What’s The Best Way To Make A Concession During A Negotiation?

Knowing how to make concessions allows you to build goodwill and reciprocity in negotiation
Knowing how to make concessions allows you to build goodwill and reciprocity in negotiation
Image Credit: Konstantinos Koukopoulos

Making concessions during a negotiation is something that none of us really want to do. We don’t like having to give into the other side on an issue. However, I think that we all realize that in order to reach a deal with the other side, no matter what negotiation styles or negotiating techniques we are using we always have to make concessions. What we need to realize is that each concession that we make is a critical part of how we are going to reach the deal that we want. Not only do we need to know what concessions we are willing to make, but we also have to know how to go about making those concessions.

When Making Concessions, Always Label Them

When we are negotiating, we should not assume that our actions will speak for themselves. The other side will be motivated to overlook, ignore, or downplay your concessions. Why would they do this? The reason is that they want to avoid the strong social obligation to reciprocate. As a result, it is going to be your responsibility to label your concessions and make them salient to the other side.

When it comes to labeling, we need to realize that there are a few rules to follow. First, you need to let it be known that what you have given up (or what you have stopped demanding) is costly to you. By doing this, you clarify that a concession was, in fact, made. Second, make sure to emphasize the benefits to the other side. Negotiators tend to 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 may not be seen as concessionary behavior. By 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 are labeling your concession.

During A Negotiation Always Demand And Define Reciprocity

When you label your concessions this helps trigger an obligation to reciprocate, but sometimes the other side 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 do this, you achieve three goals. First, it labels the concession. Second, it tactfully demands reciprocity. Third, it also begins to define the precise form that reciprocity should take. While each of these elements is critical, all too often negotiators overlook the need to define reciprocity. Remember that no one will understand what you value better than you do. If you don’t speak up, then you’re going to get what the other side thinks you value or, worse, what is most convenient for them to give.

Understand That You Can Make Contingent Concessions

One hallmark of a good working negotiation relationship is that both parties don’t nickel-and-dime each other for concessions. Rather, each side takes the time to learn about the interests and concerns of the other and makes good-faith efforts toward achieving joint gains. Unfortunately, while fostering such norms is desirable, it may not always be possible.

When trust is low or when you’re engaged in a one-shot negotiation, consider making contingent concessions. A concession is contingent on when you state that you can make it only if the other party agrees to make a specified concession in return. The good thing about contingent concessions is that they are almost risk-free. They allow you to signal to the other party that while you have room to make more concessions, it may be impossible for you to budge if their reciprocity is not guaranteed. Keep in mind, however, that an over-reliance on contingent concessions can interfere with your attempts to build trust. If you demand immediate compensation from the other side every time you make a concession, your behavior will be seen as self-serving rather than oriented toward achieving mutual satisfaction.

Attempt To Make Concessions In Installments

While 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 by the other side if it is broken into installments. There are other reasons to make your concessions in installments. First, most negotiators expect that they will trade offers back and forth several times, with each side making multiple concessions before the deal is completed. 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 can also lead you to discover that you don’t have to make as large a concession as you thought. It is possible that when you give away a little at a time, you might get everything you want in return before using up your entire concession-making capacity. The good news here is that whatever is left over is yours to keep – or to use to induce further reciprocity from the other side. Finally, making multiple, small concessions tells 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 and then extract goodwill 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 during a principled negotiation are not ignored or exploited. It is important to note, however, that when the other side refuses to reciprocate, the refusal often hurts them as much as the party who made the concession. Nonreciprocity sours the negotiating 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 that they take the time and acknowledge and reciprocate the concessions of others.

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

Question For You: What should you do if you make a concession to the other side and they don’t reciprocate?

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What We’ll Be Talking About Next Time

When we enter into a negotiation, our goal is to use our negotiation styles and negotiating techniques to reach an agreement with the other side. We consider all of the negotiation styles and negotiating techniques that we’ll have to use to get the deal that we want. However, there will be times that after we have made our best effort that we come to realize that we are dealing with difficult people and either pride or property is involved. We need to know when a deal just is not going to be possible.