Bargaining for Advantage Read online

  But notice something. Even these obvious examples of situations that do not seem to involve negotiation arise within the context of ongoing relationships that are characterized by deeply embedded norms of reciprocity. If our neighbor is known for his loud, late-night parties and never responds when we ask him to quiet down, his appeal for help in the storm may have to wait until we have taken care of others. And the customers we serve give us more business the better we serve them. There is a quid pro quo. So situations that involve pure cooperation and sacrifice with no thought of reciprocal accommodation are, in fact, relatively rare occasions. The rest of the time, we are involved in some sort of negotiation, broadly defined.

  Not all negotiations are alike. Bargaining with family members and friends over such things as schedules, meals, obligations, and duties is more in the nature of problem-solving sessions than deal making. That is because we usually negotiate differently with those we love than we do with strangers.

  Pushing past the protective envelope of our closest relationships, we confront a complex world of negotiations with banks, stores, hotels, airlines, credit card companies, health care institutions, and the other services that govern our day-to-day lives. In the industrialized countries, many of these consumer negotiations are mediated by markets and we pay prices that are marked or printed on tags. As American consumers are rapidly learning, however, there is often a lot more room to negotiate with hospitals, department stores, and other service providers than we once thought. The norm of “customer satisfaction” often means there is one price marked on a price tag for those who wish to pay it—and another, lower one for those who wish to negotiate.

  Other parts of the world use an explicit ritual of haggling as the expected way of conducting consumer sales. A visit to the open markets of India or Egypt shows how merchants rely on bargaining to accomplish even the simplest consumer transaction. In these societies negotiation is an important form of personal expression and even entertainment, not just a business event.

  Finally, in our jobs and professions, we depend on negotiation skills to get things done with coworkers, bosses, suppliers, and, at the highest levels, CEOs and boards of directors. Indeed, negotiations within companies and institutions to solve in-house problems are among the most common and troubling negotiation situations many people face on a daily basis.

  Through all of this, as I pointed out in the introduction, many reasonable people have a nagging, uneasy feeling about negotiation. They are anxious about it. The interpersonal conflicts, the possibility of leaving “money on the table,” the chance they could be “taken,” and even the thought that they have done “too well” are all unsettling.

  Knowledge about the negotiation process and bargaining strategy helps reduce this anxiety and puts you on the road to improved negotiation results. And the place to begin building this knowledge is the same place that all negotiations begin: with the First Foundation of Effective Negotiation—your own style and personality as a negotiator. That is where our study starts.

  What’s Your Style?

  Your personal negotiation style is a critical variable in bargaining. If you don’t know what your instincts and intuitions will tell you to do under different conditions, you will have a great deal of trouble planning effective strategies and responses.

  Steve Ross, the supercompetitive founder of Warner Communications and later CEO of Time Warner Inc., was once playing canasta with his wife and another couple on a trip in a Warner corporate jet. He lost the last game just before the plane was preparing to land—and ordered the pilot to circle the airport until he finally won a hand. This was typical of the way Ross played the “game” of business, and people who negotiated against him were wise to take this personality trait into account.

  By contrast, Larry King, the popular host of CNN’s interview program Larry King Live, has a reputation as one of the nicest men in the world of big-time entertainment. In the middle of King’s career, his agent decided to shop Larry to various other television networks. The idea was to gather some competing offers, then demand a multimillion-dollar raise from CNN’s owner, Ted Turner.

  The agent’s plan was working fine, with seven-figure offers coming in from various networks, but Turner would not budge. The agent then played his “other offer” card and said that King might move to a major television network if Turner would not match the competing bids.

  Turner had known King for years and knew him to be a loyal and cooperative guy, not a “hardball” negotiator. With the agent sitting right there in Turner’s office, Turner picked up the telephone and called King directly. After a little chat about old times and how much he liked King as a person, Turner laid his request on the line: “Stay with me,” he said.

  “OK,” said King simply, “I’ll stay.”

  The agent was flabbergasted. But King was happy. He liked the money he was making, he liked Ted Turner, and he liked the fact that Turner liked him. Ted gave Larry a modest raise. Score one for Ted.

  Lesson: If you are basically a nice person, it will be a real stretch to act like Steve Ross at the bargaining table. You can do it, but not for long and not with a lot of credibility. And if you are basically a competitive negotiator, your go-for-it instincts will very likely shine through no matter how hard you try to suppress this aspect of your personality. In fact, even if you genuinely hate to negotiate, you can do just fine, provided you accept this about yourself and learn to work with it.

  I once led a workshop for a number of high-level business luminaries—including a man who founded and serves as chairman of the board at one of the world’s most successful Internet companies. After the workshop, he confided to me that most negotiations make him quite uncomfortable. As a result, he avoids the process whenever possible and considers himself a poor negotiator. I responded that he had made several billion dollars, so he could not be that bad. Not true, he replied. He had succeeded by focusing on his innovation skills—designing an Internet auction system that completely eliminates all haggling from the selling process—and by delegating the really tough negotiations at his company to other executives who excel at (and enjoy) bargaining. Instead of negotiating, he specializes in collaborative aspects of his business such as strategic planning, managing the board of directors, and enhancing the experience of his company’s unique online community. He became successful not by overcoming his negotiation weaknesses, but by accepting them.

  So my advice is to begin your study of negotiation by taking a good look in the mirror. Which moves come most naturally and comfortably to you? And how can you use those instincts as a solid foundation to build a set of effective skills and strategies for achieving your goals? You will become the best negotiator you can be by identifying and then building on your genuine strengths and talents.

  Five Strategies and Negotiation Styles: A Thought Experiment

  To begin our exploration of your bargaining strengths, try the following thought experiment. Imagine you are one of ten people, all of whom are strangers, sitting at a big round table in a conference room. Someone comes into the room and makes the following offer: “I will give a prize of one thousand dollars to each of the first two people who can persuade the person sitting opposite to get up, come around the table, and stand behind his or her chair.”

  Do you have that picture in mind? You are one of the ten strangers at the table. You can see the person sitting opposite you, and that person is looking at you. The first two people who can persuade the person sitting opposite to get up, come around the table, and stand behind his or her chair gets $1,000. Everyone else gets nothing.

  What strategy would you use to respond to this strange offer? You will need to move quickly because everyone else is also thinking about what to do.

  Before reading on, close your eyes and think of your response. Note what strategy comes to your mind first and write it down. Then see what other responses you can think of. The possibilities will help me introduce five generic negotiating strategies, whic
h will, in turn, lead us to a deeper look at your personality as a negotiation variable.

  One reaction is to sit tight and do nothing, suspecting a trick or worrying that you might look like a fool running around a table in response to a stranger’s offer. “I don’t like to negotiate, so I don’t do it unless I have to,” you might say. This is the avoiding response favored by the Internet entrepreneur I mentioned above. Some people might say that avoiding a negotiation is a cop-out, not a bargaining strategy. But you do not have to look very far to notice that many important negotiations are marked by one side or the other studiously avoiding coming to the table. The North Koreans successfully avoided negotiating over their nuclear weapons programs for years—and built up bargaining leverage in the meantime. Presidential candidates in the United States who find themselves ahead in the polls frequently decline to negotiate when their opponents want to increase the number of presidential debates. In general, avoiding is a good strategy when you are happy with the status quo—but it may not be the best approach to the table problem.

  Perhaps the most obvious response is to offer the person sitting opposite you $500 if he or she will race around and stand behind your chair. This is the compromise solution. Each person agrees to share the gains equally between them. Compromise is a simple, fair, fast strategy that resolves many negotiations amicably. But is it a good strategy for the table problem? You and your partner may arrive at a quick agreement to split the money evenly, but which of you should run and who should sit? During the few seconds it takes to address this issue, other people are already racing around the table. There is no compromise solution to the question of which of you should run—so a simple compromise does not fully solve the problem. An additional strategy is needed.

  That strategy is our third candidate—accommodation. You could simply get up and run behind your opposite’s chair. If you do this in response to your partner’s offer to split the money, you can refer to that promise as a bargaining standard in any subsequent negotiation over the money. But there may be no money to split. The people who implemented the 100 percent accommodating strategy took off as soon as they heard the stranger’s offer and got to their partners’ chairs before you did. But they face a problem, too. The lucky people who were the beneficiaries of the accommodating strategy now have $1,000 and the people who ran have nothing. These helpful negotiators must trust the people for whom they earned the money to share it—without the benefit of a prior commitment on how it will be shared. And remember—everyone at the table is a stranger who never expects to see their counterpart again.

  The fourth response embodies the competitive strategy. The idea here is to obtain the entire $1,000 as well as the power to decide how it will be shared. One way might be to offer to split the money 50-50 and then later refuse to do so—to renege on your promise. That would obviously be unethical, but some people might do it. After all, there was no mention of a court system to litigate disputes about who said what. An even more aggressive stance would be to lie and say you have a broken leg so you can’t move, begging your partner to run as quickly as possible. Are all competitive strategies as ethically dubious as these two? No. We will see examples of many competitive strategies in the pages ahead that are perfectly ethical under any system of morals. But the table problem is not structured well for a strategy that is both ethical and competitive. Moreover, this strategy, like the compromise approach, may take too long to implement.

  The final strategy is the most imaginative, given the terms of the offer. You get out of your chair, start running, and scream: “Let’s both get behind each other’s chairs! We can each make a thousand dollars!” This can work—if you are quick enough. This is the collaborative or problem-solving strategy. Instead of trying to figure out how to divide $1,000 two ways, the person using this approach has the insight to see that there is a way for both parties to get $1,000 out of the situation.

  The collaborative strategy is often the hardest to implement. It seeks to discover the underlying problem through good analysis and candid disclosure of interests, find the most elegant solution by brainstorming many options, and resolve tough issues using fair standards and criteria. In many ways, it represents an ideal. As we shall see, problem-solving strategies are especially useful in complex negotiations, such as those faced by international diplomats or corporate negotiators doing mergers or acquisitions. They can also play a useful role in family negotiations, where it is vitally important to avoid having “winners” and “losers.” But many obstacles stand in the way of collaborative approaches, such as lack of trust between the parties, greed, personality, cultural differences, and simple lack of imagination.

  How many of these five strategies did you think of? And, just as important, which of the five would you feel most comfortable and natural implementing? We can now use our knowledge of these five strategies to probe your personal inclinations and styles as a negotiator.

  In Appendix A, I have provided you with the self-assessment test we give our participants at the Wharton Executive Negotiation Workshop to help them determine their preferred bargaining styles. It takes only about five minutes to complete and score, so I suggest you turn to Appendix A now and complete your Bargaining Styles Assessment. Once you obtain your results, you can jump back to this chapter and read on. Later, if you want to learn more about the various styles and how they interact with one another, you can go back to Appendix A for further study.

  Your personal bargaining styles are nothing more (or less) than your inclinations or predispositions to make certain moves when you are negotiating. These inclinations can come from many sources—childhood, family, early professional experiences, mentors, ethical systems or beliefs, and so on. And your inclinations can change over time as your knowledge of negotiation grows and you gain more confidence in a wider range of skills. But I genuinely believe that most of us have a set of core personality traits that make radical changes in our basic bargaining preferences difficult. For example, I was raised in a household by two loving parents who were very strongly inclined to avoid interpersonal confrontations between themselves and between them and their three children (my two sisters and me). On the Bargaining Styles Assessment, they each would have scored very high in the “avoiding” category. This rubbed off on me more or less permanently. To this day, I instinctively and automatically try to deflect conflict in my interactions with others, although I have become much more capable of handling conflict through a lifetime of professional and personal experiences. My diplomatic trait is just part of the bargaining personality I bring with me to negotiation interactions. I have other instincts that come into play in different situations and with different people, but my diplomatic trait is never far from the surface.

  Each style or combination of styles brings a set of associated talents with it. Someone dominated by a strong inclination to compete has a talent for seeing more quickly than others how power and leverage can be gained in a given situation. And he or she derives more satisfaction from getting a great price in a haggling situation than do people who are only weakly inclined to measure their success in these terms. This person will also see the potential for using a competitive approach in more situations than will the rest of us.

  Someone who is strongly inclined to accommodate will have a talent for being a team player and helping other people, even when there is a conflict of interest. He or she will be focused on the interpersonal relationship aspect of an interaction when the rest of us are focused on the money. A person dominated by a preference for compromising will automatically seek simple, fair methods of taking turns or splitting the difference to resolve negotiation differences quickly and fairly much more often and much sooner in the process than will people who lack this inclination. And, finally, people who bring to the table very strong inclinations to collaborate will find themselves facilitating the process, asking lots of questions and developing different ways of looking at the issues to meet as many needs as possible—including their own.
They will genuinely enjoy complex, prolonged negotiations in a way that someone predominantly inclined toward simple compromises will not.

  The Bargaining Styles Assessment is a good place to start in understanding your styles, but it is only one data point in your quest to learn about yourself as a negotiator. As you read about different negotiations in this book and encounter various situations in your life, note which experiences you enjoy and which ones cause you stress. Those that feel good are the ones for which you have natural talents. Build on the insights you gain from these experiences, and, in the words of the Danish folk saying that led this chapter, “bake with the flour you have.”

  Cooperative Versus Competitive Styles

  Beneath the five personal inclinations discussed above reside two even more basic types: cooperative and competitive. Much research on the personality variable in negotiation has centered around these two basic categories. Depending on the situation, each style can be effective and each exposes its possessor to certain dangers. In Chapter 12, I give some specific advice on how to compensate for the weaknesses inherent in each approach.

  Many researchers have wondered whether people are, in general, more competitive or cooperative in their basic orientation toward bargaining. The stereotype negotiator depicted in the press, movies, and mass media is a competitive person who is adept at using hardball tactics such as ultimatums, walkouts, public posturing, and table pounding. This is not surprising, given the mass media’s attention to drama and entertainment, but it is not an accurate reflection of how the average professional negotiator—or even the average professional person—actually behaves.