THE ART OF
NEGOTIATION
Professor John Barkai
William S. Richardson School of Law
University of Hawaii at Manoa
2515 Dole Street · Honolulu, Hawaii 96822
Phone (808) 956-6546 · Fax (808) 956-5569
E-mail: [email protected]
Web Page: www2.hawaii.edu/~barkai
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 1
Common Forms
of Dispute Resolution
Negotiation:
discussion for the purpose of settling
differences
Mediation/Conciliation:
a neutral third party assists the parties
reach a negotiated settlement but has no
power to decide the issues in dispute.
Arbitration:
a neutral third party is given the power to
decide the issues in conflict. The arbitrator
decides after hearing arguments and
reviewing evidence.
Trial in Court:
evidence is presented to a judge or jury for a
decision under formal rules of law and
procedure.
BASIC DEFINITIONS FOR DISPUTE RESOLUTION:
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 2
COMPETITIVE
Competitive negotiators want to "beat" their opponents; they use high demands, threats, and
make few concessions. They generally try to undermine their opponent's confidence and seek
the maximum for themselves. This traditional style of negotiating goes by a number of
different terms such as positional, win-lose, adversarial, power negotiating, hardball, and hard
bargaining.
COOPERATIVE
Cooperative negotiators want to "work with" their opponents; they use reasonable opening
offers, show good faith, and initiate the exchange of mutual concessions. They seek a fair
and just settlement. This style of negotiating is also called win-win, interest-based bargaining,
and problem solving.
DISTRIBUTIVE BARGAINING
In distributive bargaining the parties think of the items being negotiated as fixed and each
party tries to get the most for himself. Usually there is just one issue for negotiation and more
for me means less for you. Negotiators are bargaining over the distribution of profit on the
bargaining range. This is a "zero sum" negotiation. Although the goals of the parties are in
direct conflict, a negotiator can be either competitive or cooperative in a distributive bargaining
situation.
INTEGRATIVE BARGAINING
During integrative bargaining, the parties are working together to increase the amount of
resources and to maximize mutual gain. Integrative bargaining requires two or more issues so
that trades can be made. Creating the additional resources is sometimes referred to as
"expanding the pie." Some would call this "Win-Win" negotiating. The theory here is that the
parties have different interests which can be integrated (reconciled) to create joint gains. Joint
gains are an improvement for all parties to a negotiation.
INTEREST-BASED
Interest-based bargaining attempts to shift the nature of negotiations to a more collaborative
basis. Instead of moving from position to counter-position to compromise, negotiators try to
identify their interests PRIOR to the development of solutions. Once interests are identified,
the negotiators then jointly develop a wide-ranging set of alternatives, and then choose the
best alternative.
POSITIONS
Positions are "what" the negotiators say they want. They are really solutions which have been
proposed by the negotiators. Positions are based upon the interests of the parties; interests
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 3
are usually not disclosed, at least not in competitive negotiations. In most negotiations people
take, and then give up, a series of positions. Behind every position lie many interests.
INTERESTS
Interests are "why" the negotiators want the positions they take. Interests lie behind the
positions of the negotiators. Interests represent the basic needs to be met. Money and price
are not interests in themselves. Money represents purchasing power, the ability to acquire
other needs, status, or power itself. Understanding interests is the key to understanding "winwin" negotiating. In many negotiations the interests are never explicitly discussed. In fact,
interests are usually kept secret. Successful "win-win" negotiating requires finding a way to
disclose interests without being taken advantage of.
BATNA
BATNA stands for the Best Alternative to a Negotiated Agreement. It represents the best
result that a negotiator can get somewhere else if an agreement cannot be reached with this
party. In other words, a BATNA is the alternative that the party will select if they must walk
away from this negotiation. It is an alternative solution. If the negotiation is a DEAL, the
BATNA is to walk away to another party who can offer you a better deal. If, however, the
negotiation is over a law suit, your BATNA is to go to court.
BOTTOM LINE
The bottom line is the position at which the negotiator will walk away from the negotiation. It is
also known as a reservation price. If the negotiator cannot get at least their bottom line in the
negotiation, they will go somewhere else.
ZONE OF AGREEMENT
The Zone of Agreement represents the difference between the bottom lines of the parties. If
there is no overlap in the bottom lines of the parties, no agreement is possible
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 4
The easiest way to improve
your negotiation skills is to
A__
M_____
Q________
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 5
Two Key Ideas
about Negotiation & ADR
1) Focus on ________
2) Improve the ______
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 6
Basic Principles from Getting To Yes
by Roger Fisher & William Ury
(additional comments by John Barkai)
1.
SEPARATE THE PEOPLE FROM THE PROBLEM.
Don't attack or blame the other negotiator; attack the problem which you are
negotiating. Allow the other negotiator to save "face." Try to reduce the emotional
temperature of the situation and to build a good working relationship. Allow emotions to
be expressed without taking it personally (although this is difficult). Good
communication is essential. Ask lots of questions, especially open-end and clarifying
questions. Use active listening.
2.
FOCUS ON INTERESTS NOT POSITIONS.
Positions are "what" negotiators want; "interests" are why they want them. Ask
questions to try to learn their interests. Get into shoes of the other negotiator. Although
problem-solving negotiators may be willing to disclose their interests, be aware that
competitive negotiators will try to learn your interests, but they will not disclose their own
interests. Remember that not all interests are tangible. Many undisclosed and
unconscious personal needs (Maslow) come to play in negotiations. Settlements can
result from both common and conflicting interests.
3.
INVENT OPTIONS FOR MUTUAL GAIN.
Most negotiators take only one negotiation position at a time, but this approach
suggests brainstorming many options and maybe even putting them all on the table at
once. Generate a variety of options before deciding what to do. Some people would
say to enlarge pie before cutting it.
4.
INSIST ON OBJECTIVE CRITERIA.
Instead of allowing the negotiation to be determined by a contest of wills or power,
negotiators can select one of more objective criteria which can be used to determine
the final settlement, e.g., an independent appraisal.
5.
KNOW YOUR BATNA.
(Best Alternative To a Negotiated Agreement)
Most people think about a "bottom line" in a negotiation, but seldom do they think about
what they will do if they do not reach settlement. Your BATNA is what you will have to
do if you do not reach agreement. One way to improve your power in a negotiation is to
work on ways of improving your BATNA. A BATNA is your "Walk-a-way" alternative.
Plan in advance what you will do if the negotiation does not reach a settlement.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 7
GETTING PAST NO
Basic Principles from the book
by William Ury
Whether you are negotiating with a hostage-taker, your boss, or your teenager, the basic
principles remain the same. In summary, the five steps of what the author calls "breakthrough
negotiation" are:
1.
Go to the Balcony. The first step is to control your own behavior. When your opponent says
no or launches an attack, you may be stunned into giving in or counterattacking. So, suspend your
reaction by naming the game. Then buy yourself time to think. Use the time to figure out your
interests and your BATNA. Throughout the negotiation, keep your eyes on the prize. Instead of
getting mad or getting even, focus on getting what you want. In short, go to the balcony.
2.
Step to Their Side. Before you can negotiate, you must create a favorable climate. You
need to defuse your opponent's anger, fear, and suspicions. He expects you to attack or to resist.
So do the opposite: Listen to him, acknowledge his point, and agree with him wherever you can.
Acknowledge his authority and competence, too. Disarm him by stepping to his side.
3.
Don't Reject . . . Reframe. The next step is to change the game. Instead of rejecting your
opponent's position--which usually only reinforces it--direct his attention to the problem of meeting
each side's interests. Take whatever he says and reframe it as an attempt to deal with the problem.
Ask problem-solving questions, such as "Why is it that you want that?" or "What would you do if you
were in my shoes?" or "What if we were to . . . ?" Rather than trying to teach him yourself, let the
problem be his teacher. Reframe his tactics, too: Go around stone walls, deflect attacks, and
expose tricks. To change the game, change the frame.
4. Build Them a Golden Bridge. At last you're ready to negotiate. Your opponent, however, may
stall, not yet convinced of the benefits of agreement. You may be tempted to push and insist, but this
will probably lead him to harden and resist. Instead, do the opposite--draw him in the direction you
would like him to go. Think of yourself as a mediator. Involve him in the process, incorporating his
ideas. Try to identify and satisfy his unmet interests, particularly his basic human needs. Help him
save face and make the outcome appear as a victory for him. Go slow to go fast. In sum, make it
easy for him to say yes by building him a golden bridge.
5.
Bring Them to Their Senses, Not Their Knees. If your opponent still resists and thinks he
can win without negotiating, you must educate him to the contrary. You must make it hard form him
to say no. You could use threats and force, but these often backfire; if you push him into a corner, he
will likely lash out, throwing even more resources into the fight against you. Instead, educate him
about the costs of not agreeing. Ask reality-testing questions, warn rather than threaten, and
demonstrate your BATNA. Use it only if necessary and minimize his resistance by exercising
restraint and reassuring him that your goal is mutual satisfaction, not victory. Make sure he knows
the golden bridge is always open. In short, use power to bring him to his senses, not his knees.
The breakthrough strategy requires you to resist normal human temptations and do the
opposite of what you usually feel like doing. It requires you to suspend your reaction when you feel
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 8
like striking back, to listen when you feel like talking back, to ask questions when you feel like telling
your opponent the answers, to bridge your differences when you feel like pushing for your way, and
to educate when you feel like escalating.
At every turn the strategy calls on you to choose the path of indirection. You break through by
going around your opponent's resistance, approaching him from the side, acting contrary to his
expectations. The theme throughout the strategy is to treat your opponent with respect--not as an
object to be pushed, but as a person to be persuaded. Rather than trying to change his mind by
direct pressure, you change the environment in which he makes decisions. You let him draw his own
conclusions and make his own choice. Your goal is not to win over him but to win him over.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 9
Basic Principles from “The Power of a Positive No”
by William Ury (Summarized by Geoffery Lee)
The Positive No exercises your power to protect interests while also tending to relationships. The Positive No
replaces the three common approaches to the power-versus-relationship dilemma: accommodation (loss of power), attack
(loss of relationship), and avoidance (loss of interest). The Positive No avoids the pitfalls of the three A's by engaging the
other in a constructive and respectful confrontation.
The Positive No is a “Yes! No. Yes?” Saying No means, first, saying “Yes!” to your interests; followed by a matterof-fact “No.” that sets a clear limit; ending with “Yes?” that invites the other to reach an agreement that respects the other's
needs.
Stage One – Prepare
1. Uncover your Yes! -- Base “no” on what you are for, not what you are against.
1. Stop: go to the balcony: The first step is to control your own behavior. There is no chance to influence the
other unless you are able to control your own natural reactions and emotions.
2. Use the time out to uncover your underlying interests, needs and values. Reach down to your core to
discover what really matters and what your true priorities are, distilling that into a single positive intention.
3. The most powerful intentions are positive. Transform negative emotion into positive intention, clarifying what
your really want to do in the situation.
2. Empower your No. -- To be prepared is half the victory.
1. Develop a Plan B: a practical strategy that will address core interests independently of the other's cooperation
and respect: similar to BATNA. Brainstorm a variety of plan B's. Prepare to: “do it yourself,” “exit,” “look to third
parties who share interests.”
2. If your alternatives are extremely unattractive brainstorm again, check your options, and check the facts.
Carefully prepare to gain the confidence to negotiate effectively.
3. Anticipate the other's power moves. -- What can they do to compel you, what can you do to stand your
ground? Take away their threat by changing the situation. Don't let anxiety and fear magnify potential
consequences.
4. Reassess your No. -- Do you have interests in saying no? Do you have the power? Do you have the right?
3. Respect your way to Yes. -- Give positive attention to others. Act with respect no matter what. Listen attentively
and acknowledge the other, letting them know you value them.
Stage Two – Delivery – Affirmation (Yes!) Establish a Limit (No.) Proposal (Yes?)
1. Express your Yes! -- Affirm your intention and explain why: by using “The” statements to set out the facts, “I”
statements to explain interests, and “We” statements to invoke shared interests and standards.
2. Assert your No. -- Let your No be simple and straightforward, flowing from your Yes!, flowing from a
commitment to a future course of action, flowing from respect. No is a selection principle that allows you to be
who you are.
3. Propose a Yes? -- As you close one door, open another. Your proposal should clarify and strengthen your
position, while respecting the interests of the other positively.
Stage Three – Follow-through
1. Stay true to your Yes. – If there is disagreement Don't Yield Don't Attack. Go to the Balcony. Listen respectfully
and empathize without sympathizing. Paraphrase. Use: “Oh” to acknowledge their point neutrally. “So” to let the
other run through tactics and tricks. “No” repeat no.
2. Underscore your No. – Emphasize patiently and persistently that No means no. Repeat the No and employ an
anchor phrase. Educate the other with reality-testing questions. Plan B if they refuse to respect your needs,
withdraw cooperation and implement plan with respect.
3. Negotiate to Yes. – Build a Golden Bridge. Facilitate a wise agreement by not compromising essentials and
helping the other address unmet interests. The other should not see the negotiation as a loss but rather as a
satisfactory ongoing agreement. Help them save face. Help the other win approval from those the other
represents. Use the “acceptance speech test” to find the persuasive arguments, themes, and criticisms for the
other's constituency. Cultivate a healthy relationship. Continue to respect them. Pay more attention to the
relationship, rebuild confidence, and replenish your good will account. End on a positive note.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 10
Strategies for Integrative Bargaining
Facts: A married couple are trying to decide where to spend their two-week vacation.
He wants to go to the mountains; she wants to go to the seashore.
1.
Expanding the Pie.
Increasing the resources to be bargained for. If the resources can be increased
then perhaps both sides can get what they want.
Example: Get four weeks vacation and spend two at the mountains and
two at the seashore.
2.
Nonspecific Compensation.
One side gets their objectives and the other side is paid off for accommodating
the other's interests.
Example: W tells H that if he goes to the seashore, she will buy him a new
set of golf clubs.
3.
Logrolling.
If two or more issues are in disputes, the negotiators may be able to do a series
of trade-offs. One side gets their top priority on the first issue and the other side
gets their top priority on the second issue.
Example: H wanted an inexpensive cabin; W wanted a luxury hotel. If W
prefers quality of accommodations to the place, a luxury hotel in the mountains
might meet both their needs.
4.
Cost Cutting.
One side gets their objectives and the other's sides costs are reduced by going
along with the first side.
Example: H likes a quiet, peaceful vacation; W likes the beach because of
all the activity. An inexpensive place on an isolated beach may fit the needs of
both.
5.
Bridging.
The parties are able to invent new options that meet each side's needs and
interests.
Example: H really wants to hunt and fish; W wants to swim, shop, and
enjoy the nightlife. Maybe they can find a resort that has all of these.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 11
POWER - RIGHTS - INTERESTS
THREE WAYS TO RESOLVE DISPUTES:
POWER:
Determine who has more power.
Examples: Competitive negotiations & strikes.
RIGHTS:
Determine who is right.
Examples: Go to court or arbitration.
INTERESTS:
Reconcile underlying interests of both parties.
Examples: Interest-based negotiations or mediation.
New ideas about resolving conflicts:
Focusing on INTERESTS is better than focusing on RIGHTS,
and,
Focusing on RIGHTS is better than focusing on POWER.
The goal is to encourage people to resolve their differences by reconciling their interests, and
if that is not possible, then to use low-cost methods to determine rights.
The recent "win-win" negotiation advice suggests replacing traditional "hard bargaining" over
rigid positions, in which the focus is on power, with problem-solving negotiation, in which the focus is
on creatively reconciling interests.
New alternative dispute resolution (ADR) methods are aimed at replacing rights-based
procedures (such as litigation) with interests-based procedures (such as win-win negotiation and
problem-solving).
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 12
PLANNING & PREPARATION
FOR NEGOTIATIONS
Most people prepare for a negotiation by trying to
decide what their "bottom line" is. Their bottom-line is the
worst agreement they would accept. They then decide
how much above their bottom line they will ask for when
they make their first offer. They may also determine a "fall
back" position for their first concession, but that is about
the extent of their planning.
A great improvement can be made in negotiating
planning by systematically considering factors that apply to
virtually every negotiation. Both you and the opposing
side should be analyzed. The "5 Planning Factors" should
be considered in every negotiation. A planning chart can
be used to help you in the planning.
Before and during the negotiations, you should ask
yourself the following questions:
What do I know?
What don't I know yet?
How am I going to find out the information I need?
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 13
5 FACTORS
FOR PLANNING
1) PEOPLE
What are the past histories and present feelings of the people involved in this
negotiation? What are their goals and objectives? Who is more powerful and
what is the source of that power? What influences can they bring to bear on this
negotiation? What do you know about their negotiating style?
2) RELATIONSHIP
Do the negotiators or their constituents have any history together? What was
that prior relationship like? How are they getting along now during the
negotiation? Do they have a good relationship? Is it strained? Have they just
met for the first time? Will the parties have a continuing relationship or will this
be a "one-shot" negotiation? Even if the parties are not likely to work together in
the future, will reputations be made in this negotiation that will follow the
negotiators in the community?
3) ISSUES
The issues involved in the negotiation are the topics to be negotiated. They are
also the questions and concerns that each party raises during the negotiation. It
is usually very helpful to frame the issues as questions to be answered rather
than statements that are made.
4) POSITIONS
The positions in the negotiation are the solutions that each person has in mind.
Positions are the "What" that the negotiators want. Many different positions are
considered during a negotiation including, the opening position (demand), a fall
back position, a bottom line, and a BATNA (Best Alternative To A Negotiated
Agreement).
5) INTERESTS
Interests are the basic needs that negotiators seek to be met in any agreement.
If you know the interests, you know "why" the negotiators take the positions they
do during the negotiations. Maslow's hierarchy of needs is helpful here.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 14
NEGOTIATION PLANNING CHART
(Fill in the blocks with information you know.)
PEOPLE
Who:
RELATIONSHIP
Past:
ISSUES
1.
POSITIONS
When to disclose?
INTERESTS
OPTIONS
1.
1.
2.
2.
3.
3.
4.
4.
Initial:
2.
Current:
First Fallback:
US
Negotiation
Styles:
3.
Bottom-line:
4.
BATNA:
5.
Desired:
Ways to improve:
Who:
Past:
1.
Estimated Initial:
Negotiation
Styles:
Current:
2.
Estimated Bottom-line:
Estimated:
7.
Disclosed:
THEM
3.
Desired:
Estimated BATNA:
4.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 15
6.
TIPS
FOR NEGOTIATING WITH A COMPETITIVE
NEGOTIATOR
Flinch.
Take time out.
Remember your BATNA!
Get another opinion.
Ask "how" they will negotiate.
If they don't know what "win-win" means,
they won't be negotiating that way.
Avoid multiple concessions
if your concessions are
not matched by their concessions.
Recognize "dirty tricks"
and comment on them immediately.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 16
TO IMPROVE YOUR NEGOTIATIONS:
Think in terms of interests
Classify the type of negotiation:
Deal or Dispute
Distributional or Integrative
Expand the pie
Use a planning chart
Investigate the opposing negotiator
Consider both strategy and tactics
Set high goals for yourself
Practice before you negotiate
Determine your BATNA
Ask lots of questions
Separate the people from the problem
Generate alternatives by brainstorming
Frame your proposals as a gain to them
Flinch when you hear a high demand
Protect your facts when necessary
Be willing to make concessions, but only if they do too
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 17
EIGHTEEN RULES OF NEGOTIATION
1.
Assume that everything is negotiable.
2.
Have high aspirations.
3.
Never accept the first offer.
4.
Deal from strength if you can, but create the appearance of strength, regardless.
5.
Put what you have agreed on in writing.
6.
Recognize that the other party is probably holding back valuable information.
7.
Flinch to create doubt in the counterpart's mind and to add value to a concession.
8.
Find out what your counterpart wants. Don't assume that their wants are the
same as yours.
9.
Concede slowly and call a concession a concession.
10.
Keep your counterpart in the dark about your strategy and your stake in the deal.
11.
Try to get your counterpart to lower to lower his/her level of aspiration.
12.
Ask questions if you do not understand what is going on. Do not let your
counterpart deliberately confuse you.
13.
Answer a question with a question to avoid giving away information needlessly.
14.
Invoke the higher authority to buy more time.
15.
Information is power - get as much as possible.
16.
Verify anything you are told that you do not know to be a fact.
17.
Be cooperative and friendly. Avoid abrasiveness, which often breaks down
negotiations.
18.
Use the power of competition. Remember that power can be real or imaginary.
- from It's Negotiable, by Peter Stark (1994)
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 18
NEGOTIATIONS: STRATEGIES & TACTICS
A Film
Brainstorming
Preliminary meeting to discuss a wide range of ideas & to discuss
strategies and tactics. List ideas without evaluating them.
Blanketing
Ask for everything at once.
Bracketing
Narrow opponent down to determine what they really will take.
Intimidation
Dominating. Playing top dog.
Undermining
Put opponent on the defensive. (Dig underneath)
Surprise
Change in approach. Show you have information the other side does
not expect. Present new proposals or demands. Emotional outburst.
Feinting
Pretending. Lying. A false show to catch the opponent off guard.
Give the impression you want one thing when you really want
another.
Salami
Taking something bit-by-bit (one slice at a time) rather than the whole
thing. A small concession asked for at the end of a negotiation is
called a "nibble."
Forbearance
To postpone for a period of time. Take time out. "Let's take a break."
Deadline
Knowing your opponent's time limit allows you to put pressure on
them. Set a time limit. Push your opponent to make a decision by a
certain time limit.
Good Guy,
Bad Guy
One person acts tough, a second person acts nice - hoping to induce
a concession.
Limited
Authority
Claim of not enough authority to be able to approve the deal on the
terms presented.
Fait Accompli
An accomplished fact. The thing is already done so argument is
useless.
Silence
By using silence, you hope the other side will speak (to their
disadvantage).
Apparent
Withdrawal
Make opponent think you are unwilling to discuss the issue further.
The goal is to get them to reduce or give up their demand.
Reversal
Speaking from the viewpoint of your opponent and incorporating
their interests, you make it sound like your opponent has gotten a
good deal from you. Also means to act in a different way than
expected.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 19
NEGOTIATING TACTICS
Professor John Barkai
University of Hawaii Law School
AGGRESSIVENESS
ANCHOR
ANGER (Real or Fake)
APPARENT WITHDRAWAL
BACKTRACKING OR UNRAVELING
BLAMING or FAULT-FINDING
BLAND WITHDRAWAL
BOULWAREISM (Take-it-or-leave-it)
DEADLINES
DEADLOCK AND CONCEDE
DRAFTING THE AGREEMENT
DRAFTSMAN OR SINGLE NEGOTIATING TEXT
DUMB IS SMART AND SMART IS DUMB
ESCALATION
EXPLAIN OFFERS AS GAINS
EXPOSE THE JUGULAR
FAIT ACCOMPLI
FALSE DEMANDS
FALSE SCARCITY
FEEL, FELT, FOUND
FEINTING
FIRST OFFER-LARGE DEMAND
FLINCH
FORBEARANCE
GOOD-GUY BAD-GUY
HIGHER AUTHORITY
HOT POTATO
INDUCED COMPETITIVENESS
INSCRUTABILITY
LIMITS
LINKAGE
LOW BALLING
MISLEADING CONCESSION PATTERN
NIBBLE
PARTICIPATION AND ASSOCIATION
PERSISTENCE
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 20
PLAYING TO FEARS OR ASSUMPTIONS
PRECEDENTS
“PRECONDITION” DEMANDS
PRINCIPLE
RED HERRING
REINFORCEMENT AND REWARD
RELUCTANCE
REVERSAL
SALAMI (Piecemeal)
SOWING DOUBTS; DISMISSALS OUT-OF-HAND OR PUT-DOWNS
SPLITTING THE DIFFERENCE
STATUS, AUTHORITY, ASSOCIATION AND CREDENTIALING
SURPRISE
ULTIMATUM (take it or leave it)
WALK AWAY
WHIPSAW
YWHTDBTT (You Will Have To Do Better Than That)
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 21
NEGOTIATING TACTICS
Professor John Barkai
University of Hawaii Law School
PLEASE UNDERSTAND THAT NEGOTIATION TACTICS PROBABLY
WORK BEST BETWEEN PEOPLE WHO DO NOT KNOW EACH OTHER WELL
AND WHO WILL NOT BE WORKING TOGETHER IN THE FUTURE. WHEN
YOU ARE NEGOTIATING WITH YOUR FAMILY, FRIENDS, CO-WORKERS,
AND OTHER BUSINESS ASSOCIATES, THINK ABOUT OVERALL
NEGOTIATION STRATEGIES AND ABOUT INTERESTS RATHER THAN
SIMPLY ABOUT NEGOTIATION TACTICS.
When some people come to a course about negotiations, they hope to learn negotiation
tactics that will make them a better negotiator. Negotiation tactics are specific negotiation
behaviors that are used during negotiations. Sometimes tactics are considered the "tricks" of
negotiation. Some tactics are part of the normal, ethical behavior that takes place during
negotiations. Other tactics are considered to be "dirty tricks." Many of the tactics are not true
tactics but are really just personal styles of behavior of people who are engaged in conflict.
Tricks, however, are not likely to make you a better negotiator. Understanding the
negotiation process is the most critical thing to learn about negotiations. Nonetheless, most
people do hope to learn some new tactics at a negotiation course, and hopefully you have
learned some new tactics here. But if you are interested in more tactics, a whole range of tactics
are listed on the following pages. As the tactics are set forth here, no value judgment is made
as to their honesty or usefulness in negotiation.
RESPONDING TO DIRTY TRICKS
If "dirty tricks" are used against you, the best response is to openly identify the tactic for
your opponent and to question its legitimacy.
For example, "You two aren't trying to use the old good-guy bad-guy ploy on me are you?"
Generally, your opponents will deny trying to use the tactic, but will also stop using it.
If you hope to keep the negotiation going, give them some room to back away from the dirty trick
gracefully and to save face.
NEGOTIATING TACTICS
AGGRESSIVENESS
Aggressiveness or the lack of it may be an unchangeable part of one's personality. It
might be useful in negotiations to force the other side into concessions or to make errors.
As with anger, aggressive or competitive behavior is likely to provoke a similar response
from the opposing negotiator.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 22
ANCHOR
Anchoring is fixing or establishing the focus of discussion around a certain point, whether it
is a figure, a range, or and issue, simply by asserting it. Anchoring plays on the human
tendency to fix attention on, and be influenced by, what someone says.
ANGER (Real or Fake)
Anger is a common emotion in many conflicts. It shows a serious disagreement with the
opposing position and may cause a party to reconsider the reasonableness of their
position or to reassess the resistance to that position.
APPARENT WITHDRAWAL
The negotiator appears to have withdrawn from the process and yet still has the
negotiation covered through an associate or by other means.
BACKTRACKING OR UNRAVELING
After a few issues appear to be settled, a negotiator, to get his way on a new
issue, may threaten to undo the earlier agreements.
BLAMING or FAULT-FINDING
Blaming or assigning fault is an aggressive tactic which may invoke conciliatory behavior,
either because of induced guilt feelings or a sensed need to mollify. It may focus
negotiation on a substantively irrelevant, but psychologically volatile or conflictual, issue.
BLAND WITHDRAWAL
One of the negotiators might leave the negotiation without showing emotion or giving an
explanation. A negotiator might take some action and then claim that he did not know that
he was doing something in a way that the other side would object to.
BOULWAREISM (Take-it-or-leave-it)
Lemuel Boulware, former labor negotiator at GE in the 1940s, would do his research and
make what he thought was a fair and reasonable offer to the union. There was only one
offer made. Boulware did not offer any later concessions. It was "Take it, or leave it."
This tactic will not work if the other negotiator expects you to make high demands with
later concessions. In labor negotiations, such a tactic is now considered an unfair labor
practice and is illegal.
DEADLINES
Set deadlines when you want them. "I need your answer by tomorrow at 3 p.m." Ignore
deadlines when you do not want them.
DEADLOCK AND CONCEDE
Negotiator organizes issues with least important issue first and most
important issue second; and then continuing to alternate less important and
more important issues. During bargaining, she deadlocks on the first issue,
but then concedes. She then also deadlocks on the most important issue,
but demands the other side concede since she conceded on the first issue
and there has not been a reciprocal concession.
DRAFTING THE AGREEMENT
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 23
Once a deal has been made, it often must be put in writing. The drafter might try to add
some unnegotiated terms into the document. The drafter can be protected from the other
party slipping something in the contract. Either volunteer to do the drafting or be prepared
to give the document a very careful reading.
DRAFTSMAN OR SINGLE NEGOTIATING TEXT
A party to negotiation brings to the table a document drafted as a basic text
to set the agenda. It tends to set the agenda and focus the parties on a
prescribed resolution of issues. A means of taking the initiative in the
negotiations, leaving the other side to work with it, ignore it, offer a counterdocument, or use discipline in dealing with the document.
DUMB IS SMART AND SMART IS DUMB
You are generally better off by acting as if you know less than everybody else. It defuses
the competitive spirit. This is the tactic often used by the TV detective Colombo.
ESCALATION
Most negotiations progress from a set of initial high demands, through a series of
concessions, to a final, lower settlement. Sometimes a negotiator will break away from
this pattern and actually increase or escalate the demands during the course of the
negotiations.
EXPLAIN OFFERS AS GAINS
Psychological research suggests that when people are faced with a small sure gain and a
risky, larger potential gain, they will generally go for the small, sure gain. However, when
faced with a sure small loss and a larger potential loss, people do not want the small loss.
They will hold out against the small, sure loss even if they risk a big, potential loss.
Therefore, you should frame your negotiating proposals as emphasizing gains. This
research suggests avoiding threats.
EXPOSE THE JUGULAR
The loser in a dog fight often rolls over and exposes his neck and soft belly. The winner
usually stops the attack. Sometimes a weak opponent can get more by conceding
weakness. The more powerful negotiator may not always squeeze out the last drops of
blood, but may give a break to the weaker party. But, this is a big risk!
FAIT ACCOMPLI
You present your opponent with a completed and seemingly unchangeable action. Your
opponent accepts rather than opening up the process again. For example, you can send
back a signed contract, but one in which you have made changes. You send a signed
check, but for less money than what they other side wanted.
FALSE DEMANDS
False demands are similar to making large demands. False demands are extra issues
that the negotiator added to the initial demand so that they can be traded away as
concessions. Both false and large demands help to disguise the true bottom line and
interests of the negotiator.
FALSE SCARCITY
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 24
Psychologically when faced with a limited commodity, or the commodity becomes scarce
or restricted, people react by wanting more of it than when it was more available.
Negotiators use this psychology be suggesting that the opportunities are quite limited.
FEEL, FELT, FOUND
Agree with them until you can get them to agree with you. There are three verbal steps.
1)
FEEL: "I understand the way you FEEL."
(Acceptance, not challenge.)
2)
FELT: "Other people have FELT exactly the same way."
(Their responses are normal.)
3)
FOUND: "However, those people FOUND that ..."
(Tell how other people have come around.)
FEINTING
An apparent move in one direction is used to divert attention from a move in the other
direction. You look left, and then pass to the right. Mislead them as to your present
intention. You stress goals that are unimportant to you and then give them up for
concessions from the other side that are important to you.
FIRST OFFER-LARGE DEMAND
States an extreme demand, beyond or at the far margin of the range of credible or
reasonable offers. This has the effect of setting the perceived or apparent bargaining
range. Often combined with the tactic of splitting the difference.
FLINCH
React visibly (flinch) when you first hear the offer. Your nonverbal communication (you
can add the verbal too) says "That is much too much!"
FORBEARANCE
Forbearance calls for delaying, holding off, and stalling rather than giving an immediate
response to your opponent’s requests. If you concede too quickly, your opponent might
gain a psychological advantage. Delaying your response might cause your opponents to
rethink their positions. Even when you know that you will reject their offer, if you delay
rather than give an immediate "no," you appear to have thoughtfully considered their
idea.
GOOD-GUY BAD-GUY
The bad-guy works with you first. He leaves the room and his partner, the good-guy,
takes over and apologizes for the other guy's behavior. The good-guy appears to be
your friend. He'll make you a good deal. Guess what? They are working together.
HIGHER AUTHORITY
The negotiator appears to agree with your position, but has to report to a higher authority.
The higher authority is never present, and of course says "No deal" on those terms.
This tactic is very common when buying a new car. "I'd like to give it to you at the price
we talked about," says the salesperson, "but the boss said 'no.'" It is helpful to claim you
must take the proposal to a higher authority, - your client, boss, partner, spouse, mother,
etc.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 25
HOT POTATO
If they hand you a big problem, try to hand it back to them immediately or at least let the
stream out the potato.
INDUCED COMPETITIVENESS
Induced competitiveness converts what would ordinarily be a two party
negotiation into a multi-party negotiation where all the parties interested in
a particular good are forced to compete with one another for it. The
competition makes the item more desirable and drives up its price. An
alternative way of inducing competitiveness is to create an auction for the
item.
INSCRUTABILITY
Inscrutability often comes from using silence and not offering any reactions. This is the
classic poker player's tactic. Don't let them read your cards by reading your face.
Actually, the face often will not leak out nonverbal reactions. Look to the hands and feet
for the nonverbal leakage.
LIMITS
Negotiators can either set and respect limits or refuse to acknowledge them. If the
legislative session must end at midnight, the limits can be changed by unplugging the
clock.
LINKAGE
Linkage attempts to expand the scope of a negotiation by bringing in issues
which, while not clearly related, one can make a plausible case for
considering. The effect is to change bargaining power and leverage, or to
change the focus and character of the dispute or the set of gains or
opportunities the parties are trying to decide. Adding issues or parties can
change the dynamics of negotiation.
LOW BALLING
The negotiator makes a low offer to attract the other side, but there is no intention of
going through with the deal on the terms offered. Later, they will say that there are
"additional" charges or that the circumstances have changed. This is a "bait-and-switch"
tactic.
MISLEADING CONCESSION PATTERN
In theory, a party will make smaller and smaller concessions as bargaining
converges on his bottom line. Knowing this, negotiators can mislead the
other side by using a concession pattern that converges at a point above or
below his actual bottom line. The other side, reading the concession
pattern, may mistakenly conclude the conceder has reached his bottom
line.
NIBBLE
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 26
The deal is done, or at least it looked that way. Now one of the negotiators asks for one
more small concession. The concession is so small that the other party often gives in just
so not to upset the deal.
PARTICIPATION AND ASSOCIATION
Get others to join in on your side. Tom Sawyer was good at doing this. Get important
people to work with you. It is negotiating power by careful alliances.
PERSISTENCE
No. No. No. Be persistent in your resistance. Say "no" until your tongue bleeds. The
refusal to move can test the other side’s firmness and uncover just how much
concession room there is.
PLAYING TO FEARS OR ASSUMPTIONS
Negotiators can advantageously manipulate the other side’s fears or
assumptions. Whenever a party discloses in some way that it has made an
assumption favorable to the other side’s bargaining position, the other side
can use that knowledge to its advantage.
PRECEDENTS
As justification for refusing to do what the other negotiator wants you to do, you claim that
the desired action would set a bad precedent for you. "If I do that for you, I will have to
do that for everyone."
“PRECONDITION” DEMANDS
Setting a precondition to negotiation is a way of obtaining a concession without giving
any in return. Demanding satisfaction of a precondition may not only gain a concession
without cost, it may also reveal how eager the other side is to secure a deal. The
response to this tactic is to be clear you consider the precondition a part of the
negotiation, and that you expect a reciprocal concession.
PRINCIPLE
Appeals to principle are often highly persuasive. One good way to prepare
for negotiations is to develop arguments of principle for the positions one
takes.
RED HERRING
A red herring is a false, yet highly distracting, issue that a party can use to
bring pressure to bear on the other side. It is most useful in negotiations
where the parties represent outside constituencies that can be manipulated
to pressure a recalcitrant party. The false demand tactic is a version of the
red herring.
REINFORCEMENT AND REWARD
Treats concessions as rewards for desired concession behavior of the
other side. The concession follows the other side’s concession and is a
more than equivalent concession, the excess being the reward. This
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 27
produces more concessions and even stimulates concessions to continue
even when the negotiator stops making reciprocal concessions.
RELUCTANCE
Accept their offers very slowly. If you are too quick to accept, they will think that they are
giving you too much. They may even try to back out on you.
REVERSAL
You move in the opposite direction. By appearing to go backwards (or sideways) you are
actually moving forwards.
SALAMI (Piecemeal)
Do not go for everything at once. Go for it piecemeal. Take one slice at a time until you
get the whole salami.
SOWING DOUBTS; DISMISSALS OUT-OF-HAND OR PUT-DOWNS
Sowing doubts about proposals, or curt dismissals of offers, and various
other kinds of put-downs can undermine the other side’s confidence and
cause it to make faulty judgments about the relative merits of its bargaining
position.
SPLITTING THE DIFFERENCE
When the parties are stuck at different positions, one solution is to each compromise half
the difference. With offers at $600 and $1000, the compromise would be $800. This
technique gives the "appearance" of fairness. But is it fair in your case?
STATUS, AUTHORITY, ASSOCIATION AND CREDENTIALING
Negotiations can be influenced when one side is consciously or
unconsciously impressed by the status, stature, or authority of the other
side, and either defers or makes unwarranted assumptions about the other
side’s power, strength, or resolve. Association is a similar tactic using
borrowed authority, where negotiators seek legitimization by making some
claim of important association (such as name-dropping).
SURPRISE
You make an unexpected move or present a withheld goal. The other side has not
anticipated your shift in methods and arguments. Examples are escalation, walk outs,
new data, and emotional reactions.
ULTIMATUM (take it or leave it)
You claim that this is your last offer. They must take your offer or the negotiation is over.
Say that this is your best and last offer. However, in reality, nothing prevents you from
making another offer at a later time. In2 fact, most negotiations end when the parties
think they have the best offer they can get. Settlement is reached when each party
believes that they cannot get a better deal without spending more time, money, and
emotional energy than the potential improvement over the current situation is worth.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 28
WALK AWAY
The classic tactic in third-world markets and is often used here too. If you cannot get the
price you want, walk away from the deal and maybe they will follow you. This tactic is a
bluff. To work effectively, you have to be able to truly walk away from this deal and seek
out your BATNA.
WHIPSAW OR “OTHER OFFER”
A potential buyer may play the seller off against another seller (whipsaw the seller with
another source of supply). If the third-party seller is real, they represent a real BATNA for
the buyer. This tactic may work well for a weak buyer. Sometimes, however, the buyer
simply pretends that another source of supply may exist when in fact it does not.
YWHTDBTT (You Will Have To Do Better Than That)
If the other side is told "You will have to do better than that," often, they will make you a
better offer. Some people claim to not even read the first offer. They just ask for a better
offer, no matter what the first offer was. They assume that the person who made the
offer made an excessive demand.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 29
Negotiation Lessons from the Pawnshop
By Jay Folberg – May 2008
http://www.mediate.com/articles/negotiation_lessons_from_the_pawnshop.cfm
JAMS Dispute Resolution ALERT, Vol. 8, No. 2, Spring 2008.
My resume is loaded with Alternative Dispute Resolution credentials: law school professor and then a
dean; teaching negotiation and mediation for decades on several continents; writing books and
dozens of articles; negotiating and mediating land use lawsuits, commercial cases, employment
issues, institutional conflicts, and many other types of disputes with up to eight-figure payouts; serving
on umpteen advisory boards and “blue ribbon” commissions. But my resume is not the reason you
should follow my advice about negotiation. The reason you should pay attention to what I have to say
is that I am the son of a pawnbroker.
The most important lessons about negotiating and reaching agreements were provided by my Dad, in
a pawnshop in East St. Louis. Since then, I’ve learned new, fancier names for some of the concepts I
was taught as a youth, and I’ve been involved in more complicated transactions and disputes, but the
pawnshop experience offered invaluable, practical lessons in how to negotiate. Here I will pass along
to you some of what I learned at my Dad’s side.
Schmooze and Learn
My Dad, a high school dropout, was a savvy and professional negotiator, but he didn’t come across
that way. His humble and friendly manner put customers at ease. Dad was a good “schmoozer,” who
listened more than he talked. He told me “we were born with one mouth and two ears so that we can
listen twice as much as we speak.” If by asking questions and listening you can learn what is in the
head and heart of someone, it is much more likely that you will make a personal connection, satisfy
their needs, and in so doing, get what you want. If you actively allow others to express themselves,
they usually will tell you what you want to know. The more you talk, the less they can say, and the less
you can listen and learn. Dad emphasized that you seldom learn anything new by speaking. When
you do speak in a negotiation, particularly at first, do so in a way that elicits more information, directly
or indirectly, or that helps build trust. Connecting with people, whether as a pawnbroker with a client or
a lawyer with their opposing counsel, makes our work worthwhile. Taking the time to establish a
personal connection and trust is usually time well spent.
Soda Pops and Reciprocity
Reciprocity works. People tend to return favors and are more likely to respond positively to those who
reach out by offering a small gift or show of concern. When someone seemed like a serious
customer, particularly in the hot summers in East St. Louis, my Dad would ask if they would like a
cold pop (a “soda” in the Midwest). This seemed to break the ice and created a sense of both trust
and obligation. This is a simple lesson practiced by fruit peddlers, who offer free samples, and by law
firms, where a receptionist asks, immediately upon greeting you, if you would like a cup of tea or
coffee. In your legal negotiations, look for a non-costly concession to make early. Giving a little
something early on will likely trigger more cooperation from the other side. My Dad’s offer of a cold
pop helped turn reluctant “lookers” into more relaxed customers who were more likely to reciprocate
Dad’s sincere but calculated kindness.
The Secret Code
Legal folklore and some academic texts assert that when negotiating you should let the opponent
make the first offer. However, negotiators may have an advantage if they make the first offer. First
offers, like prices we placed on items in the pawnshop, act as an anchor point for bargaining. A pair of
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 30
diamond earrings with a $300 price tag is much more likely to sell for $200 than if marked $200.
However, the first offer or demand should not be so exaggerated that you are laughed out of the room
or that bargaining never starts because your offer (or price) is out of the bargaining zone. The
important lesson is to aspire high, but have a realistic bottom line that you don’t forget. In the
pawnshop the aspirational sticker price was, typically, double the amount loaned on clothing and
household items; triple the amount for jewelry, musical instruments, guns, and tools. The bottom line
was the amount loaned plus 10%.
Dad needed a code to keep the bottom line secret from others but clear to him and those of us who
worked in the shop. He went back to his fruit peddling days and used the 10-letter code “fruitandco,”
representing, from the first letter to the last, the numbers one to 10. With fruitandco in our minds, we
could count to 10 with 10 separate letters forming a secret digital code.
Each item for sale in the store had a tag with the “price” written at the top for all to see and at the
bottom the cost plus 10% written with the code “fruitandco” letters in smaller print. A bottom line
amount of $5.70 would be written “tno”. All of us who worked in the store knew the code and never
lost money on a sale – we would walk away from the deal when we hit the bottom line. But we started
every negotiation trying to hit the goal – to come as close to the marked target price as possible,
which was profitable but also fair and reasonable.
Gold Plated Perceptions
In the pawnshop, I learned that deals take place when the offer on the table leaves
everyone better off than no deal. The same is true for settlements of lawsuits. In other words, you
don’t get any of what you want unless the other side gets at least some of what it wants. Wants,
needs, and values are matters of perception.
Pawnbrokers and lawyers try to change the other sides’ perceptions through persuasion that the unredeemed item for sale (or the lawsuit) is worth more and that buying it (or paying the claim) is a good
deal. The person on the other side of the store counter (or the lawsuit) points out flaws, highlights
perceived better alternatives, and argues that the goods or claim is worth less than we think.
Dad was a master at the art of managing perceptions. Behind the counter displaying used watches,
he kept a stack of high-end fashion magazines with glossy advertisements for expensive watches. He
would deftly flip one of these magazines open while a customer was looking at a pawned watch and
bring the customer’s attention to the price of a new watch that resembled one in the case. (Never
mind that the advertised watch was real gold and ours was gold plated.)
Similarly, a plaintiff’s lawyer will be quick to compare the amount of his demand to a large verdict for a
similar claim. The defense lawyer will point out why the current claim is, at best, a plated imitation of
the golden facts that resulted in the big verdict and more similar to a recent case resulting in a
defense verdict. By referring to carefully selected reference points by way of comparison, each
negotiator will try to change the other’s perception in a way that will result in a sale or settlement
agreement.
Do the BABULEW
The best thing that ever happened to boost our sales was when a jewelry store that sold only new
merchandise opened in the neighborhood. Once that store opened, my dad had a tool, even better
than glossy magazine adds, to deal with any customer who wanted too good of a deal. When anyone
was unsure about whether to buy at our shop, Dad would suggest that they visit the jewelry store
down the street and then do the BABULEW – which stood for “Best Alternative to Buying Used from
Lew.” The BABULEW comparison usually closed the sale.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 31
This type of analysis was popularized in the best selling negotiation book, Getting to Yes, which
emphasized the importance of knowing your “best alternative to a negotiated agreement” (BATNA).
Before you decide if an offer is worth taking, compare what will happen if you don’t make a deal. The
better your walk-away alternative, the easier it is to walk away. In lawsuit settlement negotiations, the
BATNA is usually mediocre – further delay and costs along with the prospect of a risky trial.
If you can point out to the other side that their walk-away alternative might not meet their interests as
well as the deal you’re offering, they too, might do the BABULEW.
Diamonds for Vacuum Cleaners
My Dad focused on his customer’s underlying interests rather than just the amount of money they
offered. He didn’t get hung up on a customer’s bravado or the occasional low offer or insulting
comment. Customers used monetary offers to communicate all kinds of things that had little to do
with dollars. The same is true with litigants. Plaintiffs in lawsuits ask almost exclusively for dollars in
their complaints and the defense invariably offers fewer dollars than the plaintiffs demand. But the
dollars usually represent basic human interests. These interests might be met more creatively if better
understood.
People need money to satisfy material, social, and emotional needs. Finding out how the money will
be used or what needs must be met is helpful to fashioning a satisfactory agreement. I remember a
customer who brought in a modest diamond wedding ring to pawn. Dad wouldn’t give her the amount
she wanted – the ring wasn’t valuable enough to justify her asking price. Instead of just saying “no,”
Dad asked why she was pawning the ring and for what she needed the money. She said that she was
recently divorced and needed money to buy a vacuum cleaner for her housecleaning jobs. Dad had
lots of unredeemed vacuum cleaners and a mutually advantageous trade was made. Focusing on
needs, not just dollar demands, facilitated a deal in a situation that did not look promising.
People also have “process” interests in making deals and resolving differences in a way they consider
fair or, even better, advantageous. Our customers usually thought they did well, were treated with
respect, and had some fun bargaining with the pawnbroker. Dad was a master at making people
believe they “bargained him down.” He knew the importance of being able to come down from his
opening price so that the customer could get more than a good deal – she could get the satisfaction
of successfully bargaining for concessions. Dad knew it was important for customers to leave the
shop feeling good – not just about the final price, but about the way they got there. The same is true
for lawyers with whom you negotiate.
Give and Take
Concessions are the incremental compromises a negotiator makes after an opening offer. Usually the
concessions made are offered in return for concessions from the other side. Making concessions can
be done strategically, knowing that the timing, amount, and nature of concessions are a form of
communication by which each side sends signals about their values and reservation points. The
pattern of concessions sends a message. By carefully considering what you want to communicate,
you can manage concessions to shape the message, particularly about how close you are to your
bottom line. (Diminishing concessions signal you are close.) Consider the following pattern of
concessions and the message my Dad was sending when selling a watch:
“Lew, that old watch isn’t worth $100. I will give you $50.” “Ok, business is slow; I can give you a 10%
discount. $90 and it’s yours.”
“It’s only worth $50.”
“I can sell you that other watch in the case for $50, because it isn’t gold plated. This watch would cost
you $200 new.”
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 32
“You are a good salesman, Lew. Wrap it up and I’ll give you $60.”
“No, I can’t do that. Elgin watches are in demand and I don’t get them in often. If you want to take it
right now, I will accept $85. That’s it.”
“I know you are robbing me, but I will pay $75, if you will throw in a new band for it.”
“The band will cost you $10, so the total will be $95.”
“Lew, you’re going in the wrong direction.”
“No, you’re getting a real bargain and I can’t come down.”
“You don’t have to come down. I’ll pay $85 with the new band.”
“It’s past our closing time and I need to go. I will let you have the band at cost for $6, if you buy the
watch now for $85.”
You drive a tough bargain. Here is $90. Take it or leave it.”
“OK, you’re killing me, but I really do need to close the shop.”
The timing of concessions is critical. Concessions given in rapid succession early on may signal risk
aversion or desperation. Giving away too much in the initial stages of the negotiation depletes the
reserve of concessions that can be offered later when they may be more appreciated. A negotiator
should space concessions because while gains feel good, they only feel good for a little while, so it’s
best to string them out and get the most from them.
Concessions should be made in the context of reciprocal trade-offs or exchanges rather than given
simply to find the other side’s point of acceptance. Remember the caution not to “bargain against
yourself.” Demanding a concession in return both reinforces the value of what is being conceded and
signals the resolve of the negotiator making the concession. It also helps to build the process of give
and take and fuel movement toward agreement.
Leveraging Nylons and Jeans
I started working in the pawnshop after the end of World War Two. Dad had a good stock of some
price controlled items in short supply after the war – particularly nylon stockings and Levi jeans. This
supply gave him bargaining power in negotiating for the sale of other goods that weren’t price
controlled, because he could dangle the possibility of including one of these “scarce” items in a
package sale with other less coveted merchandise.
Dad did not put the nylon stockings on display, despite the fact that most women wanted them.
Instead, he would let it be known that he had quality stockings and would make them available if the
buyer was a “good customer,” i.e., one who spent a lot. “Buy this used suit and you could also get a
pair of hard to find nylon stockings for your honey.”
The nylon stockings and jeans gave Dad the scarce ingredient he needed to create a package that
allowed him to move merchandise that was harder to sell. Both sides got what they wanted through
packaging, just as you can in settlement deals. For example, in land use disputes, municipalities may
allow a developer more building density or height if the developer will include more scarce affordable
housing units or public amenities. Packaging works.
Power and Commitment – Please Don’t Try This
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 33
If my Dad had something in the store that a customer wanted, he had a degree of power because he
controlled if the customer got it. The customer, of course, had something Dad wanted – money. In
any negotiation there must a degree of power and motivation to fill a need on both sides. The
negotiation process, in part, is how each side shapes the perception of their power in the mind of the
other.
Power is linked to commitment. If the other negotiator perceives that you are committed to give (or not
give) what he wants only if he gives you what you want, then you have power in the negotiation. A
hostage taker adds credibility to his bargaining position if he shoots one of several hostages, but in so
doing he also risks ending the negotiations. Similarly, lawyers who have trial experience and
demonstrate a credible commitment to go to trial, will do better in negotiations than lawyers who have
only settled cases. However, if her willingness to litigate is overplayed, a lawyer risks alienating the
other side and forcing a trial where a settlement would have been both possible and desirable.
Dad told me a story that illustrates the power of an irrational but credible commitment or threat. A man
walked into the pawnshop wanting to pawn a gun. He wanted $50. Dad would normally hold firm not
to give more than $20 on a similar gun. The man explained that he needed $50 to pay his rent, which
was past due, and if he didn’t get it he would kill himself. This threat would generally not move my
father to part with more money. However he looked into the man’s eyes, which were bloodshot from
tears, and saw a commitment that seemed real. The man got his $50. This may have worked in my
Dad’s shop, but please don’t try it in your next negotiation.
Playing “What If”
“Lew, you can’t outshoot me.” “Yes, I can.” “No, you can’t.” “Want to put your money where your
mouth is?” “Why not?” “Loser pays for all the ammunition.” “OK.”
My Dad’s pawnshop became well known for offering a staple item in rough and tumble East St. Louis,
unredeemed guns. We also sold ammunition for both personal weapons and hunting guns. Outside,
behind the store, we had a makeshift shooting range. A brick corridor four or five feet wide, formed by
the side of our building and the one next door, terminated in a brick wall, in front of which Dad layered
wood and metal to absorb the bullets. Paper bulls-eye targets were regularly blasted to bits in back of
the shop. My Dad was an excellent marksman.
Dad liked to challenge customers, including police officers who were regulars in the shop, to shooting
matches. The deal was that the customer would pay full price for all the ammunition used, but only if
they lost. Dad promised that if he lost, he would pay for the ammo. Perhaps my memory is colored by
the awe I had for my father’s shooting prowess, but I don’t recall Dad ever losing. The ammo sale was
based on who won the shooting match – a kind of “contingent agreement” – a commercial bet on an
uncertain future outcome, where each perceives that they are likely to win.
If parties in a negotiation have different predictions about future events or disagreement over the risks
that will flow from concluding a deal or reaching a settlement, they may reach impasse. However, if
the negotiators, like Dad, put their money where their mouths are, they can structure an agreement
that builds upon these differences. In appropriate circumstances, negotiators can agree to disagree
and write contingent outcomes into the deal. When are the appropriate circumstances? When the
parties think the risks are worth taking and they are confident of their shooting abilities.
Exploding Offers
Negotiations are like gas – they expand or contract to fill the space or time available. I’ve seen many
stalled mediations conclude only when the disputants become aware that the time to make a deal or
settle is running out. Sometimes the deadline is imposed by a court, and sometimes it’s self imposed,
like a plane to catch. As the end looms, concessions are offered and compromises are reached that
would not be considered earlier.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 34
There comes a time in some negotiations, like in sales, when one negotiator thinks it is advantageous
to prevent the other side from exploring alternatives, getting more information, or having second
thoughts. In these situations, the negotiator may try to impose a deadline. Introducing deadlines into a
negotiation is a way to create a perception of a vanishing opportunity.
In the pawnshop we had to take inventory once a year to calculate merchandise taxes due. But just
about every other week I would hear Dad close a sale late in the day by saying “we are getting close
to taking inventory for the merchandise tax. Buy this right now and I will knock off another 10% so I
don’t have to pay tax on it.” The idea that the discount was fleeting made it especially alluring. (It was
true that everyday the inventory was closer to happening and if sold before then there would be no tax
due on that item.) This type of take-it-or-leave-it deadline is sometimes referred to as an “exploding
offer.” Lawyers do something similar when they say “you have until 5:00 p.m. to accept this settlement
offer or it’s off the table because tomorrow we start preparing for trial.”
A Good Loser
Never celebrate a victory, at least not in the presence of your opponent. If you can leave the other
side convinced they did well, there will be fewer issues going forward and less likelihood that the other
side will back out of the deal. The relationship between negotiators is strengthened if no one feels
they were beaten. There is value in the rapport established for future negotiations. Conversely, if an
opponent or his attorney loses face, he may feel compelled to “get even” at the next opportunity.
I will never forget hearing this exchange in the pawnshop at the end of vigorous bargaining between
Dad and a regular customer over the price of an electric fan on a hot summer day:
“Glen, you drive a hard bargain. You can take the fan for $17 on one condition; don’t tell anyone how
little you paid for it. I’m losing my shirt to you.”
“Stop your bellyaching, Lew. You gotta be making money. How else do you stay in business and feed
your family when you always lose money selling this stuff?”
“You’re right. I lose money on almost everything I sell, but I sell so much I can afford to lose more
money. It’s a matter of volume!”
Glen left the shop feeling like he had bargained well. The person you negotiate with should always
feel they got a good deal. A positive experience prevents buyer’s remorse and may bring them back
for more. When appropriate, congratulate your counterpart on the agreement achieved, but not too
much.
Relationships Matter
Pawnbrokers, like lawyers, develop reputations and depend on relationships to succeed. The interest
in creating or preserving a relationship is particularly important when negotiating contracts and
resolving business disputes, where the parties see or once saw a benefit in working together and
anticipate future transactions. In the 1965 Academy Award-nominated movie “The Pawnbroker,” an
old, lonely gentleman pawned something every week just to have a reason to talk to the pawnbroker.
Some regulars at the pawnshop pawned their jewelry a few days before payday and retrieved it after
getting paid. Musicians would pawn instruments between gigs and come into the shop mid-week
because Dad would let them practice at impromptu jam sessions, which also drew in other
customers. The relationship between my Dad and his “band of regulars” was good for the soul and
good for business. Your relationship with other lawyers, including opposing counsel, is important for
your long term success as a negotiator.
Live and Learn
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 35
I can’t fully capture here all my Dad taught me about negotiation. There are too many good
pawnshop stories and lessons and too little space in this newsletter. I’ve shared a few of my
favorites in the hope that you learn something from my Dad that helps you negotiate better. But I
hope you learn something else as well – that no matter what your background, no matter what
your parents did for a living, there’s a lot to be learned from a life well-lived that can apply to the
resolution of legal disputes. Mine were lessons from a pawnshop, what were yours?
Jay Folberg is Professor Emeritus and former Dean of the University of San Francisco School of
Law. He is co-author of Resolving Disputes: Theory, Practice and Law, Aspen Press, 2005.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 36
NEGOTIATION GAMBITS
Created by Students in Prior Classes
To make the first offer:
Well, this is how I see it...
Let me tell you what I had in mind.
Why don't we start at...
This is what X would like; what is your position?
After serious contemplation, I have come to this conclusion...
Would you be willing to try this?
Are you open to discussing serious offers?
Would you be open to accepting an offer at this meeting?
I think________is a good offer. What do you think?
If I could offer you______________, what could you offer me?
To get the ball rolling, we think X could offer...
(In your best Brando) I'm going to make you an offer you can't refuse.
I just want to get this resolved, so what if...
If this went to court it would cost us both a great deal of time and money; therefore...
Let's get down to it. What if ....
As a negotiator, when I want them to make the first offer:
We'd like to get this resolved today. What do you need?
How do you see this?
What do you think?
Look, tell me what you need and I'll tell you if we can work something out.
Why don't we just lay our cards out on the table so that we can start sorting out the details. Go ahead, tell me
what you want.
How much are you asking?
What will it take to get you to do____________?
What is your range?
What is your bottom line?
What do you think is a fair proposal?
What are you willing to do to resolve this dispute?
What is your solution?
Could you tell me what you need?
What would it take to preserve this relationship?
What do you think we should do?
Why don't you start us off in the right direction?
Could you fill me in on what you're willing to do here?
What would it take to close this deal right now?
What kind of figure would get you interested?
What is a reasonable starting figure for us today?
To get the ball rolling, how about giving me a ballpark figure?
(In your best Brando) Make me an offer I can't refuse.
I'm open to suggestions.
What do you truly want?
What are you interested in?
As a negotiator, to offer a concession:
We would be willing to pay X for Y.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 37
What do you think of this?
What if I were to ....
I would like to offer a concession.
Does this meet your needs?
In an effort to show good faith, we are willing to?
Well, I think we can accommodate you there.
Perhaps we could provide?
Maybe this could work for both of us.
We can probably do something along those lines.
Because I want to see this thing work, I'll..
I am willing to ...
Although we feel we deserve X, we can live with Y.
If I were to agree to that, what would you be willing to do in return?
To get this going, I'll be flexible on this.
I really don't normally do this, but...
Would this solve our problems?
Because you are ..., I'll do this.
As a negotiator, to ask for a concession:
Can you do better than that?
We would agree to X, if you would do...
How much are you willing to come down?
Is that your best offer?
Will you take X for it?
I can’t go any higher than X.
What can you do?
We’re going to need something more than that.
What is your side willing to do?
Can you do anything to meet us halfway?
Would you consider making any concessions?
Now, I know that you must concede at least something.
You have to give to get. What are you willing to give?
As a negotiator, dumb is smart:
I don’t know much about this, but I was told that…
You probably know more about this than I do but…
I may be wrong, but my understanding is that…
I’m not really sure about this, and maybe you could explain it to me, but…
Okay, I’m trying to make sure I understand can you explain that again?
I’m sorry, but I really don’t think I caught the gist of this proposal. Could you run through it again, but in more
detail for me?
I’m not sure I understand. How does your solution make it better for both of us?
As a negotiator, when you want to delay decision:
I’m sorry, but I’ll have to give that more thought.
Let me get back to you on that matter.
I’ll have to check on that.
I’m not ready to go that far.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 38
Why don’t we address that later.
I have an idea of what I want. However, I’d like to hear your offer first.
Before I provide you with that information, can you tell me how much this whole thing is worth to you?
That’s a question I’m not yet prepared to answer.
Perhaps if you provide me with information as to what your interests are, we may be able to find an appropriate
figure.
I’m going to have to digest this material a little longer. Do you mind if we break until after lunch?
Let’s go over this proposal one more time later. I really want to give it the attention it deserves.
Let me get back to you on that.
Can I have a couple of days to think about it?
Let me discuss it with my supervisor before I give you a solid answer.
I need to talk it over with my supervisor, but it sounds good.
Let me sleep on it before I decide.
The approval will take a couple of days. I’ll be in touch.
I’m late for an appointment, let me get back to you when I return.
I like what I’m hearing so far, but I need to have my accountants (or engineers, etc.) take a look at it.
Can we make our final decision on ____? That’s when everyone will have had a chance to look at the project
more thoroughly.
Now is not a good time because (excuse), how about we discuss it on___________?
Can you get me more information before I decide?
As a negotiator, use active listening tools:
I’m picking up that…
As I get it, you felt…
If I’m hearing you correctly…
So, as you see it…
I’m not sure I’m getting you, but…
So you feel that…
It sounds as if you are concerned about…
How do you feel about this situation?
How did you come to that conclusion?
If you were doing things over again, what would you do differently?
What do you mean by that?
Why is that important to you?
Tell me more about that.
What happened next?
What I am hearing is…. Is that right?:
Before you go on, do you mean…
Will you give some examples of what you mean?
I’m not sure I followed that. Could you explain it to me again?
Do you mean that…
That is interesting, but why ______?
You want to probe for underlying interests:
What do you think is important?
Why do you think that happened?
Why is that important to you?
What exactly are you after?
You say that bothers you. Why does that bother you?
In other words, your point is_______.
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 39
What are your other concerns?
Are there issues other than what you have already told me?
What were you trying to accomplish when you did________?
That’s interesting; tell me more.
Why are you opposed to that idea?
How will what you are asking for meet your needs?
____________seems to be very important to you. Could you explain why?
Our discussion always seems to come back to… Do you think we could specifically talk about that?
I sense that there might be something else.
Is there another spin to this?
So, how do you feel personally?
How does this sit with you?
What is your opinion?
Can you live with this?
Have you thought through the consequences?
What do you expect by the end of this negotiation?
Can you tell me why you feel that way?
Can you tell me why you think that is more important than_____?
What would be most satisfactory to you, and why?
How do you think I, as a mediator, can help you and your situation?
What are your goals?
Are there other things we should consider?
Professor John Barkai --- University of Hawaii Law School
- Negotiation p. 40