Bargaining for Advantage

Bargaining for Advantage

Published: July 23, 1999 in Knowledge@Wharton

"Every minute you’re not negotiating skillfully is an opportunity cost," says Richard Shell,
chair of the legal studies department at Wharton and author of a book
that takes its name from Wharton’s Executive Negotiation Workshop, Bargaining for Advantage.
"We are all tempted to compromise in negotiations and this may be the
right move, but compromise may not be the optimal result when many
issues and needs are on the table."

"Cooperative people seem to
think they have to make concessions to get goodwill," Shell adds. "But
those are two separate issues. There is integrative bargaining where
your goal is to get the best result for both sides. But there is also
distributive bargaining where the issue is how to divide the pie best.
The manipulative negotiator moves one millimeter and expects an inch in
return. So sometimes, when you are faced with a competitive
counterpart, the best defense is a good offense."

"Test, probe,
set the standards, determine if there’s going to be reciprocity," Shell
advises. "Check yourself when someone triggers a feeling of obligation
in you to be sure you’re moving in incremental steps."

One technique Stuart Diamond
endorses is constant practice in all sorts of consumer and personal
interactions. He stresses that negotiators should begin with close
attention to detail. When you call a toll-free number for customer
assistance, for example, Diamond advises that you learn the name of a
customer service agent. Write down that name and, if the agent is
willing to help you, don’t let him or her transfer your call to an
unknown person. Ask your contact to stay on the line with you and make
that person your ally.

Diamond, a practice professor at Wharton
is also president of his own firm, Global Strategy Group. He uses the
tools he teaches every day. "Having the proper training in negotiation
is like having the key to a castle’s 200-pound door. A tool, like
asking the right questions, can be a very small thing. But with the
tool you can unlock a very big door. Without it, you’ll never get in,"
he says.

An important first step in negotiations is knowing
yourself, so participants in the Bargaining for Advantage program
complete an evaluation that identifies their personalities and
negotiating habits. Identifying whether you are likely to compromise,
accommodate or become aggressive in a negotiating session helps you
compensate for possible weaknesses and begin scouting your
counterparts. The goal is not to find a one-size-fits-all negotiating
place but to select the optimal strategy for each situation.

Lars
Magnusson, a technical manager with Swedish Defence Material in
Stockholm, attended the workshop in May and says he hadn’t thought much
about how he was perceived in a negotiation. And he hadn’t considered
the strategy of researching others before beginning talks. That changed
once he was paired with someone who acted very differently than
himself, he says.

Shell and Diamond purposefully match
participants with partners based on their personal styles—some who are
much like themselves and then others who work quite differently. They
are also encouraged to experiment with new behaviors and note the
results. Knowing what puts other people at ease, which topics excite
them and how to read non-verbal cues are all critical pieces of
information gathered during negotiations, Diamond says.

"There’s
a natural tendency to lean back when someone else leans in toward you.
Fight that impulse and lean in. People will trust you more," he says.
"Eye contact and body language are also important. The more you know,
the more you can affect the process," he adds.

As someone who
negotiates $500 million in real estate transactions in a year, workshop
alumnus Wayne R. Crosby III looks for any advantage. Crosby is chairman
of Resort Property International of Naples, Florida. Having the chance
to test out several strategies—as the amiable compromiser one day and
the hardnosed combatant the next—gave Crosby a broader understanding of
how to seal a deal during a week of intensive negotiation training. It
also proved profitable.

"On the fourth day of the class," says
Crosby, "I applied a lesson I learned to close a major acquisition for
a property in the $75 million range. There were several suitors for
this parcel, but we reconsidered our position and had the seller spell
out what his goals were. Then we worked on meeting his needs. Putting
his needs first was the grease that helps get things done.You both
become partners trying to reach a goal." Another key strategy Crosby
picked up was being sure to talk to the right person. Bargaining with
someone who lacks the authority to act can both waste time and benefit
an adversary.

"We don’t want people to leave until they have
either solved or started solving the real problems that brought them
here," Shell emphasizes.

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