Tag archive: threats-in-negotiation

Threats, bluff and bluster, though risky, do have a place in commercial negotiations.  They have no place in dealing with workplace associates.  Research indicates that those who have the means to threaten tend to use it.  It also shows that threat leaves a trail of hostility that does not fade from memory.  Threats, even when not executed, destroy or jeopardize relationships.  The negative consequences of threats are hard to predict but not likely benign. Sometime in the future, you’ll be tempted to use threats to gain your point in a workplace dispute or disagreement.  Resist the impulse.  The other will never fully trust you again.  They may have the means to counter your threats with worse ones of their own.  I’ve seen this happen with people who threaten lawsuits and later find themselves paying heavy legal fees they never intended to incur. As for lying, if you have ever worked with anyone who lies or seeks to mislead by bluffing, you know how hard it is to believe anything they say.  After a few experiences like that you avoid them as much as possible.  Negotiating with such people is not apt to result in an agreement they will later honor.  Lasting relationships with liars and bluffers is not possible. Another trait that proves difficult in negotiation is dealing with people who conduct themselves in an arrogant or domineering manner.  As a salesperson I have dealt with buyers who stormed into our conference room as though they were above anyone there.  They made it clear that we were subservient to them and in the bargaining room only by their good graces.  All they accomplished by putting us down by their arrogance was to set the stage for paying a higher price than they might have otherwise paid.

The Chinese place a high value on face-saving in both negotiation and everyday affairs.  They try to leave the other a graceful way to retreat from any position taken.  They take the time to frame their opposition in such a way that the other can agree without losing the good regard of associates.  They do this in several ways. The key to leaving the other side a face-saving way to retreat from their position lies not in manipulation or the clever phraseology of a demand or offer.  It rests on conditioning the request for concession or other benefit on the motivations of the concession-maker and the values they wish to achieve. For example, a buyer asking a seller for a further concession or benefit to close a deal might say, “I know from past experience that you are a fair and reasonable person, a person who believes that good business depends on a well-satisfied customer who benefits from the exchange.  Your offer to sell at that price is appreciated but leaves us little room for healthy growth.  We believe a lower price will benefit both of us because it would allow us to sell more to our customers and therefore buy more from you.” The seller who concedes to such a request does so without loss of face. Another way to save face for those they oppose is by handling threats carefully.  When, in the heat of negotiation, they are tempted to threaten someone, they avoid it.  Threat, whether carried out or not, demeans the other.  It treats them like a child.  Threat, not carried out, results in the loss of face for the threatener. On the other hand, when threatened, they respond by making light of it by saying, “You wouldn’t do a thing like that to someone like us.” Such a remark makes it easier for the threatener to later desist with little loss of face. The Chinese, in their desire for social and business harmony, have built strong defenses against dysfunctional disagreement.  Most important are the “QUANXI” tradition that provides family and friendship channels that serve to reduce the level of dissension in business, social and family affairs, as well as the tradition of “saving face,” which allows for gracious give and take, and retreat in place of continued discord.

Threat is implicit in every negotiation, whether it is expressed openly or not.  There is always the possibility of deadlock.  Both parties are there for a reason, and if talks fail they can both expect to lose something. The decision facing a threatened negotiator is whether he or she will gain or lose by believing the other party’s threat.  This is never an easy choice. We know that threat creates hostility and may have unexpected consequences.  Before using threats in a negotiation, I suggest you consider the following precautions: First, threats have to credible.  The other party must believe that the threat will be carried out.  The person who threatens but fails to follow through loses authority.  A threat is likely to be believed if the threatening party has made good on previous threats. Second, threats have to be proportional to the problem at hand.  If you want a small concession, don’t make a big threat. Third, before threatening, be sure you have the resources to follow through.  Above all, be sure that your organization is willing to back you in taking the necessary action. Fourth, threats may win momentary concessions, but they leave a residue of anger.   Threatened sellers may get revenge later by overcharging on specification changes or by increasing prices when the balance of power favors them. Fifth, threats can break up long term buyer-seller partnerships or create distrust between parties that have spent years building a relationship. Sixth, threats have a way of getting out of control.  They have consequences that the threatener may not have intended. For example, in diplomacy a country that feels threatened may choose a preemptive strike.  In business, a seller threatened with a loss of future business may decide to deliver inferior merchandise, ship late, or stop servicing the buyer’s account. Despite the dangers associated with threats, they will happen at one time or another.  What should a negotiator do when threatened?

1. Find out whether the threat will, if executed, cause the threatener as much harm as it will cause you.
2. Stand by your position.
3. Look at past history.  Some people do lots of threatening but seldom follow through.  Their bark may be louder than their bite.
4. Superiors are not fond of threats made by subordinates.  They may support you if you let them know you have been threatened.
5. Remind the threatener that threats often result in unintended consequences.  Tell a story that makes the point.

Wise negotiators are careful about making explicit threats.  They understand that restoring a relationship after a threat may be like putting Humpty Dumpty back together after his fall.  At best, the relationship is hard to restore.  At worst, it cannot be put back together at all.

It’s regrettable that the legal profession is held in such disrepute.  Newspapers are full of stories about lawyers who abuse their clients and charge unconscionable fees. It is no surprise that so many people wonder if the legal system and its army of lawyers is out of control.  Lawyer jokes say much about the frustration people feel. Almost everyone is afraid of getting involved in legal battles.  Disdain for the profession is pervasive.  People are intimidated by the threat of legal action, and for good reason.  In an extended legal battle opposing lawyers are certain to expose weaknesses in your procedures, policies and judgments.  They can cause the most competent and self-respecting executives to lose confidence in themselves.  In a lawsuit, business secrets may be exposed.  Is it any wonder that we are intimidated by lawyers and lawsuits? In addition to the stress of going through a lawsuit, we have to consider the huge costs involved.  Top lawyers earn $1000 an hour.  It’s easy to run up a bill of two or three hundred thousand dollars on even a simple matter. Legal intimidation does influence negotiation.  One of the parties may be afraid of the legal process.  One may have the resources to pay high legal costs, while the other does not.  There are people in business who budget legal action into their competitive strategy, knowing that others will run from it.  The possibility of a lawsuit is often a hidden factor in determining the outcome of negotiations. What can be done to reduce the impact of legal intimidation?  These countermeasures can help:

1. Few threats to sue end in lawsuits.  When the other party threatens, don’t overreact.  They may talk big but be unwilling to pay the costs or do the work that goes with legal action.  Keep talking.
2. Because we live in a litigious society, it’s wise to build the cost of legal action into your overhead and pricing strategy.  Legal intimidation is less effective when you have the cash to defend against it.
3. Build mediation and arbitration into your business relationships.  It reduces the tendency toward legal adventurism.
4. It pays to put an attorney on retainer, or to hire one for your staff if business warrants.  It will help avoid legal pitfalls before they arise.  If legal problems are allowed to fester, the cost of protecting yourself will rise.  Getting good legal advice early on pays for itself.
5. When a serious lawsuit threatens, use the services of the best law firm you can afford.  The difference between a good firm and a mediocre one is enormous.

Asian cultures are said to be more concerned about face-saving than Western cultures.  I’m convinced that Westerners are just as concerned about saving face.  Perhaps our concern is deeply hidden, but it’s there.  Face-saving is one of the big hidden issues in every negotiation. People negotiate on two levels:  personal and business.  A bad deal for a person’s organization may not be bad for them personally.  Conversely, if an individual suffers loss of face in dealing with another, even the best agreement will leave a bitter aftertaste.  All of us need to validate our self-worth.  When our self-image is threatened, hostility emerges. When an individual feels threatened they may make threats of their own, walk away, or become apathetic—but all usually get angry.  Experiments show that people, given a chance, retaliate against the person who attacks their ego.  Those who have “lost face” are willing to suffer losses to themselves if they can cause the abuser to suffer.  Research clearly supports that the person whose “face” is threatened withdraws.  The more critical the attack, the less information the face-saver communicates.  Loss of face becomes significantly more serious when the abuse is visible to friends or associates who are important to them. A negotiation can hardly be conducted without questioning the other person’s situation and position.  One must probe into the facts and assumptions.  But take care to avoid making these probes personal.  They should be directed at the business issues and not at the competence of the other person. There are ways to minimize the potential hostility that might be created when a person is put into an awkward position.  Try blaming errors and discrepancies on third parties, or other people no longer with the organization.  Another technique is to blame differences on policies, procedures, or systems that neither of you control.  These “bad-guys” serve to direct responsibility away from the person and towards non-threatening channels. Here a few tension reducers I’ve found useful: “Given the data you have, I can see your conclusion, but have you considered . . . .” “It’s certainly open to several interpretations, but I believe that . . . “ “Here is some information you may not have had an opportunity to review.” “Perhaps there are other factors I’m not aware of.” “Let’s look at it this way.” “The difference between our points of view is not large, however we need to consider …” “I think your XYZ department may have led you in the wrong direction.” I know some people who still believe that a strong personal attack pays off.  I don’t.  It is dangerous to abuse another person no matter how angry you are or how justified your position.  Always leave the other party a face-saving way out.  

There are some business negotiators who believe that the way to “win” a negotiation is by intimidating the other party. These people are trying to put you o the defensive. How can you resist being intimidated? The first step is to recognize the most common intimidation tactics. According to Dr. Chester L. Karrass, there are eight types of intimidation tactics. These are:

1. Legal intimidation: This may be the threat of a lawsuit or other legal action.
2. Use of experts: Experts have power due to their extensive knowledge of the topic area.
3. Raising the stakes: Raising the stakes also raises tension.
4. Using threats: Threats create hostility and tension.
5. Status: Some negotiators will use social class or status to affect the outcome of negotiations because people are apprehensive about negotiating with those who are more powerful, educated or wealthier.
6. Hostages: Hostages are collateral that are used to be traded for something else (a concession for instance). In business, hostages can be money, goods, property, secrets, company reputation.
7. Environmental or physical intimidators: Using bad conditions such as lack of air conditioning (or heating), uncomfortable seating arrangements and any other physical stressors to influence the negotiation outcome.
8. Emotional intimidation: Trying to intimidate by embarrassing or denigrating the other party. Some people may yell and create a scene, making others uncomfortable.

Some of these intimidation tactics are subtle and some are blatant but all are aimed at reducing your power in the negotiation and making you less assertive in support of your position. Have you dealt with any of these intimidation tactics? If so, what was your response?

One of the tenets behind a win-win negotiation is that all parties must be satisfied with the deal. It isn’t a win if someone feels he/she got the short end of stick, right? In fact, Dr. Chester L. Karrass writes the following in his book “In Business as in Life, You Don’t Get What You Deserve, You Get What You Negotiate:”

The basic principle of win-win negotiating is that there is ALWAYS a bigger and better deal for both parties if they are willing to search for it. Both buyer and seller increase their PROFIT and SATISFACTION without hurting each other.

Maurice E. Schweitzer has an interesting take on satisfaction, in this article on the Harvard Law School Program on Negotiation website. He writes that satisfaction is important because this ensures that the parties will uphold their contractual negotiations more readily and also, that the other party will likely recommend you/refer business to you AND seek you out as a partner for future negotiations. Clearly, satisfaction is a key component of a successful negotiation. How do you ensure it? Schweitzer writes that negotiators must manage expectations, both before and during a negotiation. There are ways of doing this. For instance, Schweitzer writes:

Your reaction to an opening offer can also influence your counterpart’s expectations. By reacting with a surprised look, a laugh, or a flinch, you can lower your counterpart’s expectations about the feasible bargaining zone. Conversely, by appearing very cooperative or particularly eager for agreement, you may raise your counterpart’s expectations.

Dr. Karrass also writes about expectations. He says:

Every demand, concession, threat, delay, piece of information, deadline, authority limit and question has an effect on people’s expectations.

Being able to  manage expectations is a necessary skill that  help you reach a satisfactory deal. What are your thoughts?

Many business negotiations are straightforward affairs, where both parties are trying their best to reach an agreement that is mutually beneficial, a both-win negotiation. Disagreements are discussed and resolved, making everything go fairly smoothly.  However, there are some negotiations that do not go smoothly. There is drama and there are threats. There may even be events—or moves-- outside the negotiating room can exert pressure. Types of moves that can create pressure are:

• Wildcat strikes
• Lawsuits
• Boycotts
• Demonstrations
• News reports that affect either party
• Press releases that share sensitive information
• Rumors about a product or service
• Rationing of materials
• Changes in credit terms
• Sending out requests for quotations

Some of these may be more serious than others. If two countries are in diplomatic negotiations, and one country’s military makes moves to ramp up presence, clearly, there will be pressure in the room. A sudden strike during a labor negotiation could pressure management into concessions. Rumors however, could be summarily dismissed, as could news reports. Of course, it will depend on the content and what is being alleged. According to Dr. Chester Karrass: “A move outside the conference room adds emphasis to the words. It escalates risk.” He adds: “Moves affect the expectations of the parties and alter the balance of power.” How do you deal with outside moves? Please share in the comments.