Business Negotiation January 09, 2014

Threat and Its Intended and Unintended Consequences

Threat is implicit in every negotiation, whether it is expressed openly or not.   There is always the possibility of deadlock...

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.
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