Four Ways To Use Concessions In Your Next Negotiation

As negotiators we understand that in order to get what we want out of a principled negotiation no matter what negotiation styles or negotiating techniques we are using we are going to have to make concessions to the other side. What we need to understand is how best to make concessions in order to allow us to get the deal that we are working towards in our next negotiation. Making strategic concessions at the right time can be an effective tactic in a negotiation. Here are four ways to make your concessions work to your best advantage in your next negotiation.

Make Sure To Label Your Concessions

In a negotiation, never assume that your actions will speak for themselves. The other side will be motivated to overlook, ignore, or downplay your concessions. Why is this? They want to avoid the strong social obligation to reciprocate. What this means is that it is your responsibility to label your concessions and make them important to the other side.

When it comes to labeling, there are rules for you to follow. First, let it be known to the other side what you have given up (or what you have stopped demanding) is costly to you. By doing so, you clarify that you made a concession.

Second, take time to emphasize the benefits to the other side. Research suggests that negotiators reciprocate concessions based on the benefits they receive, while tending to ignore how much others are sacrificing.

Third, don’t give up on your original demands too quickly. If the other side considers your first offer to be frivolous, your willingness to move away from it will not necessarily be seen as concessionary behavior. In contrast, your concessions will be more powerful when the other side views your initial demands as serious and reasonable. Accordingly, spend time legitimating your original offer and then use it as a reference point when you label your concession.

Always Demand And Define Reciprocity When Making Concessions

Labeling your concessions helps trigger an obligation on the other side to reciprocate, but sometimes they will be slow to act on that obligation. To increase the likelihood that you get something in return for your concession, try to explicitly—but diplomatically—demand reciprocity from them.

When you are making concessions make sure that you label the concession. Secondly, demand reciprocity. Thirdly, define the precise form that reciprocity should take. Each of these elements is critical. However, negotiators often overlook the need to define reciprocity. Remember that no one in a negotiation understands what you value better than you do. If you don’t speak up, you’re going to get what the other side thinks you value or, worse, what is most convenient for them to give.

The strategy of demanding and defining reciprocity plays out in a variety of contexts; if you understand how to use it then you can profit from it immensely. A great example is a tactic consultants and contractors like to use. When a client praises his work, a smart consultant will quickly point out that the person who would really love to hear this praise is his boss. In this way, he defines for the appreciative customer how best to reciprocate.

Remember That You Can Make Contingent Concessions

One indicator of a good working relationship is that parties don’t nickel-and-dime each other for concessions. Rather, each side learns about the interests and concerns of the other and makes good-faith efforts toward achieving their joint gains.

Unfortunately, while fostering such norms is desirable, it is not always possible to do during a negotiation. Some people that we negotiate with are clearly untrustworthy or entirely self-interested. Such negotiators are likely to exploit your goodwill by refusing to reciprocate at all, much less in the way you have defined.

When trust is low or when you’re engaged in a one-shot negotiation, consider making what are called “contingent concessions”. A concession is contingent if you state that you can make it only if the other party agrees to make a specified concession in return.

Contingent concessions are almost risk-free to you. They allow you to signal to the other side that while you have room to make more concessions, it may be impossible for you to budge if reciprocity is not guaranteed. Keep in mind, however, that an over-reliance on contingent concessions can interfere with building trust with the other side. If you demand immediate compensation each time you make a concession, your behavior will be seen as self-serving rather than oriented toward achieving mutual satisfaction for everyone involved.

Realize That You Can Make Concessions In Installments

Research shows that most of us prefer to get bad news all at once, we prefer to get good news in installments. This finding suggests that the same concession will be more positively received if it is broken into separate installments. There are other reasons for you to make concessions in installments. First, most negotiators expect that they will trade offers back and forth several times, with each side making multiple concessions before reaching a final deal. If you give away everything in your first offer, the other side may think that you’re holding back even though you’ve been as generous as you can be.

Installments may also lead you to discover that you really don’t have to make as large a concession as you thought. When you give away a little at a time, you discover that you might get everything you want in return before using up your entire concession-making capacity. Whatever is left over is yours to keep and use — or to use to induce further reciprocity.

Finally, making multiple, small concessions shows the other side that you are flexible and willing to listen to their needs. Each time you make a concession, you have the opportunity to label it as such and extract goodwill from them in return.

What All Of This Means For You

All of the strategies that we have discussed are aimed at guaranteeing that the concessions you make are not ignored or exploited by the other side. It is important to note, however, that when someone refuses to reciprocate, the refusal often hurts them as much as the party who made the concession.

Nonreciprocity as it is called sours the relationship, making it difficult for negotiators to trust each other or risk further concessions. Thus, effective negotiators ensure not only that their own concessions are reciprocated but also, of course, that they acknowledge and reciprocate the concessions of others.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: What action could you take during a negotiation if the other side does not match your concession?

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What We’ll Be Talking About Next Time

As negotiators we’ve all heard about the power of being able to reach a win-win agreement with the other side of the table. This is not always an easy thing to do. It may be our ultimate goal, but more often than not how to reach that goal can prove to be elusive. However, the good news is that there are a number of different negotiation styles and negotiating techniques that we can use in order to create situations in which both sides in a negotiation can reach a win-win agreement.