Kelman: Smart negotiating
A new book presents research-based insights on how you can become a better negotiator
Books and articles on negotiating are staples of academic research and airplane reading. The airplane reads are often short on evidence and long on exaggerated claims. Academic research is normally inaccessible to the lay reader, and its implications for practice are sometimes unclear.
An exception is a new book, “Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond” by Deepak Malhotra and Max Bazerman, faculty members of the Harvard Business School. Malhotra and Bazerman provide practical, easily readable guidance based on academic research about decision- making and decision-making biases, particularly during negotiations.
A short column can hardly do justice to the richness of this book, so my advice is to get yourself a copy. But I’ll whet your appetite with some highlights. Contingency contracts are a great solution to many negotiating problems.
When different offers reflect genuinely different judgments about what is likely to happen in the future — for example, about when inflation will increase — those differences can often be handled through a contingency contract that stipulates different payouts, depending on what happens in the future. An economic price adjustment clause is one example, but the same technique can be used in many circumstances more than it is now.
In addition, the authors point out, if the other party states that its offer is based on a certain view of the future and then refuses to accept a contingency contract, you’ve learned that the party was trying to deceive you with the original argument. Introducing additional issues is often a good way to create value.
If you’re only negotiating on one factor, such as price, the negotiation will be only a contest of will or skill to claim as much of the pie as possible. Negotiating about multiple issues provides an opportunity to expand the pie by trading off something you don’t value highly, but the other party does, against something with the opposite features. Negotiation is an information game.
The authors emphasize the value of something obvious that is often ignored: the more you learn beforehand about your party’s and the other party’s options and values, the better you can negotiate. They wrote, “if the other party perceives that you have done your homework, their willingness to deceive you decreases.” Developing negotiating skills is important for the government’s contracting workforce.
In the Office of Federal Procurement Policy’s recent workforce survey, contracting officials identified more training in negotiating as a priority. One effect of employee shortages is that the government has less time available to negotiate.A lesson in Negotiating 101 is that the party under the greatest time pressure is at a disadvantage in negotiations.
Finally, negotiating skills are the kind of business skills that can’t be defined in a rule and still leave room for contracting employees to use their brains, which is what the government must let its young hires do if it expects to retain them as employees.Kelman is professor of public management at Harvard University’s Kennedy School of Government and former administrator of the Office of Federal Procurement Policy. He can be reached at steve_kelman@ harvard.edu.