Suppose you're an experienced salesperson entering into negotiations for a contract renewal with a company you've successfully done business with for years. Recently, your counterpart at the other company was replaced by a new hire. You call Joe, the new guy, to set up your first meeting and immediately realize you're in for some trouble.
"Here are my rules," Joe says, cutting the pleasantries short. "First, we'll meet at my office. Second, I'll let you know what we will talk about and what we won't. Third, I'll tell you the price range we'll be working in. And we won't put anything in writing until we have a deal."
"I'm fine with meeting at your place," you say uneasily, putting off his other demands for now. "But we should probably include some of our production people and someone from your operations division. We've got to make sure we meet their interests as well."
"No," Joe says. "That's not how I do it."
"For years," you continue, "your predecessor always brought along your head of operations. I think that's why everything always went so smoothly. We need to talk about more than just price. We want to make sure that our components meet your company's unique needs."
"Let me worry about that," Joe says.
You are completely taken aback. Joe seems impossible to deal with. Is he truly irrational or just trying to drive a hard bargain? How can you find out for sure?
One of the trickiest aspects of negotiation is figuring out how to deal with an individual who cannot be convinced by the merits of evidence or arguments. How can you put a stop to irrational behaviors and demandsthose that don't appear to contribute at all to the effectiveness of a negotiation? How can you get someone to be reasonable? In this article, I'll use this hypothetical purchasing negotiation to help you analyze the various possibilities you face when confronting an adversary who seems stubborn, irrational, or even downright crazy.
Possibility #1: Your negotiating partner is perfectly rational; it's just that you don't understand how the world looks to him.
One of the first rules of negotiation is to assume that your partner is rational. Approach each new negotiation with an open mind. Differences in life experience may lead to what look like strange behaviors, so instead of jumping to conclusions, try to imagine how the negotiation might look to the other side. Max Bazerman's monthly Negotiation column "The Mind of the Negotiator" has described many of the cognitive biases that can lead people to read and react to the same situation in totally different ways.
Instead of jumping to conclusions, try to imagine how the negotiation might look to the other side. |
When faced with a partner as stubborn as Joe, imagine what might be going on in his head. Perhaps he's dealing with some new corporate guidelines that govern how he is to proceed. Maybe he's been burned in the past because he wasn't able to manage the "internal" negotiation while proceeding with an "external" one. Perhaps he's nervous about having his performance judged negatively by others in his organization.
How can you address such concerns? First, try asking directly what problem your new partner is trying to solve. "I know you may be feeling some heat back at the office," you might say. "Maybe if I understand what you're up against, we can add some new issues to the equation." You might offer options to help Joe protect himself, such as promising to circulate a draft summary of any tentative agreement to both sides.
Second, you might agree to Joe's demands, while reserving the right to pause the conversation if the change turns out to be counterproductive. Sometimes you might have to try proceeding in a new way, even if it feels unproductive. At the very least, an ongoing failure to move talks forward will provide a shared basis for arguing on behalf of a better approach. As long as you don't agree to anything that fails to meet your company's interests, you won't lose anything by adopting a sympathetic stance toward what appear to be unproductive demands.
Suppose you agree to meet Joe one-on-one at his office. You start off the talks like this: "We clearly have common interests. Your company needs our components to stay competitive globally. We're prepared to keep providing them, as long as you maintain or increase your current order. As you know, we have to make continual adjustments in our production systems to get you just what you want, when you want it. If I can come back to my people with a minimum five-year deal, at stable or increasing sales volumes, we can probably remain at the current price with only modest annual adjustments for inflation. What do you think?"
"No way, no how," says Joe, crossing his arms.
"What do you mean?"
"I'm not interested in doing business if you can't give us a substantial reduction in the current unit price," Joe says. "Also, we need to be able to adjust our order up or down. We also want the right to abandon the contract at any time, with no penalty. And you'll have to guarantee on-time delivery or else pay a big penalty."
"Wait a minute, wait a minute," you say. "A penalty if delivery gets held up for reasons beyond our control? A reduction in unit price? Unpredictable sales volumes? Where is this coming from? No one is paying less than you are for our components. But sales volumes will have to remain constant at least or we can't provide customized service."
"If you want to keep our business, you'll have to find a way to cut prices and eliminate any delivery risk," says Joe. "Now, listen. I promised my guys that we'd have something signed by now. What's it gonna be?"
"Look," you say. "Our companies have been working together for almost a decade. We ought to be able to sort this out. Your predecessor and I always put all our cards on the table. What's going on? Is there some problem you're not telling me?
"I'm sure you and Sue got along great, but times have changed. Gotta get the price down. Gotta reduce the risk. Gotta maintain flexibility. Those are the rules. Do we have a deal, or not?" Joe faces you with a smug smile his face.
Possibility #2: Your partner is perfectly rational but has adopted a seemingly irrational stance as part of his hard bargaining strategy.
Joe may just be pushing to see what he can get away with. If you don't push back, he'll keep "claiming" even more. This strategy is not irrational, especially for someone who has used it successfully in the past.
In their book Getting to Yes: Negotiating Agreement Without Giving In (Penguin Books, 1991), Roger Fisher, William Ury, and Bruce Patton advise you to treat your partner the way you'd like to be treated yourself. Negotiation theory suggests you focus on interests, not positions; separate inventing from committing; invest heavily in "What if?" questions; insist on objective criteria; and try to build nearly self-enforcing agreements.
This advice does not preclude making it clear that there are limits beyond which you will not be pushed. "If you can't be more flexible, we're done," you might tell Joe. "No one is going to give you a better product and better service at a lower price. But if you want to look around, go ahead; then get back to me."
Personally, I don't believe that what we assume to be irrational behavior truly is irrational most of the time. |
If modeling effective behavior doesn't cause your difficult partner to act reasonably, don't despair. There are several other tactics you can try. First, to test your interpretation of events, insist on bringing others from your organization into the negotiation, and press your partner to bring in colleagues as well. In addition, be sure to summarize what's said in writing and distribute memos after each exchange. By doing so, you'll put your difficult partner on notice that others will be aware of what he's up to. Next, put forward multiple proposals that meet your interests very well and that seem to meet the other side's interests at least reasonably well. Even if you don't reach a deal, your offers will be on record. Finally, never make unilateral concessions just to appease your partner. You'll only encourage more of the same unproductive claiming behavior.
Once Joe realizes that there are, indeed, limits to how far he can push you, he may very well temper his demands: "I know you guys do a pretty good job, but there's always room for improvement, right? How are you going to get me a better deal?"
Possibility #3: Your partner really is irrational. All rules of normal discourse go out the window.Suppose you've tried all of the strategies outlined above, but they've failed. Joe refuses to listen to your mutually beneficial proposals and won't be convinced by arguments on their merits. Now you're convinced that you are dealing with a truly irrational negotiating partner, someone willing to risk everything to make sure you get nothing. What can you do?
First, prepare a written memorandum laying out several possible deals, and then set a very explicit deadline for ending negotiations. Make sure to enumerate all of the evidence and arguments, and to spell out why these proposals meet both sides' interests. Though it can be difficult, try to get the memo into the hands of your partner's higher-ups.
If your counterpart refuses to make progress in your one-on-one exchange, fails to respond to a reasonable set of proposals, and remains unwilling to allow others to attend the negotiations, there's not much reason to go forward. Through his statements, Joe has signaled a commitment to hard bargaining for its own sake. You've made a number of mutually advantageous proposals, and you're still getting nowhere. It's time to call off the game, break off talks, and wait to see whether Joe will suddenly back down, as hard bargainers sometimes do.
Personally, I don't believe that what we assume to be irrational behavior truly is irrational most of the time. Rather, experience tells me it's more likely that people behave according to Possibility #2: they're trying to advance their interests by shutting down the other side through hard bargaining. They may be simply bad negotiators, not irrational ones. In the final analysis, negotiating with a seemingly irrational partner isn't so different from negotiating with anyone else you hope to lead into the trading zone, where great deals emerge.
Seven Steps for Coping with Irrationality
Whether your negotiating partner is truly irrational or simply pretending to be, your behavior should stay the same. By following these guidelines, you can save yourself from negotiation nightmares and perhaps even get a good deal:
- Don't respond to irrational behavior in kind. You'll only make things worse.
- Don't make unilateral concessions to win over the other side. You'll just encourage more of the same bad behavior.
- Don't lose your cool out of frustration. Walk away before you lose your temper.
- Focus on meeting your own interestseven if you don't like the way the other side is behaving.
- Prepare for each exchange carefully. Talk with others in your organization and rehearse as often as possible.
- Summarize each negotiation exchange in writing. Try to keep others on both sides in the loop.
- Know when it's time to walk awaythen do it.