“Leaders, beware of how anchoring occurs in negotiation. It can be what sinks you. But it can also be what lifts your efforts to greater heights.” -Greg Williams, The Master Negotiator & Body Language Expert Click to Tweet
“Proven Leader Success Secrets – How To Use Anchoring To Win More Negotiations”
People don’t realize they’re always negotiating.
Leader, when negotiating, are you aware of the mental manipulation that happens when anchoring occurs? Anchoring is a powerful psychological negotiation tool whose impact most leaders never consider. Anchoring occurs in negotiation when a negotiator makes the first offer that serves as a reference point for future offers and counteroffers in negotiation. And it can heavily influence the outcome of the talks, which is why leaders should be aware of when it occurs.
That is but one of the reasons a leader should become mindful of the moment anchoring occurs. And since it sets the tone and direction of the negotiation from that point forward, the strategy leaders employ throughout a negotiation will be influenced by the fixed anchor. Thus, to lead others better, leaders should become more mindful of an anchoring starting point and where it might lead.
To that end, see if you would have recognized the anchoring point in the following story.
The Anchoring Story
I entered a shoe repair store to have heel taps placed on a pair of shoes – taps are small pieces of plastic nailed into the heel to extend the heel’s life and prevent it from wearing down prematurely. I asked the proprietor about the cost of the taps and installing them on the shoes. He said it would be $6. Before I handed him the shoes, I noticed a half-inch smudge mark on the back of one shoe and asked what the cost would be to remove it.
The proprietor examined the shoe with the precision of a surgeon about to perform surgery. After deep deliberation, he said he was unsure if he could remove it – it would take several applications of chemicals and time to dry between each application, and I would have to leave the shoes for that to occur. So, I asked if he could remove it and what it might cost. He said $45. I told him to apply the taps only. And off he went to the back of his shop.
Applying taps to shoes typically takes about one to two minutes. After about five minutes, the proprietor returned. He had my shoes in hand – taps on, and the smudge removed. I was ecstatic! And he said, “I wanted to do you a favor. So, I removed the smudge – just give me $15.”
Did you catch how he anchored me? First, he told me how difficult the smudge would be to remove. He said it would cost $45 if he could do it. And in the end, after removing the smudge and applying the taps, he charged me $15.
Had I agreed to pay $45 to remove the smudge, I would have ended in a worse negotiation outcome. The lesson is to know where anchoring places you mentally when someone anchors you.
Anchoring’s Importance And Where It Might Lead
Whenever a leader considers the effect anchoring will have on negotiation, they should consider where it will lead! At the beginning of the talks, leaders tend to rely on the initial offer to decide how to continue negotiating – that first offer serves as an anchor, a point of reference, for all subsequent decisions.
Anchoring can also be the source of unexpected disclosed information. That could occur when one leader is more skilled than the other. In that scenario, the less experienced leader may make an extremely high or low opening request, depending on their position.
The thought is to anchor their opposite for a better deal as they delve deeper into the negotiation. In the meantime, while that leader has exposed their negotiating strategy, the more skilled negotiator ignores the offer and makes a counteroffer that subdues the less experienced leader.
Beware Of Hidden Power
Where anchoring is concerned, another thought to ponder during negotiation is the source of the power behind the person with whom you are interacting. You may be familiar with the power behind the person you initially negotiated with at car dealerships.
The first person anchors you with an offer. Then, that person departs the negotiation, and their counterpart takes over. That individual offers a slight concession, and you feel momentarily pleased with the progress.
Depending on the stakes of the negotiation, the opposition can continue that process through many iterations – you reach an impasse with one negotiator, and another person replaces them. As a leader, be aware of this anchoring strategy. Do not fall into this abbess.
A Leader’s Emotions
To forestall a leader’s attempts at anchoring you, control your emotions. That means do not become so fixated on the anchoring point that it overshadows how you had planned to negotiate. You can control the negotiation and its outcome better by controlling your emotions about the points anchors set. And that will allow you to see anchors better for their value or ploy.
Anchoring has a profound effect on leaders and their ability during negotiation. And most leaders are unaware of the degree anchors influence their actions. If you want to become an exceptional leader, do not let that be you. As a dear friend says, @Terry Jackson, “Negotiation is Strategic Thought In Motion.”
So, as a leader, if you want to be more strategic in your negotiation efforts, heighten your mindfulness of the effects anchoring has on your leadership abilities by using the information presented here. And everything will be right with the world.
Remember, you’re always negotiating!
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