5 Mistakes You Should Absolutely Avoid in Negotiation
Negotiation plays an important role in our daily life. Although it is often associated with business or diplomacy, the truth is we negotiate every day: when we select our next holiday’s destination with our family, when we decide which restaurant to go with our friends, or in any situation where something needs to be discussed collectively.
But let’s go back to business. Quite often, business negotiation is not well understood. Many call themselves “good negotiators” – and genuinely believe they are – when they actually do not know the basics of negotiation. Negotiation is like mathematics: if no one shows you your mistakes, you won’t be able to realize your mathematic reasoning is wrong and therefore you will start to believe you are actually good at mathematics. In the same way, if no one tells you your approach of negotiation is wrong to begin with, you will grow confident about your abilities after each negotiation, even though the results you obtained are often sub-optimal.
That is because negotiation is a very complicated process that is affected by A LOT of different psychological biases. Even if you do not know them all, you can still improve your results in negotiation by being aware of (and avoid) these 5 major mistakes:
Mistake 1: Thinking you are rational and objective (because you are definitely not)
People tend to think that negotiation is a very rational process where all the parties involved remain perfectly objective and cool-headed to try to get the best result out of the negotiation: this assumption is far from true.
The negotiation process involves many psychological biases that go against rationality. Although there are too many to list them all, here are some of the most important:
- The zero-sum bias: probably the most impactful. This bias leads us to believe that negotiation is a zero-sum game (meaning that if you gain something your negotiation partner will have to lose something in return, and vice versa). We will come back to that later.
- The confirmation bias: this describes our tendency to confirm our assumptions by considering only the information that support them, leaving aside everything that contradicts them.
- The emotional biases: anger, happiness and things as simple as weather influence us more than we think.
- The attribution error: we misinterpret our counterpart’s behavior, giving it the wrong cause.
- The effect of stereotypes: we make assumptions concerning our business partner based on his belonging to a specific group.
- Finally, we often have much more interests at stake than we think during a negotiation. Beside purely economic interests, negotiators are also influenced by self-esteem considerations and the desire to maintain good relationships with their counterpart.
Some of these biases will be considered in details later in this post.
Mistake 2: Believing negotiation is a zero-sum game
There are two approaches to negotiation:
- Many see negotiation as a form of competition with winners and losers. In other words, your gains are directly linked to your counterpart’s losses.
- Other people believe negotiation is a collaborative process where you try to find a mutually beneficial deal with your counterpart.
The “competitive” approach is predominant in Western societies. However, this point of view is wrong in 99.9% of situations. It is indeed nearly impossible to find a situation where the negotiators’ interests are absolutely opposed. Why do we often feel that way, then? That is because we behave according to our beliefs. By believing we will have to bargain hard to get what we want, we do that right at the beginning of the negotiation and close the door on any attempt of collaboration. This is the zero-sum bias, and it is dangerous for two reasons:
- Entering into a confrontation can endanger our relationship with our negotiation partner on the long run. Depending on the situation it can be harmless or very risky (if our counterpart is going to be a long-term business partner, for example).
- More importantly, competition in negotiation leaves value on the table. It leads the negotiators to set compromises, which are sub-optimal by definition. Instead, it would be more productive to find creative solutions allowing both parties to fulfill their interests.
Mistake 3: Focusing on claims instead of interests
Here is a classical example often used to illustrate this point:
Two sisters are fighting over the last orange in a basket of fruit. In order to solve this conflict, their mother cuts the orange and give each of the sisters one half of the fruit.
Now, let us say that the mother asks her daughters why they want this orange:
“I need the peel to make a cake”, says the first sister.
“I want to make an orange juice”, says the second sister.
In this situation, a new solution has been found: the mother decides to peel the orange and give the zest to her first daughter, then gives the orange to her second daughter so that she can make orange juice. In this way, both sisters are satisfied.
What is the difference between the first and the second situation?
In the first case, both parties (the sisters) were making claims. To put it another way, they were only saying what they want. The final solution was based on a sub-optimal compromise.
In the second case, an optimal solution was found because both sisters said why they wanted the orange, i.e. why they were making their claims. This is their interests.
What can we learn from this example?
When you are negotiating, the most important question is WHY. Ask yourself why you want what you want: by doing that, you will learn more about your own interests. Likewise, ask your negotiation partner why he is making his claims to learn more about his own interests. Knowing your counterpart’s interests and yours is crucial as it will allow you to come up with creative solutions that fulfill all the parties’ interests in a better way.
Mistake 4: Assuming too much
This piece of advice is very important when you prepare for the negotiation and during the negotiation itself, to some extent.
When we prepare for negotiations, we are faced with many unanswered questions concerning our counterparts’ interests, their negotiation style… We might not even know who will be negotiating with us to begin with. In this situation, we need to make assumptions.
While assumptions are certainly helpful, it is worth keeping in mind that these are only assumptions that need to be verified as soon as possible. Remember the biases listed earlier in this post? We have already talked about the confirmation bias, i.e. our tendency to ignore the information going against our assumptions. If you assume your counterpart is going to negotiate aggressively you will prepare for that, and as a result you might end up ignoring your counterpart’s attempts to cooperate and trigger yourself the competitive behavior you anticipated (whether your initial assumption was right or wrong).
In the same way, stereotypes play an important role in making assumptions. You will probably make very different assumptions regarding your counterpart depending on whether he is a priest or a car salesman, for example. Be very careful with this, as stereotypes often prove to be wrong!
Mistake 5: Overlooking Preparations
Preparation is crucial in negotiation, and should last no less than the duration of the negotiation itself. Here are the steps that must absolutely be followed during the preparation:
- Define everyone’s interests: How could you possibly negotiate if you do not know what you really want? Start by defining what you want out of the negotiations (your claims). Ask yourself why you want it (as an example, “I want a 5% discount” is a claim, not an interest. Why do you need this discount?). When you have found your interests, write them down and find out about your future negotiation partners’ interests. Of course, that takes more work: use all the means available to find out what your counterparts’ interests are. You will probably make many assumptions at this stage: keep them in mind, but do not forget that these assumptions will need to be verified during the negotiation.
Note: if you negotiate with the representative of an organization, do not solely focus on his company’s interests. You will negotiate with a human being first and foremost, and this human will have his own interests (e.g. bonus linked to the result of the negotiation, need to maintain his self-esteem…)
- Find out about your best alternative: think about what you will do if you cannot reach an agreement: what is your best option? Once you have defined this alternative, write it down and keep it in mind during the negotiation: there is no point in accepting a deal of lower quality than your best alternative.
- Find out about who your partners are, as well as the state of your current relationships and which relationship you would like to have. Depending on whether or not this relationship is important, you might want to focus on improving it as one of your main objectives.
- Come up with as many solutions as you can (at least five, but feel free to write more: the more the better!). These solutions must be fair and satisfy both your counterparts’ interests and yours.
The bottom line: Communicate!
To conclude this post, I would like to emphasize the importance of communication in negotiation: most of the strategies above only work if there is a sufficient level of communication and trust between parties. Only by achieving that can you collaborate with the other parties to reach a deal that satisfies everyone’s interests and does not harm existing relationships, at the very least.
Sometimes, people are stubborn. What if the other parties won’t cooperate?
There is only ONE situation where you should never try to collaborate with your negotiation partners: This is when they do not want to cooperate themselves, whatever you say or do. There can be many reasons to that: some negotiators want to feel the satisfaction of “dominating” their counterpart by getting a better deal than them – even though this deal might not be good objectively – while many others are suspicious of any cooperation attempt and perceive collaboration either as a deception or a sign of weakness.
In any case, here is what I usually do when I have to negotiate (at work or in my personal life): first of all, set the scene by explaining how you would like to carry out the negotiation, and show the benefits of your method to your counterparts. If one of your partners starts by making claims, just ignore them and keep your cool. Do not rush things, and take the time you need to get the other parties to cooperate. If after some time it appears that some of your partners won’t cooperate no matter what and keep their aggressive behavior, then play the same game they do. Never try to cooperate with someone who uses a competitive approach, as you would almost always “lose” and get a bad deal. Although this is probably the worst way to negotiate, sometimes you just do not have a choice!
What strategies do you use in negotiation? I would love hearing from you!