The reservation point in negotiation is when the highest price at which someone is willing to buy an item is established, and the lowest price at which a seller will sell the item is confirmed, and the haggling that occurs between these two negotiators. It’s an attempt at reconciling these two, often hidden, goals in negotiation.
Negotiation strategies for building trust at the negotiation table (see also: Negotiation Examples and Negotiation Techniques: Six Strategies for Building Trust in Negotiations) include the sharing of information between negotiators in order to reach a mutually beneficial deal. Sometimes asking a simple question can move you from deadlock to deal. Yet negotiators often neglect to ask key questions because it doesn’t occur to them to do so or because they don’t want to appear weak, uninformed, or reveal too much information about their motivations in negotiation. Even when we do remember to ask the other side questions, we sometimes ask questions that are unlikely to shed much light on the negotiation scenario at hand.
For example, imagine that you and your business partner have just interviewed representatives from two different PR firms with the intention of giving one of them your business. You have a strong preference for one firm, and your colleague favors the other.
Here’s how this discussion might proceed:
“Don’t you think Firm A seems to have more connections in our industry?” you ask.
“Possibly, but can’t you see that Firm B would devote more attention to us because it’s hungrier for business?” your colleague responds.
“Are you really saying you want to hire an inexperienced firm to do this critical work?” you say.
“Do you think we can afford to spend the fortune Firm A would demand?” asks your colleague.
In this bargaining situation, both parties are asking questions not to reach a deeper understanding, but to argue their point of view. The result? An “attack and defend” pattern that jacks up tension and stalls the negotiation.
According to negotiation research conducted by professor Linda Putnam of Texas A&M University, leading questions such as the first two function as veiled advocacy for a particular position (“Don’t you think…” and “Can’t you see…”). The last two loaded questions are characterized by opinionated words (inexperienced, fortune) designed to corner the other party.
Both types of questions can trigger defensiveness and emotional reactions (see also: Emotion and the Art of Business Negotiations). They also tend to prompt yes or no answers (or no response at all) rather than more nuanced, reflective responses.
Instead of asking such closed, opinionated questions, strive to ask open-ended, neutral ones aimed at information gathering and defining priorities. Doing so requires you to look beyond your own biases and open yourself up to being persuaded by your counterpart.
“It seems we had very different initial reactions to the two PR Firms,” you might say to your colleague, “and I’m interested in hearing your opinion. What impressed you about Firm B? Why do you think it is a better fit for us than Firm A?”
This approach is likely to motivate your counterpart to respond carefully and thoroughly. And after he has a chance to state his point of view, he may be more likely than he would otherwise be to inquire about your own perspective.
The lesson: When we approach our counterparts with genuine interest and respect, they are likely to respond in kind. That’s why reservation point in negotiation works.
What are your experiences with a reservation point in negotiation?
Adapted from “Are You Asking the Right Questions?” first published in the Negotiation newsletter, February 2010.
Originally published in 2012.