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All pain, no gain: when negotiating, don't take a fall just for the sake of friendship

Boxing Knockout

Don't take one for the team

When negotiating, big sacrifices aimed at maintaining a relationship aren't worth it

By Prof. Leigh Thompson

John was a tough negotiator — but he was also a self-described “team player.” I had the occasion to observe him in action in a recent negotiation, in which he “took one for the team.”

The simulation involved a buyer-seller scenario in the tech industry and John was in the role of the seller — a role that he finds himself playing in his actual business negotiations. As I watched John, he made early and deep concessions on price, volume and terms to the buyer so as to maintain good relations and, ideally, secure future business with that party.

Because it was a simulation, I was able to dissect the net effect of John’s deep concessions on his outcome and on the other party’s outcome as well as those concessions’ collective effect. The upshot was that by “taking one for the team,” John lost big. He gave up a ton of value. The other party — the buyer — ended up with a huge amount of value. The buyer was quick to reveal that she (in this case) would have actually paid a lot more for the product in question. And the simulation was structured so that the buyer and seller were actually equivalent in bargaining strength.

However, the most heartbreaking aspect was the fact that by making so fast and so deep a concession, both members of the negotiation ended up dividing a much smaller pie than they could have. In short, they left a lot of undiscovered value on the table.

Let’s face it—we all want to be reasonable when it comes to negotiation, and we all want to behave in ways that will, we hope, secure future business. However, it is important to remember these four tips before you “take one for the team:”

  1. We negotiate in long-term relationships with people who have short-term memories: If we make a deep concession today, the other party most likely won’t remember our good-faith effort in the future. Thus, we don’t get any credit in the future from making a concession today.
  2. Firm flexibility: Only make concessions on low-priority issues — not high-value issues. John made a concession on one of his key value drivers and later discovered that it wasn’t as important to the customer as he’d earlier thought.
  3. One step at a time: You get more relationship mileage by making a number of small concessions rather than one big, deep concession. As I tell my negotiation students, step up or down the concession ladder rung by rung. Don’t jump off or else you might break both legs.
  4. Quid pro quo: Only make concessions in a quid pro quo fashion. I find that my students who record concessions and track the patterns are the most successful. You can also gently pressure the other party to make concessions by reminding them of where you started and how far you have come.
So buy flowers, or pick up a lunch check. Better yet, shake hands if you want to build relationship credit, but don’t give value away needlessly.

For more on improving your negotiation chops, see Prof. Leigh Thompson's The Truth About Negotiations (Chapters 14-19) and The Mind and Heart of the Negotiator (Chapter 3).
Mind and Heart of the Negotiator

Image by Daniel Novta under a Creative Commons license