THE NEGOTIATOR’S DILEMMA
“Everything is negotiable. Whether or not the negotiation is easy is another thing.”
Creating and claiming value are two of the most fundamental aspects of negotiation strategy that exist in tension with one another. The tension arises over whether one should seek to create value or to claim it and the parties must decide whether to be competitive, cooperative, or some of both.
The best outcome for one person is not necessarily the best for both, but if both pursue their best option, they will often both get the worst outcome. Authors Lax and Sebenius came up with one way to think about strategy in what they call the Negotiator’s Dilemma.
To create value of your claim you need to reveal info about your interests, but revealing your interests can put you at disadvantage in claiming value. Traditionally speaking, there have been two directions a negotiator can take, cooperate or compete.
Knowing whether to compete where interests conflict—claiming more instead of less—or to create value by exchanging the information that leads to mutually advantageous options is at the core of the negotiator’s art.
A negotiator can be “soft on everything”, focusing on maintaining a relationship while making offers and conceding generously. Conversely, a negotiator can go “hard on everything”, insisting on their position, making threats and conceding stubbornly.
It’s easy to imagine scenarios where each of these directions might make sense. Yet, a policy of always being soft is dangerous, while a policy of always being hard runs the risk of not making any agreements and creating bad relationships.
The Negotiator’s Dilemma states four different scenarios:
Great: If you compete and the other cooperates, you will have a great outcome, and the other will have a terrible outcome.
Good: If both you and the other side decide to lay all cards on the table and cooperate, both will have a good outcome.
Mediocre: If both you and your adversary take the offensive and compete, both will receive a mediocre outcome.
Terrible: If you decide to cooperate, while the other decides to compete, you will have a terrible outcome while the other gets a great outcome.
One smart approach to managing this dilemma is to consider what you can reveal. Reveal the nature of those interests, but not the intensity. Share info reciprocally, in bite size pieces.
When creating value, you will build trust and share information while asking questions. You can explore interests on both sides and generate options and packages that make the pie larger. To distribute value, behave in ways that build trust and discuss standards or criteria for dividing up the pie. Pay special attention to follow through by agreeing on monitoring arrangements and making it easy to live up to commitments.
“Good” negotiators insist on claiming a fair share of the value created. And the results of “good” negotiations are where both parties receive a fair portion of the value that has been created.
This is Part 5 of a 6 part series on negotiations. Please see other posts on this subject here:
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