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Adam Grant
Wharton professor and author of GIVE AND TAKE

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The Bad Habits of Good Negotiators

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Adam Grant The Bad Habits of Good Negotiators

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About Hiring Jay-Z (Or Any Other Celebrity)

For a good part of the past decade, Ive taught negotiation skills to diverse audiences Fortune 500 executives, generals in the U.S. Army and Air Force, and professional athletes in the NFL and NHL. They tend to excel at preparing, analyzing options, and establishing a strong position. Yet some of their communication choices fly in the face of the best data on what actually works at the bargaining table. Negotiations start with the exchange of information. Many people view this process like playing a poker game. Why should I tip my hand before Ive seen yours? But in Give and Take, I cover a wealth of evidence that most people are matchers: they follow the norm of reciprocity, responding in kind to how we treat them. This means that the best way to earn trust is to show trust. If we want to receive information, we need to lead by sharing information. That said, its risky to give away information that could make you vulnerable. The good news is that there are two easy ways to avoid this trap. The first is a technique that I learned from Robert Adler, a negotiation professor who now serves as a Commissioner of the Consumer Product Safety Administration for the Obama administration. Its called selective informationsharing, and it involves revealing a piece of information thats small or impossible to use against you. In one experiment, Stanford and Kellogg students negotiated over email. When they only exchanged their names and email addresses, they reached deals less than 40% of the time. When they shared information that was irrelevant to the negotiation, schmoozing about their hobbies or hometowns, 59% reached agreement. When you open up about something personal, you send a signal that youre trustworthy, and your counterparts will be motivated to reciprocate, matching your disclosure with one of their own. The second is called rank-ordering, and it involves listing the issues on the table, and sharing the relative importance of them. In a job offer negotiation, for example, you might say that salary is most important to you, followed by location, and then vacation time and signing bonus. Research shows that rank-ordering is a powerful way to help your counterparts understand your interests without giving away too much information. You can then ask them to share their priorities, and look for opportunities for mutually beneficial tradeoffs: both sides win on the issues that are most important to them.
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But you can only find these win-win possibilities if you resist the temptation to sequence issues. All too often, people try to reach agreement on one issue at a time. Lets resolve the salary first, and then well move on to the other issues. When Neil Rackhams team taped skilled and average negotiators, the average negotiators insisted on handling issues one at a time more than twice as often as the experts. By keeping all of the issues on the table, you have the flexibility to propose trading location and bonus for a bump in salary. Once youve exchanged information, someone needs to make an offer. On average, is it better to make the first offer or let your counterpart open? When I poll executives, more than three quarters believe that its usually best not to make the first offer. By encouraging a counterpart to make the first offer, they assume that theyll gain an information advantage. Theres only one problem with this assumption: its wrong. One thorough analysis of negotiation experiments showed that every dollar higher in the first offer translates into about 50 cents more in the final agreement. As Adam Galinsky, a leading negotiation expert at Columbia Business School, summarizes the extensive research: more often than not, negotiators who make first offers come out ahead. Why? First offers serve as anchors: they set the tone for the negotiation. When we hear a first offer, we find ourselves pulled in that direction, and have trouble adjusting our own judgments. In one clever experiment, Greg Northcraft and Maggie Neale invited experienced real estate agents to inspect a house from top to bottom, and then asked them to estimate the independent appraisal value of the house. Unbeknownst to the agents, they were randomly assigned to see one of two different listing prices. Half of the agents saw a listing price of $119,900, and they estimated that the house would appraise for just over $114,000. The other half of the agents saw a listing price of $149,900, and they predicted that the house would appraise for over $128,000. The listing price should have been irrelevant; the agents had seen the house, so who cares what list price the seller chose? But the agents couldnt escape the pull of the anchor. Beyond setting the tone, making the first offer has two other advantages: it signals confidence and strength, and it creates more flexibility to make concessions without getting stuck with a bad deal. Of course, the credibility of your first offer depends on having a legitimate rationale
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to back it up. If your opening is too extreme, you can offend your counterpart or damage the relationship. And if your counterpart has better information than you, making the first offer can backfireyou might miss the mark completely. But as Dan Pink notes in To Sell Is Human, weve moved from a world of information asymmetry to information parity. In the information age, its much easier to do our homework about the value of a house, a car, or a skill set by gathering benchmarking data about similar items. As a result, I tell my students and clients that if they arrive at the bargaining table unprepared to make the first offer, they havent prepared enough. When preparing to make a first offer, people often overcorrect. Theyre so concerned about justifying their positions that they marshal as many reasons as possible. Yet Rackham found that experts give fewer reasons to back up their arguments: skilled negotiators averaged fewer than two reasons per argument, compared with three reasons per argument from the nonexperts. The more reasons advanced, the more a case is potentially diluted, Rackham writes. If a negotiator gives five reasons to back his/her case and the third reason is weak, the other party will exploit this third reason in their response. Presenting too many reasons can also convey a lack of confidence, making clear that were uncertain of the legitimacy of our offer. An effective first offer is best supported by one or two compelling reasons. There will always be times where we simply dont have the chance to prepare to make the first offer, or our counterparts beat us to the punch with an opening anchor. If an initial offer is too extreme, write negotiation authorities Max Bazerman and Maggie Neale, you need to reanchor the process. One strategy is to make your counteroffer equally extreme, knowing that the final agreement will usually be near the midpoint of the first two offers. But this approach comes with a downside: because anchoring can be powerful, you might not adjust enough, making your counteroffer insufficiently extreme. Also, by countering, youre sending a message that the first offer was an acceptable launching point for the negotiation. To avoid these traps, you can ask your counterparts to explain their reasoning, or simply tell them their initial offer is so far off the mark that you dont feel its a fair or productive place to begin. But my favorite response is to follow one of Rackhams tips: test your understanding and summarize. The idea here is to sum up what has just happened, and show that youre wise to it. In Rackhams study, of all behavior in a negotiation, testing understanding and summarizing made up less than 9% of the communications of average negotiators, versus more than 17% for skilled negotiators. open in browser PRO version Are you a developer? Try out the HTML to PDF API

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I had a chance to test this strategy when negotiating with a car dealer. He made an initial offer that was hardly better than the sticker price, and I saw an opportunity. It sounds like youre using a technique called anchoring, I said, where you open with an extreme offer to start the negotiation at the most favorable point for you. Thats not what youre doing, is it? When I labeled the behavior, he saw that I couldnt be easily duped. And when I asked the question, I gave him an escape hatch. He took it: I knew I couldnt fool you. For more on effective negotiation strategies, see Adam's new book Give and Take: A Revolutionary Approach to Success, a New York Times and Wall Street Journal bestseller. Follow Adam on Twitter @AdamMGrant Image credit: The Office

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417 comments

and 1,400 others like this post

Dian Gunderman Procurement at AvivaUSA Valid and practical reminders for all of us!
26m

Aidan Byarufu Head-Sales & Marketing Department at African Probiotic Yoghurt Network That's interesting to learn cause whatever we do in a daily life we always presented with opportunity to negotiate something, whether business or just in our daily social life.
31m

Ronald Macdonald Sales Manager Which of you are streetwise in your field of profession ?
1h

Andrea McNeal Healthcare Strategy Leader Very good article! I would add that a negotiator should carefully think through their BATNA (Best Alternative to a Negotiated Agreement) as well as that of the other party(s). They shouldn't reveal their BATNA, in most cases, but knowing it makes the negotiation process more productive and prevents them from entering into an agreement that is less than favorable. Also, if your BATNA is stronger it increases your negotiating power because you know that you don't have to concede as much. A successful negotiation is one in which you walk away with a result better than your BATNA and in the case where the relationship with the other party is important that they also walk away feeling as if they won.
1h

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 Aadarsh Vyas and Sharif Sabri

Ritu Bhatt EVP - Business Strategy at Cosmic Strands Very useful points to note. Thank you!
1h

Lucy Barcenas of the things that works against sales people: 1.Over confidence which is my favorite 2.Underestimation of the value their product & their Company can bring (knowledge) 3.Limitation when creating alternatives
1h

Karen Killgo

Sven Haile Business Adviser Thanks for the article. Yes, analysis and preparation are key. But why should the property listing price have been irrelevant? Practical evidence suggests that it is relevant for several reasons, i.e. seller's market or desperate agent to name a few. And I reckon one has to differentiate when an opening offer is favorable and when not. The article does not go into detail. For example, an opening anchor is then useful to make, when there are competitors who could snap away the deal or when the counter party is in a weak position, etc.. It is not useful when time is on one's side or one is afraid of losing a potential buyer. And as to a comment by a reader on objective judgment - it depends on whether the parties meet in person or not. A personal meeting can motivate the parties to make exceptional compromises or to shift their perspectives, which can have great impact on making or breaking a deal. If the parties don't meet/speak directly, then the quality of the agent plays a critical role - and of course in practice it's also about timing.
1h

Claire Kashukwe Limbwambwa, FZIHRM Lead Consultant (Owner) at TimeQue Consulting

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Great article, thanks

1h

Frank Alfieri Focus Industries: Data Analysis / Aerospace - Component Repair and Overhaul / Retail Home Furnishings Interesting article. I would have to say that from experience, having the correct information (data) is the first and foremost important objective. Once you are armed with the data, you should, as you describe in your post, make a list of your "desired" outcome by preferences (Rank Order). Also, establish, or try to establish the "desired" outcome by preference for your negotiating counterpart. Once that is established, you and your team can perform a pseudo negotiation in which you "link and trade" between all the items on the table. However, I would still have to say that the best negotiators will always keep their "best card" in their back pocket. The strategy is in trying to determine if your counterpart has really put all their cards on the table, or "what their best card is" so that they don't dupe you into making concessions for a reasonable or unreasonable tradeoff.
1h

Karen Killgo and Sven Haile

Dario Maione International Strategic Purchaser Really interesting article with smart negotiation tips useful for both professional and private life.
1h

Karen Killgo

Lydia Madonia, CHRP Director, Employee Success (CANADA) at Salesforce Adam, test my understanding and summarize is a powerful tool. I use it when coaching others and I could see how you could transfer the efficacy of the intervention to negotiations. Thanks for sharing.
2h

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Steve Pope Tactical planning and analysist Negotiation is like chess. Each is observing and positioning to gain their objectives depending on what each side is willing to give to achieve their goal. The key is listening objectively without letting feelings and emotions cloud the views of the parties involved. All negotiations begin with a test of the waters.
2h

Doug Simmons Associate Broker at Innovative Real Estate Group I'm finally realizing that it's OK to strive for a "Win / Win" outcome to negotiation. Many aspects of this article speak directly to me as a relatively new Associate Broker in Real Estate. Thanks for the reminders and inspiration for all future negotiations - Living my life with a sense of abundance (not scarcity)
2h

Darrell Potie Good stuff!

2h

Tina Schwartz Founder & Literary Agent at The Purcell Agency Excellent article with a variety of great information. Thank you!
3h

Valerie Raburn VP and Chief Innovation Officer - Retail, Travel & Insurance at Xerox I was a professional negotiator for several years on high value insurance claims. We often internally debated which was the best approach...to wait for a demand or to preemptively make the first offer. I always chose the latter and was able to settle claims faster and at a fair value. It was much better to maintain control by working off my starting number, which was based upon

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many years of experience, than to negotiate down from a typically inflated, unrealistic and unsupportable demand. The opening number definitely sets the tone for the balance of the negotiation. And the fairness and rationale of the opening amount speaks volumes about being trustworthy.
3h

Lucy Barcenas

Kim Hoff Realtor at SC Real Estate Network Excellent article on negotiating and very well written.
3h

Brent Bankosky Experienced Business Development Executive Very well written article and excellent points about how to approach a few key situations that are common in most negotiations.
3h

Mark Hankey Founder at Flag Victor Limited This bit is so true - "pressing flesh" is one of the critical keys to good business relationships: When they only exchanged their names and email addresses, they reached deals less than 40% of the time. When they shared information that was irrelevant to the negotiation, schmoozing about their hobbies or hometowns, 59% reached agreement. When you open up about something personal, you send a signal that youre trustworthy, and your counterparts will be motivated to reciprocate, matching your disclosure with one of their own
3h

Mary Arroyo-Ortiz Property Manager at Cedarwood Cooperative Excellent advice. Thank you!

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4h

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