When making concessions in negotiation, we tend to assume that a concession must really cost us, financially or otherwise, for the other side to take notice and give us what we want. But in fact, we can often make real headway toward our negotiation goals by giving a token concession—a concession that costs us little, write Harvard Business School professors Deepak Malhotra and Max H. Bazerman in their book Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond (Bantam, 2007). By inspiring reciprocation, a token concession can get us much closer to our goals.
A Real-World Experiment
In Negotiation Genius, Malhotra and Bazerman tell the story of a national trade association that wanted to conduct a member survey via mail. Hoping to encourage members to return the survey, the association worked with researchers Jeannine James, president of the American Research Company, in Fairfax, Va., and Richard Bolstein, a professor at George Mason University, to determine whether it could boost the response rate by offering different financial incentives for filling out the survey.
The association sent the questionnaire without a financial incentive to one randomly chosen subgroup of members. Of this group, 20.7% returned a completed questionnaire. The association then promised to pay a second group of members $50 if they completed and returned the questionnaire. This time, 23.3% of members responded—not much of an increase from the first group. The association sent a third group of members a single dollar bill—a token concession—along with the questionnaire (and no other incentive). This time, 40.7% of members from this group returned completed questionnaires—a much higher response rate.
“The behavior of these respondents violates the predictions of standard economic theories,” note Malhotra and Bazerman. “Not only was the $1 ‘incentive’ considerably lower than the $50 incentive, it wasn’t an incentive at all—it was a guaranteed payment regardless of whether the member complied with the request.”
A Strong Pull to Reciprocate
Why did so many more members dutifully fill out and return their questionnaires? It seems they felt obliged to comply because the dollar was not an incentive but rather a unilateral, token concession, or gift.
Many cultures have a strong norm of reciprocity—the impulse to return a favor. If you shovel your neighbor’s sidewalk after a snowfall, there’s a chance he or she may drop off some cookies to thank you or shovel your sidewalk the next time it snows, for example. Likewise, in a business negotiation, if you offer a concession, even a token concession, the other party probably will feel a powerful drive to reciprocate with a concession of their own. A token concession, or gift, can be a strong motivator of reciprocal behavior.
Delivering a Token Concession
To improve your negotiation skills, consider making any of the following token concessions recommended by Malhotra and Bazerman in your next business negotiation:
- Encourage your counterpart to choose the time and location of your first negotiating session, such as their office rather than yours.
- Bring doughnuts and coffee to share with your counterpart.
- When you get down to business, agree to a small request made by the other side.
Tips on Offering a Token Concession
How can you guarantee that your token concession will be acknowledged, appreciated, and reciprocated? Here are three suggestions:
- Remember your code of ethics. In business relationships, a token concession can risk resembling a bribe if you appear to have expectations of a quid pro quo exchange of favors. Before offering a token concession, consider whether your terms could be viewed as unethical, illegal, or otherwise unfair to others. Try to give without an expectation of receiving in return.
- Figure out what the other side wants. A fellow negotiator might feel coerced to reciprocate your offer of a token concession, especially if you are the more powerful party. When crafting a token concession, think about what the other side wants and figure out if you can give it.
- Show them the strings. Before your counterpart has a chance to accept a token concession, explain why you are offering it. If you are asking for anything in return, make that clear. Ideally, you should offer a token concession with the goal of generating good will rather than any particular concrete reward.
What is another token concession you might offer in a business negotiation?
Just a minor remark in regard to your Tips. At item 3, if there are ‘strings attached’, then surely it is no longer a token concession, but a minor negotiating point? You acknowledge that in closing the Tip with the rider “ideally”; but my experience is that the goodwill is the target. You can come back later and rely on the token concession as a general support that you have acted in good faith throughout the negotiation (and the token concession is one part of that); but if it was a genuine trade-off then it will always be acknowledged as such?
i also wonder in the ‘survey response’ experiment whether the uniqueness of the enclosed $1 note generated the higher response; and that a repeat of the same approach would not have the same effect?
An interesting and useful idea…