Getting (More of) What You Want

By now, we hope we’ve convinced you that getting a good deal should be the goal of any negotiation. However, although understanding what constitutes a good deal is central to success, negotiators often are confused about what they should be trying to achieve—especially about which trades among the issues at hand make them better off and which don’t. Only through careful planning can they obtain clarity about these crucial aspects of the negotiation, and maximize their chances of getting more out of it.

The first step when planning and preparing for a negotiation is to identify your goal for the negotiation—exactly what is it that you want more of? But this is only the first step. In this chapter, we outline the steps necessary to systematically plan for a negotiation and enhance your chances of getting a good deal.

The planning process is divided into three phases: (1) figuring out what you want; (2) figuring out what your counterpart wants; and (3) developing your negotiation strategy based on what you know about yourself and what you discover about your counterpart. The first phase focuses on identifying your goals, your issues, your preferences, and your reservation and aspiration prices. The ultimate objective of this phase is to derive an issues-value matrix or a comprehensive list of settlement options and the relative value of each of those settlement options to you.

In phase two the focus switches to the goals, preferences, and reservation price and aspiration of your counterpart to create an issue-value matrix from her perspective. Obviously, this is a much more difficult task, and undoubtedly there will be some aspects that you cannot accurately assess. Therefore, in addition to the preparation before the negotiation, you should supplement and verify your information as the negotiation unfolds.

Finally, combining the two perspectives of the issue-value matrix allows you to develop your negotiation strategy. With this roadmap, you will be better able to assess alternatives, make creative proposals, and decide whether to accept your counterpart’s proposal or to walk away.

Now, before you decide to skip the first step as being obvious or even trivial—after all, why would you ever engage in a negotiation without knowing what you want—our experience shows that many negotiators do in fact start negotiating without really understanding what they are trying to achieve. As it turns out, knowing what you want is harder than it appears, and even experienced negotiators forget or change their goals in the heat of a negotiation.

Because of the competitive nature of negotiations, negotiators often shift their objective from getting more of what they want to simply beating the other side. This is best demonstrated by an exercise we often conduct entitled Competitive Advertising. We separate our students into teams and instruct them (both orally and in the written instructions) that the goal of the game is to make as much money for their team as possible. In each of the ten rounds, teams must simultaneously decide whether to cooperate (not advertise) or defect (advertise). The payoffs are highest for teams who advertise while their counterparts do not advertise. The payoffs are intermediate when both teams do not advertise, highly negative when they both advertise, and even more negative for teams who do not advertise when their counterparts advertise. After round three we allow the teams to “negotiate” and resume the game, then “negotiate” again after round seven. The teams resume the game again for the three last rounds, at which point the game is over and the total profits and losses are tallied.

This game confronts students with a classic example of the prisoner’s dilemma—a scenario in which both parties have incentives to undermine their opponents even when they would both be better off if they cooperated. As one would expect, most teams lose money in this game. When confronted with this fact, some teams very quickly point out that they lost less than their counterparts, even though they admit that they lost money.

In fact, if you eavesdropped on their conversations, you would observe that most teams quickly transform their objective from making as much money as possible to beating the other team. What’s more, most of the teams that beat their counterparts do so by losing less, not by making more. As a result, because the goal is shifting from one of doing well for one’s team to beating the other team, negotiators and their counterparts are both worse off.

One of the main lessons of this example—and of this chapter—is that losing sight of your goal can be very damaging to both you and even to your counterpart. The good news is that careful planning can help you maintain the clarity and focus on your goal. It is challenging enough to figure out and commit to your reservation prices, alternatives, and aspirations without the interference of an ongoing negotiation. Without clearly defining these parameters, you are likely to be at the mercy of your counterpart in ways that will increase not only the likelihood that you will get less than you could, but also the risk that you will accept a deal that makes you worse off than you would have been had you not negotiated at all.

PHASE ONE: FIGURING OUT WHAT YOU WANT AND CREATING THE ISSUES-VALUE MATRIX

This first phase of the planning process—the one in which you assess your own goals for the negotiation—has six steps: (1) determine what you want to achieve; (2) break down your overall goal into individual issues; (3) rank the issues by importance in achieving the overall goal; (4) identify possible settlement options for each issue; (5) assign relative values to each issue; and (6) determine your overall reservation price and your overall aspiration value.

1) What Do You Want to Achieve in the Negotiation?

Why are you negotiating? What do you want to achieve in this interaction? At this stage, focus on the high-level goal rather than on a particular issue or issues. For example, you may be negotiating to get a new job, buying a car, improving the control you have over your work schedule, or having more influence in your work team.

To illustrate the preparation process, imagine that you are in the market for a new car. Your goal is to purchase the coolest car at the best price. Thus, the motivation for your negotiation is to claim value in the form of the cool new car but to pay as little as possible for that coolness and not to violate your budget constraint!

While setting that overall goal, you are implicitly also determining what is not your goal. For instance, when buying a car, you goal should not be to make the dealer happy, or (presumably) to establish a long-term relationship with the dealer. It is very important not to lose sight of what is important to you in the negotiation and what is not!

2) What Are the Issues over Which You May Be Negotiating?

Once you have determined the overall objective, list the attributes that characterize the outcome. These are the issues over which you will be negotiating. As we saw in Chapter 4, the more issues there are in play, the more opportunity there will be for value creation.

So what are the issues, and what are your positions on those issues that, in the aggregate, can satisfy your overall goal? You need to be creative and inclusive about what issues to include in the discussion. Since your overall goal is to buy a really cool car, what are the attributes that are critical for maximum coolness? Once you have identified the make and model, likely issues that relate to an affordably cool car are the price, delivery, warranty, extended warranties, color, dealer-installed options, and financing. For the purpose of this illustration, consider issues related to costs: price and financing terms; and issues that affect coolness: color and audio components.

3) How Important Is Each Issue to the Achievement of Your Goal?

Once you have identified your goal and its attendant issues, rank those issues in terms of their relative contribution to your goal. The ultimate objective is to establish your trade-off values among the issues. This will help you maximize the chances of achieving your overall goal. Understanding these relative trade-offs highlights potential substitutions among the issues, thus increasing the number of possible deals.

Because this is a difficult task, we recommend that you begin by ordering the issues by relative importance. You can do this best by first thinking about each issue and then comparing how achieving it moves you closer to meeting your overall goal. Those that are most central will be the most important. So for example, when buying a car, the size of the engine may be more important than whether the car has a metalized paint.

Assume that you view costs and coolness as approximately equally important. Within the cost component, you view price much more important than financing, while within the coolness component, you view audio twice as important as color.

To quantify these relative ranks, you need to compare one issue to another. The best way to do this is to create a metric on which you array the issues. For example, you decide to use a metric of 100 points. Of this total and based on what you value, you allocate 46 points to costs and 54 points to coolness. In turn, of the 46 costs points, you allocate 40 to price and 6 to financing, while of the 54 coolness points, you allocate 36 to audio and 18 to color. This approach allows you to construct a value matrix that will help you make trades among the various issues.

4) For Each Issue, What Are Potential Settlement Options?

While different settlement options may be available for the issues under consideration, you might prefer some of these over others. For example, in an employment contract, when you were negotiating fringe benefits, there may be five health care plans that you would consider while there might be three different bonus plans that include differing amounts of cash salary and stock options. Be creative, because these settlement options will constitute the proposals that you present to your counterparts.

Returning to our cool car example, you notice that the manufacturer’s suggested retail price of the car is $45,799.00, whereas you would be thrilled if you could buy it for $37,500. On the financing side, you will consider an interest rate of 8 percent, 6 percent, 4 percent, and 2 percent. For audio, you consider single-CD, six-CD player, premium, and top of the line; while your color preferences are white (least desirable), red, and silver (most desirable).

5) What Is the Relative Value for Each of These Settlement Options?

Once you have identified settlement options for each issue, assign each one a set of points out of the total metric you settled upon in Step 3 (100 points, in this example). The value you assign to each one reflects how important that option is to achieving your overall objective. While you could simply rely on the more-is-better-than-less rule of thumb, a more careful consideration of what you prefer may reveal this rule to be inadequate. Understanding how your preferences change as you move through the settlement options can give you insights into how much more of that issue you want.

In our cool car example, you decide on the following allocations:

Price: $47,499 (MSRP) 0 points, every $1000 drop in price is worth 4 points, until 40 points for $37,500.

Financing: 8% 0 points, 6% 2 points, 4% 4 points, and 2% 6 points.

Audio: Single-CD 0 points, 6 CD player 12 points, premium 24 points, and top of the line 36 points.

Color: White 0 points, red 9 points, silver 18 points.

6) What Are the Parameters for This Negotiation?

Now to the specifics: First, with your issues-value matrix, you can determine your reservation price across the issues under consideration. As discussed in Chapter 3, setting the reservation price at the package level rather than at the level of each individual issue provides greater flexibility to construct creative combinations of issues that meet your underlying interests.1 Because you have valued multiple options for each issue, you can now explore a precise aspiration and reservation price at the package level. In addition, you can use this fine-grained understanding of the issues to evaluate your alternatives. Now, you can begin to compare directly the proposals that your counterpart may offer with the value of your alternative.

Returning to our cool car example, first determine your reservation price (your bottom line) by considering your alternatives: You could simply keep your current car. You have determined that this alternative is worth 30 points. But that is not all. You reasonably expect that you could achieve 50 points by playing one dealer against another (taking the value of your time into consideration). In this case, your reservation price for this negotiation is 50 points.

Next, you need to set your aspirations. One possibility is to aim for the 100 possible points. But this would mean that you would have to get the maximum value on every single issue. But for you to get 100 points means that your counterparty might have to concede on every issue, essentially settling for their reservation price on the deal. Although possible, this may be extremely optimistic, even by the standard of an expert negotiator like Thomas (and downright impossible by most normal people’s standards).

PHASE TWO: YOUR COUNTERPART’S PERSPECTIVE

Now, that you have analyzed your objectives and parameters, repeat the analysis from your counterparts’ perspective. Revisit the five steps you took to figure out what you wanted; start at Step 1, but this time, run through the steps from the perspective of your counterpart. Naturally, you have less information on each of the steps than you have from your own perspective. Make a note of these gaps, and use the negotiation process to learn more about your counterpart.

1) What Are Your Counterparts’ Goals in This Negotiation?

Consider the negotiation from the perspective of your counterparts, and fill in as many of the blanks as you can. Why are they negotiating with you? What aspects of your respective goals do your counterparts hold in common with you? The more you understand your counterparts’ preferences, the more you can craft proposals that take advantage of value-creating opportunities. You will often have little direct insight into what your counterparts really value because of incomplete or limited information, but do the best you can and (as above) make note of gaps in your knowledge.

It also might be useful to see if you know someone who might have some insights into how an individual counterpart thinks: for instance, someone who has negotiated with your counterparts or with someone who is similar to them. Those insights could be particularly useful as you try to put yourself into the mindset of your counterparts.

2) What Are Your Counterparts’ Issues?

Think creatively about the issues that your counterpart might wish to negotiate. These may be the same issues on your list, but may also include ones that do not overlap with yours. As you consider the goals and aspirations of your counterparts, what additional concerns or opportunities arise from the issues that they might raise? Pay particular attention to issues that do not appear on your list. Knowledge of those issues will give you a strategic advantage because you could concede on them without sacrificing your objective. Consider how to break down complex issues into their components. This may help you figure out ways to yoke different issues together.

Although it is highly likely that you will not have as much information about how your counterparts value these issues as you have about how you value them, identifying and assigning values to possible settlement options from your counterparts’ perspective will be very beneficial in deriving your negotiation strategy. In our cool car example, the dealer has two issue categories: profitability (price and financing) and customer satisfaction. In this case, customer satisfaction may be based on many different attributes of the car and the experience. But for the sake of simplicity, assume that the two most important attributes are the audio system and the color of the car.

3) What Is the Relative Importance of These Issues from Your Counterparts’ Perspective?

What issues are likely to be more important to your counterparts, and which ones less important? It is helpful to realize that the more different your counterparts are from you, the more likely they are to value the issues differently. These differences can reflect culture, experience, expertise, or background—but the greater the differences, the more potential value there is to be created through negotiation.

As you think about the differences between you and your counterpart, be mindful of your unconscious biases. When you expect differences, you are more willing to see differences—and it is these differences that signal the asymmetry necessary for value creating. As you perceive your negotiating counterparts to be more similar, you expect the situation to be predictable: Their interests will be the mirror image of yours. What you want more of, they want more of.

These are the basic assumptions that result in the fixed-pie mindset of adversarial negotiations. In what is known as the false consensus effect, people assume that their preferences and opinions are widely shared by others.2 In negotiations, this can easily lead you to believe that achieving your preferred outcomes on issues is incompatible with your counterparts’ achieving their desired outcomes on these same issues (e.g., if salary is your most important issue, it must also be the most important issue for your potential employer—and there is a limit to how many salary dollars the employer can provide).

When you and your negotiating counterparts are obviously dissimilar—perhaps because you differ in culture of origin, profession, experience, or demography—the mere presence of these differences makes the negotiation less predictable and can motivate you to engage in a more elaborate and systematic search for information. At the same time, the greater the differences, the more potential there is for value creation. Thus, while the negotiations are likely to be more complex, they are likely to be also more beneficial. However, because these differences change how reliably you can assess your counterpart’s preferences, you need to find out as much as possible when negotiating with counterparts who are different from you and with whom you have less experience negotiating.

Researchers found that people who expected to face dissimilar counterparts had plans that were more elaborate and with more information than were the plans of those who believed they would face similar counterparts.3 The more different your counterparts are, the more motivated you are to plan and prepare for the negotiation. You will be more likely to seek out information about the issues, and this additional information search can enhance your ability to persuade your counterpart in line with your preferences. Thus, the perception of differences changes how you plan by increasing your information search and the subsequent elaboration of your arguments.

The more uncertain you are about how the negotiation will unfold, the more useful it is to engage in the difficult work of creating an issue-value matrix. Figuring out which issues have integrative potential—and which are congruent or distributive—requires that you compare your preferences on issues with those of your counterpart. Expecting to find differences in how your counterpart values the issues in the negotiation can improve your assessment of the category (integrative, distributive, or congruent) of each issue. In addition, writing down your beliefs about what your counterpart wants in this matrix form also provides a useful template for revision when you verify your assessments in the information-exchange component of the negotiation. Reflecting this in our cool car example, you believe that the dealer values profitability much more that customer satisfaction. Moreover, within the profitability category, price is more important to the dealer than financing, while within the customer satisfaction category, the dealer is more open to concession on color options because, from the dealer’s perspective, it is cheaper to provide than a high-end audio system.

4) What Are Your Estimates of Your Counterpart’s Parameters?

Using the information you have gathered in the preceding steps, you should now rank the issues by your counterpart’s sense of relative importance. Then try to deduce your counterpart’s reservation prices, aspirations, and relative values of the issues. In many instances—particularly if this is the first time you are negotiating with these counterparts—it will be difficult to determine their parameters beyond rank ordering the issues. We will return to this issue in the next phase, when we discuss information gathering during the negotiation.

Still, by careful sleuthing (e.g., using your social and business network connections), you may find useful information about your counterpart. You can also match what you know about your counterpart with what others with those same characteristics are likely to do. For example, individuals who have written books on negotiation are more likely to negotiate—and are more likely to have higher expectations! Or, as research shows, women have lower expectations than men so aspirations are likely to differ by gender.4

Now let’s apply this to the cool car negotiation. Based on your knowledge of the car dealership and what you know about sales people more generally, out of 100 points, you are expecting the dealer would have assigned 70 points to profitability, with 40 points to price and 30 points to financing; and assigning 20 to customer satisfaction, with 18 points to color and 12 to audio.

Within each of those subcategories, you assess the dealer’s settlement options as:

Profitability:

Price: $37,500 (employee discount) 0 points, $47,499 (Manufacturer’s Suggested Retail Price) 40 points.

Financing: 8% 30 points, 6% 20 points, 4% 10 points, and 2% 0 points.

Customer satisfaction:

Audio: Single-CD 12 points, six-CD Player 8 points, premium 4 points, and top of the line 0 points.

Color: white 0 points, red 9 points, and silver 18 points.

5) Are the Potential Settlement Points That You Have Identified Sufficient?

Are there other outcomes that your counterpart would consider? As you gain more insight into your counterpart, you may be able to rework the settlement points that you identified when you were focusing solely on your own interests.

PHASE THREE: DEVELOP YOUR NEGOTIATION STRATEGY

After all of this analysis of your goals and those of your counterparts, you are ready to prepare your negotiation strategy. To begin, consider the following four questions.

1) What Information Are You Missing?

Decide on an information-gathering strategy—that is, a way to obtain more information about your counterpart during the negotiation itself. This will be important to fill the holes in your knowledge. Based on what you were able to establish in phase two, you may need to focus on confirming whether the issues you identified for your counterpart are indeed relevant. If your prediction of what is and is not important to your counterparts maps onto what they say and do in the negotiation based on their words and actions, you can update your assessment of their reservation price and quality of their alternatives.

In general, your counterpart’s willingness to share information will be related to how strategically valuable they perceive the information to be. Given that criterion, it is likely that they will be least reluctant to share information about the issues, more reluctant to share information about the rank ordering, and most reluctant to share information about reservation prices and aspirations.

One strategy that we have found to be effective is to open the negotiation with a discussion of what you and your counterparts are trying to achieve, what is important to each of you, what the potential issues are, and even what possible outcomes or settlement options could be. But understand that, while this discussion will allow you to fill in some of the blanks (and confirm what you already know) in what you believe is your counterparts’ value matrix, it will also provide information about you to your counterpart. So start with more general issues and look for reciprocity—are your counterparts forthcoming and truthful? Compare their answers to facts you already know to see if they’re being straight with you.

You won’t get all the information you want. Obviously, what you would like to know are your counterparts’ issues, settlement options, and their relative values. Of course, it would also be very useful if you had some information about your counterpart’s reservation price—that is, the point at which they would be willing to abandon the negotiation and take their next-best alternative.

While your counterparts should be reluctant to share their reservation prices, they may be more forthcoming about their alternatives. With knowledge of a counterpart’s alternative, you can begin to triangulate a reservation price. For example in the car-buying example, the dealer might ask you how much you like your current car, what other dealers have you visited, how soon you want to complete the purchase and take possession of the car, what other cars you are considering, and so on. All of these questions allow the dealer to infer your alternatives and from those to triangulate your reservation price.

In turn, you can obtain information about the dealer’s cost of the model you are considering, how many days’ supply are on dealers’ lots, and what the average selling prices for this model are. All of these can give you information that will help in triangulating the dealer’s reservation and aspiration prices.

Finally, reservation prices can also be inferred from negotiators’ behavior. Research shows that those with superior alternatives will be more aggressive in their demands than will those with inferior alternatives. These aggressive demands can help you to assess the value of the alternatives and focus in on your counterparts’ reservation prices.5

2) Which Issues Are Likely to Be Distributive, Integrative, and Congruent?

Using the information from the first two phases of your planning—concerning the issues, potential settlement options, and your and your counterparts’ ranking and valuation each of those options—you should now determine whether the issues are likely to be congruent (no disagreements), distributive (you and your counterpart value them equally but in opposite directions), or integrative (you and your counterpart value them in opposite directions but not equally). At first, this seems to be a relatively straightforward assessment. The only way you can do that is to compare how you value each issue with your best assessment of the value that your counterpart places on these same issues. And this is the challenge because you are relying on your incomplete knowledge of counterparts’ preferences.

Compare how you ordered the issues for yourself and how you ordered the issues for your counterparts. Where are the issues about which you and your counterparts do not feel equally strongly? The greater such a discrepancy, the more potential value that could be realized by yoking these mismatched issues; that is, if they make a concession on an issue that they care less about, you would make a concession on another issue that you care less about. For example, if an issue, such as compensation, is your most important issue, but your counterpart sees considerable upside to the stock options and bonus, then designing a proposal that gives each side more of what they care about can create additional value over and above a simple split-the-difference strategy.

On the other hand, if you both view an issue as very important, particularly when that issue is denominated in dollars, the issue is likely to be distributive. Congruent issues are likely to be those that reflect the common interests of the parties, while integrative issues reflect the different importance parties place on particular issues.

For example, the combined issue-value matrix (Table 5.1) in our car buying example looks as follows:

TABLE 5.1 COMBINED ISSUE-VALUE MATRIX

	Buyer	Dealer
Price (Distributive)
$37,500	40	0
$40,500	30	10
$42,500	20	20
$44,500	10	30
$47,499	0	40
Financing (Integrative)*
8%	0	30
6%	2	20
4%	4	10
2%	6	0
Audio (Integrative)
Single CD	0	12
6 CD Player	12	8
Premium	24	4
Top of the line	36	0
Color (Congruent)
White	0	0
Red	9	9
Silver	18	18

*While integrative, the financing is more important to the dealer. In contrast, the outcome on the audio-component issue is more important to the buyer.

Comparing the relative values assigned by the buyer and the dealer allows you to identify the type of each issue. First consider price: As you can see, at each price point, an increase in price reduces the value claimed by the buyer by a constant 10 points while increasing the value claimed by the dealer by the same 10 points. Thus, price is a distributive issue as both buyer and dealer value price equally but in opposite directions.

Next consider financing. The buyer’s claimed value increases by a constant 2 points for each reduction of a percentage point in financing. Thus, conceding on the financing rate reduces the value claimed by the buyer by much less than it benefits the dealer. Taking in isolation, financing by itself could be viewed as “distributive,” but combine financing with price, taking a midpoint as a starting point. Compare a settlement at $42,500 and a financing rate of say 4%. Such a deal is worth 24 points to the buyer (20 + 4) and 30 points to the dealer (20 + 10). If the dealer were to trade a price reduction by an additional $2000 for an increase in the financing rate by 4 percentage points to 8%, the trade would benefit the buyer by a net 6 points while benefiting the dealer by a net 10 points (−10 + 20), hence creating a net increase in the value claimed by both the dealer and the buyer of 16 points. Thus, integrative issues can be used to enhance the value claimed by both parties when combined with another distributive and (as we will show shortly) integrative issue.

Next consider the audio option—also an integrative issue. Although the buyer prefers to get top-of-the line audio and the dealer prefers to sell a car with the single-CD player, the magnitude of those “opposite” preferences is not equal: Each concession costs the dealer 4 points but benefits the buyer by 12 points. So now, consider combining the two integrative issues (as opposed to the integrative and the distributive issues discussed in the previous paragraph),6 beginning at a financing rate of 4% and a six-CD player. That deal is worth 16 points to the buyer (4 + 12) and 18 points to the dealer (10 + 8). Now, have the dealer concede on the audio and the buyer concede on the financing: If they move to top-of-the-line audio and financing terms of 8%, that deal is worth 36 points (a net gain of 20) to the buyer and 30 points (a net gain of 12) to the dealer. Thus, both parties are better off by a sum total of 32 points.

The final issue is color. As you can see from the combined value matrix, both the buyer and the dealer prefer silver. Thus, color is a congruent issue: There is simply no dispute, because while the buyer really likes the silver color, it turns out that the dealer has too many silver cars on the lot and is motivated to move that particular color.

Consider two strategic approaches with congruent issues. First, assume that the dealer recognizes first that the issue is congruent. The dealer could simply reveal that fact to the buyer, and the parties would settle on silver, with both the buyer and the seller realizing 18 points. Second (and more likely), assume that the dealer decides to play it strategically, offering white first. Then, suggesting to the buyer that he just found a silver car, but that car was more expensive than the white one (for example, going from $42,500 to $44,500). The buyer would agree to that trade, gaining 18 points on the color but sacrificing 10 on price, for a net gain of 8. In contrast, by not revealing the information to the buyer and playing it strategically, the dealer could gain 28 points, 18 for silver and another 10 for the new price of $44,500.

3) Where Are the Gaps in Your Plan?

What information do you hope to learn during the negotiation? Because no planning process can be totally accurate or complete, you need to identify the information about which you are least certain—the questions that still need answers. Be specific. Once you enter into the negotiation, you can use these answers to these questions to augment your strategy.

In addition to the parameters of your counterparties’ preferences that you don’t know, there may also be some parameters that you thought you knew but really did not. One strategy to uncover such errors is to predict your counterpart’s responses to your questions and proposals, and pay attention when their responses differ significantly from what you expected. For example, you offered a trade on an issue that you believed very important to them in exchange for a concession on what you thought was a relatively unimportant issue to your counterpart—yet they did not accept. Although very strategic counterparts may not clearly indicate that the trade you propose is advantageous to them, unexpected behavior deserves more of your attention and exploration. What did you miss? Is it that your counterpart is misrepresenting his interests, or that you misunderstand his preferences? You need to distinguish between these two interpretations by asking additional questions (e.g., why is this trade not good for you?) or asking them to propose alternative trades that reveal their preferences on the issues in question or reveal that they are simply misrepresenting their interests to confuse you.

4) What Strategies and Tactics Will You Employ to Achieve Your Goals, Taking into Account the Preferences, Goals, and Strategies That Your Counterpart Is Likely to Use?

Reflect back on the goals you have set for yourself and the goals you expect your counterpart has established. Use these as the filters to select strategies that are consistent with achieving your goals. Clearly, the strategies and tactics that Thomas uses when he is buying a new car differ from the strategies he would use when negotiating with his nephew about the responsibilities inherent in driving that new car. Matching your strategies to your goals in a specific negotiation requires you to choose your strategies and frame your negotiations in ways that will be most persuasive to the person across the table. Use what you know about your counterpart to guide your choices.

Consider what you know about your counterpart from her reputation, your common negotiating history, and the type of relationship you have. All of these factors help you predict and interpret your counterpart’s behavior and select approaches that will be much more effective in achieving your goals for this interaction. Armed with all this information about you, your counterpart, and your negotiation strategy, there are still two very important aspects of planning that you should keep in mind.

THINGS TO CONSIDER WHEN YOU PLAN

1) Planning Can Change Your Expectations; Expectations Can Change Your Experience

The planning you do in advance of a negotiation alters your expectations of what will happen and therefore can change what you experience in the negotiation. Consider the following research: In one study, all participants saw three truly funny cartoons, followed by three not-so-funny ones.7 Half of the participants were told nothing about the contents of the cartoons, while the remaining participants (the misinformed group) were told that all the cartoons would be funny. The misinformed group rated the less-funny cartoons to be as funny as the truly funny ones. Those who were told nothing (the control group) found the truly funny cartoons significantly funnier than the less-funny cartoons. A videotape of the facial expressions of participants in the misinformed group backed up this self-reporting by indicating that positive expectations improved their cartoon-viewing experience; their facial expressions suggested that they found all the cartoons equally funny.

In another related study, participants were asked to taste and rate their preferences for beer.8 In one beer, an odd flavor (balsamic vinegar) was added. It turns out that participants disliked the adulterated beer more when they knew about the additive prior to their tasting the beer. Disclosing the additive after tasting did not significantly reduce participants’ preference for the beer as compared to a control condition in which they received no information about the additive.

These studies reveal the power of information to change perception. Having the information prior to the experience creates anticipatory expectations that can change not only your preferences but also the experience and interpretation of the others’ behavior. Thus, if a negotiator has, prior to a negotiation, an expectation that the negotiation will be adversarial—more like a battle—the behavior of the counterpart will be interpreted and evaluated though the adversarial filter. Alternatively, if the negotiator expects a more collaborative interaction, the behavior of the counterpart and the negotiation itself may be evaluated through an entirely different filter of collaborative problem solving.

2) Uncertainty Is Good—in Moderation

Engaging in the planning process prior to negotiating can reduce the uncertainty or unpredictability of the negotiation. That certainly seems like an advantage. Yet, as you plan for the negotiation, what you don’t know becomes clear, which may raise the specter of unpredictability. If you are too confident about how the negotiation will unfold, your perception of predictability can have the unintended, negative consequence of making you less effective at creating value.

Consider the following example of the connection between uncertainty and value creation. Participants in a research study were either certain or uncertain that their counterpart had behaved extremely selfishly in a prior interaction.9 Negotiators who felt certain of their opponent’s bad behavior included fewer value-creating and more fixed-pie strategies in their preparation, while those who felt uncertain about whether their counterpart had behaved selfishly included more value-creating and fewer fixed-pie strategies in their preparation. Not only was there a clear difference in the strategies that negotiators developed, but their outcomes also reflected those differences. Those who were more uncertain realized better outcomes with more joint value because their strategies including more opportunity for value creation.

Too much uncertainty is as bad for value creation as too little uncertainty. When people are overwhelmed by uncertainty, they rely on their most well-learned or familiar routines or practices. Even if uncertainty were an aversive experience and you were willing to exert considerable effort to resolve the uncertainty, too much uncertainty can create a condition known as threat rigidity. When faced with revolutionary and unexpected changes in their environments, people often revert to their most overlearned, dominant behaviors.10 When levels of uncertainty go from being useful (by motivating negotiators to think more deeply about value-claiming and value-creating strategies) to overwhelming, negotiators often revert to their most well-learned behaviors—behaviors that typically include expectations of adversarial interactions, split-the-difference compromises, and fixed-pie frames.

How you manage uncertainty often depends on your available mental resources. To some extent, your mental resources are of course intrinsic, but research has identified three factors that can affect your reserve of mental energy and, thus, your responses to uncertainty: need for closure, time pressure, and accuracy motivation.

Individuals vary in how much information or knowledge they need to make a choice or a decision. This difference is their “need for cognitive closure.”11 Individuals high in need for closure hold their thoughts and opinions more strongly, are quick to make decisions, and rely on incomplete but easily available information. When encountering uncertainty, high need-for-closure individuals will be more motivated to reduce the uncertainty by making a decision quickly—in negotiation, high need for closure is reflected in a desire for quick agreements that eliminate the uncertainty associated with negotiating. Individuals low in need for closure are more willing to entertain multiple interpretations or conflicting opinions, prefer to gather information more systematically before forming an opinion or making a decision, and are more willing to suspend judgment. Those low in need for closure are willing to tolerate uncertainty by postponing judgment until they have systematically assessed the situation.12 In a negotiation, those with a low need for closure are motivated to gather information to resolve or mitigate the uncertainty rather than reaching a quick deal.

Either because of a formal, immediate deadline or the feeling that the time is running out, time pressure can affect how negotiators process information. Time pressure in a negotiation affects information-processing strategies. Negotiators who perceived a high level of time pressure took less time to propose counteroffers and to reach final agreements, reported less motivation to process information, made less persuasive arguments, and used more heuristics than negotiators who perceived less time pressure. As a result, negotiators who perceived high time pressure used more heuristic processing strategies and achieved agreements of significantly lower joint value than did those who perceived low time pressure and processed information more systematically. This was true even when all negotiators had the same amount of actual time to complete their negotiations.13

Finally, negotiators may differ in their concern for accuracy—their “accuracy motivation.”14 Higher levels of accuracy motivation typically occur when negotiators are held accountable, either to a constituency or to a third party,15 for the quality of their agreements and are associated with greater engagement in systematic and thoughtful information processing.16 In negotiation contexts, those who expected to have their negotiation behavior evaluated by a third party were less likely to fall prey to the fixed-pie bias, and they achieved outcomes of higher joint value than negotiators who did not expect to be evaluated.17

To be sure, the planning process outlined above is challenging. Even being motivated by your desire to get more of what you want, not all negotiations require this level of planning. In fact, the last time Margaret engaged in this full-blown planning process was when she was facing her negotiation with Stanford. Since then, the planning that she has done for the more routine negotiations with her husband, coauthors, friends, and colleagues is an abbreviated version of this three-phase process.

The amount of time spent preparing for a negotiation should be consistent with its relative importance. The issue is more or less planning—not planning or no planning. Even in relatively mundane negotiations, your baseline is knowing your alternatives, reservation price, and aspirations as well as the issues to be discussed both from your perspective and the perspective of your counterpart. And contrary to the natural predilections of most negotiators, it is better to err in the direction of too much planning rather than too little!

Even if you were to produce a three-phase plan in considerable detail that reflects the points of this chapter, it would still be incomplete. There would be aspects of the negotiation, particularly of your counterpart’s interests, preferences, or options that would be unknown to you. With your plan in place, however, you would have a better idea of what those unknowns were and could tag those points for attention during the actual negotiation.

The topic of the next chapter is strategic thinking—that is, taking what you have developed in your plan and choosing strategies and tactics that can help you get more of what you want. If this chapter has been all about obtaining basic information about yourself and your counterpart, Chapter 6 goes deeper: In that chapter, the focus is on understanding your counterparts and predicting their likely reactions to various strategies and tactics that you employ.

SUMMARY

Effective planning and preparation are critical to achieving success in negotiation. While the importance of a particular negotiation will influence how detailed your preparation is, the preparation before a negotiation should include three important phases:

1. Figuring out what you want and creating an issue-value matrix to quantify it.

a. What do you want to achieve in the negotiation?

b. What are the issues over which you will be negotiating?

c. How important is each issue in achieving your goal?

d. What are the potential agreement options for each issue?

e. What is the relative contribution/value of each settlement option to your goal?

f. What are your parameters in this negotiation?

2. Figuring out what your counterparts want and creating their issue-value matrix.

a. What are your counterparts’ goals in this negotiation?

b. What are your counterparts’ issues?

c. How important is each issue to achieving their goals?

d. What are your counterparts’ parameters?

e. Are the potential settlement points you have identified sufficient?

3. Developing your negotiation strategy.

a. How do you gather the additional information you need?

b. Which of the issues are likely to be distributive, integrative, or congruent?

c. What are the holes in your plan?

d. What strategies and tactics will you employ to achieve your goals, taking into account the preferences, goals, and strategies that your counterpart is likely to employ?

As you plan, be mindful of the assumptions and expectations that are embedded in your plan. What you do in advance of the negotiation can influence your expectations of what will happen. In addition, while planning can reduce your uncertainty, you don’t want to be too sure of yourself and of how your counterparts will react. Uncertainty in moderation is associated with more value-creating outcomes in negotiations. So, a moderate amount of uncertainty is good. Too little can make you too confident; too much, and you quickly revert to your most well-learned and dominant behaviors—which, in the case of negotiation, are likely to be manifested as an inflexible commitment to a zero-sum, split-the-difference perspective on negotiation. How much uncertainty is too much depends on at least three factors: (1) need for closure (how comfortable you are with ambiguity and how willing you are to tolerate indecision); (2) time pressure (how powerfully you are influenced by deadlines); and (3) accuracy motivation (whether you have to justify what you did to an outside observer or authority).