Not sure what works best? In this short video Stanford professor Margaret Neale answers questions about how to craft a winning negotiation strategy:
It’s common to wonder if it’s best to make the first offer or not. According to Margaret Neale that depends from negotiation to negotiation. Regardless of that many people believe that the person who starts is lost.
If you make the first offer, you get the benefit of anchoring your counterpart because they need to respond. But when you receive the first offer you get the benefit of the information it gives you. Consequently what’s important is what benefits you most in the negotiation you are facing at the moment.
Where is the benefit?
Should you aim for setting the anchor or getting the information? The answer to that mainly depends on how prepared you are. And how prepared your counterpart is. Being prepared and having, to the best of your ability, made an estimate on what your counterpart hopes to gain will make it easier for you to decide which of the strategies is likely to be best for you.
Do you negotiate the easy issues first?
Negotiating is trading proposals back and forth. Frequently your counterpart will want to go issue by issue i.e. solve the easy issues first. Professor Neale however is of the opinion that doing so leaves you with the difficult issues and nothing left to trade. Another aspect is that your easy issues may not be your counterparts easy issues. If that’s the case, you have lost the opportunity of using those issues to give them concessions and it could hence work against you.
Negotiating the package
Professor Neale is of the opinion that it’s optimal to negotiate at a package level. Your counterpart will start by trying to break it apart and go issue by issue which you should resist. Instead it is better to, from the package point of view, negotiate in the sense of “if I get a concession here I will give you a concession there”. That way you can avoid the battle it becomes when everybody is keeping score by negotiating issue by issue. It’s much easier to develop a win-win scenario if you negotiate on a package level.
When to walk away
At what stage should you walk away from a deal and when should you keep on negotiating? Again, this depends on how prepared you are. What are your alternatives? What will happen if you don’t get an agreement? What difference will it make if you make an agreement or walk away i.e. what’s your bottom line? What’s an optimistic assessment of what you could achieve by making a deal? If you know the answer to those questions you will know what to do.
What strategy do you normally use when negotiating? Do you negotiate issue by issue? Or do you agree with Margaret Neale that it’s best to negotiate on a package level? Do you prefer to make the first offer or not? How prepared are you when you negotiate? Or do you mainly improvise? What would make you walk away from a negotiation? What are your experiences of negotiating? Do you normally get what you want?
Video: Stanford Graduate School of Business – Photo: US Department of State