An account manager sits down for the annual price negotiation with her category buyer and presents the new list price with an average 2½% price increase across the board. The buyer looks at the list and accepts the changes instantly. After the account manager leaves, she starts to feel concern about the ease with which she accomplished the price increase. She feels dissatisfied.
Now consider the more usual scenario. The buyer responds to the new prices with dismay and outrage - and rejects them outright. The pair battle it out for four weeks until eventually an agreement is reached: no price increase but the buyer will list two new ranges. The account manager feels she achieved the best possible outcome and feels satisfied despite getting a worse price. The fact that the buyer made it hard for her to achieve two new ranges made the negotiation valuable to her.
Negotiation is the ritual by which we allow the other party to feel that they are winning. This feeling is created by rejecting proposals and forcing a conflict. Human nature requires this conflict to feel a level of satisfaction. So, by assumption, rejecting the other party's proposals will create the illusion of them winning when we finally agree to it.
Further, let's assume the account manager never expected to get a price increase. She merely wanted to test the buyer's position and protect herself against the buyer demanding a price reduction, by opening negotiations with an extreme position to give herself some room for movement. Had the buyer accepted the first proposal up front, she would have known that she had not opened extreme enough. Therefore, the fact she has been rejected is great news. Enjoy being rejected, but recognise that you need to move your position. It is this movement that allows the other party to feel that they are winning. Intransigence in negotiation will only lead to deadlock.
If you are negotiating several different variables, you cannot credibly open extreme on all issues. You should open realistically on all issues but consider the total value of your proposals across all variables. You should give way on issues that are of relatively lesser cost to you and trade them in exchange for those that are of relatively greater value.
During concession trading, there tends to be less conflict as the emphasis shifts to creating greater value for both parties.
In essence, rejection is a fundamental element prevalent in the ritual of negotiation. But remember, in the end the goal of negotiation is for parties to resolve differences to reach an agreement.
Graham Botwright is a partner in The Gap Partnership
Now consider the more usual scenario. The buyer responds to the new prices with dismay and outrage - and rejects them outright. The pair battle it out for four weeks until eventually an agreement is reached: no price increase but the buyer will list two new ranges. The account manager feels she achieved the best possible outcome and feels satisfied despite getting a worse price. The fact that the buyer made it hard for her to achieve two new ranges made the negotiation valuable to her.
Negotiation is the ritual by which we allow the other party to feel that they are winning. This feeling is created by rejecting proposals and forcing a conflict. Human nature requires this conflict to feel a level of satisfaction. So, by assumption, rejecting the other party's proposals will create the illusion of them winning when we finally agree to it.
Further, let's assume the account manager never expected to get a price increase. She merely wanted to test the buyer's position and protect herself against the buyer demanding a price reduction, by opening negotiations with an extreme position to give herself some room for movement. Had the buyer accepted the first proposal up front, she would have known that she had not opened extreme enough. Therefore, the fact she has been rejected is great news. Enjoy being rejected, but recognise that you need to move your position. It is this movement that allows the other party to feel that they are winning. Intransigence in negotiation will only lead to deadlock.
If you are negotiating several different variables, you cannot credibly open extreme on all issues. You should open realistically on all issues but consider the total value of your proposals across all variables. You should give way on issues that are of relatively lesser cost to you and trade them in exchange for those that are of relatively greater value.
During concession trading, there tends to be less conflict as the emphasis shifts to creating greater value for both parties.
In essence, rejection is a fundamental element prevalent in the ritual of negotiation. But remember, in the end the goal of negotiation is for parties to resolve differences to reach an agreement.
Graham Botwright is a partner in The Gap Partnership
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