The Negotiation Academy - EFOS · at the negotiation table. There are many tactics and ploys in...

NOTES

Tactics......................................................................................................................................................................................................2 THE NIBBLE a.k.a The Add On .............................................................................................................................................................3 FUNNY MONEY (a subtype of the Nibble)............................................................................................................................................4 THE FLINCH...........................................................................................................................................................................................5 DEFFERING TO HIGHER AUTHORITY a.k.a Mandated Authority....................................................................................................6 THE BOTTOM LINE ..............................................................................................................................................................................7 THE VICE................................................................................................................................................................................................7 GOOD COP /BAD COP ..........................................................................................................................................................................8 THE SET ASIDE .....................................................................................................................................................................................9 THE HOT POTATO a.k.a passing the monkey .....................................................................................................................................10 SPLITTING THE DIFFERENCE..........................................................................................................................................................10 THE TRADE OFF .................................................................................................................................................................................11 THE WALK AWAY..............................................................................................................................................................................12 DELAYING AND STALLING .............................................................................................................................................................12 PRECONDITIONS ................................................................................................................................................................................12 PERSONAL ATTACKS........................................................................................................................................................................13 PRECEDENTS.......................................................................................................................................................................................14 WITHDRAWN OFFER.........................................................................................................................................................................14 THE DECOY .........................................................................................................................................................................................15 THE PUPPY DOG .................................................................................................................................................................................16 THE CALL GIRL ..................................................................................................................................................................................17 EXTREME OFFERS .............................................................................................................................................................................17 CHERRY PICKING...............................................................................................................................................................................18 COMPETITION.....................................................................................................................................................................................18 LIMITS ..................................................................................................................................................................................................19 TAKE IT OR LEAVE IT .......................................................................................................................................................................20 POWER OF PRINT OR POLICIES ......................................................................................................................................................20 APPEAL TO EMOTION OR MORAL APPEAL .................................................................................................................................21 APPEAL TO AUTHORITY A.K.A. ASSOCIATION ..........................................................................................................................22 RELYING ON AUTHORITIES ............................................................................................................................................................22 DEFAULT..............................................................................................................................................................................................22 DELIBERATE MISTAKE.....................................................................................................................................................................23 PLANTED INFORMATION.................................................................................................................................................................23 WITHDRAWAL....................................................................................................................................................................................24

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The Negotiation Academye u r o p e

Creating Tomorrow's Corporate Architecture

© Copyright 2004. The Negotiation Academy – Europe Limited. All rights reserved

NOTES

Tactics Tactics are those actions, or inactions, that support the achievement of strategy related goals or promote or hinder actions or inactions undertaken by another party. A party involved in a negotiation, may choose to expedite a certain process within its control, e.g. a document to be conveyed, depending on the strategic position that it may achieve through either an efficient or inefficient approach to having a document conveyed. Prior to the 1980’s, many companies focused their negotiation training on tactics. Although the following tactics will yield a short term result, we don’t advocate their use in a business context. The reason we don’t advocate their use is due to both the long term damage they will deliver to your business relationships, and the questionable ethics of using manipulative tactics. Once you have mastered the NTWM! methodology, the need for maneuvering to gain a small short term advantage will be made redundant. These tactics are designed to extract value out of the other side without making any value contribution or creating new value. They are thus Win-Lose by nature. Regrettably you will all too often have to negotiate with others who employ these tactics against you. It is therefore important to be able to identify them, and have the knowledge and skills to neutralise their effect with suitable counters. The counters you will find here have one thing in common. They separate the tactic from the person. So whilst you are acting and sometimes judging the tactics employed, at no time do we recommend you blame the person or attach the tactic to the person’s identity. We are not our tactics. Using these tactics doesn’t make a negotiator a manipulator. So there needs to be a clear distinction drawn between a negotiator using manipulative tactics, versus a negotiator being manipulative because they are using these tactics. Often a negotiator will either be acting out of habit without giving thought to their actions. Other times what we perceive as a tactic may in fact be something entirely different.

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You wouldn’t dare use one of these tactics on a friend or family member would you? Perhaps your best insurance policy against these tactics is to invest time in befriending your counterparty before

NOTES the negotiations proper begin. Rapport skills used in a neutral social setting pay large dividends later at the negotiation table. There are many tactics and ploys in negotiation. We cover the main areas you will encounter and suggest the most effective counters we have found.

THE NIBBLE a.k.a The Add On A favorite technique used by sales persons immediately after a deal is made, is to add additional cost items to the deal. • Sales person: "With all the features the price is £995." • Client: "Excellent! It’s better than I thought. " • Sales person: "Naturally £50 for delivery and £50 for installation needs to be added.”

The sales person relies on the fact that once a deal is made the buyer relaxes and is therefore highly likely to accept add-ons.

Some authors on the subject note that this technique should be used with caution as it has the potential to act as the proverbial straw that breaks the camels back. In principled negotiation all specific items should be placed on the table up front so they can be dealt with at event time as proposed. The nibble should be used sparingly. It should not be used at all when the added value demand is of significant value. Children are masters of the nibble. Not only can the sales person use this ploy. A client can use it by responding as follows immediately once the deal is made: • Client: "Thanks. I'll take it seeing your excellent price includes delivery and installation. " • Sales person: "Well it doesn't really, but I probably could arrange it.” • Client: "Fantastic!"

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The client derives strength from the fact that the sales person is highly vulnerable once the deal is made; as he/she does not wish to see his/her hard work undone.

NOTES In the aforementioned example the sales person could have countered the nibble by responding: • "Come on, you already have a fantastic deal. Be fair.'

To this the client could however have responded: • "So we start all over again, do we?"

Dealing with the Nibble Just when you think you are fully agreed and about to sign the contract, they ask “Transportation and insurance is included, isn’t it?” There is a strong urge to make this final concession for the sake of signing the deal. This urge must be resisted. The Trading principle of using an If-Then should be used: “In contracts where we pay for transportation and insurance, we add an extra 3% to the price.” So yes, if you are willing to pay the extra 3%, then we will cover these two items.” We usually recommend you enquire as to the interest behind this newly raised request. If it was omitted earlier by mistake, then perhaps there is an opportunity to meet this need in another creative way that meets both parties’ needs. A great way to prevent nibbling and other unpleasant surprises is through being explicit and thorough in specifying exactly what is included and excluded in the deal.

FUNNY MONEY (a subtype of the Nibble)

After a buyer has negotiated a great deal on the purchase of a car the following ensues: • Sales person: "You really have made an outstanding decision. Congratulations! All we now have

to do is complete the lease. Before we do that I have to share with you that a mere £30 per month would buy you the deluxe model. It's such a small increase you would not even feel it. What do you say?"

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Unless the buyer is very careful he is likely to end up spending much more over the period of the purchase agreement than intended.

NOTES

Dealing with Funny Money Similar to the nibble.

THE FLINCH

• Sales person: "So with all the features I showed you the price is £ 2 000.” • Client: "What! How much? £2 000? That's big money my friend.'" • Sales person: "That naturally includes an on-site warranty and installation.” • Client: "£1 500 is still big money.” • Sales person now makes a concession: "Naturally we will throw in some software for your new

computer.” Failure to flinch when a low offer is made, leads the party making this offer to conclude that the other party has yet to reach its real base. This could result in further pressure to achieve an even lower price. Merely accepting an offer without flinching could result in an opportunity to achieve a better price being missed. It will also leave the other party feeling that they have not done as well as they could have.

Dealing with a Flinch

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Physical reactions such as sudden gasping for air and visible expressions of surprise and shock are common examples of flinching. What makes the flinch so dangerous is that it happens in an instant, and most are not aware of it at a conscious level. Seeing a shocked expression is far more believable as compared with hearing someone saying “I’m shocked.” To effectively combat you first need to notice what is happening consciously. Then think about whether they genuinely expected something else, or if they are merely playing a part to lower your expectations. Like most other tactics, if you have noticed the tactic, you are unlikely to be influenced by it and therefore most of the way there in dealing with it.

NOTES Since a flinch is essentially a disappointment on their side, take the time to ask “I notice you looked surprised, what were you expecting?” This puts you in a position to talk about their unrealistic expectation, rather than your unrealistic terms.

DEFFERING TO HIGHER AUTHORITY a.k.a Mandated Authority Mandated Authority comes in two main forms: • The other party can only negotiate on certain items, whilst others remained fixed by a higher

authority. Sometimes called ‘Limited Authority’. • Final approval can only be given by a higher authority. First ask the other party how their company will make the final decision to buy. You may need to probe further to uncover the other decision makers and line of authority. Failure to enquire fully at this stage may mean that negotiation time and energy have been wasted by the higher authority’s torpedo “No”. You don’t necessarily need to start negotiations with the decision maker. It is useful to create a relationship with the lower level authority person with whom you are negotiating, as they exert a great deal of influence in your favor. Having established that you do need to talk with a higher level authority, make clear that you will need to talk with at some stage. When faced with off the table items mentioned above, don’t accept these at face value. If you do, the list will grow and you will have gained nothing in exchange for these concessions. Enquire as to the interests that lie behind these items being non-negotiable. Having a mandated authority from whom to gain final approval is most useful in circumstances of high risk and in new and unfamiliar markets although it may not always be possible. In the example below the Client might have enquired who he would be required to speak to in the event of him not accepting the repair bill or by accepting a fixed quote upfront that had been validated against the market.

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NOTES • Client: "I'm very dissatisfied with the repair bill for my car. It’s ridiculously high for the job you did!

I will not pay this bill.” • Workshop manager: "I only work here my friend. If you do not pay I may not release your car. I do

not have the authority to change the bill.” (A neat deferral.) • Client: "Who can?” • Workshop manager: "The Service Director in our head office.”

Dealing with Deferred Authority To counter deferral as a ploy, negotiating parties need to probe for information on such decision makers during the Environmental Analysis Phase so as to involve them in the negotiation.

THE BOTTOM LINE • Sales person: "Forgive me for taking so much of your time, but this car is truly a winner, is it not?

It has everything that opens and closes!" • Client: "I sincerely appreciate the time you have taken, but this is not what I want. I need

something much simpler.” (Client gets up and starts moving away.) "In all fairness, what's your best price for this car?"

As the sales person has invested much time and energy he/she is worried that an empty handed result may ensue. This could easily result in a big concession as a last stab at saving the deal. To such a bottom line concession a skilled buyer may respond: "Maybe I reacted too quickly. What are you saying I will get for your latest price? "

THE VICE Think of an art lover in an art gallery with the expectation of achieving a good price for a painting. • Sales person: "Our very best price is £15 000.”

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• Despite this being lower than the client expected, he/she displays reluctance by responding with

NOTES shock: "How much? You will have to do much better than that!"

Dealing with the Vice No matter how good the response of the sales person, the buyer continues to apply the vice. To counter the vice the sales person could either immediately reveal the bottom line or counter with: "Exactly how much better will I need to do?" This establishes the expected concession and prevents an unnecessarily large concession.

GOOD COP /BAD COP Imagine sales person and owner negotiating with the prospective buyer of a property. • Owner: "I'm sorry, but I do not wish to spend more time on this negotiation. I really have to go

now, as I don't see the possibility of a meaningful offer. Go well “(Gets up and departs, slamming the door.)

• Sales person: "I must apologise for my client. He's a difficult person. I want you to know that I want you to get this house. Let me see what I can do.”

• Buyer: "Do you think you can convince your client?" (This is dangerous, as the buyer is now asking the sales person to take over the negotiation and could end up feeling compelled to accept the deal the sales person offers.)

The best counter response for the buyer is to inform the other parties that he/she is aware of the ploy being used, thereby nullifying it.

Dealing with the Good Cop/ Bad Cop routine

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No matter how often we see these antics in old and new movies alike, many negotiators often don’t see when these scenarios are being played out in front of their very eyes. You will be faced with two or more negotiators; one is demanding concessions whilst the other is (by comparison!) more reasonable. Often the bad cop doesn’t have to be present at all. The other party will make references to their boss or other team members’ demands for your concessions.

NOTES Most important is for you to notice what is happening, and remember that despite appearances, the ‘good cop’ is not on your side. Often the dynamics can be changed by your calling them on their behavior by smiling and saying “You know what this reminds me of? A police interrogation scene from an old movie with that old good cop / bad cop routine. Now I know you guys wouldn’t intentionally be doing that routine on me, so let’s get back to the reason why came together today.” Alternatively you could focus all your efforts on the bad cop, and ignore the good cop. Since it is the bad cop you have to satisfy, it should be her/his interests that need to be fully discovered.

THE SET ASIDE Imagine a meeting where a procurement manager is negotiating with a representative from a printing firm: • Procurement manager: "We only do business with companies that give us sixty days. I do not

know why we are wasting our time if you can’t”

• The representative is now in danger that this negotiation could collapse before a relationship is established and the facts are out in the open. If he/she is inexperienced he/she may either make a concession or allow the negotiation to collapse. The experienced negotiator may, however, respond by saying: "Let us put this aside for a moment while we first see if there are other things we both want?" (Using a putting aside gesture could support the verbal statement.)

Dealing with the Set Aside

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Your best method of safeguarding yourself stems from a combination of preparing thoroughly to predict and then understand what they should and will be asking for. Check their expressed interests against your expectations. Then develop your interpersonal perceptions to notice when the other party is being economical with the truth. There are always signs; you are strongly advised to hone your senses. We recommend your training and gaining practice in the following areas: NLP, Body Language, Behavioral Psychology and Linguistics.

NOTES THE HOT POTATO a.k.a passing the monkey The Hot potato refers to the childhood game where the hot potato is passed from one child to another. Since you cannot hold onto the potato for more than a moment you pass it on to the next player. By doing so you pass ownership of the responsibility to the next player. The underlying assumption is that no one wants to be responsible for the waste of food. The loser is the one who drops it. Business literature speaks of responsibility as the monkey, and the same principle applies here. • Buyer: "I only have £250 000 available." (Ownership of the problem is transferred to the other

party.)

• Response from a skilled estate agent: "I fully understand. So if I find an excellent property that meets your needs and is slightly outside this budget, do you want me to show it to you or only offer it to other buyers?"

• The agent passes ownership of the problem back to the buyer and thereby tests the validity of the

statement made by the buyer.

Dealing with the Hot Potato Pass it back!

SPLITTING THE DIFFERENCE Skilled negotiators know how to get the other party to split the difference. • Buyer: "You are asking £9 000 for this car, but I only have £8 000. It's a shame we are unable to

do business over a mere £1 000. Is there a way we can do something?"

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• Seller: "I very much would like to sell my car to you. Why don't we split the difference?”

NOTES • Buyer: "How do you mean? Are you suggesting we split the difference between your £9 000 and

my £8 000 and I pay you £8 500? Sounds fair to me, but I first need to consult my wife. May I use your phone?"

• Buyer after phone call to wife: "I tried. What a shame that we have to not do business over a mere £500." (The initial £1 000 difference is now forgotten.)

• Seller: "I'll tell you what, let’s split the £500. Will you then accept?" • Buyer: "So if I understand you correctly you are saying £8 250? Yes?" • Seller: Well why not? Is that acceptable to you?"

Dealing with Splitting the Difference One has two choices here; allow the difference to be split again or if the £8500 represents your Real Base -- exercise your BATNA!

THE TRADE OFF • Printer: "We have had a problem with the letterheads you wanted by the 30th of July. They will

not be ready before the 15th of August. I'm very sorry, but I have tried everything possible to accommodate you. I hope it’s OK with you."

• Skilled negotiator: (Sees this as an opportunity and knows how important it is to stop the erosion.) "Well I'm not sure. We have a very tight deadline. I'll see what I can do. Should I succeed I would have to know what you are going to do for me?"

• Printer: "I don't know. What if I add another 1 000 copies at no cost to you to the requested print order?"

In some cases it may even be good to bank this 'debt' for future use.

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Note: A principled printer might have begun this conversation with a sincere apology and have parted with less as a result of the delay in delivery.

NOTES

THE WALK AWAY Once a negotiator says to herself that he/she must have something, a big erosion of power takes place. There are no once-in-a- lifetime deals. To think in this way is to become emotionally embroiled and be unable to walk away. The ability to walk away is real power in negotiation.

Dealing with the Walk Away See Withdrawn Offer below.

DELAYING AND STALLING When one party deliberately uses delaying tactics, the other should resist the temptation to focus on their behavior, but rather concentrate on the intention behind their behavior. They need to understand that the purpose is to wear the other party down and either compel them capitulate or be more flexible.

Dealing with delaying and stalling The best counter to this ploy is to remain emotionally detached and to resist self-imposed or imposed deadlines. Declaring to the other party that their tactic is known and therefore will not succeed is a highly effective response. Setting them a deadline that is well within your own deadline is another very useful counter strategy.

PRECONDITIONS This refers to a situation where a negotiator acquires concessions by merely consenting to negotiate.

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• Manager: “If you give me the sole right to market your product we can talk, but only then.”

NOTES

The unskilled negotiator easily falls prey to this tactic and finds his/her options restricted even before the negotiations commence.

Dealing with preconditions Continuing with the negotiation and setting such issues aside without even referring to them best counter preconditions.

PERSONAL ATTACKS Personal attacks are often deliberate attempts to throw a party off balance and cause an emotional response. This requires parties to constantly be on their guard against this tactic. Merely smiling can best interrupt personal attacks. Reminding the other party that this is contrary to the initial agree-to-agree or win more-win more frame that the parties together formulated could also be a strong deterrent. People and issues must be kept apart in all negotiation.

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As discussed earlier, Ury (1991) notes that, there are three kinds of tactics, which difficult negotiators might use; stonewalling, attacks and tricks. Stonewalling is the refusal to budge; usually through the appeal to being unable to be flexible, stating bygones are bygones or referring to company policies. Attacks are the pressure tactics designed to intimidate and discomfort us to the point of our acquiescence. Attacks may take the forms of threats, undermining of credibility or authority. Tricks usually take the form of misrepresentation by negligence, omission or invention. To be more specific the usage of false or confusing information in the forms of figures or legalese, reference to another authority and the usage of what calls add ons, last minute demands that appear after agreement has already been reached.

NOTES PRECEDENTS • Employee: "Why should I? John was not required to do it. Why must I?” (Claims a precedent has

been set in the past.) • Manager: "This is an entirely new situation with totally different circumstances." (The manager is

not prepared to rationalise.)

Dealing with Precedents If they are valid accept them. As is oft mentioned, prevention is better than cure, so avoid or be careful in setting precedents.

WITHDRAWN OFFER This is a tactic that can be used at any time during the negotiation. It is often used when the other party threatens to walk away from the negotiation. It involves one party threatening to take away an agreement that has been concluded. • Marketing Manager: "I regret to inform you that my sales manager has just informed me that I

misquoted the price. What I said is far below the real price, and I will therefore have to withdraw this price offer."

• Buyer (frequent response): "I'm sorry, it’s too late to now try and retract! We accept your offer!" When the Marketing Manager now reluctantly lets it go the other party feels good at getting what they "could not have". A good counter to this ploy is to walk away and test the validity thereof.

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NOTES

THE DECOY This is a highly contentious area that poses the question: How can you know whether the other party is being totally honest when disclosing their interests? Might they be ‘loading the dice’ in their favor through adding false surplus interests into their agenda? So you hear about 13 interests, when in truth they only have 10? Two examples of how this can create a win-lose in their favor: First danger is of your making an exchange on an invalid interest of theirs, only later to have them drop this exchange from the deal – leaving you with an unmet interest of yours, and them with a deal that satisfies all of their interests. Second danger is for the other party to agree to ‘forget’ about their fictitious interests if you will forget about your real interests. There are various methods of handling this dishonest tactic. Your being thorough may be sufficient. So remember to get to their motivation for each interest by asking how each interest helps them. Then work together in ranking their interests. If you feel suspicious, trust your hunches and probe further, research more widely and withdraw to regroup. This ploy involves asking for something you do not want and very well know the other party is unable to give, and then following this up with a request for a trade-off when a negative response is received. • Manager: "I need these files within 30 days. (Knows that 90 days is the minimum time needed to

fulfill this order.) • Sales person: "90-days are the minimum time we need." • Manager: "What! You are leaving me with a very costly problem. What must I do in the

meantime? I cannot live with 90 days!" • Sales person: "I'll tell you-what we can do. I'm willing to give you a discount of 5c per file. What

do you say?" (The sales person does not want to lose the deal.)

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The 30 days was a mere decoy to secure a concession.

NOTES Dealing with the Decoy Your best method of safeguarding yourself stems from a combination of preparing thoroughly to predict and then understand what they should and will be asking for. Check their expressed interests against your expectations. Then develop your interpersonal perceptions to notice when the other party is being economical with the truth. There are always signs; you are strongly advised to hone your senses. We recommend your training and gaining practice in the following areas: NLP, Body Language, Behavioral Psychology and Linguistics.

THE PUPPY DOG This description derives from the situation where the kids want a dog and the parents are very apprehensive. • Sales person in pet shop: "Take it home for the weekend and see if you like it." (The sales person knows that once the dog has been in the home for a weekend it will be nearly impossible to return it, as the other party will then be emotionally involved.) Think of an estate agent that takes a photo of you, your wife and your children in front of a beautiful home and then gives it to you to take home. Think of the photocopier the sales person places in your office with 'no obligation' to buy.

Dealing with Puppy Dog

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The best counter is to not accept such offers or to prevent against becoming emotionally ensnarled and obligated.

NOTES

THE CALL GIRL The value of a service rendered diminishes very quickly after it has been delivered. When a concession is made it must therefore immediately followed by a request for a counter concession. To delay would mean allowing the value of the concession to diminish. This is the reason why fees are often negotiated up front. It is very important to remember that concessions prior to the commencement of a negotiation cannot be seen as part thereof.

EXTREME OFFERS

If you are the buyer, you will hear the seller ask for a lot more than you expected. If you are the seller, the buyer will offer you far less than you expected. The intention is to lower your expectations and thereby gain a concession without having to make one in return. The risk is that you will be offended and enraged, refusing to have any further dealings with the other party. It’s important to note that the other party’s culture may dictate this tactic as standard practice. A German or American trading in China will grow accustomed to extreme proposals. If the culture in which you must operate dictates extreme opening offers, then you are recommended to blend in and take advice on how to play by their rules.

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To generalize then: in western countries, separate the person from their behavior or tactic. If you are surprised, show your surprise and allow yourself to laugh. This can diffuse the situation and facilitate a deal. We don’t generally recommend an extreme counter proposal. Let the other side know that their expectations need to be adjusted, and use other deals as precedents to persuade them by how much.

NOTES

CHERRY PICKING

Buyers can model their perfect deal through shopping around and getting many bids before coming to you. They may come to you with a proposal that fully satisfies their interests on price and discount structures, quality, service, timescales etc. Often they may tell you that “this is what the competition is offering us, so you’ll need to at least match it!” In reality they would have “cherry picked” the most desirable offerings from each of your competition’s proposals. This should be seen as an attempt at unethical framing. See the relevant section in this manual for a discussion on framing. By asking who exactly you are being played off against, you are better able to satisfy your own interests. Enquire into who they were offered this dream deal by, and whether this company indeed did offer them an identical deal to the one you have to beat. If it seems too good to be true you may be right! Take time out to do your market research and examine the named competitors standard conditions and current deals. If at all possible, talk with your competition. Draw the other sides’ attention to the principle of trading and mutual concession making. Explain that in order to make the deal worthwhile you will need to gain something in return for varying your offer in favor of their cherry picked deal. Perhaps you will be the one with the challenging task of bringing this buyer’s expectations back down to earth, and perhaps you will win the deal in so doing.

COMPETITION The law of supply and demand comes to us in many guises. Similar to ‘Cherry Picking’ you may hear that your competitor offered the same deal for a lower price. You may be told that unless you meet their price the contract will have to go out for bids. More subtle may be allusions to conversation or products of your competitors. Perhaps you will notice a competitor’s product catalogue on their desk with post-it notes sticking out from several pages.

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Often you will be faced with a generalization of “Everyone else is providing this service as standard”. Of course you will want to challenge this generalization immediately, lest it sticks and they start believing their own claim. Ask who exactly they have spoken with, and then proceed to compare your

NOTES offering to the other party in detail. Don’t take their word for it; make your own enquiries if you don’t already know what your competition is offering.

Dealing with Competition First establish exactly how comparable your competitors’ offering really is. Quality, volume, service, delivery, time-scales and payment terms need to match to make for a meaningful price comparison. Very rarely will your offering be totally undifferentiated from the competition. Ideally your due diligence preparation would have armed you with information on your competitors value proposition. Work to differentiate your offering so as not to be commoditized and beaten down on price.

LIMITS Limits range from money, to time (deadlines as mentioned above), to capacity, to personnel and more. The most feared to a sales person is limited money. “We love you, your product and organisation - we just can’t afford to pay more than X.” Perhaps you can deliver within their stated limit, ensure that you apply the trading principle and get something back for making this concession. “If I sell at X, then you will need to forgo your after sales support and reduce warranty to 1 year.”

Dealing with Limits The best means of dealing with Limits is to attempt to reframe. The literature, specifically the Cialdini’s of the world show effectively through empirical research that when the risk of losing a valuable product or service is fully understood, then the limiting restrictions are brought into proper perspective. “Yes we do need to work to your budget. Let’s also remember that we are talking about saving your company 2000 hours per year here, worth which is worth X2 discounted over 10 years. So the real cost isn’t X, it’s the risk of not saving X2.”

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For more on Cialdini see the section on Persuasion.

NOTES TAKE IT OR LEAVE IT

This tactics is confrontational and sometimes even hostile. Focus on the interest behind the demand, and then work together with the other party to create options that allow the interest to be met in another way. “The workers won’t accept less than a 2% increase in salary, take it or leave it!” can be met with “I understand the workers need 2% more in salary, so please help me to understand what they will be doing with 2% more?” It may be that this money would go towards their retirement plans. If so, the company could offer to increase the pension contributions to meet the desired security levels. Until you know why they want a 2% rise, you’re not in any position to create alternatives. If you suspect a bluff, one good way to expose the bluff is to ask “If we were to agree to your demand, then would you be prepared to sign the contract here and now?” If you don’t ask this question, you run the risk making a concession only to face another demand. Often you will flush out more of their interests through asking this question. Similar is “You are going to have to do better than that!” Again, we recommend your asking “How much better, and if we do, will you be willing to sign here and now?” You are not committing yourself, but merely exposing their intentions. Another response is to use the trading principle: “If we reduce your price, then we need you to increase your order.”

POWER OF PRINT OR POLICIES

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We tend to lend the written word and company policies more weight and credibility than the spoken word and requests. For this reason we recommend you list your prices in writing rather than mention them verbally. Written words are viewed in a light of enhanced legitimacy, and are therefore less often challenged.

NOTES

Dealing with Print and Policies If presented with a price or company policy, ask who originally formulated the price or policy, and what interests it was intended to serve. They may not have thought about this policy before, and may realize that it is either defunct or does not apply. If shown a list of client company names, choose a couple of companies and ask for details of what work they did, when, what the results were, whether they have testimonies to show.

APPEAL TO EMOTION OR MORAL APPEAL You will hear the other side framing their appeal as being the ‘fair’ or ‘right’ way. In so doing, by disagreeing with their proposal, you run the risk of being branded ‘unfair’ or ‘wrong’! “If we agree to pay in 30 days, then it’s only fair that you let us have our standard 5% discount”. “Let’s be fair and share the costs on this.” “If I take this deal back to my boss, he will chew my ear off! Can you please help me out just a little?” Remind the other party that you earned your trusted position through trading in negotiations. So if you make this concession for them, you will need a concession in return. If there are interests of yours that are not fully met, now is the time to bring them up. “If I give you a discount of 5%, then I need you to add product group Y to this order.” The moral appeal could mask an interest that has yet to be fully satisfied. In the third example you could enquire “So what interests would your boss want met, can you rank them?”

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See also above Principles of Analysis

NOTES APPEAL TO AUTHORITY A.K.A. ASSOCIATION Also known as ‘Name Dropping’. They may mention having done business with a VIP or esteemed company. Alternatively they may display picture in their office of themselves shaking hands with great leaders like Nelson Mandela. The danger lies in the human tendency of wanting to do business with people who are well connected. Most important is to recognise what is happening and not to allow yourself to be influenced or swayed to treat this person any differently than you would have without this information. If you think they are stretching the truth, enquire into what they did with the person or company, be interested and ask for details. If they mention a company ask for the name and position of the person they dealt with. If they become vague or change the topic you can draw your own conclusions.

RELYING ON AUTHORITIES The use of authorities is appropriate when the issue in question requires specialized knowledge or skill that the ordinary person does not possess. If the issue is not a technical one, if it is a matter of common sense, or if it is a value judgment, a political view, or an observation about human nature, then the ordinary person is capable of understanding the evidence for it and should not be asked to rely on someone else's judgment.

DEFAULT

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The default tactic tests your thoroughness and diligence. You are given a benefit such as extra service or a more product, along with a contractual term or note saying that they assume these terms are to your liking. The onus falls upon you to get in touch with the other party and explain that you did not ask for these additional products or services. If you are lazy and either don’t read all communication, or if you don’t take action, you will be setting a precedent of tacit agreement that is difficult to escape from further down the line.

NOTES Dealing with Default It is best to be firm when responding to a default tactic. Let the other party know that you understand the intention behind the products, and that you would value them clearing all variations to the agreement personally.

DELIBERATE MISTAKE

This tactic plays on your ethics or lack thereof. You may be baited with a contract or offering that is clearly to your advantage – contrary to your discussions. The danger lies is you’re eagerly signing before the other party realises their error or omission, only to have this matter brought to your attention and corrected later on. We recommend you point out the error or omission as soon as you notice it. This tactic, as with the others, has a way of boomeranging to catch up with you in the medium to longer term.

PLANTED INFORMATION

It is somehow human nature to trust what we have learned about the other party by coincidence over what the other party is telling is about themselves. It is largely for this reason that (friendly) mergers and acquisitions (M&A) are often only announced shortly before being agreed between parties. The risk exists of the press publishing an unfounded and speculative article, thereby shooting holes in the trust that has been steadily building between companies and their shareholders. There are many case histories later documenting how one side ‘leaked’ information to the press in order to tilt the M&A negotiation in their favor.

Dealing with Planted Information

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As far as is practical, research the information at your disposal, and resist reacting in the moment. If you have a good relationship with the other party, you can save a lot of time by sharing the information with them, face to face, and asking for the truth behind it. If they verify the rumour to be true, ask for their sources.

NOTES WITHDRAWAL

Withdrawal comes in two main forms: • Withdrawal of a previously agreed term or tentative agreement. • Withdrawal from the negotiations altogether. With the first, the other party will ask to claw back their side of an already agreed tentative agreement. Be careful to understand how circumstances have changed to justify their changed need. Consult your notes to see what you had promised in return, and remind them that you too will need to withdraw this item in return. Enquire as to what interests they are looking to satisfy, and look at creating new options together. Corporate negotiations are typically highly complex – requiring parties to sense when changes in circumstances and negotiating parties demand a revisit. You will need to judge as to whether the second is a tactic or a real withdrawal. Listen very carefully to their wording to identify whether they are providing you with a conditional withdrawal. “We are going to have to break off discussions with your insistence on a 50% share in this venture!” Here you are given the 50% share condition/demand to overcome, without knowing their underlying interest. Start by pacing areas you know you are in agreement over. Your overarching reason for meeting, your sharing interests, and the areas agreed so far. Once you are both back in an agreement frame, enquire into why they don’t want you to have a 50% share. I may be that in China joint ventures are controlled by the government. Perhaps you can appoint the CEO whilst they appoint the Chairperson, and your decision making procedures allow you to veto any proposals despite their 51% share. They get the public perception of control, you get equal say.

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The Negotiation Academy - EFOS · at the negotiation table. There are many tactics and ploys in...

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