The unreliability of our gut: Intuitions in negotiation

The recent summit between President Trump and Kim Jong Un has brought the issue of intuition in negotiation to the fore. The North Korean dictator reportedly spent years planning for such a meeting, trusting little to his gut and everything to his analysis and preparation. President Trump, in contrast, is widely known to rely on his gut, for example by saying that he would simply intuit whether a deal with Kim was possible within the first minute.

Given these two divergent approaches, each with its own appeal, it’s probably worth considering the reliability of our intuitions in negotiations. Unfortunately, I’m here to suggest that they are not very reliable at all.

In the spirit of making life (if not world events) negotiable, consider the following five ways that our intuitions can fail us. Our intuitions often tell us…

  1. To avoid making the first offer. Seems intuitive to let the other party move first. That way, we can learn about their preferences and maybe get a great deal. Right? Well, often wrong. As I’ve suggested often before, if we do that, we miss the golden opportunity to focus the other party’s attention on our own goals and desires, making us counteroffers very much in line with our own thinking. Instead, we end up making offers very much in line with theirs.
  2. To deal with one issue at a time. Seems intuitive to agree on each issue in turn, and probably the easiest first. Right? Typically wrong again. If we do that, we treat each each issue as a competitive fight, losing the opportunity to link and trade issues. Accordingly, we leave ourselves with a tremendous problem when we come to the truly contentious issues, typically at the end.
  3. That if I want something, you don’t. Seems intuitive that two negotiators want two opposite things. Right? Wrong more often than you’d think. People do want the opposite of some things, typically money or other quantitative issues. But, as I’ve suggested often before, they often want the same thing on qualitative issues—or at least care less about some qualitative issues than others, paving the way for tradeoffs. Intuition fails us again, precluding the possibility of a win-win.
  4. To focus on our bottom line. Seems intuitive to focus on our bottom line, and especially whether the deal under discussion is better than said line. Right? Wrong or at least woefully incomplete. If we focus exclusively on our bottom line, chances are that we’ll settle for something just better than that line, which is often not very good at all. Instead, we need to focus on our target, only coming back to our bottom line when we need to, at the end.
  5. That everyone negotiates pretty in much the same way. Seems intuitive that everybody around the world pretty much thinks about and approaches negotiations the same that way we do. Right? No, totally wrong. Mountains of evidence now indicate that negotiators from different cultures very markedly in their strategies, interests, and the ethical or legal standards they bring to the table. Intuition fails us again, and this time with a bang.

So you see that, appealing as our gut may be, it’s not particularly reliable in negotiations. And now that we all understand as much, maybe we can collectively convince our political leaders.

Preparing to negotiate? Use your “BRAIN”!

Most people know to prepare before a negotiation. If not, then negotiation instructors like me frequently remind them. So the problem is not a lack of awareness about the need to prepare. It’s the lack of a framework describing what to prepare. What exactly should negotiators ponder before arriving at the bargaining table?

Since knowing what to prepare is pretty much a prerequisite for preparing itself, and preparing itself a prerequisite for a negotiable life, let me suggest you use your BRAIN (via the following acronym):

  • BATNA. All good preparation starts with a consideration of alternatives—specifically a negotiator’s next-best alternative if the current negotiation fails (i.e., their Best Alternative to Negotiated Agreement or BATNA). Otherwise, they’ll never know how much power they have or how far to push the envelope.
  • Reservation price. Great negotiators transition directly from their BATNA to their bottom line, walk away point, reservation price. Otherwise, they don’t really have the foggiest idea whether to get to yes or get to no and go with their BATNA.
  • Aspirations. BATNAs and reservation prices are great, but negotiators who spend too much time pondering their alternatives or minimally acceptable agreements (i.e., their reservation prices) tend to get them. To get something better, great negotiators also define their goals, targets, aspirations—actively considering what they really want when their counterpart demurs.
  • Interests. The acronym might as well stop there (and consider the acronym if it did), but the preceding letters alone tend to elicit a very competitive negotiation. Great negotiators know that spending the whole time competing to attain their aspirations, clear their reservation price, or avoid their BATNA results in a competitive scramble over the crumbs of a very small pie. Instead, they know they need to identify and find creative ways of fulfilling both negotiators’ overall objectives (i.e., their interests), and thereby “grow the pie.”
  • Negotiation counterpart. So why not BRAI then? Because that makes very little sense as a word and even less sense as a preparation strategy—the latter because it completely omits the other party. Negotiators who BRAI, and most negotiators do, fail to anticipate their counterpart’s situation and thus find it immensely hard to understand or respect that situation while negotiating. So great negotiators repeat the preceding letters for their counterpart, taking a wild albeit educated guess as to their counterpart’s BATNA, reservation price, aspirations, and interests.

So the next time you sit down to prepare for a negotiation, don’t just use your mind—use your BRAIN! Doing so can’t spell the difference between a smart negotiation outcome and an outcome that everyone deems dumb.

Seven surprising reasons why negotiators lie

The students in my negotiation classes are very rarely surprised to learn that negotiators sometimes lie. Deception, they assume, is central to negotiation. “And why do negotiators lie?” I probe—a question that usually elicits eye-rolls and answers related to one of two obvious motives: greed (e.g., “to get a better deal”) or fear (e.g., “to avoid a bad deal”). And the students are partially right, in that greed and fear can explain a fair portion of negotiators’ deceptions.

But the students are wrong in one critical respect: some of the most common reasons why negotiators lie have little to do with either motive. Indeed, although research has not and may never ascertain the proportion of lies attributable to each specific cause, lies born of greed or fear are probably—and surprisingly—in the minority. So let’s consider some of the most common reasons why negotiators lie, in hopes of making ethically challenging situations negotiable:

  1. A lack of preparation: The most common source of deception in negotiation, most likely, is a distinct lack of forethought. How will I answer that tough question about my alternatives? What will I say if they ask me, point-blank, about my bottom line? We often fail to consider such questions in advance, which can tempt us to deceive when our counterpart actually asks them.
  2. A lack of creativity: Negotiators often lie because they find themselves in a tough spot and perceive a false dilemma: to lie or not to lie? In reality, even a small dose of creativity often suggests a third way. What if the recruiter asks if I have a competing offer? Could I focus on the fact that I just hit the job market and am expecting great success, instead of fixating on a yes or no?
  3. A lack of time: Negotiators often lie because they don’t take the time to consider the situation carefully, opting for the simplest and often the most self-serving option, which is the most deceptive.
  4. Confusion between competition and deception: Negotiation scholars like to distinguish between competitive and deceptive negotiation behaviors. Put simply, real negotiators often don’t. They see deception as just one more competitive arrow in the quiver, appropriately attached to the bow whenever a value-claiming opportunity arises.
  5. Subtle environmental cues: Believe it or not, negotiators may be tempted to lie by the objects, substances, or physical spaces around them. As I’ve recently summarized, psychology offers many reasons to suppose that environmental cues as innocuous as money, fake sunglasses, or ominous colors can heighten the temptation to lie.
  6. Mythical images of the negotiator: Relatedly, and as I’ve also described before, negotiators and negotiation are steeped in mythology. Our most common image of the successful negotiator—the aggressive, competitive, no-holds-barred, take-no-prisoners, wheeler-and-dealer (no names)—is incomplete at best and wrong at worst. Incorrect images lead to inappropriate behaviors.
  7. Agreement bias: Put simply, we don’t feel very good walking away from our negotiation counterparts, even when we know we should. So when we see that one little lie is all that’s required to seal the deal and walk away smiling—when we tell the counterpart the sweet words they want to hear or omit the treacherous words they don’t—well, then we often end up lying.

In sum, my negotiation students are quite right that greed and fear underlie some of the deception we see in negotiations. But they—and probably most other people—are wrong in thinking that greed and fear are the only or even the primary sources of lies in negotiation. They’re not! People lie for manifold and diverse reasons, not that any of those reasons excuse them for doing so. Here’s hoping that knowing the reasons can help you detect deception from others and wholeheartedly avoid it yourself.

I need more money! Five topics to ponder before requesting a raise

“By failing to prepare, you are preparing to fail.”

–Ben Franklin

 

Despite that supposedly low inflation rate, everyone’s cost of living seems to constantly go up. With rising costs come the need for a rising income. Increasing your income, in turn, often requires you to request a raise.

Asking the boss for more money is tough! But Ben Franklin’s advice makes even the toughest challenges negotiable.

Although Ben’s quote did not appear in one of his negotiation blogs, it might as well have appeared there: preparation is probably the single-biggest predictor of negotiation success and failure, especially in important and complicated negotiations like raise requests. The real question, then, is what to prepare—what things to think about in the heart-pounding moments before the request?

Well, imagine yourself palpitating at your desk, two hours before the raise meeting. Before this or any other important negotiation, always consider the following five issues:

    • Your interests. Why do you want a salary increase? “Because I need more money!” you’re thinking, as well as, “What a stupid question!” Truth-be-told, it’s often far from a stupid question. To see why, force yourself to ask yourself “why” again. Why do you need more money? Are you planning to buy something big? Struggling to pay your bills? Saving up for school? All of these are common reasons to request a raise, but each has very different implications for the types of solutions that might satisfy you. If you’re planning to buy a house next year, an end-of-year bonus might help, but if you can’t pay your electric bill right now, an end-of-year bonus won’t do you much good. If you’re saving for school, your company’s educational reimbursement policy is probably more relevant than your paycheck.
    • Their interests. What’s likely to motivate your boss? When she initially demurs, why? Is this year’s budget already gone? Would paying you more create inequity? Is she just demurring to demur? Again, knowing why means knowing what solutions might work. If she doesn’t have any money right now, maybe she will at the beginning of next fiscal year. If it’s inequity she fears, maybe offering to assume more responsibility would make a raise more palatable. If she’s demurring to demur, maybe you should just justify your request.
    • Your reservation price. What’s the worst outcome you would accept? This of course depends on your best alternative to your current job. If you don’t have one or haven’t thought about what it might be, then you’d have to accept almost anything (or nothing) in the way of a raise. But if you have an attractive, high-paying job offer burning a hole in your personal inbox, you should set an aggressive minimum for your current company and accept nothing less.
    • Their reservation price. What’s the most they’re likely to give? This of course depends on their best alternative to you. If they could step out the front door and sneeze on somebody with your skillset, then they’re sure to act like Scrooge. But if finding another “you” would take months or years of aggressive recruiting, then they’re likely to say yes to anything reasonable you request. Most importantly, if the most they’re willing to give is less than the least you’re willing to accept, you’d better start looking for another job and/or come up with a creative way to satisfy your interests that doesn’t involve a salary increase.
    • Your target. What’s the best salary you could realistically expect? That number should be much closer to their reservation price than yours. And since their reservation price is a number that they would be willing to give, they will not be offended when you focus on it and use it to make a first offer during the negotiation, which is generally what I’d advise you to do.

 

The bottom line: in this and any important negotiation, listen to Ben Franklin. What do you think about while preparing for an important negotiation?

 

PS If you like what you’re reading and would like to learn more, I’m teaching an open-enrollment course on Strategic Negotiations in November. I hope to see you there! http://carey.jhu.edu/academics/executive-education.