Historically, by giving someone something, they felt a social obligation to reciprocate. Maybe today with friends and family, this still does work. But in business it counts for nothing.
Today's Shrinking Margins
Maybe it's because of shrinking margins or commercial desperation. As margins get tinier there's more pressure to maximize them. Suddenly, negotiating an extra quarter point or half point can be the critical difference between being successful and being under water. But our cultural instincts have not caught up yet to the seriousness of the matter.
American's Are Terrible Negotiators
There hasn't been any real research done in this area, so it's not entirely clear as to why. There have probably been about 500 theories raised, including impatience, fear of conflict or failure, geographic isolation, and our Puritan ethic. Americans find the whole topic of negotiation very stressful and tacky
A Few Simple Rules
When negotiating, always trade concessions. This is crucial in terms of the other side saving face. Get in the habit of saying, "Okay, but if I agree to this, I need this from you," or "If I agree, then I can't do this other thing we talked about."
Another important rule is not to put the final price on the table at the beginning of the negotiation. Why not put out a higher price? Some people worry that you're lying if you ask for more than you expect. But if you say "I would like X amount," even if you don't expect to get it, that's being honest. Don't say, "I have to have this. This is the bottom line." That will hurt your credibility, especially if you back down eventually.
It's also important to treat all the issues as a package. If a person closes the door on each part of the negotiation, they are bleeding leverage all the way along. They should be able to reopen any issue until they get an overall package in place that they are happy with. Our instinct is to settle point one the move on to point two. But this is dangerous. A lot of the rules are counterintuitive. But once they are practiced a few times, it becomes more comfortable.
For all the rules of negotiating read Negotiate to Win by James C. Thomas, Jr.
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