Negotiation has notoriously and historically been referred to as a dance, specifically a tango. The Argentine dance based on a constant back and forth between two partners is a visual interpretation of negotiation. In a best-case scenario, talented parties on both sides can jump right into the complicated dance, trading steps, pivoting direction, until the end, when both parties are satisfied. A worst-case scenario might leave both partners literally dancing circles around each other, each one trying to best the other, with no resolution in sight.
In reality, most negotiations likely fall somewhere in the middle. It’s a complicated dance after all, and how we react to offers, concessions, missteps and successes can have significant implications for how well the dance is done, and the negotiation mutually beneficial. Great negotiators have a stash of learned and practiced skills that start with managing expectations, establishing a goal and being completely aware of every move being made.
Manage the Size and Timing of Concessions
Competitive negotiation refers not to a single moment in time but a series of moves that make up this metaphorical dance and revolves around the size and timing of concessions. If managed well, the dance will end well. If not managed in a strategic and deliberate way, however, the results will be less acceptable.
Recognize the Substantive Value and Symbolic Value of Each Move
In competitive bargaining, each move has both a substantive value (the amount conceded) and a symbolic value (the message communicated). The substantive value is easily defined – it’s what the other side gives up or withheld. Symbolic value can be a little tricky.
Messages are being sent concerning a willingness to move, the anticipated length of the negotiation/dance, and the distance to one’s “bottom line”. Some messages may be truthful and accurate while others may be sent to disguise true positions. An effective negotiator reads both the substantive and symbolic moves in order to manage the dance.
Car buying is a classic example of competitive bargaining where there are many different moves, and each ‘dance’ is done a bit differently with every partner. Many new car dealerships are actually doing away with the traditional dance and moving forward with more of an agreement negotiation, where the vehicle has a set price and the only dance that takes place is with the prospective buyer and the financial institution providing the car loan.
Generally, the substantive value of a traditional car sale will be the amount you pay versus the amount listed on the car’s sticker. The symbolic value might be keeping that buyer as a regular customer via their valuable recommendations to friends and family, it could mean enticing the buyer to regular maintenance at the dealership, even advertisement wherein the customer allows a dealership’s decal to be placed on the vehicle.
Recognizing the Relationship Between the Size of Concessions and Time
As the bargaining begins, both the size of concessions and time follow a generally predictable pattern. Specifically, each concession tends to be about half the size of the previous concession but takes twice as long to be made. This is made in many cases when larger concessions are made early in the negotiation, but the concessions are very small and made very slowly toward the end.
Continuing to use the example of car buying, the bargaining essentially begins as soon as a salesperson approaches a buyer, and once they entice you into the negotiation, the almost comically predictable theatrics begin. Both sides use the size of concessions which can range from sticker price to trade-in value, warranties, and so on, as well as time, which can play a significant role if you’re focused on the right things.
It’s said that time is money.
The dance in car buying either starts with the sticker price, or what you want your monthly payment to be. You may go back and forth with the salesperson and the sales manager, line by line. They can probably make your monthly payment happen – so that’s a big deal, but at what cost to you? These transactions generally take place over a few hours on a single day, so it’s not surprising when customers feel like they’ve been gypped.
If you feel uncomfortable or like you’re not seeing the numbers you want to see, you’re strongly encouraged to walk away. This is hard to do, but it’s part of the dance, and more importantly, it’s part of a successful negotiation.
Time can give you an opportunity to gather more information. And if the dealership, or partner in your negotiation dance, thinks you’re ready to walk away from a deal due to issues that be might major in your book, but negotiable in theirs, you can almost bet they’ll call within the hour.
Recognizing the Psychology of Bargaining
Moving from one position to another is difficult. No one wants to make a concession that is larger than what the other side made. No one wants to make that last concession.
The tension of negotiation is bound up in those very human dynamics.
The effective negotiator recognizes the difficulty, psychologically, in making concessions, and assists the opposing negotiator in making them with persuasion, face-saving and creativity.
Chris Voss, a former FBI hostage negotiator, famously said “Negotiation is often described as the art of letting the other side have your way.” In the past, people thought taking emotion out of a negotiation and focusing exclusively on the business at hand, was the way to go. Now, it seems clear that despite our best intentions, how we feel and in turn, how we make people feel about certain things is inherent to every level of the process.
The car buying process, for instance, might start with a commercial for a vehicle. The business end of the commercial is always at the end of the ad, and almost always sped up to near incomprehension. Why? Manufacturers are obligated to be transparent about certain details they know may kill the fantasy they just created for you. If everyone only cared about getting from Point A to Point B, commercials would be useless. The vehicle has to appeal to your emotional needs before you even make it on the lot, and car manufacturers spend a lot of money honing in on exactly that feeling.
And during the negotiation itself, it’s critical to listen to the ideas each side is considering (or what they’ll let you in on). Find out what the hesitation is – maybe it’s not really the fact that buying the minivan is such a hit to a buyer’s aging ego as it is a realization of the size and obligations a growing family includes.
Being prepared and having done the research on what you’re there to do is key. Honesty is also critical, and you should be open in expressing what your goals are – a car salesperson, for instance, may be able to negotiate on levels you, as the prospective buyer, are not even aware of. Some dealerships are focused on the amount of money they make per car, others are focused on the pure quantity they’re able to sell. Depending on what goals your dealership is working with, being honest about what you really want may lead to some creativity on both ends that can result in a better deal for both sides.
Embrace Opportunities for Linkage
Linkage is a negotiation strategy that brings together two separate issues and, by connecting them, creates a resolution to an otherwise difficult circumstance. Linkage recognizes that the packaging or bundling of a proposal may be more acceptable than an attempt to deal with each, individual piece of the proposal.
While it’s not available in all circumstances, in deals where more than one issue is involved, linkage can be an influential technique.
Identify the Separate Issues that Might be Linked in Negotiation
One of the best ways to identify linkage opportunities is by getting to know your negotiating partner. Salespeople do this by talking to you – where do you work, what part of town, kids, — they’re seeking out all the different needs you might have in a vehicle. In no time at all, you go from imagining yourself with the windows rolled down in that new SUV to the latest mini-van with a new rear-seat entertainment system and tinted windows. As the other side in this negotiation, don’t be afraid to play the same game.
In real estate, linking concessions comes into play in almost every transaction. To facilitate a quick sale, for example, a seller might agree to fence in a backyard for a prospective buyer. This is a good concession since it’s an issue the buyer wants, and the seller doesn’t necessarily have to budge on the overall price. However, the buyer wants to close sooner rather than later – so a real estate agent might link these two issues by putting a portion of money from the sale in escrow, whose disbursement is tied to the agreed-upon conditions.
You also hear about linkage occurring in political spheres. Members of all types of government across the globe are always trying to solve multiple problems to their mutual benefit. A bilateral trade agreement is one example. In these agreements, two or more countries reduce or eliminate tariffs, and other trade barriers to make the exchange of goods between the countries more efficient and optimal. In this situation, they are linking trade from one country to another. Now, if either country gets embroiled in some sort of imbroglio, the other party may want to tighten these agreements in an attempt to coerce the other party back into a more balanced situation, so it can be a tricky situation just as easily as it can be advantageous.
Learn How to Negotiate with the Pros
The Lowry Group, LLC (TLG) is the outgrowth of almost three decades of experience helping organizations achieve their next level of success throughout the United States and around the world, including conflict resolution. TLG’s work began as an external consulting, systems design, and training resource composed of faculty from the Straus Institute for Dispute Resolution at Pepperdine University School of Law.
But TLG has moved beyond its academic roots to respond to repeated requests from corporate and government organizations for “real world” assistance. The TLG team has been chosen by scores of major organizations that must become more effective in negotiating sales, business transactions, client relationships and disputes.
What makes companies and individuals truly successful is the ability to ably manage negotiation. We created resources you need to identify, resolve and manage negotiation. From CEOs, to small business owners, and to anyone managing a team – developing the skills to navigate negotiations is not just important, it’s imperative. Managing negotiations is a cornerstone not only in conflict resolution but also in understanding the psychology of business relationships. Learn how to up your negotiation skills with the Negotiation Navigator Online Course!
