The opening stages of negotiation can be filled with uncertainty. How assertive should you be? How can you set yourself up for success? What should an opening offer look like? To answer these questions accurately, thorough preparation for negotiation is key. Negotiation research offers guidelines to get talks off on the right track.
Boost Your Assertiveness
We frequently pass up valuable opportunities to negotiate, ample research concludes. Individuals often fail to negotiate for higher salaries and special assignments at work, and organizations miss out on promising partnerships.
In a paper that assessed how people respond to negotiating opportunities, researchers Roger Volkema, Ilias Kapoutsis, and Andreas G. Nikolopoulos asked graduate business students in Greece to indicate how they would likely react to various scenarios. In one vignette, for example, a consultant had to decide whether or how to contact a freelancer about taking on extra work after the freelancer finished a big assignment and was taking a break. Participants could choose responses that varied in assertiveness, such as not contacting the freelancer, asking him to do the work for overtime pay, or asking him to perform it at his usual rate. Most participants were unwilling to make overt requests, and only a few said that they would make the most assertive request offered.
In a personality questionnaire, participants who made requests scored high on self-efficacy—confidence in one’s ability to meet goals. The researchers concluded that for negotiators to move toward making meaningful requests of their counterparts, they must both be able to recognize negotiating opportunities and have a strong sense of self-efficacy. During your preparation for negotiation, you might boost your confidence in your ability to meet your negotiation goals by observing successful negotiators or practicing your skills in relatively low-risk negotiations.
Enhance Your (Sense of) Power
Negotiators often feel powerless, as when asking someone for a favor or interviewing for a job, and their performance suffers as a result. A team led by Joris Lammers of the University of Cologne in Germany examined whether giving people a chance to reflect on past powerful experiences would set them up for more successful negotiations.
In one experiment, some French undergraduate students were randomly assigned to write about a time they felt powerful, others were assigned to write about a time they felt powerless, and others received no writing assignment. Next, all participants engaged in a mock interview for entrance to business school. Despite being unaware of the writing assignments, the interviewers, most of them professors, chose to admit 47.1% of those who didn’t have a writing assignment, 68.4% of those who wrote about feeling powerful, and only 26.3% of those who wrote about feeling powerless.
The takeaway? When you’re feeling nervous about a negotiation where you sense you lack power, you might significantly improve your performance by taking a quiet moment during your preparation for negotiation to reflect on a time when you felt more in control.
Make Opening Offers with Precision
Think of the last opening offer you made or received in a price negotiation. How many zeros were at the end of it? Chances are, at least two or three.
Whether the first offer in negotiation comes from the buyer or seller, it will generally be a round number rather than a precise one, Malia F. Mason of Columbia University and her coauthors confirm in their research. They reviewed opening offers that MBA and executive students made in class negotiation exercises and found that 48% contained only one digit other than zero (e.g., $500, $5 million), 49% contained only two digits other than zero (e.g., $9,200), and none were specified to the dollar place (e.g., $524). They also found evidence of the round-number phenomenon in real-world markets, such as the online real-estate marketplace Zillow.
The opening offer in a negotiation anchors the discussion and can significantly affect the final agreed-upon price. Perhaps contrary to intuition, precise first offers actually serve as more potent anchors than round ones, Mason and colleagues found. Whether playing the buyer or seller in a negotiation scenario, study participants made greater price adjustments away from round offers from their counterpart than from precise offers. At times, this was even true when a precise offer (such as a $19 sale price) was less aggressive than a round offer ($20). Why? In one experiment, relative to participants who received round offers, participants who received precise opening offers perceived the offers as more reasoned and informed.
Thus, during your preparation for negotiation, you might consider making a precise opening offer to gain credibility. There’s a caveat, however: Mason’s study looked at negotiations involving relatively small sums of money, from about $10 to $4,000.
By contrast, precise offers for high-value commodities (such as a house listed at $1,285,498) could seem so unusual that they backfire. Perhaps the key during negotiation preparation is to choose an offer that’s precise enough to convey your knowledge of the commodity—say, $1,285,500 for that house—but not so precise that your strategy seems odd.
In your own preparation for negotiation, what strategies and considerations have you found to be helpful?