Concession Strategy in Complex Negotiations–Planning Your Give-And-Take: Part 2

In “Concession Strategy Part 1” we explored what goes into a concession strategy, the importance of detecting your counter-part’s approach to negotiation (collaborative vs. competitive) and four guidelines for conceding. In Concession Strategy Part 2 we’ll focus on the five skills you should develop or refine to become a better practitioner of “win-win” negotiations.

It may seem contradictory to think you can concede your way to a “win-win” agreement. When and how you concede can be powerful factors in achieving your ultimate goal—succeeding as a “win-win” architect and practitioner. Executed well, a concession shows good faith negotiating, flexibility and an awareness of your counterpart’s priorities. Executed poorly a concession conveys weakness, desperation and fear.

Here are five skills that will help you execute an effective concession strategy.

1.  Engage your counterpart in brainstorming to “expand the pie” and create options. Even though you may have a specific trade or exchange in mind, encourage your counterpart to offer some acceptable options. Help them envision a trade but don’t provide all the details; let your counterpart fill in the blanks. Use questions to guide and direct their thinking. For example, you might say, “I’m wondering if there is some way we might reduce risk to your organization.” Or “What actions might we take to speed implementation for your organization?” “What value does this have for your organization?” Professional negotiators are skilled in provoking discussion that expands the pie (i.e., helps their counter-part see options not previously considered).

Here’s the skill challenge: are you comfortable in initiating a collaborative discussion of interests, priorities, goals and options? What questions can you use to provoke and focus discussion with your counter-part?

2.  Use non-monetary options effectively. Skilled negotiators compose lists of non-monetary options for each issue. What could they concede alone or bundled with other options in ways that give their counterpart a “win” without paying a huge financial price? What’s non-monetary for one deal may have a hefty price tag for another deal so be careful what you offer. Some examples of (possible) non-monetary or minimal monetary options are timing, service plans, payment options, guarantees and warrantees, length of contract or license, dedicated customer service lines, product access, on-site training, and speed of delivery.

Here’s the skill challenge in a nutshell: when faced with a request that provides your counter-part a financial consideration, can you identify an option that provides them what they want without incurring a financial cost? It may take a bit of rehearsal and preparation to build your list of options, but it can be invaluable in saving dollars and closing the deal.

3.  Divide large concessions into several smaller ones. Sometimes two or more concessions—instead of one large one—can give the perception that you are more responsive, flexible and willing to concede. Take into careful consideration whether your counter-part exhibits fair reciprocity or “give and take” when you concede. If so, then you may wish to break down a $40K request into several concessions.

Here’s the skill challenge: Have you considered the best way of serving your company’s interests while satisfying the concerns of your counter-part? Is it more effective to provide a single concession or divide your concession into several parts? Is your counter-part following the rule of reciprocity or not? If so, you may wish to make several smaller concessions.

4.  Temper your concession with TACOW. TACOW stands for “tentative agreement contingent on the whole.” TACOW allows one party to make a concession contingent on the resolution of another (yet to be finalized) issue. This prevents you from agreeing to too much, too early. Effectively, you reserve the right to revisit tentative terms and conditions depending on issues that surface later in the negotiating session.

When creating trades and bundling non-financial options, we often encounter unfamiliar landscapes. In short, we are offering or agreeing to terms and conditions that require outside input from our organization. For example, a change in the payment schedule might require approval from Financial Services or the waiver of an indemnity clause might require Legal Services’ authorization. TACOW allows you to tentatively agree to conditions while you pursue your internal authorization process.

Here’s the skill challenge: When do you need to slow down and build contingencies? When do you need to delay closure and seek clarification without stifling the momentum of agreement? Closely manage the tempo of the negotiation process. Are you on the verge of making a hasty concession that you may regret?

5.  Manage the emotional climate of the negotiation. Negotiations can be frustrating and nerve-racking. Tempers can become short and parties can become inflexible. What do you do if your counter-part becomes angry, demanding or abusive? Many negotiators fall into one of two traps: they become defensive or offer concessions to placate the other party. Take your time and slow the tempo down. Instead of defending your position, try to understand the cause of their emotion. Ask probing questions. “Clearly this is an important issue. Could you share with me your thoughts on the issue?” “What’s the result that you don’t want to be left with and let’s figure out how to work around it.”

Here’s the skill: remain calm when faced with anger or frustration, be the cool, collected “adult.” Ask probing questions that let them vent their anger, then articulate their underlying thoughts. There is nothing wrong with their anger as long as you don’t match their emotions. Their anger is evidence of something that is important to them. Discover what it is and look for options.

Parting Thoughts

Thorough preparation is the foundation to building an effective concession strategy.   Skill development is the key to executing your strategy. Focus on how well you probe and engage your counterpart. Brainstorming, prioritizing and listing options are great ways to gain a better understanding of their underlying interests while enhancing their ownership in solutions. Effective execution of your strategy will require patience, good questioning skills and a firm grasp of available options.