Tag Archives: bargaining

Smash through the standoff! Introducing issues to unproductive negotiations

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At some point, many negotiations spiral into an unproductive standoff over money—an issue over which the negotiators tend to utterly disagree. Most often, such standoffs end with an escalation of conflict or proliferation of concessions, neither of which is particularly productive. But, as I teach in my negotiation classes, there’s third way that can make life negotiable: adding another issue to the table.

“So what types of issues should we add?” asked a participant named Stuart Merkel in one of my recent executive education courses? “Is there a set of categories—a list of topics to consider adding to the table?” And I must admit that I was hard-pressed to provide a reasonable answer. I had no choice but to scratch my head and say no, to the best of my knowledge.

So why not take this post as an opportunity to detail the most common categories of issues that negotiators add to the table—new topics that can smash through the standoff and make everyone happier? Drawing from negotiation research and my observation of innumerable students negotiating, I’d propose the following top-ten list of issues to consider introducing, should you find yourself in a standoff:

  1. Time: How quickly will the agreement be executed?
  2. Quality: At what level of quality?
  3. Performance incentives: Will the seller get a bonus for completing the work / delivering the product early or excellently? Or a penalty for completing it tardily or poorly?
  4. Responsibilities: Which part of the agreement will each party be responsible for executing?
  5. Payment terms: How quickly, at what level of interest, and in what form will the buyer issue payments?
  6. Add-ons: What additional services or products will the seller bundle with the main commodity?
  7. Future business: After the current agreement, will either party consider or commit to engaging with the other?
  8. Future events and contingencies: How will the parties adjust for future events, foreseen or otherwise?
  9. Warranties: Will the seller guarantee the quality of the product or service, and for what period of time?
  10. Returns: Under what conditions will the buyer be able to change their mind?

So thanks, Stu, for the great idea—an idea that inspired a post that will hopefully help people break through the standoffs they’ll inevitably encounter eventually.

“That’s not negotiable.” (Yes it is)

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Many an aspiring negotiator has been stymied by three simple words: “That’s not negotiable.” How often do car dealers, retailers, and employers utter that tremendously painful phrase? And how directly does it strike at the heart of our grand negotiation strategy?

Well, I’m here to tell you that sometimes it’s not negotiable. But many times, it is. And recognizing as much can make life itself more negotiable.

To show you what I mean, let me decode three common meanings lurking behind the three simple words, none of which amount to it actually being non-negotiable:

  1. “I’m going to try this tactic on you.” Oftentimes, people say it’s not negotiable simply because they know you won’t question them. Car dealers will tell you that a particular discount cannot be negotiated, only to remember an even better discount if you happen to start walking out in pursuit of a better offer. But most people don’t, so the non-negotiability rarely gets questioned.
  2. “I’m referring to price, specifically.” Oftentimes, people really won’t haggle on price, but they’re more than happy to haggle on anything else. I recently visited a sofa store with their no-haggle guarantee plastered on the door, echoed by the salesman’s immediate assurance that prices there were non-negotiable. But then he immediately informed me that I could get free shipping if I bought during the sale. “And can I get free shipping if I buy after the sale?” I asked. “Well, I guess we could do that,” he responded. Price was not negotiable, but he was chomping at the bit to negotiate delivery.
  3. “It actually is negotiable.” Oftentimes, people will tell you something is not negotiable only to trade it off with something else, thereby making it negotiable. Employers will tell you that salary is not negotiable, only to agree to virtual work, a different location, or a different bonus plan if you accept the given salary. But by trading the “non-negotiable” issue with other negotiable issues, they’ve essentially made the non-negotiable issue negotiable.

In sum, it might not be negotiable. And if not, so be it. But I wouldn’t conclude as much from the three simple words. Instead, I’d try to probe whether it’s a tactic or a comment confined to single monetary issue like price or salary, setting off in search of more negotiable terrain.

Three traps to avoid in every home repair negotiation

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We’ve all been there: We’ve seen something BIG—and I mean BIG—start to break in the house. A roof, a furnace, a major piece of plumbing: the feeling of dread is the same. So is the need to get several bids, lest you expose yourself to outrageous bids from unscrupulous repairmen.

But what to do with the multiple bids as they arrive? It’s not obvious, but it’s negotiable. This post will discuss three traps to avoid when soliciting multiple bids for a major repair. Since you should really entertain multiple offers in any negotiation, though, these traps are truly universal.

So imagine the dreaded day has arrived: your ailing roof now needs replacement. You’ve set a budget ($30,000 or less), solicited three bids, and just begun to receive them (gulp). Here are three traps to avoid as the bids roll in, each grounded in a particular psychological state and each likely to produce a particular type of poor agreement:

  1. Satisficing: Grounded in laziness, satisficing involves accepting the first offer that satisfies your minimum requirements. Supposing that the initial bid was $31,000 and the next was $28,000, satisficing would involve accepting the second bid before waiting for the third or continuing the discussion with the first two companies. Why would anyone do that? Because it’s easy (and easy to justify). Instead, wait for all three bids, then continue the discussion with the best two (at least), in order to see which can fulfill your fundamental interests best. Note that those interests might have nothing to do with price (e.g., the timeline for the work).
  2. Hubris: Grounded in anger, hubris involves walking away from a negotiation even though it serves your interests better than the alternatives. Suppose that the third bid came in at $27,000, which made you so angry at the initial $31,000 bid that you tore up their offer and shot off an email chastising their greediness. But oops! Reading the fine print on the remaining two offers, you now see that both are offering to complete the work in six weeks. You seem to recall that the first bid promised immediate repairs, which sounds a lot better in light of the impending rainstorm. So hubris involves rejecting a better offer. Why would anyone do that? Because it feels good to voice our irritation. Instead, try to retain and compare all offers against your fundamental interests (e.g., preventing the drowning of your daughter’s stuffed animals), staying at the table with the parties that meet them best—even if certain aspects of their offer, well, make you displeased.
  3. Agreement Bias: Grounded in fear, agreement bias is pretty much the opposite of hubris. It involves staying in a negotiation and actually reaching an agreement that serves your interests less well than the alternatives. Having ripped up the first bid, imagine you’re now negotiating with the second company ($28,000 bid). You’ve since learned that their offer is essentially identical to the third, except for the additional $1,000, which they refuse to remove. But there is the salesman from the second company—sitting across the table, smiling sweetly, and pushing the contract in your direction. Agreement bias involves signing it even though you know the third offer is better. Why would anyone do that? Because it feels uncomfortable to say no to somebody’s face—many of us are actually afraid of it. Instead, and again, try to stay focused on your interests, one of which must be saving $1,000. If that’s too hard, now would be a good time to try ratification.

Bottom line: When comparing multiple bids, it’s all about staying focused on what you really want and need. That sounds unbelievably obvious, but decades of research show people falling into these traps, then struggling to climb out solvent and satisfied.

Have you or someone you know ever fallen for one of the traps?