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Brain circuits

Three dilemmas to help you test your negotiating skills

Published 10 July 2021 in Brain circuits • 2 min read

Leaders negotiate all the time. Externally, you negotiate with customers, suppliers and potentially allies, regulators and unions. Internally, you negotiate over goals, deadlines and budgets. While there is no single “best way” to negotiate, there are critical aspects to negotiation that it is important to understand. You need to adapt your approach to each situation. Like any other skill, your ability to negotiate will improve with practice.

Do you think you are a great negotiator? You can test your skills by grappling with these three negotiators’ dilemmas and checking if your answers are consistent with the research.

Before you start

Before answering, think about the following:

  • When you are prepared to trade off (or not) to close a deal,
  • How important it is to you to preserve an existing relationship and
  • What is the best way of achieving agreement. In difficult situations it may be worth enlisting the help of an external expert or adviser who can help facilitate the negotiation and reduce conflict.

Three “Negotiators Dilemmas”

Should you make the first offer in a negotiation?

If you have a good sense of the market or think you have more information than the other, you can make a first offer to “anchor” the negotiation, otherwise it might be best to let the other side make the first offer.

If you want to influence someone to agree to a costly (in terms of time, effort and money) proposal, should you present the most or the least costly option first?

Research indicates it is more effective to present the most costly option first because of the principle of “reciprocity”. This means when someone rejects a more costly proposal, they are more likely to feel they should accept the less costly option.

Is it better to tell someone what they will gain from doing something, or what they will lose if they do not do it?

It is better to tell someone what they will lose. This is governed by the “scarcity principle” which suggests that the fear of missing an opportunity is a powerful motivator; the more unique or scarce something is, the more desirable it becomes.

 

Authors

Michael Watkins - IMD Professor

Michael D. Watkins

Professor of Leadership and Organizational Change at IMD

Michael Watkins is the best-selling author of The First 90 Days, Master Your Next Move, Predictable Surprises, and 11 other books on leadership and negotiation. A Thinkers 50-ranked management influencer and recognized expert in his field, he contributes regularly to leading business journals and podcasts. His work is featured in HBR Guides and HBR’s 10 Must Reads on Leadership, Teams, Strategic Initiatives and New Managers. He received his PhD from Harvard University in Decision Sciences and taught at Harvard and INSEAD prior to IMD. He is a trusted mentor and coach for C-level leaders of global organizations and directs The First 90 Days and Transition to Business Leadership programs.

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