“To prevent mistakes from slowing your negotiation, place your anchors carefully.” -Greg Williams, The Master Negotiator & Body Language Expert (Click to Tweet)
“How To Avoid Risky Anchoring Mistakes In A Negotiation”
“People don’t realize; they’re always negotiating!”
He entered the negotiation and informed the other negotiator that his best offer was $10,000. The other negotiator said, “sorry, the asking price is $75,000 – we’re too far apart to continue unless you’d like to make a reasonable offer.”
With that, both negotiators had anchored the negotiation. And one of them wondered to himself if he’d made a mistake. He questioned whether he’d just placed himself in a position to swim in quicksand. Continue, and you’ll find out why he had that thought.
How Anchoring Works
Anchoring is a negotiation maneuver that negotiators use to set the expectations of the other party. That’s its sole purpose – to set guidelines in which aspects of the negotiation will occur. By establishing those standards, negotiators create boundaries in which the negotiators will haggle.
What Makes Anchoring Risky
Some negotiators are not aware of what they should offer, how to make counteroffers, or how to position themselves. And since they’re not sure of what they might encounter from the other negotiator, that negotiator doesn’t know which tactics to employ. That uncertainty sets him up to become maneuvered. And anchoring is the factor that determines the degree that he might become maneuvered.
When a negotiator invokes anchoring, he sets a proverbial marker in place. And that marker establishes a boundary. While it can be artificial, for the time it exists, it defines an aspect in which the negotiation will occur. And not until one of the negotiators makes an offer are new boundaries set. But the interaction that goes into reframing those boundaries is what can determine the flow and outcome of the negotiation. Thus, negotiators must always be cautious about the anchoring techniques they use in their attempt to control the interaction and actions of the other negotiator.
In the opening dialogue between our negotiators, one made the initial offer of $10,000. The statement, “we’re too far apart to continue unless you’d like to make a reasonable offer,” rebuked him. Embedded in that response was, your offer is ridiculously out of bounds, get serious. The statement also risked initiating bruised feelings, which can have negative implications for the negotiation going forward.
Suffice it to say. Anchoring occurs naturally as the result of the offers exchanged between negotiators. But the way someone makes an offer determines how well the negotiators will engage one another. Do that incorrectly, and a mistake will occur that will impact the outcome of the negotiation.
The challenge that makes anchoring dicey is the boundaries it sets and the emotions it can evoke. There are many nonverbal signals conveyed in the offer made to anchor the opposing negotiator. Some messages can create the impression that a negotiator lacks seriousness or one in which he feels the other negotiator views him as being ‘less than’ capable of ‘playing’ in an environment. He might imply that as stating, that he’s not ready for the big leagues – come back when that changes. From there, bruised feelings must be attended, which incorporates an entirely new set of challenges.
The other challenge with anchoring is, if your initial request is too high, you run the risk of not getting an offer. If it’s perceived to be too low, others may question the validity of your offer’s value, or you may leave an opportunity on the table. In both situations, you’ve harmed your negotiation efforts. Thus, before extending an offer, be mindful of the position the offer will place you in as you engage the other negotiator. Because, even if you back away from your initial anchor offer, which is what occurs in most negotiations, you’ll have to do so in a manner that doesn’t place you in an unfavorable position from which to continue your efforts.
Anchoring Attempts To Be Mindful Of
- Concealed – I’m going to be fair with you. Will you do the same for me? An attempt to anchor one negotiator to the perspective of fairness became initiated. Since no one defined ‘fair,’ a concealed message resided in it. While the request can convey sentiments of being open-minded, it can also transmit other thoughts. When a negotiator makes a statement about being fair or any nebulous appeal, question the exact meaning they’re applying to their request. In so doing, you’ll have a greater understanding of what that person is requesting and to what degree you can agree to it.
- Backdoor – This type of anchoring ploy is employed when a deal is close at hand, and one of the negotiators makes a statement such as, “I just remembered, I’m not allowed to exceed the limit of your offer. I need the authorization from my superior to meet your request. And that might take days, weeks, or months.”
An emotional game has occurred in that situation. One negotiator thought the deal was in the process of being consummated and whoosh, it disappeared before his very eyes. That can be the mental shove that causes that negotiator to make concessions to avoid the timeframe it would take to get the deal approved. If you’re the negotiator that’s being maneuvered by this ploy, don’t make an initial concession. Probe by asking questions about how the other negotiator forgot his limit, why you should believe that he’d have authority to conclude an agreed-upon outcome, etc. You need to put that person on the spot to prevent him from using the same tactic again. Plus, you must display through your actions that you will not blindly accept an excuse that may be flimsy or a tactic he’s using.
Mistakes naturally occur in negotiations due to anchoring misperceptions and their application. To reduce the conflicts that such mistakes can have in your negotiation, consider how you’ll use anchoring and the possible impact it’ll have throughout the talks. Yes, negotiators make mistakes in their negotiations, but anchoring doesn’t have to be one of them. By controlling how you employ anchoring, you’ll enhance your negotiation efforts. And everything will be right with the world.
Remember, you’re always negotiating!
Listen to Greg’s podcast at https://anchor.fm/themasternegotiator
After reading this article, what are you thinking? I’d like to know. Reach me at Greg@TheMasterNegotiator.com