Making threats strategically

By on / Negotiation Skills

In negotiation, the time, energy, and resources that you devote to reaching agreement can suggest that you’re desperate for a deal—any deal. The greater your investment in the negotiation, the less credible the threat of walking away becomes.

In such instances, one way to make this threat more credible is to find someone else to take your place. You might delegate authority to finalize the deal to someone who has less riding on the outcome. Threats become most credible when the authority to carry through on them is delegated to whoever is most willing to do so.

If you feel you’re too invested in the negotiation, you might announce, after making a threat, that your boss is filling in for you. “I’d hate to see the deal fall apart,” you could explain, “but he makes the final decision and has less at stake than I do.” You might also suggest that your substitute is a harder bargainer than you are: “I don’t want to walk away from this deal, but he’s in charge and is not happy with the offer on the table.” In both cases, you’ve assigned the decision of whether to follow through on the threat to someone with greater power.

This dynamic often plays out in corporate hiring decisions. In many companies, new recruits must negotiate their compensation with the human resources (HR) department rather than with the hiring department. When a hiring manager is anxious to bring someone onboard, he will have a harder time refusing the recruit’s demands. Because the HR department has less to lose if the recruit walks away, its own threats (such as “This is the most we can offer”) are more credible.

Adapted from “Making Threats Credible,” by Deepak Malhotra (professor, Harvard Business School), first published in the Negotiation newsletter, March 2005.

 

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