Boost your negotiation success
When we negotiate it is often under tense conditions where there is potentially a lot at stake. We have to think quickly and make important decisions on the spot. Experience can help within negotiation scenarios, but even the most seasoned negotiator can make fundamental errors if they are unaware of the invisible forces at play.
Cognitive bias – the invisible thinking trap
A cognitive bias is an unconscious error in our thinking that has a huge influence on our decision making. For example, most of us have a bias towards short-term thinking over the long term.
During seminars I often ask participants if they would rather have £70 now or £100 in 12 months time. Incredibly, 99% of the people I ask would prefer immediate payout despite the smaller amount.
In the cold light of day this way of thinking is illogical – but under pressure the brain will always favour instant rewards over long-term gain.
This ‘short-term bias’ is a filter within our brain that operates subconsciously, but plays a huge part in business negotiations as we focus on how we can benefit immediately – very often at the cost of healthy, long-term, win-win partnerships with clients.
A great example of this is the reward and commission system that sales people operate under. Often rewarded on a quarterly basis, sales teams become over eager for a quick win at the expense of nurturing a partnership that will pay dividends in the long term.
We also see short-termism in the upper echelons of business where CEOs are answerable to the board and shareholders and judged on the latest quarter’s figures. They are under pressure to make the company look good in the short term but often fail to plant seeds for long term gain. This is certainly more prevalent in the western world as opposed to cultures such as Japan where investing for a future harvest is more culturally acceptable.
Indeed, many argue that short-termism from financial giants contributed to our most recent global recession!
Short-term bias is just one example at play within negotiations that few people acknowledge (let alone prepare for). But what else should we be considering?
The overconfidence effect – so you think you’ve got it nailed?
This is another cognitive bias that is particularly common among those who negotiate on a regular basis and feel comfortable within their role. Social psychologist Scott Plous even goes so far as to label overconfidence as the most “pervasive and potentially catastrophic” of all the cognitive biases to which human beings fall victim.
It is well documented that around 80% of your time in negotiation should be taken up with preparation – but very few people actually put in this time – thinking ‘it’ll be alright on the night’. When we then sit down at the negotiation table we come to realise we could have been better prepared – that we don’t have all the facts and figures, and if they reject our first proposals, we don’t have satisfactory alternatives at our fingertips.
Once we enter that territory anxiety levels increase and stress takes over, releasing cortisol, which, shuts down the prefrontal cortex (our thinking brain). When this happens a negotiation can fall apart – because just when we need our thinking brain the most, we don’t have it. All because we didn’t prepare sufficiently!
Preparation is key to success!
Without being aware of cognitive biases like overconfidence and short-termism we are likely to remain trapped within their gravitational pull. On the other hand, if we are conscious of their existence we can work around them and be better prepared for negotiations.
Think you know all there is to know about negotiation?
You might be surprised – sign up to a seminar near you and find out more…
- How to tell if someone is bluffing in negotiation
- Putting the salesperson back in the driving seat
- 5 reasons why negotiations go wrong – Inadequate preparation