Negotiated Concession Providing Ongoing Advantages
A token concession can be a powerful tool in business negotiations, acting as a small, symbolic gesture that demonstrates flexibility and encourages reciprocation without compromising key deal points.
In a negotiation, concessions should be strategic and ideally traded rather than freely given. Even small concessions can influence the dynamics and outcomes positively by encouraging the other party to also make concessions. Token concessions help create a collaborative atmosphere, especially in distributive negotiations where value is fixed, and parties haggle over shares.
Examples of token concessions include slight price reductions, adding small-value extras, agreeing to minor deadlines adjustments, offering to absorb some small non-monetary costs, granting slightly better payment terms, and conceding on a minor contract clause. In enterprise contract negotiations, concessions may also involve clauses such as offering "true-up/true-forward" mechanisms.
Research has shown that token concessions can be particularly effective. In a real-world experiment, a national trade association sent a questionnaire to three groups of members. One group received no incentive, another group was promised $50, and a third group received a dollar bill along with the questionnaire. The response rate was highest for the group that received the dollar bill, demonstrating the motivating power of even a small token concession.
It's important to remember that the usefulness of a token concession depends on the negotiation context, the relationship between parties, and having clear limits to avoid unwanted significant sacrifices. In business relationships, it's crucial to adhere to the code of ethics to avoid a token concession being perceived as a bribe or unfair.
Offering a token concession with the goal of generating goodwill rather than any particular concrete reward can be more effective. For instance, allowing the counterpart to choose the time and location of the first negotiating session can be a strong motivator of reciprocal behavior.
Effective leadership and communication skills are closely linked to power in negotiation. Emotional intelligence also plays a significant role in negotiation, as it helps in understanding and managing emotions during the negotiation process.
For those looking to improve their negotiation skills, the Program on Negotiation at Harvard Law School offers a free special report on negotiation strategies and techniques.
In summary, token concessions are effective when used strategically to prompt reciprocal concessions and advance negotiations without compromising key deal points. They work best when carefully prepared and linked to gaining something in return or shifting the negotiation dynamics positively.
- Effective leadership and communication skills are vital in business negotiations, underpinned by emotional intelligence that helps manage emotions during the process.
- In enterprise contract negotiations, concessions may involve clauses such as offering "true-up/true-forward" mechanisms, which can be a token concession that encourages reciprocation.
- Offering a token concession, such as allowing the counterpart to choose the time and location of the first negotiating session, can be an effective strategy for generating goodwill and prompting reciprocal behavior.
- To enhance your negotiation skills, you might consider the Program on Negotiation at Harvard Law School, which offers a free special report on negotiation strategies and techniques.
