How To Create More Value During Your Next Negotiation

We need to have strategies in order to be able to create value during a negotiation
We need to have strategies in order to be able to create value during a negotiation
Image Credit: Mike Cohen

One of the biggest problems that any negotiator faces when they sit down at the negotiating table is that we are all affected by bias. We might like to think that we aren’t, but study after study has shown that we all are. What this means is that we need to understand that we may be affected by outside forces when we are negotiating and so we need to take steps to minimize their impact on us. Just exactly how can we go about doing this?

The Problem With Intuition

All negotiators know that there are a variety of psychological biases that affect negotiators. Many of these spring from a reliance on our intuition, and may hinder integrative negotiation. The good news is that negotiators are not always affected by bias; we often think systematically and clearly at the bargaining table. Most of us believe that we are capable of distinguishing between situations in which we can safely rely on intuition from those that require more careful thought – but often we are wrong. In fact, it turns out that most of us trust our intuition more than the evidence suggests that we should.

Including Both Intuition And Reality In Your Next Negotiation

In order to explain why negotiators don’t always think rationally or logically, researchers have distinguished between what they call System 1 and System 2 thought. The System 1 thought process describes our intuition: quick, automatic, effortless, and influenced by emotion. By comparison, the System 2 thought process is slower, more conscious and logical. During a negotiation when you are carefully considering options, you are using System 2 thinking. When you are simply acting on intuition during a negotiation, you are using System 1 thinking. I’m pretty sure that we can all think of instances in which we acted rashly, relying on System 1 thoughts and emotions, as well as times when we carefully evaluated a situation using System 2 logic.

Using System 1 vs System 2 Logic in An Integrative Negotiation

Unfortunately, most negotiators fall back on System 1 thinking during their negotiations. Reliance on our intuition increases when a situation is complex and negotiators reach a state of cognitive overload. At such times, our ability to process information is pushed to the limit. When this happens we naturally shift away from System 2 thought toward System 1 thought. Clearly, a complete System 2 thought process is not always necessary for every managerial decision or for every small negotiation you may face.

As an example, when you’re negotiating with your coworkers over where to go for lunch, when you’re setting deadlines for low-priority tasks, or when you’re informally discussing items that you plan to revisit later in more detail, System 1 thought will be sufficient. Taking the time to logically reason through every decision can be costly, it can even lead to decision paralysis. However, we should engage in System 2 thought during our most important negotiations.

Strategies For A More Rational Integrative Negotiation Approach

The first way that a negotiator can avoid using too much System 1 thinking during a negotiation is to make a System 2 list. The first step in negotiating more rationally is for us to identify real-life negotiation situations that call for extra vigilance. Periodically, perhaps once per month, you should make a list of important upcoming negotiations that you think might require System 2 thought. When you carefully prepare for particular negotiations, you are setting yourself up to engage in System 2 thought in situations where it is required. You also should schedule negotiations to best engage in System 2 thinking.

Time is always an issue in any negotiation. We need to take steps to not let time pressure affect our decisions. Intuitive System 1 thought can take over when negotiators are facing intense time pressure. Awareness of this tendency should lead you to make some key adjustments to your negotiations. You need to set aside time. Keep in mind that you’ve already decided that these talks are important. If someone catches you off guard during the negotiation and launches into discussions on the fly, ask them to reschedule the conversation for a later time or date. There should be little reason that you should feel guilty about postponing your negotiation or decision. Unless someone has given you specific, credible information that time truly is of the essence, take sets to avoid succumbing to pressure tactics.

How many sessions a negotiation takes in order to reach a deal can vary from negotiation to negotiation. You attempt to partition the negotiation across multiple sessions. We all have a natural desire for closure. As a result, most of us seek to reach an agreement or settlement during a negotiation as quickly as possible. We need to keep in mind that completing an entire negotiation in one session is typically unnecessary – and, in fact, sometimes it can be impossible. Even when you’re well prepared for a negotiation, if it is the slightest bit complex then it will raise new information, unforeseen issues, and tactics that you did not anticipate. As negotiators we need to understand that in a negotiation, patience often generates significant dividends. To avoid falling back on System 1 thinking, you need to structure a process that allows you to rethink or re-strategize. One way to go about doing this is to schedule breaks every hour or two. By doing this these intervals will give you time to evaluate and organize unexpected information as well as your thoughts.

What All Of This Means For You

The goal of any negotiator as we head into our next negotiation is to find a way to add more value to the negotiation. We can quickly run into challenges when we allow our intuition to start to take over our decision making processes. Researchers have uncovered what is called System 1 and System 2 thought. System 1 thought describes our intuition which is quick and influenced by emotion. System 2 thought is slower and logical. We tend to rely on our System 1 thinking too much during a negotiation. If we want to use our System 2 thinking more we have to make some changes. We need to make a System 2 list. We have to find way to not allow time pressures to affect our decisions. We should always attempt to partition the negotiation across multiple sessions.

Understanding how we think during a negotiation is the first step in improving our thought process. We need to understand that if we want to add value to our next negotiation, we need to learn to slow down and think logically. This can be very hard to do. If we take the time to change how we negotiate and adopt methods that allow a slower, more logical approach to negotiating then we will have a better chance of getting the deal that we want.

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

Question For You: How can you tell if you are using the System 2 type of thought process?

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What We’ll Be Talking About Next Time

In order to get what you want out of your next negotiation, you are going to have to get strategic. The ultimate goal is to make sure that everyone involved in the negotiations feels that there was enough value in the negotiations so that they were able to get what they want. This means that you are going to have to understand what strategies are available to you and how to go about using them.