How to Use Tradeoffs to Create Value in Your Negotiations

Through cooperation and compromise, you can increase the value of negotiations

By — on / Win-Win Negotiations


How do expectations of fairness and reciprocity at the bargaining table impact negotiator decisions regarding the strategies and tactics they use during bargaining? Sometimes talks get off on the wrong foot. Maybe you and your partner had a different understanding of your meeting time, or one of you makes a statement that the other misinterprets. Such awkward moves at the beginning of interaction can lead one party to question the other side’s motives.

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In their research, Robert Lount, Chen-Bo Zhong, J. Keith Murnighan, and Niro Sivanathan, all of the Kellogg School of Management at Northwestern University, examined trust building in negotiation (for more information on tactics for building trust in negotiations, see also Negotiation Skills and Negotiation Tactics for Building Trust in Negotiations).

When talks begin, the researchers found, both sides are likely to be apprehensive about being exploited if they are too cooperative, if they reveal too much information, and so on.

Trust: Building Relationships, One Bargain at a Time

Over time, trust serves as a useful social process that helps both sides overcome initial uncertainty. In most new, successful negotiation relationships, positive developments accumulate slowly, creating trust, and the dialogue improves. Essentially, through a set of reciprocal moves, trust evolves naturally during the negotiation process. Trust, being foundational to a working relationship, makes tradeoffs easier and insures future cooperation. Opportunities for value creation and value claiming, as well as sustained dialogue, are best facilitated by an atmosphere of honesty and reciprocity at the negotiation table. For more information on building relationships at the bargaining table in business negotiations, see also Dealmaking: Relationship Rules for Dealmakers.

Restoring Trust at the Bargaining Table

When talks get off on the wrong foot, restoring trust becomes essential. Lount and his colleagues distinguished among three stages of interaction: initial, early, and late. During the initial stage, the negotiators don’t necessarily expect cooperation, nor have they yet committed to the relationship. It’s in the early stage, once the negotiators have begun to trust one another, that the relationship becomes vulnerable. During the early stage, violating trust can be especially damaging because the nature of the relationship still is not fully established. Later, the parties may have built enough trust to overcome what appears to be a violation. But if the violation is strong enough, it may do more harm late in the process, due to the sense of betrayal felt by the injured party. For more tactics about grappling with a dishonest negotiator, read the article Dealing with a Dishonest Negotiator.

One careless move can have a profound influence on dealmaking. Recognizing this fact and avoiding missteps and dealing with them if they do occur are critical skills for negotiators.

How do you handle dishonest bargaining situations? Let us know in the comments below.

Related Win Win Article:  Negotiation Case Studies: Reciprocity at the Bargaining Table – How to Use Tradeoffs to Create Value in Integrative Negotiation Scenarios – Each negotiators’ willingness to make tradeoffs at the bargaining table depends, in many respects, on her expectations that her tradeoffs will be met with equal, reciprocal moves. In integrative negotiations, where creating value for yourself and your opponents trumps purely distributive motivations often found in haggling, using tradeoffs to create value not only signals a negotiator’s earnestness for a negotiated agreement, but also leads to more reciprocal moves on the part of her counterpart.

Be a Better Mind Reader for a Win-Win Situation in Negotiations – Negotiation research has demonstrated that body language, at and away from the bargaining table, often has a greater impact on the course of negotiations and daily life than most people know. Learn how to interpret your counterpart’s moves, body language, and speech in order to find value creating opportunities during negotiation scenarios and beyond. Powerful when used correctly, body language can also help a negotiator convey her confidence, honesty, and willingness to reach a negotiated agreement through careful monitoring of her body language in negotiations.

Claim your FREE copy: Win-Win or Hardball

Discover how to handle complicated, high-level business negotiations in this free report, Win-Win or Hardball: Learn Top Strategies from Sports Contract Negotiations, from Harvard Law School.

Adapted from an article first published in “Negotiation Briefings.”

Originally published in 2012.

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