Monday, August 15, 2011

New psychology of negotiating: never argue

When I bought my first house I remember standing on the sidewalk gnarled by roots of large shade trees, and explaining to the seller's agent why my offer was lower than the asking price. I had a long list of reasons defending my position and ended with, "Look at the sidewalk. It has issues. It's the owner's responsibility to fix them. This is going to cost me a lot."

I was young, I was defending my position in the lamest, most obscure way possible. We settled closer to their price than mine.

Later on in the closing process, I honed my real estate technique when I asked the escrow officer to make the paperwork I was about to sign available to me 24-hours before she expected me to sign it. I'd read all the little pamphlets and learned that state law gave me that right. I'm so glad it did. I discovered the escrow company had received a verbal from the sellers agent to charge me for the oil left in the tank. I called the oil company and learned I could buy oil from them cheaper than what the seller was charging me.

I pulled out the earnest money document and scoured it to see if I had agreed to the oil purchase. It stated that any oil left in the tank belonged to the buyer: me. I figured the seller could pump it out and re-sell it the oil company.

I alerted the escrow company. We worked it out. They left the oil.

What would have given me a better price at the beginning, I wonder now. A glimpse at a recent psychology study demonstrates that the negotiation process evolves into a struggle when the discussion reduces into arguing or positioning.

Art Markman, Ph.D., writes in his post When You Negotiate, Don’t Argue, that the initial offer in a negotiation is called an anchor. The anchor gives the negotiation process a framework and whoever defends the framework is likely to be the loser.

Yes, you may be right. Yes, you may have all the right reasons. But you may be wrong to share them. Think if that has ever happened to you at work.

A former co-worker used to say, "The first one to speak loses." He would craft a proposal, walk his prospect through it, and end by asking a question. He waited any length of time until the prospect to spoke. He was a top salesperson.

When we defend our position counter-arguments are created in the head of the person we're trying to convince.

Instead of trying to negotiate where we agree, our brains try to come up with all the reasons why we disagree. This puts the focus on the wrong anchor. That's when it becomes really hard to move a process forward, to get things done, to cheer on the same team, to 'get on the same page.' That's why we say, 'They threw the anchor in.'

Markman says, "Each side wants to get the best deal, and so they treat every piece of information given by the other party with skepticism." He says that our arguments are seen as "flawed" and that they are not successful at persuading the outcome of a negotiation. His recommendation is to anchor the process by making the first offer, "However, after you make that initial offer, resist the temptation to give reasons to justify that initial bid."

When has keeping silent saved you money, or saved your job?