THE ART OF NEGOTIATION
Professor John Barkai
William S. Richardson Richardson School of Law University University of Hawaii at Manoa 2515 Dole Street · Honolulu, Hawaii Haw aii 96822 Phone (808) 956-6546 · Fax (808) 956-5569 E-mail:
[email protected] Web Page: www2.hawaii.edu/~barkai
DISCOURAGE LITIGATION "Discourage litigation. Persuade your neighbors to compromise whenever whenever you can. Point out to them how the nominal winner is often a real loser: in fees, expenses and waste of time. As a peacemaker the lawyer has a superior opportunity opportunity of being a good man. There will still be business enough." - Abraham Lincoln HAWAII HAWAII REVISED STATUTES HRS H RS 605-7 Control of action; power to settle. se ttle. The practitioners licensed by the supreme court shall have control to judgment and execution, of all suits and defenses confided to them; them; provided that no practioner p ractioner shall have power to compromise, arbitrate, or settle such matters confided to the practitioner, unless upon special authority in writing from the practitioner's client.
HAWAII HAWAII RULE OF EVIDENCE, RULE 408 Rule 408 Compromise, offers to compromise, and mediation proceedings. Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable v aluable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, or (3) mediation or attempts to mediate a claim which was disputed, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations or mediation proceedings is likewise not admissible. This rule does not n ot require the exclusion of any evidence ev idence otherwise other wise discoverable merely mere ly because because itit is is presented in the course of compromise negotiations or mediation proceedings. This rule also does not n ot require exclusion when the evidence is offered for another purpose , such as proving bias or prejudice of a witness, negativing a contention con tention of undue delay, delay, or proving proving an effort to obstruct a criminal investigation or prosecution. RULE 409.5 ADMISSIBILITY OF EXPRESSIONS OF SYMPATHY AND CONDOLENCE. Evidence of statements or gestures that express sympathy, commiseration, or condolence concerning the consequences of an event in which the declarant was a participant is not admissible to prove liability for any claim claim growing out of the event. This rule does not require req uire the exclusion of an apology or other o ther statement that acknowledges or implies fault even though contained in, or part of, any statement or gesture excludable under this rule. HAWAII RULES OF PROFESSIONAL CONDUCT, RULE 2.1 In representing a client, c lient, a lawyer lawyer shall exercise independent indepen dent professional judgment and render candid cand id advice. In rendering advice, a lawyer lawyer may refer not only to law but to other considerations such as moral, economic, social and political factors, that may be relevant to the client's situation. In a matter matter involving or expected to involve litigation, litigation, a lawyer should advise a client of alternative forms of dispute resolution which might reasonably be pursued to attempt to resolve the legal disputer or to reach the legal objective sought.
Professor John Barkai
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QUOTATIONS ABOUT CONFLICT AND DISPUTE RESOLUTION CONFLICT IS LIKE WATER: Too much causes damage to people and property. Too little creates a dry, barren landscape devoid of life and color. - Cathy Costantino & Christina Sickles Merchant All polishing is achieved by friction. - Mary Parker Follett Conflict is inevitable. inevitable. Accept it as a given. Conflicts settle in time. If it doesn't make sense, you probably don't have all the facts. Find ways to express differences without provoking contention. Truth is found usually in the middle. We should learn from the mistakes of others. We don't have time to make them all ourselves. - Groucho Marx Anger is one letter short of danger.
- Anonymous
If you are patient in one moment of anger, you will escape a hundred days of sorrow. - Chinese Proverb It is often better not to see an insult than to avenge it.
- Seneca
Your most effective negotiation tool is a good question. Have a good sense of your our priorities and be willing to accept that other people order their priorities differently. That's why they make shirts in different different colors. Negoti Negotiati ating ng contra contracts cts is like like play playin ing g poker poker - you you gambl gamble. e. - Leo Reed, Teamsters' Negotiator on the Baywatch negotiation. "Discourage litigation. Persuade Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is is often a real loser: in in fees, expenses expe nses and waste of time. As a peacemaker the lawyer has a superior opportunity of being a good person. - Abe Lincoln What's mine is mine, what's yours is negotiable. Never Never negot negotia iate te with with strang strangers ers..
Professor John Barkai
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We are not in charge of what happens in the world; we are in charge of how we respond to what happens. It's always like this kid. Two guys make a deal. They always know something, the other guy doesn't. -From L.A. Times, by Stuart Woods It is a luxury to be understood. unders tood.
- Ralph Waldo Emerson
A closed mouth gathers no feet. You can't reason someone out of something they weren't reasoned into.
- Jonathan Swift
I personally think we developed language because of our deep inner need to complain. - Jane Wagner and Lily Tomlin There's not a lot of traffic on the extra mile. Anyone who doesn't think there are two sides to an argument is probably in one. - Sam Horn, Tongue Fu. I never saw an instance of one or two disputants convincing the other by argument. - Thomas Jefferson Tact is the art of making a point without making an enemy. Patience is never more important than when you're on the verge of losing it. It is better to swallow words than to have to eat them later. To speak ill of others is a dishonest way of praising ourselves. I have never been hurt by anything I didn't say. The greatest greates t remedy for anger is delay.
- Franklin D. Roosevelt - Will Durant - Calvin Coolidge - Seneca
Our task is not to fix the blame for the past, but to fix the course for the future. - John F. Kennedy The only way to get the best of an argument argume nt is to avoid it. Sticks and stone can break my bones, but words can break my heart. You can't build a relationship with a hammer. Of course I'm yelling. yelling. That's because becaus e I'm wrong.
Professor John Barkai
- Dale Carnegie - Robert Fulghum - Anonymous - Leslie Charles
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Nothi Nothing ng is a waste waste of time time if you use the the expe experi rienc encee wisel wisely y. A man convinced against his will is of the same opinion still. We don't see things as they are, we see things as we are.
- Augus Auguste te Rodin Rodin - Anonymous - Anais Nin
If the only tool you have is a hammer, you tend to see every problem as a nail. - Abraham Maslow Most anger is a cry for attention. Conversation in the United States is a competitive exercise in which the first person to draw a breath is considered the listener. - Nathan Miller If you are not listening, you are not learning. If you want to lift yourself up, lift up someone else. The hardest thing to learn in life is which bridge to cross and which to burn.
Professor John Barkai
- Lyndon Baines Johnson - Booker T. Washington - David Russell Russe ll
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CLASSIC NEGOTIATION STRATEGY & TACTICS INITIAL INITIAL OFFERS - OPENING DEMANDS Perceptions: Percep tions:
Many of the tactical moves in in positional positional negotiation revolve around shaping the perceived bargaini bargaining ng range. range. Opening demands demand s are particularly part icularly significant significant because they are the first actions which begin to influence the percep percepti tion onss of of the the barg bargai aini ning ng range. range.
Basic Rule:
The general advice about the first offer is to be extreme within within reason. The higher you start, the higher you are likely to end up.
Kissinger:
Henry Kissinger said, "If the final agreement agreeme nt will be between the two starting points, there is no point being being moderate. Be far more extreme extr eme than what you are willing willing to accept. The more outrageous your first offer, offer, the more likely that what you 'really' want looks like a compromise."
Why High?:
Why should you you start high? The experimental evidence evidence suggests that once two offers are on on the table, the best best predi predicti ction on of the the final final contra contract ct is the the mid-po mid-poin intt betwee between n the the bids, bids, provi provided ded that that the the mid-po mid-poin intt is with within in the bargaining range.
Risks of opening demands: 1)
Low Demand: If the opening demand is too low, you lose the possibility of a more favorable settlement.
2)
High Demand: If the opening demand is is too high, you may make your opponent mad. The other side will walk away even though there is was plenty of room between the bottom lines to reach an agreement.
Should you make the first offer? YES:
The first first offer is the starting point for setting the bargaining range.
NO:
Maybe Maybe the the oth other er side side wil willl misj misjudge udge the the nego negoti tiati ating ng situa situati tion on and thei theirr fir first st offe offerr will will be low. low.
How will you respond to the opening offer?
Professor John Barkai
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GETTING PAST NO Basic Principles from the book by William Ury Whether you are negotiating with a hostage-taker, your boss, boss, or your teenager, the basic principles remain the same. In summary, the five steps of what the author calls "breakthrough "breakthrough negotiation" are: are: 1.
behavior. When your opponent says says no or G o t o t h e B a l c o n y . The first step is to control your own behavior.
launches an attack, you may be stunned stunned into giving givi ng in or counterattacking. So, suspend suspend your reaction by naming the game. Then buy yourself time to think. think. Use the time to figure out your interests and your BATNA. Throughout the negotiation, keep your eyes on the prize. Instead of getting mad or getting even, focus on getting what you want. In short, go to the balcony. balcony. 2.
S t e p t o T h e i r S i d e . Before you can negotiate, you must create a favorable climate. You need to defuse
your opponent's opponent's anger, anger, fear, and suspicions. suspicions. He expects you to attack attack or to resist. resist. So do the opposite: Listen to him, acknowledge his point, and agree with with him wherever you can. Acknowledge his authority authority and competence, too. Disarm him by stepping to his side. 3.
Don 't Reject . . . Reframe. The next step is to change change the game. Instead of of rejecting your opponent's opponent's
position--which usually usually only reinforces it--direct his attention to the problem of meeting each side's side's interests. interests. Take whatever he says and and reframe it as an attempt to deal with the problem. Ask problem-solving questions, such as "Why is it i t that you want that?" or "What would you do if you were in my shoes?" or "What if we were to . . . ?" Rather than trying to teach him yourself, let the problem be his teacher. Reframe his tactics, too: Go around stone stone walls, deflect attacks, and and expose tricks. tricks. To change the game, game, change the frame. 4 . B u i l d T h e m a G o l d e n B r i d g e . At last you're ready ready to negotiate. negotiate. Your opponent, opponent, however, however, may stall, not yet
convinced of the benefits of agreement. You may be tempted to push push and insist, but but this will probably lead him to harden and resist. resist. Instead, do the the opposite--draw him in the direction you would like him to go. Think of yourself as a mediator. Involve Involv e him in the process, process, incorporating his ideas. Try to identify and satisfy satisfy his unmet interests, interests, particularly his basic basic human needs. needs. Help him save face and make the outcome appear appear as a victory for him. Go slow to go fast. In sum, make it easy for him to say yes by building him a golden bridge. 5. Bring Them to Their Senses, Not Their Knees . If your opponent still still resists and thinks he can win without without negotiating, you must must educate him him to the contrary. You must make it hard form him to say no. You could use use threats and force, but these these often backfire; if you push him into a corner, he will likely lash out, throwing even more resources into the fight against you. Instead, educate educate him about the the costs of not agreeing. Ask reality-testing questions, questions, warn rather than threaten, threaten, and demonstrate your BATNA. BATNA. Use it only if necessary and minimize his resistance by exercising exercising restraint and reassuring reassuring him that your goal is mutual satisfaction, not v ictory. Make sure he knows the golden bridge is always open. In short, use power to bring him to his senses, not his knees. The breakthrough strategy requires you to resist normal human temptations and do the opposite of what you usually feel like doing. doi ng. It requires you to suspend suspend your reaction when when you feel like li ke striking back, to listen when you feel like li ke talking back, to ask questions when you feel like telling your opponent the answers, answers, to bridge your differences when you feel like li ke pushing for your way, and to educate when you feel l ike escalating. At every turn the strategy calls on you to choose choose the path of indirection. You break through through by going around around your opponent's resistance, resistance, approaching him from the side, acting contrary to his expectations. The theme throughout the strategy is to treat your opponent with respect--not as an object to be pushed, but as a person to be persuaded. persuaded. Rather than trying to change his mind by direct pressure, pressure, you change the environment in which he makes decisions. decisions. You let him draw his own own conclusions and make his own own choice. Your goal is not to win over him but to win him over.
Professor John Barkai
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Basic Principles from “The Power of a Positive No” by William Ury (Summarized by Geoffery Lee) The Positive No exercises your pow er to protect interests interests while while also tending to relationships relationships . The Positive No replaces the three common approaches to the power-versus-relationship dilemma: accommodation (loss of power), attack (loss of relationship), and avoidance (loss of interest). The Positive No avoids the pitfalls of the three A's by engaging the other in a constructive and respectful confrontation. The Positive No is a “Yes! No. Yes?” Saying No means, first, saying “Yes!” to your interests; followed by a matter matter -of-fact of-fact “No.” that sets a clear limit; ending with “Yes?” that invites the other to reach an agreement agreeme nt that respects the other's needs. Stage One – One – Prepare Prepare 1. Uncover your Yes! -- Base “no” on what you are for, not what you are against. 1. Stop: go to the balcony: The first step step is to control your own behavior. There is no chance to influence influence the other unless you are able to control your own natural reactions and emotions. 2. Use the time out to uncover your underlying underlying interests , needs and values. Reach down to your core to discover what really matters and what your true priorities are, distilling distilling that into a single positive intention. 3. The most powerful intentions intentions are positive. Transform negative emotion into positive intention, clarifying what your really want to do in the situation. 2. Empower your No. -- To be prepared is half the the victory. victory. 1. Develop a Plan B: a practical strategy strategy that will will address core interests independently of the other's cooperation and respect: similar to BATNA. Brainstorm a variety of plan B's. Prepare to: “ do it yourself ,” ,” “exit ,” ,” “look to third parties who share interests interests.” 2. If your alternatives are extremely unattractive unattractive brainstorm brainstorm again, check your your options, and check the facts. Carefully prepare to gain the confidence to negotiate effectively. 3. Anticipate the other's power moves. -- What can they do to compel you, what can you do to stand your ground? Take away their threat by changing the situation. Don't let anxiety and fear magnify potential consequences. 4. Reassess your your No. -- Do you have interests interests in saying no? Do you have the power? Do you you have the right? 3. Respect your way to Yes. -- Give positive positive attention to others. Act with respect no matter what. Listen attentively and acknowledge the other, letting them know you value them. Stage Two – Two – Delivery Delivery – – Affirmation Affirmation (Yes!) Establish a Limit (No.) Proposal (Yes?) 1. Express your Yes! -- Affirm your intention and explain why: by using “The” statements to set out the facts, “ I ” statements to explain interests, and “We” statements to invoke shared interests and standards. 2. Assert your No. -- Let your your No be simple and straightforward , flowing from your Yes!, flowing from a commitment to a future course of action, flowing from respect. No is a selection principle that allows you to be who you are. 3. Propose a Yes? -- As you close one door, open another. Your proposal should should clarify and strengthen your position, while respecting the interests of the other positively. Stage Three – Three – Follow-through Follow-through 1. Stay true to your Yes. – Yes. – If If there is disagreement Don't Yield Don't Attack . Go to the Balcony. Listen respectfully and empathize without sympathizing. Paraphrase. Use: Use: “Oh” to acknowledge their point neutrally. “ So” to let the other run through tactics and tricks. “No” repeat no. 2. Underscore your No. – No. – Emphasize Emphasize patiently and persistently that No means no. Repeat the No and employ an questions. Plan B if they refuse to respect your needs, anchor phrase. Educate the other with reality-testing questions. withdraw cooperation and implement plan with respect. 3. Negotiate to Yes. – Yes. – Build Build a Golden Bridge. Facilitate a wise agreement by not compromising essentials and helping the other address unmet interests. The other should not see the negotiation as a loss but rather as a satisfactory ongoing agreement. Help them save face. Help the other win approval from those the other represents. Use the “acceptance speech test ” to find the persuasive persuasive arguments, themes, and criticisms for the other's constituency. Cultivate a healthy relationship . Continue to respect them. Pay more attention to the relationship, rebuild confidence, and replenish your good will account. End on a positive note.
Professor John Barkai
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Strategies for Integrative Bargaining Facts: A married couple are trying to decide where where to spend their two-week vacation. He wants to go to the mountains; she wants to go to the seashore. 1.
Expanding the Pie. Increasing the resources to be bargained for. If the resources can be increased increased then perhaps both sides can get what they want. Example: Get four weeks vacation and spend two at the mountains and two at the seashore.
2.
Nonspecific Compensation. One side gets their objectives and the other side is paid off for accommodating the other's interests. Example: W tells H that if he goes to the seashore, se ashore, she will will buy him a new set of golf clubs.
3.
Logrolling. If two or more issues are in disputes, the negotiators may be able to do a series of trade-offs. One side gets their top priority priority on the first first issue and the other side gets their top priority on the second issue. Example: H wanted wanted an inexpensive cabin; W wanted a luxury luxury hotel. If W prefers quality of accommodations to the place, a luxury hotel in the mountains might meet both their needs.
4.
Cost Cutting. One side gets their objectives and the other's sides costs are reduced by going along with the first side. Example: H likes a quiet, peaceful vacation; W likes the beach because of all the activity. activity. An inexpensive place on a isolated beach may fit the needs of both.
5.
Bridging. The parties are able to invent new options that meet each side's needs and interests. Example: H really wants to hunt and fish; W want to swim, swim, shop, and enjoy e njoy the nightlife. Maybe they can find find a resort that has all of these. these.
Professor John Barkai
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POWER - RIGHTS - INTERESTS THREE WAYS W AYS TO RESOLVE DISPUTES: POWER: Determine who has more power. Examples: Competitive negotiations & strikes. RIGHTS: Determine who is right. Examples: Go to court or arbitration. INTERESTS: Reconcile underlying interests of both parties. p arties. Examples: Interest-based negotiations or mediation.
New ideas about resolving conflicts: Focusing on INTERESTS INTERESTS is better than focusing on RIGHT R IGHTS, S, and, Focusing on RIGHTS is better than focusing on POWER.
The goal is to encourage people to resolve their differences by reconciling their interests, and if that is not possible, then to use low-cost methods to determine rights. The recent "win-win" negotiation advice suggests replacing traditional "hard bargaining" over rigid positions, in which which the focus is on o n power, with problem-solving negotiation, in which the focus is on creatively reconciling interests. New alternative dispute resolution (ADR) methods are aimed at replacing rights-based procedures (such as litigation) with interests-based procedures (such as win-win negotiation and problem-solving).
Professor John Barkai
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PLANNING PLANNING & PREPARATION PREPARATION FOR NEGOTIATIONS Most people prepare for a negotiation by trying to decide what what their "bottom line" line" is. Their bottom-line is the worst agreement agreement they they would would accept. They then decide how much above their bottom line they will ask for f or when they make make their first offer. They may also determine determine a "fall back" position for their first concession, but that is about the extent of their planning. A great improvement improvement can be made made in negotiating planning by systematically considering factors that apply to virtually every every negotiation. negotiation. Both you you and the opposing opposing side should should be analyzed. analyzed. The "5 Planning Factors" should should be considered considered in every every negotiation. negotiation. A planning chart can be used to help you in the planning. Before and during the negotiations, you should ask yourself the following f ollowing questions: What do I know? What don't I know yet? How am I going to find out the information I need?
Professor John Barkai
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5 FACTORS FOR PLANNING 1) PEOPLE What are the past histories and present feelings of the people involved in this negotiation? What Wha t are their goals and objectives? Who is more powerful and what is is the source of that power? What Wha t influences influences can they bring to bear on this negotiation? What Wha t do you know about their negotiating negotiating style? style?
2) RELATIONSHIP RELATIONSHIP Do the negotiators or their their constituents have any history history together? What Wha t was was that prior relationship like? like? How are they getting getting along now during the negotiation? Do they they have a good relationship? Is it strained? Have they just met for the first first time? Will the parties have a continuing relationship or will will this be a "one-shot" negotiation? Even if the parties are not likely likely to work work together in the future, will reputations be made in this negotiation that will follow follow the negotiators in the community?
3) ISSUES The issues involved involved in the negotiation are the topics topics to be negotiated. They are also the questions and concerns that each party raises during the negotiation. negotiation. It is usually very helpful to frame the issues as questions to be answered rather than statements that are made.
4) POSITIONS The positions in the negotiation are the solutions that each person has in mind. Positions are the "What" "Wha t" that the the negotiators want. Many different different positions are considered during a negotiation including, the opening position (demand), a fall back position, a bottom line, and a BATNA (Best Alternative To A Negotiated Agreement).
5) INTERESTS INTERESTS Interests are the basic needs that negotiators seek to be met in any agreement. If you know the interests, you know "why" "why" the negotiators take the positions they do during the negotiations. Maslow's Maslow's hierarchy of needs is helpful here.
Professor John Barkai
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NEGOTIATION PLANNING CHART (Fill in the blocks with information you know.)
PEOPLE Who:
RELATIONSHIP Past:
ISSUES 1.
POSITIONS When to disclose?
INTERESTS
OPTIONS
1.
1.
2.
2.
3.
3.
4.
4.
Initial: 2. Current: First Fallback: US Negotiation Styles:
3. Bottomline: 4.
BATNA: 5. Desired: Ways to improve: Who:
Past:
1.
Estimated Initial:
Negotiation Styles:
Current:
2.
Estimated Bottomline:
Estimated:
7. Disclosed:
THEM 3.
Desired:
Professor John Barkai
6.
Estimated BATNA:
4.
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TIPS FOR NEGOTIATING WITH A COMPETITIVE NEGOTIATOR Flinch. Take time out. Remember your your BATNA! Get another opinion. Ask "how" they will negotiate. negotiate. If they don't know what "win-win" means, they won't be negotiating that way. Avoid multiple multiple concessions concessions if your concessions are not matched by their concessions. Recognize Recognize "dirty " dirty tricks" and comment on them immediately.
Professor John Barkai
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TO IMPROVE YOUR NEGOTIATIONS: Think in terms of interests Classify the type of negotiation: Deal or Dispute Distributional or Integrative Expand the pie Use a planning chart Investigate the opposing negotiator Consider both strategy and tactics Set high goals for yourself Practice before you negotiate Determine your BATNA Ask lots of questions Separate the people from the problem Generate alternatives by brainstorming Frame your proposals as a gain to them Flinch when you hear a high demand Protect your facts when necessary Be willing to make concessions, but only if they do too
Professor John Barkai
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EIGHTEEN RULES OF NEGOTIATION 1.
Assume that everything is negotiable.
2.
Have high aspirations.
3.
Never accept the first offer.
4.
Deal from strength if you can, but create the appearance appea rance of strength, regardless.
5.
Put what you have agreed on in writing. writing.
6.
Recognize that the other party is probably holding back valuable information.
7.
Flinch to create doubt in the counterpart's mind mind and to add value to a concession.
8.
Find out what your counterpart wants. Don't assume that their wants are the same as yours.
9.
Concede slowly and call a concession a concession.
10.
Keep your counterpart in the dark about your strategy and your stake in in the deal.
11.
Try to get your counterpart to to lower lower to lower his/her level of aspiration. aspiration.
12.
Ask questions questions ifif you do not understand what is going on. Do not let your counterpart deliberately confuse you.
13.
Answer a question with with a question to avoid giving away information needlessly.
14.
Invoke the higher authority to buy more time.
15.
Information is power - get as much as possible.
16.
Verify anything you you are told told that you do not know to be a fact.
17.
Be cooperative and friendly. Avoid abrasiveness, abrasivene ss, which often breaks down negotiations.
18.
Use the the power of competition. Remember that power can be real or imaginary. imaginary.
- from It's Negotiable, by Peter Stark (1994)
Professor John Barkai
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NEGOTIATIONS: STRATEGIES & TACTICS A Film
Brainstorming Brainstormin g
Preliminary meeting to discuss a wide range of ideas & to discuss strategies and tactics. List ideas without evaluating them.
Blanketing
Ask for everything at once.
Bracketing
Narrow opponent down to determine what they really will take.
Intimidation
Dominating. Playing Playing top dog.
Undermining
Put opponent on the defensive. defensive. (Dig underneath) underneath)
Surprise
Change in approach. Show you have information informat ion the other side does not expect. Present new proposals or demands. Emotional outburst.
Feinting
Pretending. Lying. A false show to catch the opponent off guard. Give the impression you want one thing when you really want another.
Salami
Taking something bit-by-bit bit-b y-bit (one slice at a time) rather than the whole thing. A small concession asked for at the end of a negotiation is called a "nibble."
Forbearance
To postpone for a period of time. Take time out. "Let's take a break."
Deadline
Knowing your opponent's time limit allows you to put pressure on them. Set a time limit. Push your opponent to make a decision by a certain time limit.
Good Guy, Bad Guy
One person acts tough, a second person acts nice - hoping to induce a concession.
Limited Authority
Claim of not enough authority to be able to approve the deal on the terms presented.
Fait Accompli
An accomplished fact. The thing is already done so argument is useless.
Silence
By using silence, you hope the other side will speak (to their disadvantage).
Apparent Withdrawal
Make opponent think you are unwilling to discuss the issue further. The goal is to get them to reduce or give up their demand.
Reversal
Speaking from the viewpoint of your opponent and incorporating their interests, you make it sound like your opponent has gotten a good deal from you. Also means to act in a different way than expected.
Professor John Barkai
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NEGOTIATING TACTICS Professor John Barkai University of Hawaii Law School AGGRESSIVENESS AGGRESSIVENESS ANCHOR ANGER (Real or Fake) APPARENT WITHDRAWAL BACKTRACKING OR UNRAVELING BLAMING or FAULT-FINDING BLAND WITHDRAWAL BOULWAREISM (Take-it-or-leave-it) DEADLINES DEADLOCK AND CONCEDE DRAFTING THE AGREEMENT DRAFTSMAN OR SINGLE NEGOTIATING TEXT DUMB IS SMART AND SMART IS DUMB ESCALATION EXPLAIN OFFERS AS GAINS EXPOSE THE JUGULAR FAIT ACCOMPLI FALSE DEMANDS FALSE SCARCITY FEEL, FELT, FOUND FEINTING FIRST OFFER-LARGE DEMAND FLINCH FORBEARANCE GOOD-GUY BAD-GUY HIGHER AUTHORITY HOT POTATO INDUCED COMPETITIVENESS INSCRUTABILITY LIMITS LINKAGE LOW BALLING BALLING MISLEADING CONCESSION PATTERN NIBBLE
Professor John Barkai
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PARTICIPATION AND ASSOCIATION ASSOC IATION PERSISTENCE PLAYING TO FEARS OR ASSUMPTIONS PRECEDENTS “PRECONDITION” DEMANDS PRINCIPLE RED HERRING REINFORCEMENT REINFORCEMENT AND REWARD RELUCTANCE REVERSAL SALAMI (Piecemeal) SOWING DOUBTS; DISMISSALS DISMISSALS OUT-OF-HAND OR PUT-DOWNS PUT-DOW NS SPLITTING THE DIFFERENCE STATUS, AUTHORITY, ASSOCIATION AND CREDENTIALING SURPRISE ULTIMATUM (take it or leave it) WALK AWAY WHIPSAW That) YWHTDBTT (You Will Have To Do Better Than That)
Professor John Barkai
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NEGOTIATING TACTICS Professor John Barkai University of Hawaii Law School PLEASE UNDERSTAND THAT NEGOTIATION TACTICS PROBABLY WORK BEST BETWEEN PEOPLE WHO DO NOT KNOW EACH OTHER WELL AND WHO WILL NOT BE BE WORKING TOGETHER TOGETHER IN IN THE FUTURE. FUTURE. WHEN YOU ARE NEGOTIATING WITH YOUR FAMILY, FRIENDS, CO-WORKERS, AND OTHER OTHER BUSINESS BUSINESS ASSOCIATE ASSOCIATES, S, THINK THINK ABOUT OVERALL NEGOTIATION STRATEGIES AND ABOUT INTERESTS RATHER THAN SIMPLY ABOUT NEGOTIATI N EGOTIATION ON TACTICS. When some people come to a course about negotiations, negotiations, they hope to learn negotiation tactics that will make them a better negotiator. Negotiation tactics tactics are specific negotiation behaviors that are used during negotiations. negotiations. Sometimes tactics are considered the the "tricks" of negotiation. Some tactics are part of the normal, ethical behavior that takes takes place during negotiations. Other tactics are considered to be "dirty tricks." Many of the tactics are not true tactics but are really just personal styles of behavior of p eople who are ar e engaged in conflict. Tricks, however, are not likely to make you you a better negotiator. negotiator. Understanding Understanding the negotiation process is the most critical thing thing to learn about negotiations. Nonetheless, Nonetheless, most people do hope to learn some new tactics at a negotiation course, and hopefully you have learned some new tactics here. But if you are interested interested in more tactics, a whole range of tactics are listed on the following pages. As the tactics are set set forth here, no value judgment is made as to their honesty or usefulness in negotiation.
RESPONDING TO DIRTY TRICKS If "dirty tricks" are used against you, the best response is to openly identify the tactic for your opponent and to question its legitimacy. legitim acy. For example, "You two aren't trying to use the old good-guy bad-g uy ploy on me are you?" Generally, your your opponents will deny trying to use the tactic, but will also stop using it. If you hope to keep the negotiation going, give them some room to back b ack away from the dirty trick gracefully and to save face.
NEGOTIATING TACTICS AGGRESSIVENESS AGGRESSIVENESS Aggressiveness or the lack of it may be an unchangeable unchangeable part of one's one's personality. personality. It might be useful in negotiations to force the other side into concessions concessions or to make m ake errors. As with anger, aggressive aggressive or competitive behavior is likely to provoke a similar response from the opposing negotiator.
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ANCHOR Anchoring is fixing or establishing establishing the focus focus of discussion discussion around a certain point, point, whether it is a figure, a range, or and issue, issue, simply by asserting asserting it. Anchoring plays on the human human tendency to fix attention on, and be influenced by, what someone says.
ANGER (Real or Fake) Anger is a common emotion in many conflicts. conflicts. It shows a serious disagreement with the opposing position and may cause a party to reconsider the reasonableness of their position or to reassess the resistance to that position.
APPARENT WITHDRAWAL The negotiator negotiator appears to have withdrawn from the process and yet still has the negotiation covered through an associate or by other m eans.
BACKTRACKING OR UNRAVELING After a few issues appear appear to be be settled, settled, a negoti negotiator, ator, to to get his way way on a new issue, may threaten to undo the earlier agreements. BLAMING or FAULT-FINDING Blaming or assigning fault is an aggressive aggr essive tactic which may invoke conciliatory behavior, either because of induced guilt feelings or a sensed sensed need to mollify. It may focus negotiation on a substantively irrelevant, but psychologically volatile or conflictual, issue.
BLAND WITHDRAWAL One of the negotiators might leave the negotiation without w ithout showing emotion or giving an explanation. A negotiator might take some action and then then claim that he did not know that he was doing something in a way that the other side would object to.
BOULWAREISM (Take-it-or-leave-it) Lemuel Boulware, former labor negotiator at GE in the 1940s, would do his research and make what he thought was a fair and reasonable offer to the union. There was only one one offer made. Boulware did not not offer any later concessions. concessions. It was "Take "Take it, or leave leave it." This tactic will not work if the other negotiator expects you to make high demands with later concessions. concessions. In labor negotiations, such such a tactic is now considered an unfair labor practice and is illegal.
DEADLINES Set deadlines deadlines when you you want them. them. "I need your your answer by tomorrow at 3 p.m." Ignore deadlines when you do not want them.
DEADLOCK AND CONCEDE Negotiator organizes issues with least important issue first and most important issue second; and a nd then continuing to alternate less important and more important issues. During bargaining, bargaining, she deadlocks on the first issue, but then then concedes. She then also deadlocks on the most important issue, but demands the other side concede since she conceded on the first issue and there has not been a reciprocal concession.
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DRAFTING THE AGREEMENT Once a deal has has been made, it often must be put in writing. The drafter drafter might try to add some unnegotiated terms terms into the document. The drafter can be protected from the other other party slipping something in i n the contract. Either volunteer to do the drafting or be p repared to give the document a very v ery careful reading.
DRAFTSMAN OR SINGLE NEGOTIATING TEXT A party party to negotiation negotiation brings brings to to the table a document document drafted as as a basic basic text to set the agenda. It tends to set the agenda and and focus the parties on a prescribed resolution of issues. A means of taking taking the the initiative in the the negotiations, leaving the other side to work with it, ignore it, offer a counterdocument, or use discipline in dealing with the document. DUMB IS SMART AND SMART IS DUMB You are generally better better off by acting as if you know less than everybody else. else. It defuses the competitive spirit. This is the tactic tactic often used used by the TV TV detective Colombo.
ESCALATION Most negotiations negotiations progress from a set of initial high demands, through a series of concessions, concessions, to a final, lower settlement. settlement. Sometimes a negotiator negotiator will break away from this pattern and actually increase or escalate the demands during the course of the negotiations.
EXPLAIN OFFERS AS GAINS Psychological Psychological research suggests that when people are faced with a small sm all sure gain and a risky, larger potential potential gain, they will generally go for the small, sure gain. However, when faced with a sure small sm all loss and a larger potential loss, people do not want the small loss. They will hold out against the small, sure loss even if they risk a big, potential loss. Therefore, you you should frame your your negotiating proposals as emphasizing emphasizing gains. This research suggests avoiding threats.
EXPOSE THE JUGULAR The loser in a dog fight often rolls over and exposes his neck and soft belly. The winner usually stops the attack. attack. Sometimes a weak opponent can get more by conceding weakness. The more powerful negotiator may not always squeeze squeeze out the last drops of blood, but may give a break to the weaker weaker party. But, this is a big risk!
FAIT ACCOMPLI You present your your opponent with a completed and seemingly unchangeable unchangeable action. Your opponent accepts rather rather than opening up the process again. For example, you can send back a signed contract, but one in which you have have made changes. You send a signed signed check, but for less money than what they other side wanted.
FALSE DEMANDS False demands are similar to making large demands. False demands are extra extra issues that the negotiator added to the initial demand so that they can be traded away as concessions. concessions. Both false and large demands help to disguise the the true bottom line and interests of the negotiator.
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FALSE SCARCITY Psychologically Psychologically when faced with a limited commodity, or the commodity comm odity becomes scarce or restricted, people react by wanting more of it than when it was more available. Negotiators use this psychology be suggesting that the opportunities opportunities are quite limited. lim ited.
FEEL, FELT, FOUND Agree with them until until you can can get them them to agree with you. you. There are three three verbal steps. 1) FEEL: "I understand the way you FEEL." (Acceptance, not challenge.) 2)
FELT: "Other people have FELT exactly the same way." (Their responses are normal.)
3)
FOUND: "However, those people FOUND that ..." (Tell how other people have come com e around.)
FEINTING An apparent move in one one direction is used to divert attention attention from a move in the other direction. You look left, left, and then pass to the right. Mislead them as to your your present intention. You stress stress goals that are unimportant to you and then then give them up for concessions from the other side that are important to you.
FIRST OFFER-LARGE DEMAND States an extreme demand, beyond beyond or at the far margin of the range of credible or reasonable offers. This has the the effect of setting the perceived perceived or apparent bargaining range. Often combined with the the tactic of splitting the difference. difference.
FLINCH React visibly (flinch) when you you first hear the offer. Your nonverbal nonverbal communication (you can add the verbal too) says "That is much too much! "
FORBEARANCE Forbearance calls for delaying, holding off, and stalling rather than giving an immediate response to your your opponent’s requests. If you concede concede too quickly, your your opponent might gain a psychological advantage. advantage. Delaying your your response might cause your your opponents to rethink their positions. Even when you know that you you will reject their offer, if you delay rather than give an immediate "no," you appear to have thoughtfully considered their idea.
GOOD-GUY BAD-GUY The bad-guy works with you first. He leaves the room room and his partner, the good-guy, good-guy, takes over and apologizes for the other other guy's behavior. The good-guy appears to be your friend. He'll make you a good deal. Guess what? They are working together. together.
HIGHER AUTHORITY The negotiator negotiator appears to agree agr ee with your position, but has to report to a higher authority. The higher authority authority is never present, and of course says says "No deal" on those terms. This tactic is very common common when buying a new car. "I'd like to give it to you you at the price we we talked about," says the salesperson, "but the boss said 'no.'" It is helpful to claim you must take the proposal to a higher authority, authority, - your client, boss, partner, spouse, mother, etc.
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HOT POTATO If they hand you a big problem, try to hand it back to them immediately or at least let the stream out the potato.
INDUCED COMPETITIVENESS Induced competitiveness converts what would ordinarily be a two party negotiation into a multi-party negotiation where all the parties interested in a particular good are forced to compete with one another for it. The competition makes the item more desirable and drives up its price. An alternative way of inducing competitiveness is to create an auction for the item. INSCRUTABILITY Inscrutability often often comes from using silence and not offering any reactions. reactions. This is the classic poker player's tactic. tactic. Don't let them them read your cards by reading your face. Actually, Actually, the face often will not leak leak out nonverbal nonverbal reactions. Look to the hands hands and feet feet for the nonverbal leakage.
LIMITS Negotiators can either set and and respect limits or refuse to acknowledge acknowledge them. If the legislative session must end at midnight, the limits lim its can be changed by unplugging the clock.
LINKAGE Linkage attempts to expand the scope sco pe of a negotiation by bringing in issues which, while not clearly related, one can make a plausible case for considering. The effect is to change bargaining bargaining power and leverage, or to change the focus and character of the dispute or the set of gains or opportunities the parties are trying trying to decide. Adding issues or parties parties can change the dynamics of negotiation. LOW BALLING BALLING The negotiator negotiator makes a low offer to attract the other side, but there is no intention of going through with the deal on the terms offered. Later, they will say that there there are "additional" charges charges or that the circumstances have changed. changed. This is a "bait-and-switch" tactic.
MISLEADING CONCESSION PATTERN In theory, a party will make smaller and smaller concessions as bargaining converges on his bottom line. line. Knowing this, negotiators can mislead the other side by using a concession pattern that converges at a point above or below his actual bottom bottom line. The other side, reading the concession pattern, may mistakenly conclude the conceder has reached his bottom line.
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NIBBLE The deal is done, or at least it looked that way. Now one of the negotiators asks for one more small concession. The The concession is so small that the other party often gives in just so not to upset the deal.
PARTICIPATION AND ASSOCIATION ASSOC IATION Get others others to join in on your your side. Tom Sawyer was good at doing doing this. Get important people to work with you. you. It is negotiating negotiating power by careful alliances. alliances.
PERSISTENCE No. No. No. Be persistent persi stent in your resistance. Say "no" until your tongue bleeds. The refusal to move can test the other side’s firm ness and uncover just how much concession room there is.
PLAYING TO FEARS OR ASSUMPTIONS Negotiators can advantageously manipulate the other side’s fears or assumptions. Whenever Whenev er a party discloses in some way that that it has made an assumption favorable to the other side’s bargaining position, the other side can use that knowledge to its advantage. PRECEDENTS As justification for refusing to do what the other other negotiator negotiator wants you you to do, do, you you claim that the desired action action would set a bad precedent for you. "If I do that for you, I will have to do that for everyone. ev eryone.""
“PRECONDITION” “PRECONDITION” DEMANDS Setting a precondition to negotiation is a way of obtaining a concession without giving any in return. Demanding satisfaction of a precondition may not only only gain a concession without cost, it may also reveal how eager the other other side is to secure a deal. The response to this tactic is to be clear you consider the precondition a part of the negotiation, and that you expect a reciprocal r eciprocal concession.
PRINCIPLE Appeals Appeals to principle principle are often highly highly persuasive. persuasive. One good good way to prepare prepare for negotiations is to develop arguments of principle for the positions one takes. RED HERRING A red herring herring is a false, false, yet highly highly distracting, distracting, issue that that a party party can use use to bring pressure pressure to bear on the the other side. It is most useful useful in negotiations where the parties represent outside constituencies that can be manipulated to pressure a recalcitrant party. The false demand tactic is a version of the red herring. REINFORCEMENT REINFORCEMENT AND REWARD
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Treats concessions as rewards for desired concession behavior of the other side. The concession follows the other other side’s concession and is a more than equivalent equivalent concession, the excess being the reward. This produces more concessions and even stimulates concessions to continue even when the negotiator stops making reciprocal concessions. RELUCTANCE Accept their their offers very slowly. If you are are too quick to accept, they will think that they are are giving givi ng you too much. They may even try to back out on you.
REVERSAL You move in the opposite opposite direction. By appearing to go backwards (or sideways) sideways) you are actually moving forwards.
SALAMI (Piecemeal) Do not go for everything at at once. Go for it piecemeal. Take one one slice at a time until you you get the whole salami.
SOWING DOUBTS; DISMISSALS DISMISSALS OUT-OF-HAND OR PUT-DOWNS PUT-DOW NS Sowing doubts about proposals, or curt dismissals of offers, and various other kinds of put-downs put-downs can undermine the other side’s confidence and cause it to make faulty judgments about the relative merits of its bargaining position. SPLITTING THE DIFFERENCE When the parties are stuck at different diff erent positions, one solution solution is to each compromise comprom ise half the difference. difference. With offers at $600 $600 and and $1000, $1000, the compromise would be $800. This technique gives the "appearance" "appearance" of fairness. But is it fair in your your case?
STATUS, AUTHORITY, ASSOCIATION AND CREDENTIALING Negotiations can be influenced when one side is consciously or unconsciously impressed by the status, stature, or authority of the other side, and either defers or makes unwarranted assumptions about the other side’s power, strength, strength, or resolve. Association is a similar tactic using borrowed authority, where negotiators seek legitimization l egitimization by making some claim of important association (such as name-dropping). SURPRISE You make an unexpected unexpected move or present a withheld goal. The other other side has not anticipated your your shift in methods and arguments. Examples are escalation, walk outs, new data, and emotional reactions.
ULTIMATUM (take it or leave it) You claim that this is your last offer. They must take your your offer or the negotiation negotiation is over. Say that that this is your best and last offer. However, in reality, nothing nothing prevents you from making m aking another offer at a later
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time. In2 fact, most negotiations negotiations end when the parties think they they have the best offer they can can get. Settlement is reached when each party believes believ es that they cannot get a better deal w ithout spending more time, money, m oney, and emotional emotional energy than the potential improvement improvem ent over the current situation is worth.
WALK AWAY The classic tactic tactic in third-world markets and is often used here too. If you cannot get the the price you want, walk away from the deal deal and maybe they they will follow you. you. This tactic tactic is a bluff. To work effectively, you have to be able to truly walk away from this deal and seek out your BATNA. BATNA.
WHIPSAW OR “OTHER OFFER” A potential buyer buyer may play the seller off off against another another seller (whipsaw the seller seller with another another source of supply). If the third-party seller seller is real, they represent represent a real BATNA BATNA for the buyer. buyer. This tactic tactic may work well for a weak buyer. Sometimes, however, the buyer buyer simply pretends that a another source source of supply may exist when in fact f act it does not.
YWHTDBTT (You Will Wil l Have To Do Better Than That) If the other side is told "You will have to do better than that," often, they will make you a better offer. Some people claim to not even read the first offer. They just just ask for a better offer, no matter what the first offer was. They assume that the person person who made the offer made an excessive excessive demand.
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WHY NEGOTIATIONS GO WRONG: by Max H. Bazerman
Psychology Psychology Today, Today, v20, p54(5) (June, 1986)
FIVE COMMON MISTAKES IN JUDGMENT DEFEAT OUR EFFORTS TO SOLVE PERSONAL, BUSINESS AND INTERNATIONAL CONFLICTS. ... Failed negotiations may produce anything from minor minor inconveniences inconveniences to nuclear holocaust. In studying why negotiations fail, I have built on what other researchers have learned about decision-making in general, concentrating on the biases that can undermine undermine negotiations. I will describe five common common cognitive cognitive mistakes negotiators make and suggest some strategies for avoiding them. EXPANDING THE FIXED PIE Two sisters have a single orange to share. One wants to make orange juice. The other wants the peel to make a cake. After much discussion, discussion, they agree to a distributive compromise. compromise. They each ea ch take half the orange, orange, and end end up with a very small glass of juice for one sister and a very small cake for the other. In this example, first presented by Mary Follett many years ago, the sisters overlooked an integrative solution to their problem: One sister takes all the juice and the other takes all the peel. This way, each gets exactly what she wants and twice as much as she actually received. Such integrative solutions reconcile the parties' interests interests and and yield a higher higher joint joint benefit benefit than is possibl possiblee throug through h simple simple comprom compromise. ise. Unf Unfor ortu tunat natel ely, y, too too many negotiators have the same "fixed-pie" bias that kept the sisters fighting over the orange: ora nge: They They assum assumee that there is only a fixed amount of profit or gain in what is being negotiated and that in order for them to win something, the other party must necessarily lose it. This is true in some negotiations, of course, but too often we assume it is without trying to think integratively. I believe this comes from our highly competitive competitive society. We experience so many real win-lose win- lose situations--in athletics, in admission to college, in job promotion--that we apply the lessons learned indiscriminately. Faced with negotiations that require req uire both competition competition and cooperation, as most do, we think only of the competitive competitive aspects. This orientation produces a distributive distrib utive rather than an a n integrative approach to bargaining. bargaining. Psychologists Dean Pruitt and Jeffrey Rubin describe the Camp David talks this way in their new book, Social Conflict: "When " When Egypt and Israel Isra el sat down to negotiate at Camp Ca mp David in October 1978, 1978, it appeared appeared that they had before them an intractable conflict. Egypt demanded the immediate return of the entire Sinai Peninsula; Israel, which had occupied the Sinai since the 1967 Middle East war, refused to return an inch of this land. Efforts to reach agreement, including the proposal of a compromise in which each nation would retain half of the Sinai, proved completely unacceptable to both sides." As long as the dispute was defined in terms of what percentage of the land each side would control, no agreement could be reached. However, once both realized that what Israel really cared about was the security that the land offered, while Egypt was primarily interested in sovereignty over it, the stalemate was brok broken. en. The The two countries were then able a ble to reach r each an integrative solution: Israel would return the Sinai to Egyp Egyptt in exch exchange ange for assurances of a demilitarized zone and Israeli air bases in the Sinai.
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The fixed-pie assumption reduces our ability to negotiate matters of day-to-day existence as well as those of international politics. Consider a Friday evening dinner and a movie. You and your date like each other's company, but you have different tastes in restaurants and movies. Instead of haggling about each issue separately, see if one of you cares more about the restaurant restaura nt and the other more about the movie. If you do, you can work out an a n integrative trade-off--one trade- off--one picks the restaurant restaura nt and the other the movie--in which you both get get what is most important to you. Similarly, while purchasing goods is usually thought of in win-lose terms, another a nother approach is sometimes sometimes possible. possible. For example, example, a retailer may be willin willing g to cut the price if paym payment ent is made made in in cash--especially, cash--especially, in som some cases, if you don't ask for a receipt or other documentation the IRS might find of interest. DEHEXING THE WINNER'S CURSE While on vacation in a foreign country, you spot a very attractive ruby in a jewelry store window. You know something something about rubies, but you are far from being an expert. After some preliminary discussion, you make the the merchant an offer that you think is on the low l ow side. He quickly accepts and the sale is made. How do you feel feel as you walk out the door? If you are like most people in this situation, you find yourself suffering from "the winner's winner's curse," curse, " a sinking feeling that you've been taken. Why W hy else would the merchant have accepted your offer so quickly? My research resea rch with economist economist William Samuelson suggests that a key factor in the winner's curse is that one side has much better information than the other. A good negotiator must consider the knowledge and likely strategy of the other side, but this is hard to do when our opponents opponents know something we don't don't and can use the information to selectively accept or reject our offer. This quandary was expressed humorously by Groucho Marx, when he said he didn't care car e to belong to any club that would accept him as a member. member. Its willingness to take him--to accept his offer--suggested that its standards were so low that the club wasn't worth joining. Although Although we are all a ll familiar with the saying, s aying, "Let the buyer beware," bewar e," we seem to have difficulty putting putting it into practice. We consistently under-value the importance of looking at a situation from the opponent's standpoint and getting comparable information before we complete complete a transaction: a good mechanic's mechanic's evaluati evaluation on of a used car, an inspector's assessment of a house we are considering buying, a jeweler's assessment of a coveted gem. To protect yourself in negotiations of any sort, you need to develop or borrow the expertise to balance the quality of informatio information. n. If If you you can't get such informatio information n before making making an off offer, er, askyo askyours ursel elf, f, "Will "Will I be happy happy if the the offer offer is accepted accepted quickly quickly?" ?" If not, not, reconsider reconsider your your offer. offer. DE-ESCALATING CONFLICT The Professional Air Traffic Tra ffic Controllers Organization Orga nization (PATCO) strikes to obtain obta in a set of concessio concessions ns from from the government. When the government refuses to meet the demands, PATCO has two options: to back off and return to work under the old conditions or to continue the strike, stri ke, despite the threat of dismissal. Shortly after the strike started, it became clear to objective observers that, faced with an unyielding administration, PATCO had a weak negotiating position. Rational analysis would have led its leaders to end the strike or at least lea st reduce their demands before its members were fired. Instead, PATCO acted just as indiv individu iduals, als, organizations and a nd countries so often do in this situation. It increased its commitment commitment to the strike to justify the earlier decision to proceed with it. In negotiations, both sides often start with extreme demands, expecting to compromise somewhere in the middle. But they get caught up in the struggle, feel they have too much time, money and ego invested to back off
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and take a hard line instead of adopting a conciliatory or problem-solving approach. Why does this happen, when rational outsiders realize that continuing or escalating the conflict is a mistake? There are at least four complementary reasons. First, once negotiators make an initial commitment to a position, they are more likely to notice information that supports their initial evaluation of the situation. Second, their judgmen judgmentt is biased to interpret interpret what they see and hear in a way that justifies justifies their initial position. position. Third, Third, negotiators negotiat ors often oft en increase incr ease their demands or hold out too long to save s ave face fa ce with their their constitue constituency. ncy. They They may even act against their constituents' best interest to "look strong" to them. Finally, the competitive context of the negotiation adds to the likelihood of escalation. Unilaterally giving up or even reducing demands seems like defeat, while escalating commitment leaves the future uncertain. It is easy for negotiators to see this uncertain future as more desirable than the certain loss of concession. After all, the other side may be ready to cave in. This last point is illustrated by a game known as the Dollar Auction (see "Psychological Traps," Psychology Today, March 1981). Someone Someone offers to auction off a dollar bill to the highest bidder. The highest bidder bidder will get the dollar, but the second-highest must also pay what he or she bid and receive nothing. The bidding typically starts out fast and furious until it reaches the 50-to-75-cent range, at which point everyone except the two highest bidders normally drops out of the auction. What usually follows is an escalating pattern in which which both both end up up bidding bidding far more more than a dollar, dollar, since since neither neither is willin willing g to quit quit and accept accept a loss. loss. People escalate their commitment both to justify their earlier bids and to prevent the financial and ego loss of coming in second. No specific specific bid is clearly clearly wrong, wrong, since it is is rational rational to bid "just another another 10 cents," cents," if the other other party party is is about about to quit bidding. But when both parties think this way, an escalatory spiral emerges that is very reminiscent of the Vietnam War and other international and industrial failures in which both competitors get trapped by their previous previous com commit mitmen ments. ts. To prevent this kind of escalation, negotiators must be aware of their tendency to justify past actions and must constantly evaluate the costs and benefits of continuing along the same lines. Being aware of the tenden tendency cy to escalate can also be very helpful in anticipating how opponents are likely to think and act. People usually hold out when they have ha ve too much invested investe d in their position psychological psyc hologically ly to give in. i n. This suggests suggests that that a negotiato negotiatorr should avoid pushing pushing opponents opponents into a corner, getting them angry or otherwise making them feel that they can't afford to give up the struggle. str uggle. UNDERCUTTING OVERCONFIDENCE After a baseball player is in the major leagues for two years (three years, starting in 1987), he may choose arbitration if he and his team are unable to agree on a contract. Under the system of final-offer arbitration, the two sides submit offers and the arbitrator must accept one or the other, not a compromise. The challenge for each side is to come just a little closer than the opposition to what the arbitrator thinks is appropriate. Let's say the player's agent estimates that the team owner will offer $400,000 per year. The agent believes his player is worth twice that t hat but estimates the arbitrator arbitr ator will think $600,000 is right. What amount should should the agent propose? A naive analysis would suggest an offer of, say, $775,000, a bit closer to $600,000 than the expected $400,000 offer of the team. This reasoning illustrates a fourth common negotiator error. Individuals are
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consistently overconfident of the reasonableness of their position and of the likelihood that an objective third party will agree agree with them. them. In this this case, if the arbitrator's assessment assessment of the the appropriate appropriate wage wage turns turns out out to be $550,000 rather than $600,000, the agent's overconfident offer of $775,000 will cost the client hundreds of thousands of dollars when the arbitrator accepts the team's offer because it is closer to his estimate. Colleague Margaret Neale and I demonstrated this error in several experiments in which negotiator overconfidence overconfidence showed itself in two areas. area s. In simple two-party negotiations, negotiators consistently expected the other side to concede more than objective analysis would suggest; and under final-offer arbitration, negotiators overestimated the likelihood that their final offer would be accepted. For example, while obviously only half of all final offers can be accepted in final-offer arbitration, the people people in our our experimen experiments ts estimated, estimated, on on the average, a 65 to 68 percent percent probability probability that their their offer offer would would win out. This overconfidence reduces the incentive to compromise, while a less optimistic assessment makes a negotiator more uncertain and thus more likely to compromise further. In our studies, negotiators who were simply appropriately confident were consistently more willing to compromise and more successful in negotiations than their overconfident overconfident fellows. Negotiators Negotiators seem to follow follow the intuitive intuitive rule, "When in dou doubt, bt, be overconf overconfiden ident." t." To To avoid this, negot negotiat iators ors should try to obtain obta in objective assessments ass essments from outside outside experts to temper overconfidence and overestimation. REFRAMING NEGOTIATIONS You bought your house in 1982 for $60,000. It is now on the market for $109,000, with a real target of $100,000, which you estimate is the true market value. You receive an offer of $90,000. Does this represent a $30,000 gain (compared to the original price) or a $10,000 loss (compared to your target price)? Both answers are a re correct. corr ect. But which way wa y you think of the situation strongly affects your attitude toward toward the the offer. Research by psychologists Daniel Kahneman and Amos Tversky suggests that there are important differences differ ences in i n how people respond r espond to problems prob lems depending on whether whet her they the y are framed in terms terms of losses or gains. gains. In a series s eries of experiments ex periments covering situations as diverse as a s risking lives and risking money, money, they demonstrated demonstrated that if a situation is presented in terms that make it seem like a choice between a small sure gain and a risky larger gain, most will take the sure thing. But if exactly the same situation is presented in a way that makes it seem like a choice between a sure smaller loss and a possible larger loss, most prefer to gamble. Neale and I extende extended d this this finding finding to the the area of of negoti negotiation ationss when when we we analyzed analyzed this this hypo hypotheti thetical cal situatio situation: n: The union claims it needs a raise to $12 an hour and that, considering inflation, anything less would represent a loss to its members. members. Management argues that the company company can't remain competitive if it pays more more than $10 an hour; anything a nything more more would be an unacceptable loss. What will happen if both sides must choose choose between between settling settling for $11 an hou hourr (a certain certain settlement) settlement) or going going to binding binding arbitration (a risky settlement, settlement, since both sides sides must must agree to abide abide by whatever whatever figure figure the the arbitrator decide decidess on)? If both labor and a nd management management continueto view the the matter in terms ter ms of what they have to lose, they are likely to choose the risky road of arbitration. But if each side reframes the situation positively--the union seeing anything above $10 an hour as a gain and management seeing anything under $12 an hour as a gain--then caution will rule and a negotiated settlement of $11 is more likely. Neale, Thom Thomas as Magliozzi Magliozzi and I conf confirmed irmed the finding finding that people people who who frame the outcom outcomes es of of neg negot otiat iatio ion n in terms of gains or profit are more willing to make concessions to obtain the sure outcome available in a
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negotiated settlement. In contrast, negotiators who think in terms of losses or costs are ar e more likely to take the risk-seeking action of holding out and possibly losing all in a n attempt to force further concessions from their opponent. Negotiators Negotiators need to be aware aware of how framing framing affects the decision decision process. process. If you you are evalu evaluati ating ng a nego negotia tiatio tion n in terms of what you can lose, make sure you also consider consider what you can gain, and vice versa. Otherwise, your behavior behavior may reflect the the distortio distortion n of framing framing rather than than your your actual preferenc preferencee for a particular particular action. action. The framing effect also suggests that a negotiator should try to present information in a way that leads the opposition to see what they have to gain from a risk-free risk-fr ee settlement. Finally, when third parties are trying tr ying to get get others to compromise, they should strive to frame suggestions in ways that show what both b oth sides will gain from from a settlement. I have presented these common negotiator errors as separate problems, but clearly they overlap. To mention just a few examples, negotiators negotiators who don't start out with a fixed-pie fixed-pie bias find it easier to avoid escalating demands and to reframe their thinking and proposals in a positive way. Negotiators who try to understand an opponent's thinking are less likely to feel overconfident in their judge prior to escalate demands needlessly. Negotiators Negotiators who who are aware of the tendency tendency to be be overconfid overconfident ent in their their judgme judgment nt are more likely likely to consider consider what opponents opponents are ar e thinking and to reframe refra me their perceptions in positive terms.
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Negotiation Lessons from the Pawnshop Pawnshop By Jay Folberg – May 2008 http://www.mediate.com/articles/negotiation_lessons_from_the_pawnshop.cfm JAMS Dispute Resolution ALERT, Vol. ALERT, Vol. 8, No. 2, Spring 2008. My resume is loaded with Alternative Dispute Resolution credentials: law school professor and then a dean; teaching negotiation and mediation for decades on several continents; writing books and dozens of articles; negotiating and mediating land use lawsuits, commercial cases, ca ses, employment issues, institutional conflicts, and many other types of disputes with up to eight-figure payouts; serving on umpteen advisory boards and “blue ribbon” commissions. But my resume is not the reason you should follow my advice about negotiation. The reason you should pay attention to what I have to say is that I am the son of a pawnbroker. The most important lessons about negotiating and reaching agreements were provided by my Dad, in a pawnshop pawnshop in East St. Louis. Since then, I’ve learned new, fancier names for some of the concepts I was wa s taught as a youth, and I’ve been involved in more complicated transactions and disputes, but the pawnshop experience offered invaluable, practical lessons in how to negotiate. Here I will pass along to you some of what I learned at my Dad’s side. Schmooze and Learn
My Dad, a high school dropout, was a savvy and professional negotiator, but he didn’t come across that way. His humble and friendly manner put customers at ease. Dad was a good “schmoozer,” who listened more than he talked. He told me “we wer e born with one mouth and two ears so that we can listen twice as much as we speak.” If by asking questions and listening you can learn what is in the head and heart of someone, it is much more likely that you will make a personal connection, satisfy their needs, and in so doing, get what w hat you want. If you actively allow others to express themselves, they usually will will tell you what you want to know. The more you talk, the less they can say, and the less you can listen and learn. Dad emphasized that you seldom learn anything new by speaking. When you do speak in a negotiation, particularly at first, do so in a way that elicits more information, directly or indirectly, or that helps build trust. Connecting with people, whether as a pawnbroker with a client or a lawyer with their opposing counsel, makes our work worthwhile. Taking the time to establish a personal connection and trust is usually time well spent. Soda Pops and Reciprocity
Reciprocity works. People tend to return favors and are more likely to respond positively to those who reach out by offering a small gift or show of concern. When someone seemed like a serious customer, particularly in the hot summers in East St. Louis, my Dad would ask if they would like a cold pop (a “soda” in the Midwest). This seemed to break the ice and created a sense of both trust and obligation. This is a simple lesson practiced by fruit peddlers, who offer free samples, and by law firms, where a receptionist asks, immediately upon greeting you, if you would like a cup of tea or coffee. In your legal negotiations, look for a non-costly concession to make early. Giving a little something early on will likely trigger more cooperation from the other side. My Dad’s offer of a cold pop helped turn reluctant “lookers” into more relaxed customers who were more likely to reciprocate Dad’s sincere but calculated kindness. The Secret Code
Legal folklore and some academic texts assert that when negotiating you should let the opponent make the first offer. However, negotiators may have an advantage if they make the first offer. First offers, like prices we placed on items in the pawnshop, act as an anchor point for bargaining. A pair of diamond earrings with a $300 price tag is much more likely to sell for $200 than if marked $200. However, the first offer or demand should not be so exaggerated that you are laughed out of the room or that bargaining never starts because your offer (or price) is out of the bargaining zone. The important lesson is to aspire high, but have a
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realistic bottom bottom line that you don’t forget. In the pawnshop the aspirational sticker price was, typically, double the amount loaned on clothing and household items; triple the amount for jewelry, musical instruments, guns, and tools. The bottom line was the amount loaned plus 10%. Dad needed a code to keep the bottom line secret from others but clear to him and those of us who worked in the shop. He went back to his fruit peddling days and used the 10- letter code “fruitandco,” representing, from the first letter to the last, the numbers one to 10. With fruitandco in our minds, we could count to 10 with 10 separate letters forming a secret digital code. Each item for sale in the store had a tag with the “price” written at the top for all to see and at the bottom the cost plus 10% written with the code “fruitandco” letters in smaller print. A bottom line amount of $5.70 would be written “tno”. All of us who worked in the store knew the code and never lost money on a sale – we – we would walk away from the deal when we hit the bottom line. But we started every negotiation trying to hit the goal – goal – to to come as close to the marked target price as possible, which was profitable but also fair and reasonable. Gold Plated Perceptions
In the pawnshop, I learned that deals take place when the offer on the table leaves everyone better off than no deal. The same is true for settlements of lawsuits. In other words, you don’t get any of what you want unless the other side gets at least some of what it wants. Wants, needs, and values are matters of perception. Pawnbrokers and lawyers try to change the other sides’ perceptions through persuasion that the unreunredeemed item for sale (or the lawsuit) is worth more and that buying it (or paying the claim) is a good deal. The person on the other side of the store counter (or the lawsuit) points out flaws, highlights perceived better alternatives, and argues that the goods or claim is worth less than we think. Dad was a master at the art of managing perceptions. Behind the counter displaying used watches, he kept a stack of high-end fashion magazines with glossy advertisements for expensive watches. He would deftly flip one of these magazines open while a customer was looking at a pawned watch and bring the customer’s attention to the price of a new watch that resembled one in the case. (Never mind that the advertised watch was real gold and ours was gold plated.) Similarly, a plaintiff’s lawyer will be quick to compare the amount of his demand to a large verdict for a similar claim. The defense lawyer will point out why the current claim is, at best, a plated imitation of the golden facts that resulted in the big verdict and more similar to a recent case resulting in a defense verdict. By referring to carefully selected reference points by way of comparison, each negotiator will try to change the other’s perception in a way that will result in a sale or settlement agreement. Do the BABULEW
The best thing that ever happened to boost our sales was when a jewelry store that sold only new merchandise opened in the neighborhood. Once that store opened, my dad had a tool, even better than glossy magazine adds, to deal with any customer who wanted too good of a deal. When anyone was unsure about whether to buy at our shop, Dad would suggest that they visit the jewelry store down the street and then do the BABULEW – BABULEW – which stood for “Best Alternative to Buying Used from Lew.” The BABULEW comparison usually closed the sale. This type of analysis was popularized in the best selling negotiation book, Getting to Yes, which emphasized the importance of knowing your “best alternative to a negotiated agreement” (BATNA). Before you decide if an offer is worth taking, compare what will happen if you don’t make a deal. The better your walk -away alternative, the easier it is to walk away. In lawsuit settlement negotiations, the BATNA is usually mediocre – further delay and costs along with the prospect of a risky trial.
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If you can point out to the other side that their walk-away alternative might not meet their interests as well as the deal you’re offering, they too, might do the BABULEW. Diamonds for Vacuum Cleaners
My Dad focused on his customer’s underlying interests rather than just the amount of money they offered. He didn’t get hung up on a customer’s bravado or the occasional low offer or insulting comment. Customers used monetary offers to communicate all kinds of things that had little to do with dollars. The same is true with litigants. Plaintiffs in lawsuits ask almost exclusively for dollars in their comp laints and the defense invariably offers fewer dollars than the plaintiffs demand. But the dollars usually represent basic human interests. These interests might be met more creatively if better understood. People need money to satisfy material, social, and emotional needs. Finding out how the money will be used or what needs must be met is helpful to fashioning a satisfactory agreement. I remember a customer who brought in a modest diamond wedding wedding ring to pawn. Dad wouldn’t give her the amount she wanted – wanted – the ring wasn’t valuable enough to justify her asking price. Instead of just saying “no,” Dad asked why she was pawning the ring and for what she needed the money. She said that she was recently divorced and needed money to buy a vacuum cleaner for her housecleaning jobs. Dad had lots of unredeemed vacuum cleaners and a mutually advantageous trade was made. Focusing on needs, not just dollar demands, facilitated a deal in a situation that did not look promising. People also have “process” interests in making deals and resolving differences in a way they consider fair or, even better, advantageous. Our customers usually thought they did well, were treated with respect, and had some fun bargaining with the pawnbroker. Dad was a master at making people believe b elieve they “bargained him down.” He knew the importance of being able to come down from his opening price so that the customer could get more than a good deal – deal – she she could get the satisfaction of successfully bargaining for concessions. Dad knew it was important for customers to leave the shop feeling good – good – not not just about the final price, but about the way they got there. The same is true for lawyers with whom you negotiate. Give and Take
Concessions are the incremental compromises a negotiator makes after an opening offer. Usually the concessions made are offered in return for concessions from the other side. Making concessions can be done strategically, knowing that the timing, amount, and nature of concessions are a form of communication by which each side sends signals about their values and reservation points. The pattern of concessions co ncessions sends a message. By carefully considering what you want to communicate, you can manage concessions to shape the message, particularly about how close you are to your bottom line. (Diminishing concessions signal you are close.) Consider the following pattern of concessions and the message my Dad was sending when selling a watch: “Lew, that old watch isn’t worth $100. I will give you $50.” “Ok, business is slow; I can give you a 10% discount. $90 and it’s yours.” “It’s only worth $50.” “I can sell you that other watch in the case for $50, because it isn’t gold plated. This watch would cost you $200 new.” “You are a good salesman, Lew. Wrap it up and I’ll give you $60.” “No, I can’t do that. Elgin watches are in demand and I don’t get them in often. If you want to take it right now, I will accept $85. That’s it.” “I know you are robbing me, but I will pay $75, if you will throw in a new band for it.” “The band will cost will cost you $10, so the total will be $95.” “Lew, you’re going in the wrong direction.”
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“No, you’re getting a real bargain and I can’t come down.” “You don’t have to come down. I’ll pay $85 with the new band.” “It’s past our closing time and I need to go. I will let you have the band at cost for $6, if you buy the watch now for $85.” You drive a tough bargain. Here is $90. Take it or leave iit.” t.” “OK, you’re killing me, but I really do need to close the shop.”
The timing of concessions is critical. Concessions given in rapid succession early on may signal risk aversion or desperation. Giving away too much in the initial stages of the negotiation depletes the reserve of concessions that can be offered later when they may be more appreciated. A negotiator should space concessions because while gains feel good, they only feel good for a little while, so it’s best to string them out and get the most from them. Concessions should be made in the context of reciprocal trade-offs or exchanges rather than given simply to find the other side’s point of acceptance. Remember the caution not to “bargain against yourself.” Demanding a concession in return both reinforces the value of what is being conceded and signals the resolve of the negotiator making the concession. It also helps to build the process of give and take and fuel movement toward agreement. Leveraging Nylons and Jeans
I started working in the pawnshop after the end of World War Two. Dad had a good stock of some price controlled items in short supply after the war – war – particularly particularly nylon stockings and Levi jeans. je ans. This supply gave him bargaining power in negotiating for the sale of other goods that weren’t price controlled, because he could dangle the possibility of including one of these “scarce” items in a package pa ckage sale with other less coveted merchandise. Dad did not put the nylon stockings on display, despite the fact that most women wanted them. Instead, he would let it be known that he had quality stockings and would make them available if the buyer was a “good customer,” i.e., one who spent a lot. “Buy this used suit and you could also get a pair of hard to find nylon stockings for your honey.” The nylon stockings and jeans gave Dad the scarce ingredient he needed to create a package that al lowed him to move merchandise that was harder to sell. Both sides got what they wanted through packaging, just as you can in settlement deals. For example, in land use disputes, municipalities may allow a developer more building density or height if the developer will include more scarce affordable housing units or public amenities. Packaging works. Power and Commitment – Commitment – Please Don’t Try This
If my Dad had something in the store that a customer wanted, he had a degree of power because he controlled if the customer got it. The customer, of course, had something Dad wanted – wanted – money. money. In any negotiation there must a degree of power and motivation to fill a need on both sides. The negotiation process, in part, is how each side shapes the perception of their power in the mind of the other. Power is linked to commitment. If the other negotiator perceives that you are committed to give (or not give) what he wants only if he gives you what you want, then you have power in the negotiation. A hostage taker adds credibility to his bargaining position if he shoots one of several hostages, but in so doing he also risks ending the negotiations. Similarly, lawyers who have trial experience and demonstrate a credible commitment to go to trial, will do better in negotiations than lawyers who have only settled cases. However, if her willingness to litigate is overplayed, a lawyer risks alienating the other side and forcing a trial where a settlement would have been both possible and desirable.
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Dad told me a story that illustrates the power of an irrational but credible commitment or threat. A man walked into the pawnshop wanting to pawn a gun. He wanted $50. Dad would normally hold firm not to give more than $20 on a similar gun. The man explained that he needed $50 to pay his rent, which was past due, and if he didn’t get it he would kill himself. This threat would generally not move my father to part with more money. However he looked into the man’s eyes, which were bloodshot from tears, and saw a commitment that seemed real. The man got his $50. This may have worked in my Dad’s shop, but please don’t try it in your next negotiation. Playing “What If”
“Lew, you can’t outshoot me.” “Yes, I can.” “No, you can’t.” “Want to put your money where your mouth is?” “Why not?” “Loser pays for all the ammunition.” “OK.” My Dad’s pawnshop became well known for offer ing ing a staple item in rough and tumble East St. Louis, unredeemed guns. We also sold ammunition for both personal weapons and hunting guns. Outside, behind the store, we had a makeshift shooting range. A brick corridor four or five feet wide, formed by the side of our building and the one next door, terminated in a brick wall, in front of which Dad layered wood and metal to absorb the bullets. Paper bulls-eye targets were regularly blasted to bits in back of the shop. My Dad was an excellent marksman. Dad liked to challenge customers, including police officers who were regulars in the shop, to shooting matches. The deal was that the customer would pay full price for all the am ammunition munition used, but only if they lost. Dad promised that if he lost, he would pay for the ammo. Perhaps my memory is colored by the awe I had for my father’s shooting prowess, but I don’t recall Dad ever losing. The ammo sale was based on who won the shooting match – match – a kind of “contingent agreement” – a – a commercial bet on an uncertain future outcome, where each perceives that they are likely to win. If parties in a negotiation have different predictions about future events or disagreement over the risks that will flow from concluding a deal or reaching a settlement, they may reach impasse. However, if the negotiators, like Dad, put their money where their mouths are, they can structure an agreement that builds upon these differences. In appropriate circumstances, negotiators can agree to disagree and write contingent outcomes into the deal. When are the appropriate circumstances? When the parties think the risks are worth taking and they are confident of their shooting abilities. Exploding Offers
Negotiations are like gas – gas – they expand or contract to fill the space or time available. I’ve seen many stalled mediations conclude only when the disputants become aware that the time to make a deal or settle is running out. Sometimes the deadline is imposed by a court, and sometimes it’s self imposed, like a plane to catch. As the end looms, concessions are offered and compromises are reached that would not be considered earlier. There comes a time in some negotiations, like in sales, when one negotiator thinks it is advantageous to prevent the other side from exploring alternatives, getting more information, or having second thoughts. In these situations, the negotiator may try to impose a deadline. Introducing deadlines into a negotiation is a way to create a perception of a vanishing opportunity. In the pawnshop we had to take inventory once a year to calculate merchandise taxes due. But just about every other week I would hear Dad close a sale late in the day by saying “we are getting close to taking inventory for the merchandise m erchandise tax. Buy this right now and I will knock off another 10% so I don’t have to pay tax on it.” The idea that the discount was fleeting made it especially alluring. (It was true that everyday the inventory was closer to happening and if sold before then there would be no tax due on that item.) This type of take-it-or-leave-it take-it-or-leave-it deadline is sometimes referred to as an “exploding offer.” Lawyers do something similar when they say “you have until 5:00 p.m. to accept this settlement offer or it’s off the t able because tomorrow we start preparing for trial.” A Good Loser
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Never celebrate a victory, at least not in the presence of your opponent. If you can leave the other side convinced they did well, there will be fewer issues going forward and less likelihood that the other side will back out of the deal. The relationship between negotiators is strengthened if no one feels they were beaten. There is value in the rapport established for future negotiations. Conversely, if an opponent or his attorney loses face, face, he may feel compelled to “get even” at the next opportunity. I will never forget hearing this exchange in the pawnshop at the end of vigorous bargaining between Dad and a regular customer over the price of an electric fan on a hot summer day: “Glen, you drive a hard bargain. You can take the fan for $17 on one condition; don’t tell anyone how little you paid for it. I’m losing my shirt to you.” “Stop your bellyaching, Lew. You gotta be making money. How else do you stay in business and feed your family family when you always lose money selling this stuff?” “You’re right. I lose money on almost everything I sell, but I sell so much I can afford to lose more money. It’s a matter of volume!” Glen left the shop feeling like he had bargained well. The person you negotiate with should always feel they got a good deal. A positive experience prevents buyer’s remorse and may bring them back for more. When appropriate, congratulate your counterpart on the agreement achieved, but not too much. Relationships Matter
Pawnbrokers, like lawyers, develop reputations and depend on relationships to succeed. The interest in creating or preserving a relationship is particularly important when negotiating contracts a nd resolving business disputes, where the parties see or once saw a benefit in working together and anticipate future transactions. In the 1965 Academy Award-nominated Award-nominated movie “The Pawnbroker,” an old, lonely gentleman pawned something every week just to have a reason to talk to the pawnbroker. Some regulars at the pawnshop pawned their jewelry a few days before payday and retrieved it after getting paid. Musicians would pawn instruments between gigs and come into the shop mid-week because Dad would let them practice at impromptu jam sessions, which also drew in other customers. The relationship between my Dad and his “band of regulars” was good for the soul and good for business. busi ness. Your relationship relationship with other lawyers, including opposing counsel, is important for your long term success as a negotiator. Live and Learn I can’t fully capture here all my Dad taught me about negotiation. There are too many good pawn shop stories and lessons and too little space in this newsletter. I’ve shared a few of my favorites in the hope that you learn something from my Dad that helps you negotiate better. But I hope you learn something else as well – that that no matter what your background, no matter matter what your your parents parents did for for a living, living, there’s there’s a lot lot to be learned learned from from a life life well well -lived that can apply to the resolution of legal disputes. Mine were lessons from a pawnshop, what were yours? Jay Folberg is Professor Emeritus and former Dean of the University of San Francisco School of Law. He is coauthor of Resolving Disputes: Theory, Practice and Law, Aspen Press, 2005.
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NEGOTIATION GAMBITS
Created by Students in Prior Classes To make the first offer:
Well, this is how I see it... Let me tell you what I had in mind. Why don't we start at... This is what X would like; what is your position? position? After After seri seriou ous s contem contempl plati ation on,, I have have come to this this concl conclus usio ion. n... .. Would you be willing to try this? Are you you open open to disc discus ussi sing ng seri seriou ous s offers offers? ? Would you be open to accepting an offer at this meeting? I think________is nk________ is a good offer. What do you think? If I could offer you______________, what could you offer me? To get the ball rolling, we think X could offer... (In your your best Brando) I'm going to make you an offer you can't refuse. I just want to get this resolved, so what if... If this went to court it would cost us us both a great deal of time and money; therefore... Let's get down to it. What if .... As a negotiator, when I want them to make the first offer:
We'd like to get this resolved today. What do you need? How do you see this? What do you think? Look, tell me what you need and I'll tell you if we can work something out. Why don't we just j ust lay our cards out on the table so that we can start sorting out the details. Go ahead, tell me what you want. How much are you asking? What will it take to get you to do____________? What is your range? What is your bottom line? What do you think is a fair proposal? What are you willing to do to resolve this dispute? What is your solution? Could you tell me what you need? What would it take to preserve this relationship? What do you think we should do? Why don't you start us off in the right direction? Could you fill me in on what you're willing to do here? What would it take to close this deal right now? What kind of figure would get you interested? What is a reasonable starting figure for us today? To get the ball rolling, how about giving me a ballpark figure? (In your your best Brando) Make me an offer I can't refuse. I'm open to suggestions. What do you truly want? What are you interested in? As a negotiator, to offer a concession:
We would be willing to pay X for Y.
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What do you think of this? What if I were to .... I would like to offer a concession. Does this meet your needs? In an effort to show good faith, we are willing to? Well, I think we can accommodate you there. Perhaps we could provide? Maybe this could work for both of us. We can probably do something along those lines. Because I want to see this thing work, I'll.. I am willing to ... Alth Althou ough gh we feel feel we deserv deserve e X, X, we we can can live live with with Y. If I were to agree to that, what would you be willing to do in return? To get this going, I'll be flexible on this. I really don't normally do this, but... Would this solve our problems? Because you are ..., I'll do this.
As a negotiator, to ask for a concession:
Can you do better than that? We would agree to X, if you would do... How much are you willing to come down? Is that your best offer? Will you take X for it? I can’ can’t go any higher than X. What can you do? We’ We’re going to need something more than that. What is your side willing to do? Can you do anything to meet us halfway? Would you consider making any concessions? Now, I know that you must concede at least something. You have to give give to get. What are you willing to give?
As a negotiator, dumb is smart:
I don’ don’t know much about this, but I was told that… that … You probably know more about this than I do but… but… I may be wrong, but my understanding is that… that… I’m not ’m not really sure about this, and maybe you could explain it to me, but… but… Okay, I’m I’m trying trying to make sure I understand can you explain that again? I’m sorry, ’m sorry, but I really don don’t ’t think think I caught the gist of this proposal. Could you run through itit again, but in more detail for me? I’m not ’m not sure I understand. How does your solution solution make it better for both of us?
As a negotiator, when you want to delay decision:
I’m sorry, ’m sorry, but I’I’ll have to give that more thought. Let me get back to you on that matter. I’ll ’ll have to check on that. I’m not ’m not ready to go that far.
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Why don’t don’t we we address that later. I have an idea of what I want. However, I?d like to hear your your offer first. f irst. Before I provide you with that information, can you tell me how much this whole thing is worth to you? That’ That’s a question I’m I’m not not yet prepared to answer. Perhaps if you provide me m e with information as to what your interests are, we may m ay be able to find an appropriate appropria te figur figure. e. I’m going ’m going to have to digest this material a little longer. longer. Do you mind if we break until after lunch? Let’ Let’s go over this proposal one more time later. I really want to give itit the attention it deserves. Let me get back to you on that. Can I have a couple of days to think about it? Let me discuss it with my supervisor before I give you a solid answer. I need to talk it over with my supervisor, but it sounds good. Let me sleep on it before I decide. The approval will will take a couple of days. I’ll ’ll be in touch. I’m late ’m late for an appointment, let me get back to you when I return. I like what I’m I’m hearing hearing so far, but I need to have my accountants (or engineers, etc.) take a look at it. Can we make our final decision on ____? That?s when everyone will have had a chance to look at the project more thoroughly. Now is not a good time because (excuse), how about we discuss it on___________? Can you get me more information before I decide?
As a negotiator, use active listening tools:
I’m picking ’m picking up that… that… As I get it, it, you you felt felt… If I’m hearing ’m hearing you correctly correctly… … So, as you see it… it… I’m not ’m not sure I’m I’m getting getting you, but… but… So you feel that… that… It sounds as if you are concerned about… about… How do you feel about this situation? How did you come to that conclusion? If you were doing things over again, what would you do differently? What do you mean by that? Why is that important to you? Tell me more about that. What happened next? What I am hearing is?is that right?: Before you go on, do you mean… Will you give some examples of what you mean? I’m not ’m not sure I followed that. Could you explain explain it to me again? Do you mean that… that… That is interesting, but why ______?
You You want want to to probe probe for for un underly derlyin ing g inte interes rests: ts:
What do you think is important? Why do you think that happened? Why is that important to you? What exactly are you after? You say that that bothers you. Why does that bother you? In other words, your point is_______. What are your other concerns?
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Are ther there e iss issue ues s other other than than what what you you have have alrea already dy told told me? me? What were you trying to accomplish when you did________? That?s interesting; interesting; tell me more. Why are you opposed to that idea? How will what you are asking for meet your needs? ______ _________ ______ ___se seems ems to be very very import importan antt to to you you.. Could Could you you expl explai ain n why? why? Our discussion always seems to come back to?.do you think we could specifically talk about that? I sense that there might be something else. Is there another spin to this? So, how do you feel personally? How does this sit with you? What is your opinion? Can you live with this? Have you thought through the consequences? What do you expect by the end of this negotiation? Can you tell me why you feel that way? Can you tell me why you think that is more important than_____? What would be most satisfactory to you, and why? How do you think I, as a mediator, can help you and your situation? What are your goals? Are ther there e oth other er thin things gs we shou should ld consi consider der? ?
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