Business Negotiation June 10, 2015

The Concept of Satisfaction

What we bargain for in negotiation is not money, goods or services. It is satisfaction. Satisfaction as Webster defines it is anything that brings gratification, pleasure or contentment. The trouble from a negotiator’s standpoint is that satisfaction is subjective; by definition it is hard to measure. The value or utility received from money or services varies with each of us.

One person gets joy from a licorice ice cream cone. The other may hate it. Yet it is ice cream cones or their equivalent in goods, services or dollars that are the units of exchange we talk about when negotiating, not satisfaction. Satisfaction is too subjective to measure or exchange, yet that is what we really negotiate for.

As we have said, the most efficient road to agreement generally lies in the give and take of concessions between parties. Yet even that is complicated by the role of satisfaction. The satisfaction gained by a person receiving a concession is never equal to the satisfaction given up by the person making it. It may be more or less but not the same.

I have received concessions from the other side that lowered my level of satisfaction and led me to ask for more. Hoping to close, a salesperson who had been convincing me for hours that he could go no lower suddenly dropped his price more than I expected. Encouraged by this large concession, I chose to continue the give and take process by asking and winning a still better agreement.

Concessions do not have to be matched in kind or amount. More can be exchanged for less, later for now, small issues for large ones, certainty for uncertainty, a quick payoff for one that flows regularly over a long time. Satisfaction is the common denominator in the negotiation equation despite the fact that it can’t be measured.

There are four ways in which negotiators inadvertently reduce the satisfactions others receive; they give in too quickly and easily from earlier positions, they fail to learn in advance or during the bargaining what is really important to the other side, they do a poor job of explaining the benefits of their offerings or they fail to take into account what others within the organization will say, or feel, about the agreement once they learn its details. Worse even than reducing the other side’s satisfaction is when you tell them, after the deal is made, that you would have given more had they asked. I’ve seen this done more than once. The recipient of that news never forgets.

People do not always understand the benefits and satisfactions offered by a concession or offer. Those making concessions have a responsibility to make benefits clear to the party receiving them, and to explain benefits in terms familiar and important to the receiver. To say, “I will personally check the work before my staff delivers it on June 1,” is not enough. Far better to add that when we deliver our work you won’t have to worry about it being perfect. It will be ready to please your most discriminating end-user or customer.