When you look beyond the deal, managing the behavior of the parties becomes far more important than it is in a short-term transaction. In a transactional negotiation your focus is on getting an agreement, after which you move on, letting someone else worry about implementation. As a result, if you encounter aggressive and demanding negotiators on the other side, it can be tempting to give in to their demands in order to get the deal or just to make them go away. In relationship negotiation, however, every action sets the terms of the subsequent relationship.
One of the most dangerous snares that transactional negotiators fall into is what I call "the bear trap." By this I don't mean those mechanical iron jaws used to capture bears but rather the powerful, finger-length claws bears are endowed with for capturing their prey and destroying anything that gets in their way. If you have been to Yellowstone National Park in Wyoming, you have seen signs warning visitors not to feed the bears. Why is it so important? Quite simply because once you feed bears, they will learn that you are a source of food. And since they have enormous appetites, they will come back for more. Gratitude and moderation are not qualities bears understand.
In negotiation, "bears" are those people who press you for unjustified discounts, one-sided concessions, or undue favors. They want something for nothing. Their sole objective is for you to satisfy them. Giving in to their demands merely whets their appetites. Even if they accept what you offer this time, they will demand more the next time you negotiate. Worse, they'll actually come to resent you—as your willingness to give in plays into their mistrust, convincing them that you were inflating your terms to begin with and may still be cheating them now. So they push harder and demand more. Be assured, human bears are no more grateful or restrained than their four-legged cousins. That's why "Don't feed the bears!" is one of the most valuable messages all negotiators should keep in mind.
I have seen proof of this maxim countless times as clients have called for help in getting out of bear traps they negotiated their way into. One typical example was a European transport company that was seeking to expand its operations throughout Southeast Asia. The regional representative, Jack, had been told to get the necessary permits to set up operations. When he flew in to meet with the local transport licensing agency, however, he got disappointing news. The director told him that he would very much like to help him, but his office was terribly backed up in all of its work, so he couldn't predict how long it would take to process the permits. However, the director said, if Jack helped out by buying them a few late-model mobile phones, the permits could be moved onto the fast track and be ready in a matter of days.
Jack later admitted that he had been a little uncomfortable giving in to an up-front demand for no specific return. But as he was under considerable pressure to get the new offices set up on schedule, he reasoned that the cost of a few "gifts" was a small price to pay for getting the permits quickly—and would boost his career in the process. To show his goodwill, Jack didn't wait for spending authorization from headquarters (which might get sticky). Instead, he bought the phones from his own travel allowance and gave them to the agency head. The agency head seemed delightfully surprised at Jack's quick response. They parted warmly, with assurances that the permits would be ready in two weeks. Assuming he had resolved the impasse, Jack flew off to the next location confident that he would have the permits in hand on his return.
Instead, two weeks later he was told that the licensing agency had found a few "problems" with the application. "Nothing to worry about," the director assured him, but it would mean a delay while they cut through red tape higher up. The director advised Jack to exercise more patience.
Jack grew nervous. "How long of a delay?" he asked.
"That is very hard to say," the director replied. "Sadly, we are so slow here. We don't have up-to-date computers like the one you are carrying there." He paused and looked meaningfully at Jack's computer bag. "Now if we had a nice laptop computer like yours, that would certainly make our work go considerably faster." Jack said he would see what he could do.
While Jack was naturally annoyed at being shaken down yet again, his irritation was offset by his panic over what to do next. If he were to refuse the latest request, he would be back at square one. Worse, he had told his boss that he was on top of things and that the approvals were just around the corner—and his boss had made similar assurances to the head office. How could he now go back and say he had been tricked, especially when that involved a gift he had never disclosed? Not knowing any way out of this bind, he jumped even further into the trap, compounding his error by giving away even more in the hope that this would finally win him the deal. Swallowing hard, he agreed to buy them a computer. The meeting ended with more assurances. Jack smiled weakly, praying that in a short time all would be settled.
Another month went by without any sign of the permits. By this time Jack's boss had grown concerned about the delays in meeting the head office's timetable for expansion, so he had flown down himself to find out what was holding things up. The meeting at the licensing agency was a disaster. There had been no progress whatever on the approvals. When the boss demanded to know what was holding things up, the agency head replied resentfully, "You foreign businesspeople expect everything to move so quickly. Well, of course you do, since you have all the latest technology in your office. I bet you even have one of those new multimedia conferencing systems, don't you?" He showed them a picture he had cut from a magazine. "Now, if we had a system like that, I am certain we could process your application much more quickly."
Jack and his boss walked out in shock. Jack was forced to confess all. A few days later they called my office for help. "When will they stop shaking us down and just give us the permits?" Jack moaned.
The more interesting question was why Jack thought the agency head's behavior would ever change as long as Jack continued to reinforce it. Ethics aside, the man was behaving logically. Every time he demanded something, Jack delivered it. So why should he either give Jack the permits (which would bring an end to the gift flow) or stop making demands (since so far it had gotten him everything he asked for)?
Jack, in short, had been feeding a bear. Although he thought he was appeasing the bear's greed by doing this, Jack was in fact emboldening him. In the painfully ironic words of American journalist Heywood Broun on the eve of World War II, "Appeasers believe that if you keep throwing steaks to a tiger, the tiger will become a vegetarian."[23] If the agency head could get ever-larger gifts from Jack in exchange for nothing, why should he satisfy Jack's needs and give him a reason to stop giving?
That's clear enough, but it leaves open the question of why the agency head had actually grown less friendly and more aggressive with each new request. To answer that, you have to look at Jack through the bear's eyes. From the bear's perspective, Jack wasn't warm and openhanded; he hadn't volunteered anything. Rather, he had had his tight fist forced open. They had stared each other down, and the bear had won. Moreover, the fact that Jack gave in so easily every time the agency head pushed convinced him that Jack had a generous spending allowance, which he would only dip into when forced. Who knew how deep those pockets were? Yet, thought the bear resentfully, Jack had initially tried to buy him off with a few paltry telephones. Each time Jack gave in to a new demand, the bear's conviction grew that Jack must be making huge profits on the agency's back.
Jack's mistake was to be submissive in hopes it would make the other party more generous. But a strong relationship cannot rest on such unequal foundations. Dominance feeds on weakness, and submission sets up a destructive pattern of expectation.
You may have personally encountered people who were extremely demanding, even abusive. Perhaps, feeling intimidated, you gave in to their threatening behavior in the hope that it would calm them down. In the short term, it may even have had a positive effect. But, like Jack, you would have learned quickly that feeding a bear brings only momentary peace at the price of reinforcing a bully who will expect more and more while returning as little as he or she can get away with.
People are naturally mistrustful. This mistrust grows exponentially if the parties
Are strangers, especially if they look different (race, dress, and so on)
Come from other countries or speak different languages
Represent social, economic, cultural, or ethnic groups who have a history of conflict (such as unions and management)
Are already in a dispute
The most effective antidotes to mistrust, as we have seen, are openness, sincerity, and the slow building of credibility. Giving in to one-sided demands has no place on that list. When, as Jack did, you give gifts or discounts for no other reason than that your negotiation counterpart has demanded it, it confirms the other party's suspicion that you had originally inflated your terms in an attempt to take advantage of him—and only his forceful response has protected him.
Let's imagine a situation in which there is no basis for trust.
You are in a bazaar in a foreign country. An intricately designed ceramic pot catches your eye. You ask the woman at the stall how much it is, and she replies, "Two hundred dollars." You like the pot and are certain that you couldn't find one of the same quality at home for that price, but you're also a bit leery, since a number of your fellow tourists have warned you of the dangers of being ripped off by the locals. You could easily pay $200, but you strongly suspect that that isn't her "real" price. In fact, price isn't really the issue here. It's mistrust. You fear that she is overcharging you and will spend the rest of the day laughing about how she took the stupid tourist for a ride. So you say, "No, that's too much. Give me a better price."
She replies, "Okay, okay. For you, my friend, only $170."
Are you satisfied? Do you now feel you're getting a fair deal? If you are like most of us, the answer to both questions is no. By giving in to your demand so easily, she has set off every alarm bell in your brain, specifically in the prefrontal lobe, which regulates trust and social behavior. The bear within you roars, "If she can drop the price that quickly, who knows what her real price is? The first number was surely bogus. She must really think I'm a chump! Well, I'll show her what I'm made of!" And the haggling begins.
What if you do end up buying that pot for $170, $150, or even $100? Do you have warm feelings toward the seller? Would you recommend her to other tourists in your group as an honest merchant who dealt fairly with you? Of course not! Your natural instinct is to see her as someone who sought to cheat you, who was foiled only by your quick wits and great bargaining skills.
This presumption of guilt has nothing to do with reality. In fact, she may have sold you the pot at a loss. Perhaps it had been a bad day for business, and she was desperate to make enough to bring food home to her family that night. You actually don't know one way or the other—but your gut reaction will always leap to the more negative interpretation. Why? Because her willingness to drop the price, for no other spoken reason than that you had asked her to, convinces you that her first price was a lie.
This doesn't only apply to buying and selling. A few years ago, a multinational company hired me to help develop a negotiation strategy for its contract talks with the labor union of a recent acquisition. In the decade prior to being bought out, the local company had been through a couple of different owners; wages had been frozen for several years. Naturally, the union was mistrustful of management and full of pent-up demands. Although the new owner was planning to give a substantial 30 percent raise to workers to bring them back up to the industry standard, the management anticipated a fierce fight with the union.
In my first meeting with the HR team, which would be conducting the negotiation, I asked their chief negotiator how he intended to approach the union. "We'll offer 10 percent to start, then work our way up from there," he said.
"Why would you offer only 10 percent if you are planning to give 30 percent?" I asked.
"To give ourselves room to maneuver!" he practically shouted in exasperation, amazed at my inability to grasp the fundamentals of negotiation strategy. "They'll make a ruckus, naturally. Probably walk out. But in the next round we'll come up a bit, which will make them feel they're winning something. Then there'll be the usual back-and-forth, and we'll be positioned to settle on 30 percent in the final round. If we start any higher, they're sure to call a strike, since we won't have enough to give away in the later rounds."
"But if you offer them such a low figure, won't that encourage more radical demands?" I asked. "Why not begin with a reasonable offer, close to the amount you're actually hoping to settle on? You'll earn their trust, which you can build by sharing the economics behind the offer as well as your financial constraints, while making it clear that you're willing to work with them within those constraints. You can then focus the negotiation on trading off basic wages with performance pay, retirement, and medical benefits to come up with a package that the union feels best meets its members' needs without you substantially raising the overall price tag."
The company negotiator looked stunned. "There's no point bothering with trust and offering explanations! These aren't our friends. The union is like a bunch of demanding children whose method is to shout, threaten, and strike until they get what they want. If we start with a reasonable offer, they'll demand something totally unreasonable. That's the way it works here."
His strategy was not an uncommon one. Nevertheless, I suggested to him that there may be a link between the negotiation strategy and the subsequent hostility. He was treating the union as a bear (or a spoiled child), goading it to roar, feeding it generously when it did, then wondering why it kept roaring.
Let's again look at the issue from the bear's point of view. The union and its members would be unaware that the 10 percent the company negotiator initially put on the table was merely an appetizer and that the owners were fully prepared to deliver up the full dinner after a little game-playing. The negotiator would lead them to believe that that first crumb was all management would willingly part with—in short, that the company was intending to exploit them. Enraged, the union would demand an equally unreasonable number, say 50 percent, gaining wide adherence among the rank and file for defending their well-being. They may even go out on strike. Facing the union's fury, the company would unaccountably find that it had a greater ability to pay, offering more with neither justification nor explanation for this change in circumstances other than that it was responding to union demands. In turn, the workers would learn that their ability to earn more is directly linked to radical behavior.
Even were they to settle at 30 percent, the employees wouldn't feel grateful to the company for the significant raise but would credit their union leaders and their own militant action for winning the increase, which they would believe management had tried to deny them. They would now be poised for the next fight. By creating and feeding a bear, management would have worsened labor-management relations and fed mutual mistrust.
With this argument, I finally convinced the company to treat the union as a long-term partner in the company's success, starting with an offer of a 27 percent raise (a number that could be justified on financial calculations and industry comparisons). That was close enough to the 30 percent figure the company felt it could reasonably afford in order to appear generous to the workers, but it left room to give the union a small but visible victory, if needed.
The chief negotiator was uneasy heading into the first meeting with labor. "What do I do to bring them back when they walk out of the negotiation, since I can't offer them more money?" he asked grumpily.
"Let's concentrate on keeping them from walking out in the first place," I replied. "Show your sincerity by making it clear that you're trying to give them a fair deal—not playing games. Show them the figures. Let them suggest other ways of apportioning the money. Listen. Have an open mind. Be accommodating. But don't feed bears!"
He was dubious as he departed for the meeting with the union reps, but when he called back that night, he was a convert. It was the first time in his many years as a management negotiator that the union team had not walked out. "They are now acting more like the company's allies," he told me. There was still the rank and file to contend with, and a lot of feelings of injustice and mistrust that could only be conquered over time and through credible follow-through, but the foundation had been laid to turn bears back into working partners. In fact, two weeks later they signed an agreement that both sides were happy with.
Feeding bears happens whenever you appear to give up something for no other reason than that the other party demands it. (If the company had initially offered 10 percent, its ultimate rise to 30 percent would have appeared to have been a surrender to pressure—regardless of the fact that it had been part of the company's secret strategy all along.) The key phrase here is "for no other reason." Giving in to unjustified demands is quite different from offering something of your own free will, seeking to create a sense of reciprocity by conferring trust in order to receive the same, making an investment in a potential partnership, or simply doing someone a favor. If you willingly give someone some leeway on terms or a price reduction because you feel it could win you an advantage in building future business, that's a calculated commercial risk. Feeding the bears is when you unwillingly give in to force—and when both sides understand that you have done just that.
Once, after I had spoken to a company's sales and marketing team about the dangers of feeding bears, a salesman asked me, "But what do I say to important customers who, when I quote them a price, reply by asking me to give them my best price?"
I will give you the same two options I gave him. You could say,
"Oh, you didn't like the inflated price I just gave you?" and then quote him something lower; or
"The price I quoted is my best price, under the terms we've been discussing. However, we could reduce it if we ..."
Which do you think would lead to a stronger working relationship and less painful future negotiations?
This brings us to our final lesson about bears: every time you feed a bear, you train a bear. A few months ago on an intercontinental flight I heard a mother arguing with her daughter in the row behind mine. The little girl apparently had wiggled out of her seat and was sitting on the floor. "Get up off the floor; you'll get your nice dress all dirty," the mother said sharply.
No response.
"The seat belt light is on; get back into your seat now!"
No response.
"All right, that's it! I'm counting to ten," the mother warned. "Six...seven...eight...nine...ten!...Please! I'll give you some candy."
Having earned her reward, the bear cub promptly hopped back up.
One of the first things a good negotiator learns is that people of all ages are trainable. Every interaction is a lesson. It makes little sense to think you can create good behavior through rewarding bad behavior. For the little girl, the lesson she already knew by heart was that by refusing to obey her mother she would get something she wanted. Similarly, if your business associate sees that she will get a better deal by bullying you, she will begin mentally rehearsing her list of threats every time she enters the negotiation room. I once observed a negotiation in which one side, a diminutive woman, started by saying to her very large male counterpart in a timid voice, "I don't want to fight. Please don't shout at me." I could practically see the bear's teeth grow as he grinned back. The outcome was as predictable as it was painful to watch.
While it is not uncommon for people to behave aggressively, their antagonism is more often motivated by mistrust than by gratuitous hostility. They are reacting to things another person has done or said to trigger that mistrust. However, if they are approached in the right way, they will hold their belligerence in check. Put simply, the best way to avoid falling victim to bears is not to create them in the first place. The principal tools for keeping the negotiation moving in a profitable direction are honesty, credibility, and communication.
Start from a defensible position. While you naturally want to get the most out of any deal, the terms you offer must be sincere, reasonable, and respectful. A relationship-centered negotiator fully recognizes and communicates the value of what he or she brings to the table but never offers terms that are so extreme or one-sided as to demean the value of the other side. As we saw in the case of the labor negotiation, taking an unreasonable position makes you appear to be a bear, which sets off a reciprocal response in the other party. Newton's third law of motion applies equally to negotiation: for every action, there is an equal and opposite reaction.
Communicate valid arguments for every position you take. This topic will be dealt with in much greater detail in Chapter Nine, but let's look at it briefly here. Assuming that the initial terms you offer in a negotiation are supportable, if the other side responds by asking for a reduction of those terms, you mustn't simply comply. As we have seen, groundless backtracking sets off bears—and you will be doomed to a cycle of ever-increasing demands. On the other hand, you should not flatly refuse, a sure way to come across as a bear yourself. Instead, you must sincerely ask the negotiators on the other side to explain the basis of their request. Then do one or more of the following:
If they tell you, for example, that the price you are proposing is beyond their budget, suggest ways to change the terms of the package (such as by reducing the size of the order, lengthening the payment terms, or finding a way to cut costs) so that all sides maximize their value without sacrificing fairness.
If they say they've received lower bids elsewhere, ask them about their goals in more detail, then show how your product or service does a better job of satisfying those goals than the competitors do. As a prepared negotiator you should know in advance where the competition stands and where you stand in comparison. (We'll look at preparedness in Chapter Six and at setting goals in Chapter Seven.)
If they can come up with no reason beyond their feeling that your price is not genuine, you need to put in more effort to gain their trust, for example, by providing additional, preferably written, evidence showing that the terms you quoted were honest and reasonable.
Convey a valid reason for every concession you make. It is insufficient to have even the best of reasons if it remains hidden in the depths of your own mind. Only through sending the explicit and consistent message that you are looking for ways to craft a deal that is fair to both sides will you overcome the bear. When you provide a credible reason every time you "give," the process becomes less a game of intimidation or a battle of nerves and more a cooperative exercise in problem-solving. Valid reasons can come in the form of
A trade-off (either current or in the form of a future commitment)
Adjustment of the terms
New information that changes your assessment of the situation
A compelling argument that changes your perception of the situation
A voluntary and clearly articulated favor
Let's see how this works by returning to the case of the $200 pot in the bazaar. If instead of just dropping the price the shopkeeper had said, "Actually, all of these prices are fixed, but I do have one pot over here with a small flaw that I can sell you for $170," would you have experienced the same bear-like reaction as when she just dropped the price for no reason? If you are like most people, the answer is no. They not only would be more comfortable paying the offered price but would actually walk away more willing to recommend the merchant. Explanations signal honesty and respect. Both create positive feelings.
While the bear-like behavior of the great majority of negotiators stems from mistrust, from time to time you may encounter those who simply get a thrill out of dominating others and whose goal is to win by any means. They don't want fairness; they want to triumph. They don't listen to your arguments or suggestions. They withhold or misrepresent key information. They seem to go out of their way to intimidate you with loud, menacing, and abusive language. What can you do when you encounter a grizzly bear?
Never base your decisions on the decibel level of the other party. If you believe that the terms you offered were fair and reasonable, you should change them only for the valid reasons mentioned above. Insults ("You're out of your mind!") or threats ("There's no way we'll ever agree to that!") are not valid reasons. The best way to respond to grizzly attacks is to demonstrate your legitimacy calmly and ask the attacker to explain the basis of his objections. The more collected you remain, the quicker he will realize that (a) aggression isn't shaking you and (b) he's the only one shouting, which leaves him looking rather foolish. He will soon give it up.
Never negotiate against yourself. One common trick played by bears is to get you to make repeated concessions, by professing dissatisfaction with every offer you make. For example, you offer a price. The negotiator on the other side replies, "No, that's too high." So you come in with a lower price. "Actually," says the other, "we were looking for something better than that." You keep offering better terms, without any movement on the other side. It's as if you are at an auction and the price is going up, only you're the only one bidding. It's a surprisingly easy trap to fall into, even if you are scrupulous about justifying your concessions. The way to guard against this is to insist on a two-way exchange. If the other negotiator tells you that your initial offer is too high or too low, instead of automatically adjusting your terms, ask her what price or other terms she is looking for. This gives you something to respond to and takes the negotiation away from mind reading and bear-feeding and into justification and problem-solving.
Be willing to walk away. Your decision whether or not to accept certain terms must not be based on what the other negotiator wants, regardless of how forcefully he presses his case or what she may do if you say no. Rather, it's a question of whether the offered terms achieve your basic needs and are better than any other current or potential offer on the table. If a deal brings you no value, or less value than you could obtain elsewhere, you are better off walking away. Chapter Ten will show you how to identify substitutes and build a Walk-Away Line, or WAL. They are powerful tools. Just knowing that you have other options will create an invincible fortification against bears. Being able to convey that message confidently will stop them in their tracks.
Think beyond the deal. A negotiation sets the stage for a future relationship and offers a glimpse into how that relationship will function. Therefore, a dysfunctional negotiation process is a vital warning signal, which should lead you to question whether this is the party you truly want to work with. A negotiation with a major purchaser, vendor, or business partner that is characterized by power plays and take-it-or-leave-it ploys will likely lead to a working relationship characterized by ever-increasing demands and little concern for your needs. A negotiator who lies or misleads you to get a deal will likely take advantage of or cheat you during the implementation of the deal. If you feel from the negotiation that this is not a person or a company you could work with beyond the deal, you need to reassess whether you really want to enter into this relationship. If not, you are better off walking away.
A final category of bears to watch out for is the honey bear. These seemingly pleasant creatures are more likely to flatter or cajole than to growl or attack. "Help me out." "I depend on you." "Be a friend." Their method is manipulation rather than assault, but like all bears they still want you to do something that benefits them at your expense.
A honey bear is the boss who tells you that she can't give you the promotion and transfer you are entitled to, because she depends on you too much to lose you. Or the buyer who constantly wheedles you for unwarranted discounts. Or the contract negotiator who asks you to do him a favor and sign off on the terms quickly, because he has another meeting in an hour.
I am not suggesting that you shouldn't do people favors. Favors are the food of relationships. However, there are three qualifiers. For favors to be constructive, they must be reasonable, reciprocal, and based on honest information. Absent any of these qualities, they are merely sugar-coated exploitation. Whenever requests for favors appear unreasonable, one-sided, or dubious, they should be resisted in the same way you would resist any bear trap.
By using these techniques, will you be able to turn every bear into a fair-minded negotiating partner? That's too much to ask. There will always be a small number who are addicted to power or games or who have built up such implacable mistrust over time that it cannot be subdued. But the overwhelming majority of aggressive negotiators—motivated to push one-sided demands because of inexperience, mistrust, fear, habit, or even an urge to win—will change course when confronted with firm resistance. Even if they carry through with their threats and walk away, at the very least you will have protected yourself from becoming their next victim.