Bargaining for Advantage

"Every minute you’re not negotiating skillfully is an opportunity cost," says Richard Shell, chair of the legal studies department at Wharton and author of a book that takes its name from Wharton’s Executive Negotiation Workshop, Bargaining for Advantage. "We are all tempted to compromise in negotiations and this may be the right move, but compromise may not be the optimal result when many issues and needs are on the table."

"Cooperative people seem to think they have to make concessions to get goodwill," Shell adds. "But those are two separate issues. There is integrative bargaining where your goal is to get the best result for both sides. But there is also distributive bargaining where the issue is how to divide the pie best. The manipulative negotiator moves one millimeter and expects an inch in return. So sometimes, when you are faced with a competitive counterpart, the best defense is a good offense."

"Test, probe, set the standards, determine if there’s going to be reciprocity," Shell advises. "Check yourself when someone triggers a feeling of obligation in you to be sure you’re moving in incremental steps."

One technique Stuart Diamond endorses is constant practice in all sorts of consumer and personal interactions. He stresses that negotiators should begin with close attention to detail. When you call a toll-free number for customer assistance, for example, Diamond advises that you learn the name of a customer service agent. Write down that name and, if the agent is willing to help you, don’t let him or her transfer your call to an unknown person. Ask your contact to stay on the line with you and make that person your ally.

Diamond, a practice professor at Wharton is also president of his own firm, Global Strategy Group. He uses the tools he teaches every day. "Having the proper training in negotiation is like having the key to a castle’s 200-pound door. A tool, like asking the right questions, can be a very small thing. But with the tool you can unlock a very big door. Without it, you’ll never get in," he says.

An important first step in negotiations is knowing yourself, so participants in the Bargaining for Advantage program complete an evaluation that identifies their personalities and negotiating habits. Identifying whether you are likely to compromise, accommodate or become aggressive in a negotiating session helps you compensate for possible weaknesses and begin scouting your counterparts. The goal is not to find a one-size-fits-all negotiating place but to select the optimal strategy for each situation.

Lars Magnusson, a technical manager with Swedish Defence Material in Stockholm, attended the workshop in May and says he hadn’t thought much about how he was perceived in a negotiation. And he hadn’t considered the strategy of researching others before beginning talks. That changed once he was paired with someone who acted very differently than himself, he says.

Shell and Diamond purposefully match participants with partners based on their personal styles—some who are much like themselves and then others who work quite differently. They are also encouraged to experiment with new behaviors and note the results. Knowing what puts other people at ease, which topics excite them and how to read non-verbal cues are all critical pieces of information gathered during negotiations, Diamond says.

"There’s a natural tendency to lean back when someone else leans in toward you. Fight that impulse and lean in. People will trust you more," he says. "Eye contact and body language are also important. The more you know, the more you can affect the process," he adds.

As someone who negotiates $500 million in real estate transactions in a year, workshop alumnus Wayne R. Crosby III looks for any advantage. Crosby is chairman of Resort Property International of Naples, Florida. Having the chance to test out several strategies—as the amiable compromiser one day and the hardnosed combatant the next—gave Crosby a broader understanding of how to seal a deal during a week of intensive negotiation training. It also proved profitable.

"On the fourth day of the class," says Crosby, "I applied a lesson I learned to close a major acquisition for a property in the $75 million range. There were several suitors for this parcel, but we reconsidered our position and had the seller spell out what his goals were. Then we worked on meeting his needs. Putting his needs first was the grease that helps get things done.You both become partners trying to reach a goal." Another key strategy Crosby picked up was being sure to talk to the right person. Bargaining with someone who lacks the authority to act can both waste time and benefit an adversary.

"We don’t want people to leave until they have either solved or started solving the real problems that brought them here," Shell emphasizes.

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"Bargaining for Advantage" Knowledge@Wharton, [July 23, 1999].
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