Negotiating Tips, Negotiation Strategies, Business Negotiation October 4, 2010

Are you threatening me?

Using threats in a business negotiation is a common tactic, and one that Dr. Chester L. Karrassdoes not like. He writes:

I am against threat. It can create an out-of-control situation. Threat leaves a trail of hostility that does not erase easily. It may work, but the price is too high. There are better ways to make your point.

However, Dr. Karrass writes that “negotiation involves a degree of threat by its nature.” If you are going to use threats in your negotiation in order to extract concessions, then bear the following in mind:

• Threats are made more credible by escalation: If you carry out smaller threats, the other party will believe that you will carry out larger threats too. The key is that the other party must believe that you will carry out the threat.
• Threats must be scaled to the size of the problem: Using too big a stick will end up beating the other party to a pulp.

Writing in the Harvard Business Review, Deepak Malhotra gives six tips for making your threats credible. He advocates:

1. Increase your costs for not following through on your threat
2. Make your threats public and visible so you can’t retreat from them
3. Incur some costs upfront to indicate your seriousness
4. Delegate your authority in a negotiation to appear to be less personally invested
5. Create a reputation as someone who follows through on threats
6. Leverage future consequences

Malhotra sums it up like this: “As many of the strategies suggest, sometimes the best way to make your threat credible is to act in a way that would normally be considered irrational.” Read the article here. If you are faced with a threat, there are countermeasures you can take:

• Protest to a higher authority
• Prove the threat can’t hurt you
• Be obstinate or even irrational, showing you can suffer regardless of the consequences
• Show that the other party has more to lose if the threat goes through

Do you use threats as a tactic? How has it worked for you? If you have been threatened, how did you respond?