1. COMMON MYTHS, MISCONCEPTIONS
AND PITFALLS IN NEGOTIATIONS
GROUP THREE:
Benson Sibanda
Theophilus Manyumwa
Edwin Shumba
Roy Mabaudi
2. Misconception #1 A Best Alternative to a Negotiated Agreement (BATNA) is
a number.
While the term “BATNA” has been popularly used, people still get it wrong.
BATNAs are not numbers, bottom lines, or walkaway points. Rather, a BATNA is a
scenario or situation. It’s your next best option if no agreement is reached.
Your BATNA informs your reservation value or “walkaway point.” But these terms are
not synonymous. You can’t determine where your true walkaway point lies until you’ve
thought hard about your BATNA. And you always have a BATNA, even if it’s uncertain,
complicated, probabilistic, or god-awful.
But developing a sound negotiation strategy means considering your own BATNA as
well as your counterpart’s. Carefully considering the other side’s BATNA provides a
standard for decision making in terms of what one side will accept or reject in the
negotiation. A counterpart’s weak or uncertain BATNA can give you leverage, even
when your own BATNA is weak.
3. As an example, consider a renegotiation between a company and a
consultancy that have worked together for many years. The company
demands that the consultancy reduce its fees. The consultancy considers
what to do. At that moment, the company’s BATNA might be to find
another consultancy that can perform the work at a lower price. But
switching consultancies would involve lost time, money, and risks to the
quality of work. All in all, therefore, the company’s BATNA might not be
very attractive, and their reservation price (or walkaway point) might be
more flexible than their demand suggests. If the consultancy has thought
this through, they might decide to push hard to maintain current prices,
while working to create value in other ways for the client.
4. Misconception #2: You should always make the first offer – and it
should be ambitious.
negotiation trainers give this advice, and it is dangerously incomplete. Yes,
studies have shown that the initial offer in a negotiation serves as an “anchor”
(a psychologically powerful number) that pulls the bargaining range toward
your end (Kahneman, 1992). Yet research has demonstrated that when
negotiators think very carefully about their counterpart’s reservation value and
BATNA, the potential benefits of making the first offer on the outcome of the
negotiation are eliminated (Galinsky & Mussweiler, 2001).
Moreover, there are serious risks in such an approach. The first is that you
may know much less about the bargaining range than you think. Making a first
offer that is quickly accepted may mean that despite being “aggressive” you
actually undershot what was possible. The second is that by being
aggressive, you risk impasse where none was warranted, losing credibility if
you end up settling at a price far away from your first offer and fraying
relationships along the way.
5. Misconception #3: Identifying attractive precedents and
benchmarks will help you persuade the other side to give you
what you want.
The “legitimacy” of a proposal – what makes it fair or reasonable – is almost
always a subjective matter.
Demanding that the other side accept your benchmarks pulls for positioning
bargaining and is meant to claim value.
Conversations focused heavily on legitimacy are a) unlikely to lead to
productive communication and a learning-oriented process that allows the
parties to more easily create value; and b) probably means one side is talking
too much and not listening enough.
Asking questions about the other side’s interests and learning about what is
really important to them is an essential skill in creating value, and doesn’t
mean you have to give anything up.
In many complex negotiations, differences will emerge in how the sides value
different issues and options. By inventing options and discussing possible
trades across differently valued issues, a negotiator can exploit differences
6. misconception#4 You either win or lose in a business
negotiation
This is one of the major myth about negotiations. As anybody who
has studied Karrass knows, negotiations are both must win. A
successful negotiation always works out the best agreement for all
the parties involved.
Misconception #5 Good negotiators are born not made
Absolutely not! Negotiation is a learned skill. You can certainly
improve your negotiation skills by attending a
Karrass Effective Negotiation seminar. Also, the more you negotiate,
the better you will become.
7.
8. Again, the idea that negotiations are fights, where one party
will prevail over the other, is just plain wrong.
Effective negotiators are good communicators.
Negotiation is about persuasion not about arguing.
9. Although there are unethical negotiators out there, lying is
certainly not the way to an effective negotiation.
You don’t have to reveal everything, but you certainly do not
have to resort to lying or other dirty tricks.
10. People like to do business with people they like. If you are not
nice (you play dirty or are backhanded, for instance), the
other party will not want to negotiate with you.
So go ahead and be the nice person. If you have strong
negotiation objectives, a clearly defined strategy and know
your negotiating tactics, you will be able to negotiate
effectively.
11. Benjamin Franklin once remarked that “experience is a dear
teacher,” a saying that has been read as an excuse to learn—
and make mistakes—on the job.
In fact, Franklin was calling experience an expensive way to
learn.
While negotiators test their skills at work, they can harm their
employers in the process.
One prime benefit of simulation-based negotiation classes is
that they allow students to learn from experience in a risk-free
setting.
12. We all take risks, many of them beneficial.
Unfortunately, negotiators often justify risk taking when
they’re acting tough and hoping that the other side will cave.
Such hard-line gambles rarely pay off; your counterpart is
likely to become equally stubborn, and you’ll both miss out on
smart trades.
In our uncertain world, negotiators should take risks only
when the benefits appear to outweigh the costs.
13. While it’s true that intuition can yield novel strategies,
unwavering trust in one’s gut can be extremely costly.
14. Negotiation should always be considered as values add to
both the buyer and the seller.
15. True as it is a science which goes systematic. But more to
understand here is that these steps are not always sure and
certain. Negotiation is situational like chess.
17. When a counterparty makes an offer or a demand, it’s an
easy trap to allow the rest of the negotiation to become
anchored around that starting point.
Good negotiators know this, and will adopt strategies that
seek to widen the parameters of a negotiation.
18. Many people will protest they’re too busy to prepare properly
for a negotiation.
In our experience, the real issue is that people don’t have a
simple framework to turn to for quick and meaningful
preparation.
And, as in most things, “failing to prepare is preparing to fail”.
19. Many negotiators lack a strategy for dealing with “no” and
pushback in negotiation. This can overlook a rich source of
new information, and the opportunity to establish a path
towards creative options
20. You may have done the most thorough homework on facts
and issues, but without the ability to envision an effective
process, you’re at the mercy of your counterparty’s approach.
Good negotiators have the language to talk about and steer
the negotiation process, especially when things aren’t going
as expected.
21. Negotiation can often turn into a race to arrive at a solution.
But expert negotiators slow down the pace and ask enough
questions with the right language and skill to allow them to
get to the real issues.
22. Trying to ‘out-play’ the other party.
It’s all too easy for negotiators to become caught up in
common negotiation myths and to focus all of their energy on
playing games.
Early plays for power and theatrical routines may get the
heart pumping for some, but will often do more harm than
good to the negotiation process.
23. - Commitment to the process is a necessary requirement.
- Failure to assert your position forces the other negotiator to
contend until resistance is met, often making the situation
worse
24. - Commitment to the process is a necessary requirement.
- Failure to assert your position forces the other negotiator to
contend until resistance is met, often making the situation
worse
25. In order to be credible, each commitment must be executed.
It is illogical to harm one’s own interests simply to hurt the
other party.
These types of statements are often made under stress and
are caused by negative emotions.
26. : Generally this problem arises from inadequate preparation
(failure to establish this limit in advance) or misreading how
much an issue or item really is worth in sacrifice.
A wiser approach is to adjust your opening strategy to how much you truly know about the zone of possible agreement, or bargaining range. When you don’t know a lot, start by thinking through BATNAs carefully. Ask questions. Create a ground rule for inventing without committing.
Finally, in distributive negotiations, or situations in which you have to make a bid, open with the highest number or most attractive package for which you can make a reasonable claim.
