When we enter into a negotiation, our goal is to reach a deal with the other side. The idea that we might not be able to do this is something that hopefully does not cross our mind when we are just starting out. However, as the negotiations go one, the possibility that we are negotiating with difficult people and that it might not be possible to reach a deal with them has to cross our minds. What criteria can we use in order to make a judgement call as to if this deal is going to be successful or not?
The Problem With People
We need to understand that negotiators often fail to recognize when it’s time to walk away from a negotiation dispute. This is a trap that can squander time, money, and reputations. Let us agree that if you are able to receive tens of millions of dollars in a mediated settlement, and you might rightly think you scored a victory. However, it is entirely possible that you may quickly come down with a case of “settler’s remorse” and try to undo the deal. A situation like this is a textbook case of not knowing when to walk away from a dispute.
It turns out that it is not unusual for litigants to try to withdraw from settlements after a mediation ends. In fact, we need to understand that virtually all negotiators are susceptible to irrationally escalating their commitment to a chosen course of action. It really doesn’t matter what kind of dispute we’re talking about: custody battles, labor strikes, and price wars are the types of intractable disputes that often can be traced back to this form of dysfunctional competition. When a negotiator views a challenging negotiation as a competition, it can be very difficult to know when to accept an outcome as final.
Common Bias Traps And How To Avoid Them
Negotiators can fall into a trap if they allow themselves to fixate on fairness. We will often justify our appeal of a mediated settlement as a quest for a fairer outcome. Fairness concerns, which are often paramount for negotiators, can easily come to overshadow objective outcomes in our minds. But, our fairness judgments tend to be heavily influenced by our preferred outcome. For example, when two partners are dividing up a business, the partner who invested more money will probably believe that they deserves a larger share of the pie – and so will the partner who was the one who invested more time. Consciously or not, we tend to determine our preferences and then justify them on the basis of fairness.
So how do we go about solving this type of problem? Whenever we find ourselves protesting that the other side’s offer just isn’t fair, we need to stop to consider their point of view more thoroughly. Thinking about the other side’s perspective can go a long way toward helping you adjust your expectations. Additionally, you can ask friends or coworkers for their take on the matter.
We can also get into trouble if we allow ourselves to focus on sunk costs. Accounting and economics experts caution us to ignore “sunk costs” when making important decisions. The time, money, and effort that we’ve already invested in a negotiation are irrelevant to any future investments we might be considering. This advice can be very tough to follow. Your house’s assessed value may have plummeted since the housing crisis hit, but the amount you have already spent on it will loom large when you are trying to decide on an asking price for it. Focusing on how much you’ve invested into your home over the years is likely to cause you to set an unrealistically high price. To solve this problem we need to remind ourselves – over and over, if necessary – that the time, money, and energy we’ve spent on a negotiation should have little bearing on our current decisions.
Finally, we need to find a way to let go psychologically. The longer a dispute drags on, the more susceptible negotiators are to demonizing each other. The desire to punish the other side can become an unhealthy fixation, and every communication will be met with suspicion. The passion you invest in this type of a dispute can become a sunk cost in its own right. In any negotiation, as in other parts of life, it can be difficult to recognize when the pursuit of a goal has turned into a destructive obsession. Once again, discussions with trusted friends can help you recognize when it’s time to let go.
What All Of This Means For You
Every negotiator would like every negotiation to end with a successful deal. However, that does not always happen. There will be times when we should walk away from a negotiation. There will also be times when we are able to reach a deal with the other side and then after the deal has been reached, we start to regret it. This can be very dangerous for both our time and our reputation. How can we deal with this?
If we allow ourselves to focus on fairness we can justify our appeal of a mediated settlement. We need to take the time to consider the other side’s point of view. We can get into trouble if we don’t realize that sunk costs are just that – sunk. We have to remind ourselves that sunk costs can never be recovered. We also have to find a way to let go psychologically. Taking the time to talk about a negotiation with friends can help us to let something go.
Negotiators need to get comfortable with the idea that once something is done, it’s done. Once we’ve reached a deal with the other side, it can be tempting to spend time thinking about how we could have gotten more out of the deal. We need to understand that this kind of thinking is not going to be beneficial for us and we need to understand how we can move on.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: When should you try to renegotiate a deal that you’ve reached with the other side?
Click here to get automatic updates when The Accidental Negotiator Blog is updated.
P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
If you want to be able to reach a deal with the other side of the table, then you are going to have to be able to present them with something that they want. Or, to put it another way, you are going to have to be able to present them with something that they value. Sometimes when you take a look at what is being negotiated, you may see a number of things that you value, but that the other side may not value as much. When something like this happens, you are going to have to be able to find a way to add more value to your negotiation. How can you go about doing that?