Building Trust in Negotiations

Building trust in negotiations is critical, given our natural inclination to either trust too much or too little. Here’s how to strike the right balance between trust and cynicism.

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building trust in negotiations

Adapted from “Strike the Right Balance Between Trust and Cynicism,” by Harvard Business School professor Max H. Bazerman, first published in the Negotiation Briefings newsletter.

 Negotiators often must choose between trusting their counterparts and being cynical of their motives. The consequences of such decisions can be serious in dealmaking: trust too much, and you’ll lose big; be overly skeptical, and you could forgo significant gains. Communication between parties can play a role in building trust in negotiations, but as we’ll see, it’s also important to verify if trust is warranted.


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 The Good News about Trust

Imagine that a seller and a potential buyer are negotiating over a piece of land that’s beautiful but remote. As a consequence, there are few potential buyers. Thus, market indicators of the land’s value are weak at best; price estimates could fall anywhere from $1 million to $2 million.

The seller and the potential buyer have thought about their alternatives and decided on their reservation values—that is, the most the buyer will pay and the least the seller will accept. The potential buyer has decided that he won’t pay more than $1.4 million, but he’d like to pay much less. The seller, meanwhile, has decided she won’t take less than $1.35 million but is hoping for much more.

Interestingly, these fully rational negotiators might reach an impasse despite having a $50,000 zone of possible agreement. Why? The seller may try to beat her reservation price by more than $50,000 if she thinks the buyer is likely to pay more. Similarly, the buyer may try to shave more than $50,000 off his reservation price if he thinks there’s a good chance of getting such a concession from the seller. Due to both sides’ strategic thinking, these rational parties may fail to reach an agreement.

Yet when communication between parties is strong, they can avoid the impasse that such strategic concerns can foster, my colleagues Kathleen McGinn, Leigh Thompson, Robert Gibbons, and I found years ago in our research. How did negotiators in our study solve this type of problem and negotiate a deal? By engaging in a fairly typical pattern of human interaction that’s marked by the following tendencies:

  1. Negotiators care about the outcomes of others. In fact, we often want our counterparts to do well. When this is the case, we relax our strategic concerns a bit, and the quality of the information exchange between the parties improves.

 

  1. Negotiators care about their reputations. If being strategic would require you to misrepresent your position in your dialogue with the other side, you are likely to be willing to forgo strategic benefits in order to maintain your reputation.

 

  1. Negotiators correctly believe that acting with integrity increases the likelihood that the other side will respond with integrity. Thus, honesty can be seen as a good investment that prompts positive behavior from the other side.

 

  1. Negotiators enjoy reaching agreement and tend to view impasse as a negative outcome. Because of this, most of us are willing to give up some expected financial benefit to make sure we land the deal.

 

Balancing Trust and Cynicism

Thanks to the nature of communication between parties, building trust in negotiations can be less difficult than a fully rational economic analysis would predict. But other situations can trigger cynicism and suspicion of our counterpart’s motives rather than trust. So, should you trust or be cynical? There’s no easy answer.

It is clear, however, that in negotiation, you would be wise to think carefully about the decisions and motives of the other party so that you can understand what the situation looks like from her perspective. This may help you identify when reasons to trust exist and when you have cause to be cynical. Your goal should be to understand the strategic behavior of others without destroying opportunities for trust in negotiation.

In addition, remember that you need not rely on your intuition when it comes to judging someone’s trustworthiness. In our electronically connected economy, it is usually costless to collect information that will help you evaluate whether to trust. When you are approaching a new counterpart, take the time to consider various means of communication—both in person and online—that can help you increase trust, reduce cynicism, and contribute to creating value in negotiation for those at the table and society at large.

 

Question: What techniques do you find effective for building trust in negotiations?

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