manager first’). This also buys you time to think about things, which is good because you don’t want to make big decisions under time pressure; and they might twist if they’re under time pressure instead.
In most real-life negotiations, each party has some hidden information to which the other side is not privy. This makes it difficult to work out the maximum size that the pie can be, yet each side is hoping that hidden information can work to give their side the advantage to overall seize a larger absolute piece of whatever sized pie is created, regardless of what the other side may get. Nevertheless, sharing and revealing at least some information is important to work out the size of the opportunity and to facilitate the possibility of an agreement. So you’ll have to prepare and think about what information to ask for and what information to reveal.
If you don’t know what price to pay for something and the seller knows a lot more than you then it can be insulting to the seller to go too low, and dangerous for you to go too high – so instead of randomly blurting out an offer price, keep silent about any number and go elsewhere to do some research first. Figure out who has the information you need, work out what it is that you have that they want, then trade that to extract that information you need from them to get the right price.
If they don’t ask a specific question then you, generally speaking, don’t have a legal duty to provide any answer to it at all. So don’t reveal any more than you need to (such as that you’re desperate for a deal or anything else that puts you in a weaker position – information that doesn’t put you in a weaker position is fine though). But if they ask a question then you must not lie if you do give an answer. White lies are a grey area, but even here it’s safer to tell the truth. Your credibility can sometimes increase if you reveal information that doesn’t help your case.
Buyers are often curious as to why you’re selling something so it can help to openly explain this to them, as long as it doesn’t weaken your position (e.g. it’s because you want to go travelling abroad and won’t need the car anymore, rather than the car’s engine might need lots of work soon). Give them something that satisfies them. Refusing to give an answer may raise suspicions, whilst lying may backfire (e.g. saying you’re retiring from a particular job when you’d really like the possibility of getting this job again when you come back from your holiday).
As a buyer, reasons for asking questions like what the other party intends to spend the money on might not elicit good reasons to get you to increase your offer, but do care to understand their plans so that you can possibly figure out ways to enhance the deal for them without needing to offer them more cash. You should ultimately care about the other side’s objectives and motivations for a deal because helping them to make a deal will logically mean helping you to get a deal. So you should care about joint problem solving – solving their problems will help you to solve yours, which is to strike a deal.
Don’t lie because if you’re caught then that’ll likely scupper your chance of getting any deal at all, and don’t lie because most negotiations aren’t really one-off interactions – not just with the present party but your reputation as a liar may spread via word-of-mouth to other parties in the industry too!
If you over-inflate your BATNA and this value is beyond what the present party is willing to offer you, then they could just logically state that you’d be stupid not to snap up that other offer and they’ll feel like there’s no reason whatsoever to continue trying to negotiate with you anymore. You’d have no credible way of explaining why you’d consider a worse offer from them rather than take up your amazing but falsified BATNA from elsewhere!
If a lie is something you’ll be asked to prove then you’ll not be able to provide this proof (e.g. if you claim that your previous salary was x but you cannot provide a payslip to show your new employer). And if you later admit to your lie then this party will find it hard to trust anything else you’ve said or will say in the future. So lying can seriously backfire. And digging yourself a bigger hole by appending lies to cover up other lies further increases the risk to your reputation, as well as the legal risk.
If you do find yourself backfired by your own lie then own up, apologise and learn to not do it again. The most impressive apologies are those for things that one wouldn’t likely have been caught with, and the least impressive ones are those for things that one couldn’t or wouldn’t likely have gotten away with anyway – but an apology (preferably face-to-face) is better than no apology at all.
Rather than lie – if you want more from the other party then maybe ask if there’s anything you can do or offer for them as extra too (e.g. you could offer to take on more job responsibilities). Or maybe apply a little bit of time pressure (e.g. you will sign right now if they increase their offer by a certain amount).
If you suspect the other party is lying about their BATNA then query why they bothered to come see you? There could be truthful reasons. Perhaps your terms are more favourable even though your price isn’t, or your after-sales service and other non-monetary benefits are better? (If so, highlight these to them.)
When people say, “To be honest” or, “Honestly” – they’re probably about to lie, or they’ve been lying during all the other times(!) When they say, “That’s a great question” – they might be thinking that all the other questions you’ve asked so far haven’t been great. When lots of money is at stake, them saying, “We haven’t much time to negotiate this so here’s all our cards on the table right now” – is highly likely a load of baloney. The same when people say, “I’ll get fired for this but…”
If you don’t want to be lied to then don’t ask questions where you cannot easily verify the answers and where they have an incentive to lie (e.g. don’t bother asking what their BATNA is). Ask better questions like do they prefer y or z?
It’s far easier for the other person to lie to you when you’re not looking at them. Detecting fleeting micro-expressions, such as ‘duping delight’, is already difficult in most real-life situations – so don’t make it easier for the other party to lie. Always look at the other person and make eye contact.
Still, since it’s very difficult to detect lies in real time, the better strategy is to concentrate on forming long-term relationships because parties are less inclined to lie if they feel that the relationship is less ‘screw them over then scarper’. You generally want to be a ‘collaborator’ (read Post No.: 0442 for more about different negotiation styles).