Negotiation Danger Zone

Keep Your Cool And Avoid The Negotiation Danger Zone

Negotiations can be exasperating. You believe you are offering the other side a great deal, and they seem offended. You want to create a win-win outcome, and they treat you like the enemy. You thought they were ready after weeks of discussions and now they seem totally cavalier. And now you are frustrated. On some deals, when adversarial tension builds, even if the deal eventually gets done, there can be lingering emotional consequences that will impact the outcome.

This scenario is the “negotiation danger zone,” and it often leads to two types of problems. The first is that an agreement that should be completed for compelling business reasons fails to close because of emotional tensions, or it closes under one-sided terms. The second is that the manner in which the negotiation is conducted clouds the future and leads to problems downstream.

Maurice Schweitzer and Einav Hart of Wharton recently spoke about this in a Knowledge@Wharton interview. These scholars said that more harmonious bargaining, rather than adversarial negotiating, can yield better long-term results. This is especially true if the people involved have to work with each other after the deal is closed.

That is, in fact, the case in many business conversations — for example, those about whether to implement a vendor’s technology solution or hire a key employee. The parties have to work together after the deal is done. This is why I tell my clients that the ability to stay calm in the midst of tense or unpleasant negotiations can generate significant benefits and help them avoid pitfalls. I’ve seen many deals collapse because the seller or buyer — or both parties — lets the emotions of the situation get the better of them and ruin any chance for a long-term, mutually beneficial and profitable relationship.

A couple of years ago, one of my clients entered into an agreement to manage a state’s building operations. The negotiations were extremely tense: The state representatives made frequent condescending remarks and refused to listen to rationale about operational responsibilities. I encouraged our client to stay calm and detail both parties’ responsibilities in the governance provisions of the contract, including a practical operational dispute resolution mechanism. By doing so, they were able to transition to performing on the contract with confidence, and the natural operational tensions that occurred over the subsequent year were addressed cooperatively by the people involved in the project.

Contrast that with a similar situation where on numerous occasions the customer yelled and used foul language to pressure a vendor into using a specific subcontractor. The vendor conceded, and the subcontractor failed to perform; not surprisingly, a year later, the dispute between the vendor and the customer is still ongoing.

Any of us who has been in the negotiation arena for some time knows that negotiation counterparts can appear arrogant, inflexible, condescending and sometimes even mean. Whether this is part of their personality or they are using this behavior as a tactic because they believe a better result will follow doesn’t actually matter. What matters is how you react.

You can be polite and firm and stay true to your intention by refusing to react to a negative negotiation environment. Refrain from being pressured into giving unwarranted or “arbitrary concessions.” Our experience shows that arbitrary concessions routinely cost companies revenue and often lead to a deteriorating negotiation environment. Deals coerced under pressure often become pyrrhic victories, as they can negatively impact all involved.

The opposite of arbitrary concessions is what I refer to as principled concessions – concessions that are only made with a credible business rationale. Principled concessions are not based on emotional pressure. Your job as a cool-headed negotiator is to understand the business rationale of the party asking for a concession and only make the concession to the extent that it is justified. Arbitrary concessions can create an imbalance in your relationships, while principled concessions can add trust and credibility. Most importantly, they can relieve pressure and help you move the deal to fruition more quickly.

Relieving Negotiation Pressure

Another technique to cool overheated negotiations is to find ways to relieve the pressure. Sometimes this means stepping back and not responding — perhaps you can tell the other side that you would like a little time to consider their input or questions. It could also entail going out for a bite or a social activity. Humor can also work, but you don’t want to come across as flippant, and you should be conscious of context and culture.

In all cases, remind yourself that despite any posturing, the people on the other side wouldn’t be there if they didn’t see a potentially positive business outcome.

The right mindset can go a long way toward negotiation success. I recommend acting and being seen as a problem-solver, not an opponent, and as someone who is there to serve, not to sell. It’s generally harder for the person on the other side of the table to react negatively to someone whose primary missions are to serve and solve problems.

In summary, you can relieve adversarial negotiation pressure and master the negotiation danger zone by:

1. Keeping your cool and focusing on what needs to get done for a deal to work for both sides.

2. Avoiding arbitrary behavior and concessions that could jeopardize the success of the relationship after the close.

3. Using mechanisms (e.g., humor) to relieve the negotiation pressure during the process.

I leave you with a quote about keeping your composure from the third U.S. president, Thomas Jefferson: “Nothing gives one person so much advantage over another as to remain always cool and unruffled under all circumstances.” Follow Jefferson’s advice and you can be a more effective manager, sales rep and negotiator.

Note: this article originally appeared in March, 2020 on You can view the original post here.

The Trouble with Value

A recent Computerworld article covered a study done by the Harvard Medical School about the value of computerization in US hospitals.  The article led with the headline: “Computers don’t save hospitals money”.  This is not good news if you’re a seller of Information Technology solutions.

First tip: Be prepared1. You can expect to hear about this, certainly if you are selling in the health industry, but generally if you are selling the value of Information Technology to people who either have trouble believing in the value of IT, or for whom it is disadvantageous to admit it (for example, buyers in procurement roles).  The article will be used in attempts to undermine your value arguments, and thereby reduce your prices. Read more

Subcontractor Negotiations Foil Penske Bid to Save Saturn

By now most of you have heard that the Penske Automotive deal to save Saturn fell apart.  (See page 1 of the Wall Street Journal, for example)  The reason given is that Penske failed to secure a commitment from a third party to manufacture cars for sale under the Saturn name.  GM has guaranteed to do so for 2 years, but the issue was what happens after that.

Penske was negotiating with Renault to be that supplier two years from now.  But Renault balked at the plan.  In our opinion, this was a good business decision by Penske.  Too often the requirement of a subcontract relationship to make a deal happen is left for later, especially if it seems that there is time to secure the subcontract.  But the risk does not go down just because there is more time.  In fact, as in this case, the risk can increase as potential car buyers hesitate because of the uncertainty.

What do you think?  (mk)