Negotiation Tactics: The Continually Beneficial Concession
In the world of business negotiations, every move counts. A small gesture, often referred to as a token concession, can make a significant impact, according to Harvard Business School professors Deepak Malhotra and Max H. Bazerman in their book Negotiation Genius.
A token concession could be as simple as sharing doughnuts and coffee with your counterpart or allowing them to choose the time and location of the first negotiating session. These seemingly insignificant acts can be powerful tokens that foster a sense of goodwill and can potentially lead to reciprocal concessions from the other party.
Malhotra and Bazerman suggest dividing a price concession into two or more smaller parts rather than offering one large concession at once. This tactic is based on the insight from Tversky and Kahneman that people tend to prefer losing money in one lump sum but gaining money in installments. This strategy can make the concession more palatable and effective in negotiations.
When asking for a concession, Malhotra and Bazerman recommend making one clear demand instead of multiple partial demands. This strategic framing helps to improve negotiation outcomes.
The Program on Negotiation at Harvard Law School offers a FREE special report on negotiation skills for those interested in learning more about this topic.
The impulse to return a favor, known as reciprocity, plays a crucial role in business negotiations. If you offer a concession, even a token one, the other party is likely to feel a powerful drive to reciprocate with a concession of their own.
In a real-world experiment, a national trade association found that offering a token concession (a dollar bill) led to a higher response rate in a member survey compared to offering a financial incentive. The token concession was perceived as a unilateral, token concession, or gift, which led to a strong sense of reciprocity among the recipients.
However, it's important to remember your code of ethics to avoid offering a token concession that could be perceived as a bribe. Offering a token concession with the goal of generating goodwill rather than any particular concrete reward can be more effective.
Before offering a token concession, consider what the other side wants to increase the likelihood of reciprocation. Agreeing to a small request made by the other side can also be a token concession.
When crafting a token concession, it's helpful to explain why you are offering it before your counterpart accepts. This transparency can strengthen the bond between negotiators and foster a sense of mutual understanding.
In business relationships, a token concession can be a strong motivator of reciprocal behavior. By understanding the power of token concessions and using them strategically, negotiators can potentially achieve their negotiation goals more effectively.
- In business negotiations, offering a token concession, such as agreeing to a small request or sharing doughnuts and coffee, can foster a sense of goodwill and potentially lead to reciprocal concessions from the other party.
- When crafting a token concession, it's helpful to explain why you are offering it before your counterpart accepts, as this transparency can strengthen the bond between negotiators and foster a sense of mutual understanding.
- The Program on Negotiation at Harvard Law School offers a FREE special report on negotiation skills, which includes insights on effectively using token concessions in business negotiations.
