Negotiation 101: Be honest

Why being honest helps us get bigger pie in negotiation?

Negotiation 101: Be honest
Photo by Christina @ on Unsplash

It is time for exploring more tools and tips about negotiation. As mentioned in some of my previous posts, I was doing a course about Negotiation on Coursera. I managed to finish it. I have been documenting my learnings from that course. Here are my previous posts on negotiation.

Continuing the journey, I had more negotiation assignments in that course. These assignments were closer to real life negotiations, as I didn’t have access to the confidential information of the other party. Let’s see how to negotiate when we are in such situation and what should we avoid.

Don’t lie

Lying is one of the most common mistakes while doing negotiation. I made it in my second assignment. In the task, I was selling a startup I created, and I had a hard lower bound for selling price because of a crazy investor. I talked about this crazy investor while negotiating. But, I lied about the lower bound. I gave a higher number as my hard lower bound. Now imagine a scenario, where the other party has an upper bound for buying. If I lie too much, we might find ourselves in a situation where no deal can be made because my hard lower bound is more than the other party’s hard upper bound. And if no deal is made, we both lose.

Luckily, in my case, we managed to worked out a deal. But I was in a hard situation. In the real world, there is another risk when we lie. If the other party finds out that we are lying, they might lose trust in us, and it would become hard to negotiate from that point. We might have to lie more to justify our first lie. This is never good. So, bottom line, don’t lie.

Don’t hide your mistakes

This is an extension of the “not lying” part. In my third assignment, I was given a role of a person who had made a mistake. I was a campaign manager for a candidate in the election, who had printed a photo on pamphlets without permission. Thereafter, I was supposed to negotiate about purchasing the rights for that photo. Clearly, I was in a horrible position in terms of negotiation. To make the situation worse, I didn’t even have access to enough money to buy the rights at the standard price. So, what to do? Obviously, I didn’t reveal to the other party that I made a mistake. This is technically not lying. If they realize that I made a mistake, they would offer even worse deal than their standard price. Eventually, this time I failed and could only purchase partial rights. Turns out, if I had revealed my mistakes, I could have worked out a better deal even in this case. Let’s see how.

Be allocentric

This means to have the interests of the other party in mind. In the previous case, the company, who had the rights of the photo, could benefit in terms of advertising their services if I print the photo on pamphlets and distribute them to a large audience. Even more, if a person working for a political party “owes” them something. They could then ask for more favors when the time comes. So, in this case, if I reveal that I made a mistake, they would be helping me resolve that mistake and in turn get many more benefits than just the money for the rights.

This concept of being allocentric can even be used to answer multiple choice questions in an exam. Think about the examiner. They want to design the options in such a way that there is no confusion at the end about what is the right answer. They aim to differentiate between the students who are making a mistake somewhere in the calculation. If we analyze the given options by just keeping the interests of the examiner in mind, we can sometimes answer the question without even reading the question!

Anyway, back to the topic, the key lesson here is, to be honest. The first principle of negotiation is to try to make the pie bigger. And to accomplish that, we need the help of the other party. It becomes hard to even calculate the pie when there is hidden information and both parties are lying. We have to acknowledge that a good deal can only be worked out if the other party trusts us and cooperates.

In other words, we have to get out of the “competition” mindset where in order for us to win, the other party has to lose. Instead, we should aim to help the other party win. That is the only way we can win their trust and eventually get a bigger pie. Plus, life is so much easier when we see other people as comrades and not competitors. I discussed this in detail in my post 5 lessons to live a happier life.

I hope you are enjoying the negotiation lessons. There is still a lot to write, but I will do that in my next post. Stay tuned and don’t forget to subscribe!

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