Two More Negotiation Risks to Consider

Another type of negotiation risk that people fear is fear of “rocking the boat”. People who work for large corporations will agree that it isn’t wise to rock the organizational boat. Negotiators have been known to lose their reputations and their jobs for making agreements that second guessers in their own organization thought inadequate.

There is many a buyer afraid to negotiate a low price for fear that the seller may later respond by shaving on quality or delivery. When this happens, management tends to forget the low price and instead questions the business judgment of the buyer who won it.

Never forget that the other party has a lot to lose on a personal level. Their jobs, their reputations, their business judgment, their relationship with others, their commissions, their bonuses, and their next raise are on the line. From a personal standpoint, they may be better off with a poor but easily explained settlement than a better one which has a chance of falling apart later.

Another type of risk that negotiators are afraid of is “fear of losing what one already has”. People would rather forego gains than lose what they already have. For example, most of us are conservative in investing money. We would rather take a low, but secure, interest rate from the bank than put our funds into speculative stocks.

A key human motivation is to control and conserve that which we have striven hard to get.

In business, it works this way. A seller has a steady customer who pays on time. The trouble is that they profit margin on those sales is less than it should be. In a subsequent negotiation with the customer, the seller tries to raise the price, but encounters stiff resistance.

One thing the buyer can count on is that the seller is balancing the risk of losing a small but safe margin against the gain of a higher price. The fear of losing what they have will weigh heavily in their decision.

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