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COMPLEX NEGOTITAION TIPS

INTRODUCTION
What makes a negotiation complex?

- You're back for another round of negotiation with your biggest supplier. Your mandate is clear, save
money by cutting the price. Will this mitigate the years you've spent building trust with the supplier's
representative? Will your demands hurt them financially? And if so, should you care? There's a third
party contracted to deliver their supplies to you. Should they be at the table? These are the kinds of
scenarios I've helped negotiators work through in both the real world and the classroom. I've taught
negotiation for 25 years. I love it. Helping students understand the power of alternatives or the
psychology of a first offer is rewarding. They leave class able to navigate a one time sale, or even a job
offer with confidence. But sometimes students come back for more. Their foundational skills aren't
enough to manage complex negotiations, which have many moving parts. The bargaining mix is
complicated with more issues, many of them interdependent. You've got multiple parties requiring you
to manage many strategic relationships simultaneously. Relationships are ongoing with multiple
bargaining rounds, requiring a longterm orientation. Information is complex, uncertain, or even
unavailable. Your negotiation partners come from different countries and use a variety of strategies.
Many interested outside parties need effective communication. I'm Doctor Carolyn Goerner. As a
professor and negotiation consultant, I've coached hundreds of people through challenging
deliberations. This course combines practical experience with the latest research. We'll explore best
practices in managing multiple negotiation partners, building and maintaining relationships, planning for
complicated situations, and developing your professional demeanor. I'll dive into some of my favorite
questions. How do you build a relationship and still negotiate price? What's the best way to prepare for
international negotiation? What's the role of gender in negotiation? What do I do if my opponent is
aggressive? Join me as I help you build a strong skillset to manage complex negotiations.

MULTIPARTY NEGOTIATION

Coordinating negotiation teams

- Albert Einstein is credited with saying, "Everything should be made as simple as possible, "but not
simpler." He was discussing scientific theories, but he might as well have been talking about negotiation
teams. You want a small team that's easy to coordinate, but the point of a team is to have access to
broad expertise. Cornell University professor Elizabeth Mannix recommends using a negotiation team
when you need diverse knowledge and you want a more thoughtful or creative approach to solving the
problem. But these benefits come with costs, namely time and energy. Diverse perspectives can cause
conflict, so you need ample time for members to work out their differences before the negotiation
begins. And developing a negotiation game plan gets more complex when you include more data.
Preparing and deploying a negotiation team are complex. So here's some suggestions for effectively
managing your team. When assembling your negotiation team, think about both the topic and the
parties involved. You need technical experts, for a labor union contract, for example, your company's
team may need an expert on job duties and qualifications or a lawyer familiar with existing and past
contracts. Then you'll need relationship experts. Include someone who knows the other side and can
read their nonverbal reactions. Add another who understands how workers will respond to proposals. If
the negotiation will be covered by media, include a member with public communication experience. As
you can tell, the more complex the negotiation, the larger your team is likely to be. Once your group is in
place, clarify individual roles and overall strategy. Most teams appoint one lead negotiator who does
most of the talking. Other members need to know when or if to speak and what information to disclose.
Let your lead negotiator's style guide this part of the planning process. If they're slow negotiators who
take pauses and stop to reflect, the team needs to become comfortable with silence. If they're tough
negotiators, their passion shouldn't come as a surprise. Also, each person should know what information
or analysis they're responsible for and how the lead negotiator prefers to receive it during the process.
Consider developing nonverbal signals so the team can communicate silently. Maybe tapping a pen on
the table means you have information disproving the other side's assertion, or partially closing a laptop
cover says the team needs a quick private meeting. Without a strategy, team members might blurt out
information inappropriately or create distraction by frantically whispering to one another. The most
important thing you can do is practice. Too many teams spend time preparing their strategy without
thinking about execution. Ideally, you'll practice responding as a team to a wide variety of situations. I
recommend hiring a negotiation consultant to help brainstorm potential scenarios, then coach the team
to develop the best collective responses. A negotiation team can be difficult to manage. It's tempting to
limit the number of team members to save time and energy, but take advice from Einstein. Keep your
team designed as simple as possible, but not too simple. With smart coordination, you can successfully
handle a team with all the resources you need.

Handling multiple negotiation partners

- In Greek mythology, Hydra was a snake-like water creature with nine heads. When Hercules fought it,
he quickly realized Hydra was a formidable opponent. Every time Hercules cut off one head, Hydra grew
two more. Well, sometimes multi-party negotiations, where there are three or more people, can feel like
you're battling Hydra. You think you've resolved one issue only to find two more competing demands.
Things get complicated pretty quickly. Multi-party negotiations are becoming more common.
Manufacturing companies require competing suppliers to work together on a bid. Members of a
nonprofit board resolve differing opinions about fundraising. They're complex. They require more
planning and the social dynamics can be a challenge. Multi-party negotiations work more smoothly,
when you take control of the process. You're probably familiar with ways to run an effective meeting and
manage group dynamics, but negotiations are unique. So let's uncover strategies to manage negotiations
with three or more people. Negotiate the rules first. Rather than diving right into issues, spend time
figuring out how you'll reach an agreement. Do you need unanimous consensus or just a majority vote?
What are your debate rules? What constitutes an acceptable outcome? Do all parties have to be
included in the final agreement? If you have four or more parties or you think this will be contentious,
consider hiring a neutral facilitator to manage the meeting. Don't forget to explicitly name everything in
the bargaining mix upfront. As the negotiation continues, things can be added or removed from the list
but the process is simpler, when you're all clear on what needs to be discussed. You can also use this list
to create your agenda for the meeting, but don't negotiate issue by issue. They're usually contingent on
one another. Instead, define and identify potential options for each issue. Set the room up with shared
white space. This can be a projected computer screen, or just to talk board. I use a whiteboard with
different color pens for each participant. This is a central place to diagram everyone's positions. So you
can visualize the whole dispute. If you publicly document how the discussion progresses, it's easier to
stay abreast of the negotiation and avoid misunderstandings. Shared white space also has a
psychological effect. With everyone's position visually represented, people can become less defensive.
The focus of the meeting shifts instead of individual arguments, it becomes a group problem solving
session. And once you see points of agreement, you have optimism for the more contentious topics.
Finally, expect and manage coalitions. Even with only three parties, people naturally look to alliances to
gain strength. Be ready when you're asked to join forces with another negotiator. Here's some questions
to consider ahead of time. What gains will we achieve together? And how will we divide them? Who will
I alienate by forming this relationship? And what are the consequences? Is this the best deal I can get?
It's tempting to jump into an alliance, but be cautious. The first offering isn't always your best option.
Multi-party negotiations can feel like you're fighting a dangerous mythical beast. But when you take
charge of the process, you'll slay the chaos and come out on top.

Using agents in negotiation

- What in your life do you outsource? Do you enjoy eating in restaurants so you don't have to cook? Do
you go to someone to cut your hair? Now, how about outsourcing your negotiations? There are a variety
of conditions in which you could use another person, an agent, to negotiate on your behalf. There are
other times you'll want to negotiate for yourself. We'll dive into both, starting with negotiating through
an agent, and when to hire one. Consider hiring an agent when specialized knowledge or expertise is
needed in this negotiation. For example, say you're not a real estate expert. So, if you're purchasing
property, you may use an agent to minimize the chance of making mistakes. These agents are also
experts in the purchasing process. So they can make things run more smoothly. Another reason to use
agents is to leverage their network. If you were trying to locate and buy a particular piece of antique
furniture, chances are the person who currently owns it isn't someone you know. But a purchasing agent
has a wide network of people who buy and sell antiques, and is more likely to find the piece you want.
Finally, use an agent when you need emotional detachment from the negotiation. Lawyers and barristers
often service agents when inheritances are decided and dispersed. These can be tough conversations. So
having someone with no personal involvement in the matter could help the process come to a better
conclusion. On the other hand, consider negotiating for yourself if you need a personal relationship with
the other party, or need to repair a damaged relationship. In these circumstances, developing personal
trust is important. Using an agent could signal that you don't care about the person or the relationship.
That doesn't bode well for future interaction. If you decide to employ an agent, there are a few things to
understand about the agent/principal dynamics. First, decide if you're going to be present during
negotiations. Research indicates that agents make fewer concessions and spend less time searching for
solutions when the principal is in the room. If you want a tough negotiation, that's fine. But for a more
conciliatory approach, it's better to be absent. Also, be patient. Using an agent often results in more
impasses. So don't panic when the process in interrupted. Share clear guidelines and expectations.
When agents are uncertain about your desired price or other aspects of the deal, they don't negotiate as
effectively. As a side note, research indicates that agents may also charge a higher fee if they're placed in
a highly ambiguous situation. Finally, let your agent use their network. Some people are skeptical when
their agent has a prior relationship with their adversary's representative. But this can work to your
advantage. Prior knowledge usually makes negotiations go more smoothly. And if the representatives
have a strong relationship, you're less likely to have problems implementing the final contract. As you
can see, there are very good reasons to outsource negotiation. Just be sure you're choosing an expert
you fully trust to represent you.

Communicating with constituents during negotiation

- I love live theater. There's something about watching actors create music and stories that just delights
me. I have no desire to be on stage but adore being in the audience. Most negotiators don't intend a
career in acting, but in some situations it can't be helped. You're on stage. There's an audience watching.
They're directly or indirectly affected by the outcome. Even though they're not actively at the table,
these parties influence the negotiation physically and psychologically. If you're formally representing a
group, that group may constrain what you can offer and accept. And knowing your final agreement may
be publicized by the press can change the way you bargain. So just as you need to plan for people at the
table, you need to develop a strategy for communicating with outside parties during the negotiation.
Here's some ways to approach this. First try consultation. Invite constituents to participate in your
planning. Survey key parties, asking them to rank their top three interests, or invite them to a strategy
session to brainstorm the other side's objections. The transparency of consultation develops trust, and
research confirms that buy-in from outside parties gives you confidence and flexibility while negotiating.
You can use anchoring to manage expectations. Share your worst case scenario with constituents.
Explain why you might agree to a bad deal or even walk away. You've heard the phrase under promise
over deliver. That's the strategy. You know you'll likely do better than the bad scenarios, but anchoring
outside parties to them has benefits. Focus on the best possible outcome, and anything below that
seems like a loss. But anchor on the lesser deal, and the final agreement feels like a win. It's also good to
overcommunicate and provide regular updates. You don't disclose everything, of course, but even a
short daily summary can keep others calm. It assures them you're working diligently on their behalf and
makes them feel part of the process. Remember, you're not the only one with outside obligations.
Helping the other side communicate with their constituents can make the negotiation go more smoothly.
Put an outside communication strategy on your agenda. Issue joint public statements if possible,
particularly if you seek a collaborative outcome. Helping your opponent frame and sell the deal to their
third parties makes implementation easier. Most of the time your constituents won't actively watch the
drama of your negotiation unfold. Even so, they play an important role. So develop a script to engage
with your audience. Then enjoy their applause.

International negotiation

- For years, cross-cultural negotiation experts relied on research findings like this. Negotiators from
Russia and Hong Kong create less value at the bargaining table than those from other countries, but for
different reason. Hong Kong natives tend to share less information, so deals aren't just robust. Russian
negotiators use more power tactics so their opponents become defensive and don't give as much. Here's
the problem with this approach to international negotiation. Almost every time you try to stereotype
someone, you're wrong. People are interesting because they're unique and hard to predict. And research
confirms when we rely on stereotypes we don't listen or observe well. We miss the subtle ques that
signal how the negotiation is progressing. So we're less likely to reach the best possible agreement.
Long-term relationships can't develop because we don't see people as they really are. This is only one
complicating factor in international negotiations. Crossing borders brings differences and language,
currency and legal systems. With all the moving pieces, you can't afford to miss-communicate. So, rather
than rely on traditional stereotypes, try these strategies when you're negotiating internationally. First,
don't pretend you're a cultural expert. Of course you should study key traditions and cultural norms to
avoid being rude or disrespectful. If someone greets you with a bow be ready to reciprocate. But your
research should guide your observations and reactions, not dictate what you do. And if you're in doubt,
ask for help. You wouldn't hesitate to hire a lawyer for legal advice. So if you are concerned about
language barriers or cultural misunderstandings, find and hire experts to help navigate your negotiation.
Be care of cultural attribution error. That's the tendency to blame cultural factors for every difference or
disagreement. Today's world is global and people have more international experience. So before
assuming that someone born in Japan will adopt a collectivist mentality and someone living in Germany
will be direct, find out about their individual backgrounds. If both studied negotiation in Singapore
they're likely to be more similar than you expect. And if your partner has experience with international
negotiation, their home culture is less likely to influence their behavior in your interaction. Finally, focus
on preparation. I've seen people get so caught up analyzing cultural differences that they neglect more
basic preparation. Are you comfortable with your numbers? Is your information well-organized? Know
the the ins and outs of your company. Be ready to answer questions. When you're prepared, it's easier to
stick to your standards. You may have invested 24 hours on an airplane to get to this meeting, but that
doesn't mean you have to take a bad deal. Stay professional and stay focused, but don't hesitate to reject
an offer that doesn't benefit your company. There is a lot of danger when assumptions and stereotypes
come into play. Cultural differences can be small and subtle, but because they're memorable, we
overestimate their importance. In international negotiations you have a wonderful opportunity to
develop your bargaining skills. You also get to know truly interesting people who can broaden your
worldview and help you become a more successful partner.

What is Cultural Attribution Error?

recognizing that national culture is not a particularly important element in negotiation

doing significant research to understand how negotiation typically happens in another culture

*blaming cultural factors for every disagreement or misunderstanding.

Cultural Attribution Error occurs when culture is used inappropriately as an excuse for all of the
difficulties in a negotiation.

failing to recognize the impact culture differences can have in negotiation

Veronique is a real estate agent well-versed in buying and selling property. She has decided it is time to
sell her personal home. For what reason would you recommend she use an agent in this process?

*She wants emotional detachment from the negotiation.

Agents are useful when you fear your emotions will hinder your ability to negotiate.

She wants to use her own network.

She wants a close personal relationship with the person who ultimately buys her home.

She lacks technical expertise.

You are about to negotiate a contract that will affect everyone in your work unit. You want to be sure you
have their buy-in to the final agreement. So before the negotiations begin, you arrange a meeting with
people in your work unit and ask them to help you prepare. What strategy are you using?

*Consultation

Consultation involves constituents in the planning process.

Anchoring

Over-Communicating

Reciprocity

What is NOT an advantage of using shared white space?

Participants may become less defensive and adopt a collaborative problem-solving perspective.

Participants can visualize the whole dispute.

*The negotiation moves along more quickly.

Shared white space makes the negotiation easier to follow, but this doesn't change the time it takes to
negotiate.

Participants can see potential points of agreement, which makes them more optimistic.

Javier is assembling a team for a labor union negotiation. It will be widely publicized with many outside
parties interested in the outcome. His team has technical experts who understand the contract terms,
along with public relations experts who can manage communication with the press and other outside
parties. What is Javier missing from the team?

A relationship expert who can read nonverbal reactions.

This was the correct answer

Someone who knows the contract terms.

Someone to communicate with interested outside parties.

Someone to talk to the press.

LONG-TERM ORIENTATION
Maintaining relationships while negotiating price

- (speaks foreign language). We need to talk. These are scary words in any language. It's going to be a
tough conversation. You might not like what you're about to hear. When you say this to a supplier or
customer, they know you likely have to talk about price. It's a conversation many of us dread. You've
invested time and energy into your relationship with this business partner and things are going great, but
your company's profitability matters as well and a price concession from this client will make a
difference. Now, not every company sees this tension. Some just seek the best possible one-time deal.
But if you appreciate the power of more positive partnerships, you're faced with a dilemma, how do you
have a tough price conversation while protecting your relationship? Start with empathic planning. In
addition to preparing your own information, put yourself in their shoes. Understand their profit model,
so you know where they'll feel the impact of your price change. What could prompt them to accept your
proposal? What would make it easier for them to do so? Brainstorm the questions they'll have and be
ready to explain why your needs have changed. Begin the conversation by being as transparent as you
can. If your company doesn't have a philosophy of cost transparency with key vendors or customers, you
might want to consider it. Research indicates it builds trust and promotes more robust agreements. But
even without sharing all the background, you need to provide a rationale. People accept change better
when they're given a reason for it. We don't even need to like the reason, it just has to make sense. So
share as much information as possible to open the conversation. Then make a clear opening offer. This
isn't the time to be ambiguous with, oh, about 10%. Use an exact price point. The other person needs to
know how hard this conversation will be. You show respect when you give them precise information.
This is also a good time to make a concession, maybe something procedural. Like, you may need some
time to think about this, should we take a short break? Or if possible, offer something of substance. We
can switch to monthly delivery. We wouldn't expect weekly shipments at that price point. Maybe change
payment terms or product specifications. A well-placed concession shows concern for their wellbeing
and signals good intent. This is the point where some negotiators give up too much. They may feel badly
for their counterpart or guilty about making the request. If you feel emotionally drawn in it's time to take
a break. Remember, your company's needs matter too. Further concessions need to be reciprocal. Every
further price point reduction or increase in value should involve some kind of trade-off. Then look to the
future. Thank the other party for working with you during a difficult time, remind them you value the
relationship. If possible, provide assurance that you won't request changes for a set period of time.
Finally, follow up with a personal message, give them a week or so, enough time to regroup from the
meeting, then arrange a call or get together to reaffirm the relationship. Remind them what you have
found in common and why you like working together. It's never fun to say, we need to talk, but if you
plan and execute the conversation well you can achieve profitability goals, while maintaining a positive
relationship.

Managing relationships away from the table

- I love coffee, but when I order decaffeinated, I need it to be decaf. Trust me, unintended caffeine isn't
pretty. So, I go to a local coffee shop called Strange Brew. It's not the cheapest or most convenient, but
they get the right coffee every time. Finding someone to trust can be difficult. Trust makes us vulnerable
and it's risky. But once it's established, relationships are more efficient and enjoyable. You stop
questioning motives. You assume they're telling the truth and are honest in return. If problems arise,
they're easier to fix. You can build trust during a negotiation, but it's easier to develop when you're away
from the stress of the bargaining table. Here's some tips: recognize that trust takes time. You learn about
people through repeated interactions. So a few quick emails won't do the trick. If the other person isn't
used to friendly business relationships, you'll need to be patient and persistent. Ask to meet for lunch or
make a phone call to arrange the meeting. More contact makes you more familiar. Second, build a
personal relationship. Be genuinely interested in learning about the other person and willing to share
about yourself. Find things in common. You don't want to go overboard, be appropriate to the person
and the circumstances. I find props helpful. My phone case shows my favorite sports team and my wallet
has my university's logo. It's more natural to ask about someone's hobbies or background when they
know something about me. Work to understand. You learn about others by listening carefully and
suspending judgment. Don't make assumptions, ask good questions and pay close attention to the
answers. Empathy is seeing the world that others see and acknowledging their feelings. Set a goal to
focus on the other person and learn about their experience. Use the time between negotiations to learn
about your partner. Ask for a tour of their facility and observe their operations. Invite them to attend a
business event with you. Then listen as they introduce their company to others. The more you learn
about their perspective, the stronger your relationship will become. Work to show others they can be
vulnerable with you. Psychological safety is knowing you won't be ridiculed or punished for sharing new
ideas or making a mistake. To make others feel secure, lead by example, own your mistakes, encourage
questions and feedback, and don't be defensive when you get them. Your openness and humility
encourage the same in others. You can build psychological safety by asking for feedback between
negotiation sessions. Use a review meeting to discuss best practices in the last negotiation and what
could change for next time. This ritual helps diffuse bad feelings so you can move forward more
positively. Finally, commit to telling the truth. It might be tempting to lie in negotiation, but it typically
backfires. People are less willing to negotiate again with those who lie. If they must meet a second time,
they're more defensive, more combative. The longterm credibility you gain with a reputation for being
truthful is more valuable than any short term gain. Time, relationship, understanding, safety, truth.
Building trust away from the bargaining table creates longterm value. Even when you have to take a
tough stance or deliver bad news, you'll still be a person negotiation partners look forward to talking to.
This makes bargaining more efficient and a lot more pleasant.

Which choice is part of the recommended strategy to develop trust in relationships when you're away
from the negotiation table?

Concessions

Demands

Communication
*Safety

Psychological safety is important for trust development.

Angelique needs to request a price reduction from one of her vendors. They have developed an excellent
personal relationship over years of contract negotiations. What should Angelique do to negotiate price
while preserving the relationship?

Avoid making concessions to show she's serious about the price reductions but also wants to preserve
the relationship.

Give a vague offer like "about a 5% reduction" to avoid offending the vendor.

*Provide an explanation for why she needs a price reduction.

Focus only on planning her own material so she can be clear while negotiating.

Complicated Planning
Making the first offer when negotiating

- Think of the last two digits of your phone number. Got it? Now estimate how many countries from
Africa are in the United Nations. Believe it or not, your mind just related those two numbers in a
powerful way. If your phone number ends in a high number, like 97, you will estimate a higher number in
the second question, like 65, but my phone number digits are much lower, 28, so I'll estimate a lower
number. We just replicated a famous study demonstrating the anchoring effect. Whatever number
you're primed with prompts you to evaluate what follows from that perspective. If you're prompted
number is larger you'll make a larger guess. This is why many negotiation professionals advise you to
make the first offer. Research proves that anchoring works. You'll usually get a better economic outcome.
But if you want to build relationships as well as make money, come prepared with a strategic opening
offer. In a complex negotiation, price can't be negotiated alone. Price varies depending on other parts of
the deal. If someone orders a higher quantity they may get a discount. If you need rush delivery you'll
pay more. Without context price quotes are meaningless. Unfortunately, many negotiators adopt a price-
first strategy. They believe they're being strategically aggressive and using anchoring to their advantage.
Besides, haggling over price is easy. It's expected. It's how most people think the negotiation game is
played, but it isn't your most effective choice. Let's take a look at how a price-only negotiation might go.
- About what we have to offer. - Okay, yeah, great. So we need to upgrade our hospital's MRI machine.
What kind of price can you offer me? - It's $500,000 to replace the unit that you currently have. - Wow,
that seems high. We just bought one for $300,000 and it wasn't even that long ago. - Well, this is a really
great unit with some powerful features. We also offer maintenance, offsite repairs. - Can you get us
closer to 350? - I can certainly see if we have anything available, but I don't... - Awesome, how about you
check on that and get back to me, okay? - Given the anchoring effect, they'll likely settle slightly over
$400,000. A good deal for the seller. But you can see this negotiation got contentious pretty quickly. The
buyer doesn't have context for the price, so they can't evaluate the value they'll receive. And now the
seller is forced to adjust the price to make the deal. They've limited their alternatives and potentially left
some intangible value on the table. A different opening strategy can turn this sale around and make it
more valuable. To harness the power of the opening offer in a complex negotiation, focus on the value
proposition behind the price first. Here are some tips. First, set the agenda. Lay out the bargaining mix
relatively slowly. Ask about the importance of each item and determine its value to your customer. The
opening offer is your opportunity to get everything on the table that you might want to discuss. This also
uses the power of anchoring. When you present multiple items to potentially be part of the deal, you're
signaling that the final agreement should contain them. Number two, frame it as a gain. Loss aversion
theory tells us people are more sensitive to what they might lose rather than benefits that they can gain.
So rather than saying you'll pay $500 for maintenance, try, I'm offering you maintenance for $500. Third,
use precision strategically. People respond to precise opening offers differently depending on their
negotiation expertise. If your counterpart doesn't have a lot of negotiation experience, a precise opening
offer such as $498.57 offers a strong anchor because it's memorable, but expert negotiators who are
familiar with the anchoring effect, aren't derailed by precise numbers. So their response is different.
They see you as naive and inexperienced when you use the strategy. So when in doubt, use moderate
precision. An offer of $505 rather than $500 would be safe. When you adopt these actions, the
anchoring effect is more broad. Your counterpart is focused on your value proposition, not your price.
You're also likely to have a better relationship moving forward. Let's now look at the same negotiation,
but through the lens of the strategic approach. - So, we need to upgrade our hospital's MRI machine. So
what kind of price can you offer me? - Well, first let me tell you what that price includes. We do offer
free quarterly maintenance and inspections. We'll monitor your equipment from our office. That way we
can let you know when you start to run low on supplies before you actually run out. Have you ever had
an issue with that in the past? - Yeah. We had to reschedule 28 patients last month because of a faulty
machine. It totally took us by surprise, and a couple of our patients really needed those test results. -
That sounds annoying and expensive. We can help with that. Let's see. When your pictures start to get
grainy, just let us know. We'll send you out temporary equipment. That way you can keep on working
while we do the repairs. Turnaround's usually about a week. Is that something that you would be
interested in knowing more about? - Sure, but I need to know what this will cost. - Of course. So the
price for the unit, including the maintenance and repairs so that you have no downtime, you're looking
at about $505,000. - As good as that sounds, it's above my budget. - You know, some of our customers,
they'll allocate part of their repair budget towards the purchase of the machine. Is that something that
you can consider? - You know what, I think we can work this out in our budget. - What a stronger
negotiation, right? We now have more options. The seller can add or remove items from the list to justify
price changes. The value proposition is clearly stated, and the buyer is considering inspections and refills.
Resources that help to create a long term relationship. Rather than haggling over price, they're working
together to solve this purchasing problem. Now we've got both parts of a good deal, economic gain and
relationship development. A quick caveat. This advice assumes you have equal or better information
than your counterpart. If that's not true, wait for their offer or ask questions to prompt it. Your need to
learn as much as possible outweighs the first mover advantage. Oh, by the way, the actual number of
African countries in the United Nations is 54. Did your phone number anchor influence your guess?
Anchoring is psychologically strong, and you can get even more power from it with a well-crafted
opening offer.

Making multiple opening offers

- We talk a lot about sources of power and negotiation, your alternatives, resources, and strategy, all
help you get a better deal. But what if I told you it's possible to get power from two things at the same
time. To leverage both planning and information gathering, you can use MESOs, multiple, equivalent,
simultaneous, offers. You make two or more offers each have equal value to you, but with different parts
of the bargaining mix highlighted. Your partner's reaction can show you what's most valuable to them.
The MESO strategy is useful when you have lots of items in the bargaining mix that have value, but no
clear preferences or priorities. You're just looking for the best possible deal. If you have a partner
reluctant to negotiate, this can help open the conversation. So how do you offer MESOs? Let's say you're
negotiating with a candidate for a top management job with your company. You don't know if they're
more interested in salary or stock options. So assuming these offers are financially the same to you.
You'd say, let me give you two offers to consider. First, we can offer a base salary of 230,000 euros, and
the opportunity for a 10% performance bonus, or we can offer 200,000 euros and stock options equal to
1% ownership of the company, which is more attractive to you. Whether the candidate responds by
focusing on one offer or asking about other issues, you've accomplished two things. You're learning
about their interests, and you're opening up a rich conversation. MESOs set the tone for cooperation.
Research indicates negotiation partners usually respond well and final outcomes are better for both
parties. To be effective using MESOs, you have to prepare carefully, know all possible elements of the
bargaining mix and estimate their relative value. Then evaluate the impact of increasing or decreasing
each item. So you'd make a list of all the items that might matter to both parties. Brainstorm to make
this list as broad as possible. then determine the value of each item to you. It's great if you can translate
that to monetary value, but if you can't develop a point system and give each item an importance
number from one to 10. Then, think about alternatives for each thing on the list. So to continue our
example, your job offer could include base salary, vacation, retirement plan contributions, a performance
bonus, housing allowance and stock options. With stock options, you determine 1% ownership and the
company is currently equivalent to 40,000 euros. So offer one with base salary, 230,000 and up to a 10%
bonus costs you a maximum of 243,000 euros. Offer two with base salary of 200,000. And 1% ownership
is worth 240,000 euros. Once you're done planning, you're ready to evaluate almost any combination. I
don't recommend this strategy for all negotiations, it's time consuming. But for complex negotiations, it
can be very helpful. Quantifying all sources of value in the bargaining mix leaves you ready to respond to
almost any tactic. That flexibility and confidence can make you a powerful negotiator.
Understanding psychological traps when negotiating

- How would you answer this famous question? A bat and a ball together cost $1.10 in U.S. dollars. The
bat cost one dollar more than the ball. How much does the ball cost? If you said 10 cents, you're like
most people. Unfortunately, you're also incorrect. You took a cognitive shortcut. Psychologists tell us
humans are cognitive Mizars. We have a lot to process and can't invest too much mental energy in every
little thing so we rely on shortcuts and stereotypes to make many of our decisions. In negotiation, there
are four common psychological shortcuts that can short-circuit your effectiveness. First, anchoring, is the
tendency to be influenced by the first thing we hear. We use initial information, usually numbers, to
guide our decisions. This is a strong cognitive bias. Research confirms that allowing the other party to
make the opening price offer means they usually get the better deal. To avoid the anchoring effect,
refocus your attention on other numbers and force yourself to use those as your anchor point. That's
why I always insist that my students have aspirational goals and are ready with their own opening offer.
Even if you don't use them during the negotiation, your numbers provide an alternative to the other
party's anchor. Second, the egocentric bias causes us to overestimate what we deserve and
underestimate what they other party should get. It comes from a failure to see the other person's
perspective coupled with some personal ego protection. It can keep you from accepting a fair offer and
prompt you to make unreasonable demands. To work through it, make a special effort to find
information unfavorable to your side, ask an independent third party to help you value your offerings,
and actively practice empathy trying to see the situation from the other party's perspective. Next, the
sunk cost bias keeps us from walking away from an unprofitable situation. The logic says I've already
invested so much time and energy in this negotiation I have to see it through to the end or we've put a
lot of money into the supplier relationship so we have to make it work. In negotiation, it can keep us
from exploring alternatives and lock us in unhealthy partnerships. You can overcome this by considering
opportunity cost. Which other suppliers are you not pursuing because you're locked into this deal? It's
hard to admit that we've wrongly invested our resources so focus instead on the opportunities you could
pursue if you leave this negotiation unfinished. Finally, with confirmation bias we look for, recall, and
prioritize information that agrees with our perspective, but downplay evidence to the contrary. It's
wishful thinking because we want something to be true, we pick out information that tells us we're right.
Confirmation bias keeps negotiators from considering possible road blocks and pushback. To fully
prepare for a negotiation, actively look for evidence against your side. For example, look at your
competitor's offerings. Ask yourself why their customers would be satisfied. Then examine your products
and reputation to see where others might have concerns. Remember our bat and ball question? Well,
the correct answer is the ball cost five cents. If we let them, our mental shortcuts can get in the way of
logical thought. Understanding your biases and consciously avoiding them can make a big difference in
your negotiation success.
What is a central disadvantage to using Multiple Equivalent Simultaneous Offers (MESOs)?

They require fewer than 2 items in the Bargaining Mix.

*They are time consuming to prepare.

It takes a significant amount of time to prepare to use MESOs effectively.

They set a competitive tone for the negotiation.

They don't help you understand what's important to the other party.

Gao has been trying to finalize a contract with a new supplier for three years. It's been frustrating - and
so time consuming that Gao hasn't had the chance to look for alternative suppliers. But Gao keeps
coming back to the bargaining table. When you ask why, he says, "I've put so much time and energy into
this, I can't walk away now." What psychological trap is Gao experiencing?

Anchoring

Egocentric Bias

Sunk Cost Bias

With Sunk Cost Bias, you keep pursuing a (likely non-productive) course of action only because you've
put energy into it in the past.

Confirmation Bias

Rather than saying, "You'll pay $500 for maintenance", Peter tells his partner, "We will offer you
maintenance on this machine for only $500." What strategy is Peter using?

Setting the agenda

Obtaining information

*Framing as a gain

Using strategic precision

Is it best to be nice or be aggressive when negotiating?

- My favorite character in the Walt Disney movie "Bambi" is Thumper, Bambi's rabbit friend. As a child I
heard Thumper's famous line from the movie all the time: "If you can't say somethin' nice, don't say
nothin' at all." My parents thought it was an important lesson. But was it good advice? Should we be
telling negotiators to be nice? If we're looking for a win-win solution, showing respect and crafting a
relationship are important. But what about a win-lose scenario where the main issue is price? According
to research, being too nice leads to poor economic outcomes. You may think people will return the
kindness, but that's not usually the case. In face-to-face meetings your partner asks fewer questions
when you look too happy. They assume you're satisfied with the progress of the negotiation so they
figure they can turn competitive and ask for more. It's even true in online negotiations. Buyers who are
firm and assertive get better deals. Of course, you can take this too far. I'm not suggesting you become a
negotiating bully. That leads to escalating tension, and if the other party can walk away they likely will.
You need to land somewhere in the middle. It's not necessary that the other party like you, but they do
have to be comfortable talking to you. To gain respect you need the right mix of forceful and friendly.
Here are some tips to find that balance. Use smalltalk wisely. Build a connection and try to find
something you can reference in a followup conversation. But don't go too far. Some negotiators are so
eager to build rapport they offer unnecessary gifts or make concessions before talks even begin. I
remember a potential vendor who saw a hockey trophy in my office during his first visit. He immediately
offered me very expensive tickets to an upcoming game. It was nice, but it also made him look desperate
for my business. I didn't respect him as much. Ask good opening questions. Try two things. First, confirm
what you know about the other party's needs. This shows you've done your homework. Second, rather
than what, ask why. Phrase respectfully. Why questions move the conversation away from competing
over price and toward an exchange of information and ideas. And don't forget to reciprocate. Provide
your own explanations too. Next, frame the discussion as problem-solving. Think of it as two people
working together to solve a problem rather than two people arguing. Make the other person your
partner, not your opponent. Finally, show confidence in your offer. No apologies and no immediate
concessions. State your position calmly and firmly. Too many negotiators get nervous when money is on
the table. They think making quick concessions will show goodwill. Don't give price any special
treatment. It's just part of the overall package you need to discuss. Let's take a look at a negotiation and
see if you can spot some of these strategies in action. - [Taylor] Jorge! Hi! - Taylor! How are ya? - I'm well,
it's good to finally meet ya after chatting on the phone. - Good to finally meet you two. Any traffic out
there? - Eh, traffic's never great, but I'm listening to a pretty good book in the car so it went by fast. - Is it
a book you'd recommend? - Yeah, it's about the power of artificial intelligence. I'll send you a link if
you're interested. - Yeah? That would be great. So let's go ahead and talk about the equipment that we
discussed. - Right. We talked about delivery every three weeks. 100% quality guarantee. This is looking
like a two-year contract. Is that still right? - Yeah, that's correct. - Great. And we also talked about co-
branding. I'd like to learn more about why your customers prefer the certain features that you specified.
And with those specifications we're looking at an at-unit price of 240 Euros. - Yeah, that's still way too
high. - Okay. Well, let's figure this out. So what would you say your expectations are from your
customers? - Taylor's found the right mix of friendly and confident. He wants a good relationship with
Jorge but that doesn't overcome his desire to be a respected negotiation partner. Oh, there's one more
thing to point out. Did you see Taylor initiate a handshake at the beginning of the meeting? This may
seem minor, but research says it's important. People expect negotiation partners who shake hands to be
more cooperative and honest. But how you shake hands matters. Not too weak, not too strong. A firm
handshake communicates credibility. So rather than thinking of yourself as a nice or a mean negotiator,
let's try some other words: professional, trusted, confident. With this approach you'll get both solid
relationships and better outcomes.

Is it best to be nice or be aggressive when negotiating?

- My favorite character in the Walt Disney movie "Bambi" is Thumper, Bambi's rabbit friend. As a child I
heard Thumper's famous line from the movie all the time: "If you can't say somethin' nice, don't say
nothin' at all." My parents thought it was an important lesson. But was it good advice? Should we be
telling negotiators to be nice? If we're looking for a win-win solution, showing respect and crafting a
relationship are important. But what about a win-lose scenario where the main issue is price? According
to research, being too nice leads to poor economic outcomes. You may think people will return the
kindness, but that's not usually the case. In face-to-face meetings your partner asks fewer questions
when you look too happy. They assume you're satisfied with the progress of the negotiation so they
figure they can turn competitive and ask for more. It's even true in online negotiations. Buyers who are
firm and assertive get better deals. Of course, you can take this too far. I'm not suggesting you become a
negotiating bully. That leads to escalating tension, and if the other party can walk away they likely will.
You need to land somewhere in the middle. It's not necessary that the other party like you, but they do
have to be comfortable talking to you. To gain respect you need the right mix of forceful and friendly.
Here are some tips to find that balance. Use smalltalk wisely. Build a connection and try to find
something you can reference in a followup conversation. But don't go too far. Some negotiators are so
eager to build rapport they offer unnecessary gifts or make concessions before talks even begin. I
remember a potential vendor who saw a hockey trophy in my office during his first visit. He immediately
offered me very expensive tickets to an upcoming game. It was nice, but it also made him look desperate
for my business. I didn't respect him as much. Ask good opening questions. Try two things. First, confirm
what you know about the other party's needs. This shows you've done your homework. Second, rather
than what, ask why. Phrase respectfully. Why questions move the conversation away from competing
over price and toward an exchange of information and ideas. And don't forget to reciprocate. Provide
your own explanations too. Next, frame the discussion as problem-solving. Think of it as two people
working together to solve a problem rather than two people arguing. Make the other person your
partner, not your opponent. Finally, show confidence in your offer. No apologies and no immediate
concessions. State your position calmly and firmly. Too many negotiators get nervous when money is on
the table. They think making quick concessions will show goodwill. Don't give price any special
treatment. It's just part of the overall package you need to discuss. Let's take a look at a negotiation and
see if you can spot some of these strategies in action. - [Taylor] Jorge! Hi! - Taylor! How are ya? - I'm well,
it's good to finally meet ya after chatting on the phone. - Good to finally meet you two. Any traffic out
there? - Eh, traffic's never great, but I'm listening to a pretty good book in the car so it went by fast. - Is it
a book you'd recommend? - Yeah, it's about the power of artificial intelligence. I'll send you a link if
you're interested. - Yeah? That would be great. So let's go ahead and talk about the equipment that we
discussed. - Right. We talked about delivery every three weeks. 100% quality guarantee. This is looking
like a two-year contract. Is that still right? - Yeah, that's correct. - Great. And we also talked about co-
branding. I'd like to learn more about why your customers prefer the certain features that you specified.
And with those specifications we're looking at an at-unit price of 240 Euros. - Yeah, that's still way too
high. - Okay. Well, let's figure this out. So what would you say your expectations are from your
customers? - Taylor's found the right mix of friendly and confident. He wants a good relationship with
Jorge but that doesn't overcome his desire to be a respected negotiation partner. Oh, there's one more
thing to point out. Did you see Taylor initiate a handshake at the beginning of the meeting? This may
seem minor, but research says it's important. People expect negotiation partners who shake hands to be
more cooperative and honest. But how you shake hands matters. Not too weak, not too strong. A firm
handshake communicates credibility. So rather than thinking of yourself as a nice or a mean negotiator,
let's try some other words: professional, trusted, confident. With this approach you'll get both solid
relationships and better outcomes.

Gender and negotiation

- Are men better negotiators than women? Is it true that women don't ask for salary increases? The
answer is no, but it's complex. It depends on how strongly people watching the negotiators have
stereotypical expectations based on gender. So for example, if a woman who negotiates aggressively is
seen as violating traditional gender norms, they would be evaluated as competent, but not likable. That's
called the double bind. And while the world is definitely making progress, this reaction is still pretty
common across the globe. Your gender identity goes with you into negotiations, but research offers
some tangible suggestions for taking gender off the table. Let me share a few of them with you. First,
clearly identify negotiation situations. Men and women are evaluated more positively when negotiation
behavior is expected. When buying a car where most people negotiate, all genders bargain at the same
rate and are evaluated the same way. Bu for a more ambiguous situation, like requesting a discount from
a supplier, those with traditional gender stereotypes punish women for asking for more, and men for
being too aggressive. So let people know that you intend to negotiate. When you schedule a meeting,
call it a negotiation. Respond to a job offer with, "Thank you so much, and I'm excited by this
opportunity. Before we schedule a time to negotiate, can you tell me if anything in the offer isn't
flexible?" When you tell people to expect certain behavior, they're less surprised when it happens, their
reaction to gender role violations isn't as strong. Second, use relational accounts. This strategy
legitimizes negotiation by framing the request as good for the organization or justified by a personal
relationship. So you'd approach another manager in your company and say, "I know we're all
understaffed right now, but I need two of your engineers to join my project group for three weeks. I've
got a rush order from our biggest client. I'll assign two of my people to you when my project is done. If
we work together, both clients can get our best work." You also benefit from adopting aggressive goals.
The benefits of goal setting are robust. People who set high goals routinely achieve more. In negotiation,
there are two ways goals can work. You can aim high and strive for an aggressive reward, or you can
focus on achieving the minimum acceptable outcome. Focus on the best possible deal rather than the
lowest acceptable outcome. Another way to minimize the effect of gender is to focus on other things you
have in common with your negotiation partner. Talk about other things you're comfortable sharing.
Maybe you're a fan of the same sports team or from the same region or went to the same school. Talking
about similarities helps people focus on what you have in common rather than how you're different. The
good news is that we're less hampered by gender stereotypes every year, and we're on track to eliminate
biases in the future. But until we get there, remember ways to empower yourself and others to become
strong negotiators, regardless of gender.

To minimize the effect of gender during a negotiation, what should you do?

*Clearly call the bargaining situation a "negotiation."

Focus on gender differences.

Ignore personal relationships.

Set conservative goals.

Which of these strategies is LEAST likely to help you be effective when negotiating?

framing the discussion as problem-solving

being confident in your opening offer

*being nice throughout the negotiation

*Being too nice is linked to lower economic outcomes.

asking good opening questions

Your negotiation is going poorly, and you feel yourself getting really angry and defensive. What's your
best course of action to control your emotions?

Stay seated.

Use a commanding voice to express your anger.

*Take a 20 minute break.

Focus on small details of the negotiation exchange.

Conclusion
Experimenting with strategies

- In his book "Outliers" Malcolm Gladwell suggests it takes 10,000 hours of practice to become an expert
at something. Josh Kaufman, author of "The Personal MBA" was a little less ambitious. He says you can
go form knowing nothing to being pretty good in about 20 hours. Whatever skill level you seek, practice
is essential. The more you do, the more skilled and comfortable you become. But it isn't always obvious
how to practice negotiating. To develop your skills away from the bargaining table, try these strategies.
First, engage with salespeople. These opportunities aren't hard to find. Lots of people want to sell you
things. As you listen, practice empathy. What feature of their product is most important to them? Are
they excited about what they're selling? How interested are they in really connecting with you? Then,
negotiate. If you're offered a low interest rate, ask for 0%. See if a two month warranty can be extended.
Practice asking, and if you're turned down, work to understand why. Second, regularly ask questions. A
skilled negotiator asks more than twice as many questions while bargaining. Develop the habit of
checking your assumptions. Showing genuine curiosity can open great learning opportunities. Third,
brainstorm best outcomes. Let yourself be creative and consider possibilities. See what happens when
you trade off two unrelated issues, like payment terms and product color. List as many options for each
thing on the table as you can. When you start thinking about the bargaining mix creatively, you're a lot
less defensive about a particular position. You can answer questions and discuss alternatives more
openly. Fourth, talk to other negotiators. Use them as mentors and colleagues. Share stories, talk about
possibilities, and ask questions. Negotiation is as much art as skill, so we can learn a lot from different
perspectives. I encourage you to use the Q&A forum for this course as a starting point. I'd love to engage
with you there, to hear your thoughts and your questions about the course. Fifth, reflect on your
performance. After each negotiation, think back about what went well and what you might change next
time. Where did you improve? Did you challenge yourself? The continual process of planning,
negotiating, and reflecting is a proven way to develop your skills. One of my favorite things about
negotiation is there's always something new to learn. Keep reading, continue practicing, and don't ever
stop negotiating.