Limitations to Negotiation: Part I

Negotiation is a tool.  Like all tools, it has some strengths and it has some limitations.  Negotiation may be the first tool you reach for, like that can of WD-40.  But there are times when WD-40 is not the best tool.  For instance, the solvents in WD-40 will wash away the lubricating oils in your door locks and will hasten malfunction.  Light oil like 3-in-1 oil, or ATM fluid or motor oil will protect the locks in your vehicle's doors.

Limitations:

• Risk seeking due to "framing" parameters as loss function  (Prospect theory)
• Poor calibration   (over confidence) in judgment
• Lack of empathy (atrophied perspective)
• Sunk costs driving escalation
• Emotional investment due to early, public "demands" (Loss of face)
• No pain, no gain
• The mythical fixed pie

 

Low Hanging Fruit

I am going to discuss the three last limitations first because I see them as low hanging fruit.

 

The mythical fixed pie

Imagine Mrs ERJ and I are looking at a cherry pie.  Mrs ERJ likes the crust and a bit of flavor...more like a tart than a traditional fruit pie.  I like the filling...more like pudding or a fruit cup.  It is possible for us to both have the entire pie....at least the parts we really care about....if we talk about it long enough to learn the other party's preferences.  She can have all the crust and I can get most of the filling.

This phenomena was been documented  by Mother Goose in 1765 as the nursery rhyme Jack Sprat.  Negotiating parties having complementing value profiles is not new.

Not every negotiation resolves this cleanly.  But it is surprising (depressing) how often one of the parties will see only one path to get what they want.  So they lock onto and fixate on the one, first solution that satisfies their needs.

Given enough time and patience and trust, it is sometimes possible to back away from their pre-canned solution and comb out their requirements.  Perhaps, working together, it will be possible for each party to get more than half the pie.

No pain, no gain

Suppose two months before a contract expires the to lead negotiators go to a nice restaurant and came to an agreement over potato skins and a couple of draft beers.  Would their masters accept that agreement?

Nope.  The perception is that too much was "given away" because there was not enough pain involved.

The negotiators have to be locked into a room.  Deadlines have to loom and pass.  Extensions given.  Picket lines walked.

The negotiators have to show scars on their knees where they crawled over miles of broken glass.

The haggard negotiators have to go back to their masters, and strained of face and pale of lips, must say, "There is no more to be had."

A vote will taken and passed.

And the agreement might be one scintilla, a fraction of an iota better than the two beer agreement.  It will also be several hundred pages longer and require three years of study to understand.

Loss of face

One never gets more than what you ask for.

So both parties will make "demands" that have a great deal of "reach" knowing, intellectually, that a great deal of discounting will happen on both sides of the table.

The problem occurs when the "demands" are made public.  The demand becomes the baseline or the set point.  All movement will be measured from that initial "demand".

Example:  Suppose Labor is making $10/hr.  Suppose that a "reasonable" settlement would be $12/hour based on inflation and productivity improvements.  Labor might demand $14/hr.  On the other side of the table, Management reviews the competitive landscape and looming legislative burdens and may want to hold the pay rate at $10/hr to provide some financial wiggle room.

So even though Management might be able to support a pay rate up to $12.50/hr and Labor might settle for $11/hr (inflation), there are likely to be protracted and acrimonious negotiations because the demands create stark Win-Lose metrics for the respective constituencies.

Summary for these three limitations:

Focus on your needs and requirements rather than pre-packaged solutions.  That is, invest in knowing what you want.  There is a lot of power in self awareness.

The first 15% spent negotiating throws the longest shadow.  Go in prepared because the last 85% cannot redeem a botched, first 15%.

Don't make it look too easy.  Don't expect it to be too easy.

Keep your mouth shut.  Yes, it is natural to seek moral support by sounding out your friends.  Just be aware that you just made your job harder because you narrowed the alternatives.  It is like driving on a limited access freeway with concrete retaining walls.  You all packed in with no place to go when traffic stops.