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How many times have you heard in a negotiation that a party has reached his or her bottom line.  Perhaps you have heard the question, what is the bottom line? Bottom line, our society focuses on the bottom line.  This fascination with the bottom line changes the way negotiations take place. 

 

It is important to understand that the bottom line, although important, should not be the focus of negotiations.  In fact, focusing on the bottom line of a negotiation is a major mistake that could cost you considerably.  The three largest problems with focusing on the bottom line are burning out too fast, revealing your true intentions, and causing other people to focus on your bottom line.

 

First, when people focus on the bottom line in negotiations, they “burn out” or “peak too soon.”  When people focus on only getting to a point, they expend all their energy getting to the point and leave no mental or emotional energy after that point has been reached.  Once that negotiating objective is reached, they no longer negotiate with the same vigor that they had when they were trying to reach the objective. 

 

As an example, if a person was told that he or she  must run 100 yards as fast as he or she can, once the person has crossed the “finish line” that person can visibly be seen as losing all forms of energy.  In fact, the loss of energy is clearly visible with the athletes in the track and field sports crossing the finish line.  The moment they pass that line, they immediately slow down with every muscle in their body.  This principle is also based in basic survival instinct.  The hunter can only rest after he has caught his prey.  Up until that time, he must remain vigilant.

 

In negotiations, the classic example of “peaking too soon” is in the automobile purchasing process.  Invariably, the car salesperson and manager wear the buyer down to find out what the bottom line (or in their case, top of the line) price will be to purchase the car.  After the negotiation for the car is completed, the buyer gets this feeling of relief as if he or she finally achieved his or her goal of getting the car at the right price.  That person’s mental and emotional energy has been spent.  However, the negotiations have only begun.  The salesperson then offers small options such as a security package, a window tinting package, the under-coating package, service package, and a long term financing program.  Invariably, despite the feeble objections of the buyer as to some or all of these add-ons, the dealer upgrades its profit on the sale of these items.  Research has proven that there is greater likelihood of selling small extras after the large purchase has been negotiated.  After all if you have negotiated a $25,000 deal, what is an extra $500 for tinted windows?   

 

Second, when people are truly focused on one thing, they may inadvertently give you clear signs to show you the object of their focus.  For example, often when people say one thing and are focusing on something else, they will make a “Freudian slip” revealing the true object of focus.   The classic movie example is where a character is focusing on a person’s anatomy and then inadvertently mentions that anatomy in the conversation. 

 

The same thing occurs in a negotiation.  If a person focuses on the bottom line, often he or she will give that bottom line away by his or her actions.  Sometimes the action is a pattern of offers and counter-offers that all point to one number; other times, it will be a slip of the tongue revealing the object of the focus; and other times it is a statement such as “you haven’t even gotten to a $100,000, and until such time, I can’t seriously negotiate with you.”  Regardless of the phrase or the statement, an astute negotiator will listen to those clues and try to probe to find out if that slip up or statement truly is a bottom line.

 

Finally, the third problem with focusing on the bottom line is that others will also focus on that bottom line, and no more.  Unconsciously, once someone else knows your bottom line, he or she will focus on trying to get to that number.  It is human nature to try to achieve the result through the path of least resistance.  The classic example is in a mandatory settlement conference a judge will ask both sides what their bottom line is and then see if he or she can get the parties to meet as close as possible to that bottom line.  How many times have you said to a judge or mediator, I will take $25,000 to settle this case, and then you settle at that amount or less? 

 

Instead of focusing on the bottom line, the sophisticated negotiator should focus on goals that he or she would like to achieve.   Although a party should always be aware of the bottom line or the area close to the bottom line, the true focus should not be on what must happen for the deal to take place, but what you would like to happen when the deal takes place. 

Fear of the unknown

Fear of the unknown

Fear or No Fear affects Deal or No Deal
 
 

 

 

 Often, fear can be a significant motivating factor in negotiations.  People fear the unknown; they fear losing; they fear having a large verdict.  All of these fears can help the parties to have realistic expectations of the negotiation.  Indeed, often when a party does not fear the future result, such lack of fear can be a recipe for a failed negotiation.    

Recently, however, researchers have discovered that there are other things that people fear that is beyond what is normally expected.    Researchers have discovered that people are often motivated by fear of regret.  The concept is often called “anticipatory regret.” In four separate studies researchers tested whether and how anticipatory regret affected things like escalating a position or commitment to a position.  The researchers found that people desire to minimize future regret and that such a desire significantly motivated the decisions they made in escalating situations. 

Other researchers have found that past regret over a decision will also affect the decision in the future and the commitment to such a choice.  This research demonstrates that when people persist in a failing course of action, their decisions are formed by what considering what happened in the past and what they fear could happen in the future.   One of those future fears is the fear of future emotional pain. 

There are several ways this “anticipatory regret” research can be applied in negotiations.  First, when preparing for mediation, you should try to consider what a person may regret in the future and what value that might have on someone.  The more value that a choice may have, the more that a person may regret it, and conversely, the less the value of the choice, the less they would regret it.  

Second, think about how you can best use anticipatory regret to your advantage.  NBC game show Deal or No Deal plays on the issue of anticipatory regret.  It shows the participants what they could get.  By knowing whether the participants have a possible $1,000,000 case or a $1 case substantially affects their decision.  They are, in part, motivated by future regret:  Regret, that they might end up with the case that is $1, regret that they didn’t strive to get the million, and then regret that they may go home with no “real money” in pocket.  It is no coincidence that for several years that the game show has been in existence, no one has won the million dollars until recently.  

Lawsuits are similar to the game show.  The parties can be faced with anticipatory regret on many levels.  Will they do better at trial?  Will they be exposed to any risk by going to trial?  Will they have given up their one chance to be heard?  By thinking about these options further before negotiating, you can be better prepared to respond to issues of anticipatory regret and to persuade the other side to pay more attention to your position by using the concept of anticipatory regret. 

Further, you can then prepare your offers to best take advantage of the other person’s anticipatory regret. 

Research Source: 
 
 

  

Wong, K.F.E & Kwong, J.Y.Y, The Role of anticipated regret in escalation commitment, Journal of applied Pyschology 92(2) 545-554

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