Making and Managing Concessions
- During Bargaining you must make concessions
- You have to give to get
- You must manage your concessions
- Give value, but don't rush
- Send the right message
- Create a sense of satisfaction
- Link concessions and keep trades provisional
- Give value but don't rush
- Never make a concession without conditions
- Making a concession without conditions can damage your credibility
- Give good news in chunks
- Give bad news all at once
- Avoid big moves
- Make progressively smaller concessions
- Avoid predictability
- Keep trades provisional
During Bargaining you must make concessions. The essence of bargaining is that you have to give to get. The whole reason you are engaged with another party is because you have something they consider valuable that addresses their interests, and they have something you consider valuable because it addresses your interests.
More importantly, you must manage your concessions. The way in which you make concessions – your management of concessions -- is what gives the other side a sense of satisfaction from bargaining. You want them to reach the end of bargaining with the satisfaction that they have created and captured value, and negotiated the best possible solution given all the circumstances.
There are three essential components to ensuring satisfaction – yours and theirs:
- Give value, but don't rush
- Send the right message – and create a sense of satisfaction
- Link Concessions and keep trades provisional
Giving value means that you understand the other side's interests, and you offer them solutions that address those interests. Keep in mind these nuances when giving value:
- Give value, but don't rush.
When you are too quick to give, the other side may perceive that the offering must be low cost to you and leaves them free to ask for a great deal more.
- Never make a concession without conditions.
Getting something in return for your concession is critical. Making a concession without conditions can damage your credibility. If you express a position, then move off that position and get nothing in exchange, what does that say about your original position? It was invalid. The other side now questions any subsequent position you take.
- Give Good News in small chunks; Give Bad News all at once.
Send the Right Message
Actions speak louder than words, and your trades send messages. Make sure that the message you are sending is your intended message.
Avoid big moves.
A common mistake is to jump right from your opening position to your goal within one or two moves. Big moves send one of several messages, none of which is typically intended:
- Your opening position was not justifiable;
- You can keep making big moves; or
- There is much more to gain.
Make progressively smaller concessions.
By making progressively smaller concessions, you can accomplish several things:
- Demonstrate to the other side that you are at or close to your Least Acceptable Agreement. Instead, you are closer to your goal;
- You can extend the negotiations with your small moves and thereby have additional opportunities to make proposals and get concessions; and
- Progressively smaller moves prove wrong any assumption by the other side that you have more to give.
Keep in mind these nuances when making progressively smaller moves:
- As a general rule, each concession should be smaller than the previous concessions.
- An effective way do this is to use the Rule of Halves: each subsequent concession should be half way between your current position and your goal. The Rule of Halves can work for intangibles as well as numeric data (price, time, specifications, ratings, etc.)
You open at 100 with a goal of 200
100. . .150. . .180. . .200 agreement!
Avoid predictability in your concession pattern.
As with any concession pattern, don't reveal your pattern by being exact, and therefore predictable. And when numbers are involved, whether units or money, where appropriate begin using other than round whole numbers the closer you get to your goal.
Keep Trades Provisional
All concessions should remain provisional pending a total agreement. Use BNP 14: The "Negotiated Yes", or "Yes if….." on both single items and with regard to reaching agreement on other issues as well.
- Summarize early and often – BNP 20. We introduce this BNP in the Conclude stage because it is critical at agreement time, but summarizing, both verbally and in writing throughout the exchange of concessions is helpful in ensuring that all parties know what options are off the table, still available, what has been exchanged for what and why.
"Start High" Concession Patterns
LAA = 150
"Start Low" Concession Patterns
LAA = 250
In both examples, concession pattern "E" uses the Rule of Halves and is the preferred approach.
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