How to deal with the irrational parts of a negotiation
Negotiation can be challenging. This article will explore real business case insights.
Jane, CEO of a consulting firm, is in negotiations with Graham, a star employee who announced his resignation after starting his consulting practice. Jane’s company needed revenue, and the customer had made it clear he wanted to stick with it. Graham managed an account that contributed more than 20% of the company’s turnover. He loved the continued commission, even though he had to endure months of starvation when he settled on his property.
Jane silently pushed a piece of paper across the table, a handwritten proposal for Graham’s commission. Something about the note seemed sneaky, like a sneaky offer from the other side of the room, or perhaps even a threat to the company.
With melodramatic verve, she pulled a pen out of her jacket and wrote a highball number on the sheet, which she turned back smiling. Looking at the lowball numbers Jane smiled and pulled out the pen again.
Negotiations are interpersonal conversations marred by emotions, as is sometimes the case, but the negotiation literature treats them as if we were rational beings who draw logical conclusions while pursuing well-defined interests. Like Jane and Graham, we take illogical positions that undermine our own interests based on irrational impulses. We are crossing the line of non-competition and we will sue, or we will sue ourselves.
Because of our human discomfort with conflict, we often hesitate to discuss contentious issues, but we can minimise unnecessary escalation by engaging sooner rather than later. Make sure that when you finally open up, the dialogue will degenerate into collaborative problem-solving.
The pyrotechnics of the conversation between Jane and Graham were compounded by the public outcry of anger over Graham following his announced resignation. If anything annoys you, or if your irritation determines your behaviour or conversation, make your concerns clear. If necessary, sit down at the table where you belong and stand in the middle of the discussion, not the other way around.
Perhaps it is easier to find the best solution by better understanding the perspective of the other, but we can talk about principles and needs for a moment. At one point Graham offered the numbers to the others and moved the conversation into the discussion process, believing that Jane’s use of a handwritten offer violated the spirit of collaborative problem-solving.
Our brains are specifically designed to give cognitive priority to perceived threats, and we have survived millennia because, as a species, we care about safety. When something menacing occurs, our reptile brains automatically assume authority and our higher thinking centres are inhibited.
This is bad news if we perceive a threat during complex interpersonal negotiations, but it is good news if we buckle down when a better option is available. If we trample or make threats, our actions can cause others to do the same, and this can cause us to buckle down, even if we have better options.
The first prerequisite for the success of healthy negotiations is psychological security. Positive long-term results can only be achieved if everyone is fully committed to the implementation of the agreement by ensuring that the other party knows two things: we care about their interests as much as we care about our own, and they care about us.
Imagine how different the conversation with Jane would have been if Graham had responded to the paper by saying, “Jane, I know my departure is troubling the company. Sometimes we feel the need to question our perception of reality, but we have to be willing to keep talking and find out if something is fair. “
Both parties enter the negotiations with different views and sometimes different perceptions of the reality of their situation.
Graham signed a contract with the competition when he joined a company that imposed legal obligations on him. Jane believes Graham is a threat to the company’s ability to turn around as a customer of its new service.
Because psychological safety is so crucial, you should do everything in your power to share your understanding of the situation without triggering the perception of malicious intent. Do not portray these natural consequences as calculated revenge and show sympathy for the non-competition.
By contrast, you want to make it clear that you have to protect the interests of your business. Every inch that non-competition exceeds is a threat: take punitive action or you will be sued.
Don’t apologise for protecting your interests, but don’t enjoy your power: you need to protect yourself, your business, and your customers.
By sharing the natural consequences of poor negotiation outcomes with the other person, you can assure them that you will avoid these consequences and continue the dialogue in search of better mutual outcomes. Jane could have said in a calm, respectful tone: “We can’t agree, but please take a few minutes to review the contract you signed to make sure we have the same understanding for the future.” Continue the dialogue, not the concessions, and you will not harm yourself or your company.
This would increase the likelihood that Graham would include legal consequences in his judgment, thereby provoking unnecessary hostility. Graham could have got away with the proceeds that would have helped him set up his new business. Jane’s company retained customers, but sales fell 50% in its first year without Graham, and he left the company without revenue, which would help bring it to market.
Too often we focus so much on the technical aspects of negotiations and not on the human dynamics that drive them. Even a small change in approach can completely change the outcome of some of the most important negotiations.
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