Can Psychological Techniques Help Planners When Negotiating ContractsOctober 10, 2019

Business Minded By
October 10, 2019

Can Psychological Techniques Help Planners When Negotiating Contracts

Business Minded

A saying among professional negotiators is, “Whoever is talking the most is probably losing.” That’s especially true when the person talking most depends on words alone without using basic behavioral psychology that can help in face-to-face negotiations.

Using psychology can improve overall negotiation skills for veteran and novice planners as well as increase the odds for getting the best deal possible. However, adopting psychological techniques isn’t easy for two reasons: There is so much for planners to remember, analyze, interpret and decide while negotiating. And many planners aren’t accustomed to using psychology, although including such an approach can boost negotiation skills.

Experts agree that negotiation is part research, part business savvy, part creativity — and part psychology. According to Jonathan Howe, founding partner and president of Chicago-based law firm Howe & Hutton and a widely recognized leader in the meetings and hospitality industries, there are no specific psychological techniques that work best for planners. “Your basic negotiation skills, whether you are negotiating with a spouse or in today’s marketplace, are somewhat the same and that is important,” Howe says. “We all have our developed skills that we use.”

Howe adds, “You must evaluate the other side as an individual as well as the other side’s positioning relative to what they are trying to achieve. All of that gives you a clue to what you can put on the table and what might be reasonable in one situation, which might not be reasonable in another.”

A key to negotiating successfully is research, which goes hand in hand with psychology. Says Howe, “Information is power, and part of that is being able to know what you can about the other side. Psychology comes into play because part of the evaluation is knowing what works with that person. You want to evaluate the other side; find what makes them tick and what approach you should take.”

Carroll Reuben, CMP, CMM and president of Meeting Excellence, a Los Angeles-based meeting planning firm, agrees. Reuben says pre-negotiation research helps determine the difference between the best deal possible and the one a counterpart wants to provide. “The most important thing from my perspective is my preparation before I go into the negotiation,” Reuben says. “Having a good knowledge of the company or hotel is important as is demonstrating it. You definitely have leverage because you know where the profit centers are and where they may have flexibility to do anything.”

Do Your Research

Once research is complete, use it to help understand the other person’s thinking going into the bargaining and gain a psychological advantage. Accomplish that, experts suggest, by asking yourself the following questions before negotiating:

What does the other side really want?

Who are the stakeholders and negotiation influencers not sitting at the table? Try to know how they can impact your counterpart’s state of mind.

What are you going to do and say if you don’t get the deal you want? Knowing what you will do if there is no agreement provides a sense of power and confidence.

What interests do you share and how can you use them at the right time to gain leverage?

Which facts can you use most persuasively?

Is this a one-off negotiation or will you meet the person again?

Once research is complete, marry it with basic behavioral psychology tactics. For example, before negotiations start, make subtle ‘power moves’ that can improve leverage. One way to do that: When possible, choose the time and place to negotiate. Don’t be too flexible. People who are more accommodating have less perceived power.

Howe says it’s important to avoid showing what a counterpart can see as weakness leading up to negotiations even in small ways and offers the following example: “What if someone calls and says, ‘Let’s have lunch on Wednesday,’” Howe says. “I might say ‘I can’t do Wednesday, but I can have lunch on Thursday and recommend a specific time and place. Does that work for you?’ I’m setting the game plan and using some type of power. It’s not aggressive power. But I’m trying to see what kind of sway I might have later.”

In addition, some experts suggest, when possible separate negotiations into two meetings because people tend to bargain a little less aggressively when they know they will meet again.

Build a Connection

Once negotiations start, establish rapport with light chat and niceties to build goodwill. This is important because, according to a study in the Journal of Applied Sciences, the first five minutes of a negotiation can predict the outcome. According to Greg Jenkins, a partner in Bravo Productions, an event planning and production company in Long Beach, California, “Engage others beyond what you are negotiating. When you also can connect on a personal level with the person you are negotiating with, that might just improve your chances of getting what you desire.”

There are several ways to build rapport. Anthony Taccetta, owner of Anthony Taccetta Event and Design in New York City, includes a unique approach to establish a connection. When negotiating with vendors on behalf of corporate clients, Taccetta personalizes the client to the vendor. Such an approach psychologically invests the vendor in the outcome.

“In order to do that, I often mention why the event is so important to the client,” Taccetta says. “It may be that the corporate stakeholder is a new hire, has a new role within the company or has been at the company for a long time, but with internal restructuring at a more senior level has been tasked to shake up an annual event and make it more modern and exciting. I make sure the vendor understands there is a lot on the line for that person.”

Reuben cautions that building rapport has its limits. “It’s very important in the beginning to build rapport by chatting,” Reuben says. “Sitting down for a cup of coffee or sandwich is great. But I don’t want to make the person my new best friend. Don’t overdo it. It might come across as desperation, which puts you at a psychological disadvantage.”

Reuben says establishing rapport is especially important if you are dealing with prospective repeat customers. “But even if you build good rapport with a salesperson, he or she might be gone in a year or two because salespeople don’t last very long. It’s the nature of this business.”

So according to Reuben, planners are left having to repeatedly create rapport with different salespeople within relatively short periods of time. That’s why Reuben offers the following advice: “Take a far more professional approach rather than trying to be best friends. I wouldn’t waste too much time on it because the main thing is you must listen. Listening can be used as a psychological advantage.”

Listening builds trust and separates you from peers who push too hard. Listening also helps one learn and speak the ‘negotiation language’ of the other person and use it to gain an advantage. Says Howe, “Being a good listener and asking some good questions upfront helps you get to know the other side and what might be a need for them.”

Listening also demonstrates confidence, a key psychological trait of successful negotiators. According to Jenkins, “Listening to others demonstrates you are comfortable in your own skin and value other opinions even when you might disagree. Asking questions when you don’t know something also demonstrates confidence.”

Jenkins adds, “It’s OK not to know. When you’re afraid to ask questions, it may come from a point of insecurity, weakness or fear. Approach the situation with, ‘Enlighten me. Tell me what I need to know.’”

Exude Confidence

Educated curiosity sends a verbal message of confidence which, accompanied with non-verbal signs of confidence, lends more psychological weight to negotiation stances. According to Jenkins, “Walking into the negotiations standing tall, believing in yourself and your ability to achieve your goals will increase the chances of getting what you want. A firm handshake and good posture demonstrate confidence. A weak or less-than-firm handshake may come across to another as a person lacking confidence.”

When it comes to demonstrating confidence, Jenkins suggests something that may seem counter intuitive. “Ability to demonstrate flexibility shows confidence,” Jenkins says. “Rigid thinking is a symptom of lacking in self-confidence and will be counterproductive in responding to the changes needed in negotiating with others.”

In addition, Jenkins says, avoid over-confidence because it sends the wrong psychological message. “One can be over-confident and completely miss the mark,” Jenkins warns. “Over confidence could come across as arrogant, less-than-flexible and give the impression that you think you are smarter than the other person. When that happens, negotiations are off to a bad start and there is a good chance you may not get the outcome you expect or desire.”

Choices of words and phrases can also impact negotiation outcome by communicating weakness or limiting options. “I will never forget early in my career arriving in Japan on a Tuesday and driving with people I would be negotiating with,” Howe says. “We had a lot of small talk which is good and helps rapport. They asked when I was going back. I said Friday. Well, Tuesday and Wednesday came and we didn’t get much done. On Thursday we moved well, but were not where we needed to be. So, I’m under the gun because I had boxed myself in by saying I’m leaving on Friday. Finally, I said I’d like to leave when we finish the negotiation, but the people in Seoul are really interested and I’m going there on Friday if we don’t make a deal here.” Howe was able to make the deal before leaving Japan.

Experts offer the following tips on the types of phrases that can gain a psychological upper hand and don’t weaken leverage. Use cooperative words such as ‘collaborate,’ ‘we,’ ‘us’ and ‘brainstorm’ because they imply a shared goal and working together. Don’t say “I have a better offer.” Instead, ask “How would the deal you offer differ from the following alternative?” Don’t use passive language such as “I hate to ask this but,” or “I know this might sound like a lot but,” or “Would you ever possibly consider?”

Use verbal mirroring. This involves repeating parts of the other person’s previous statement in the form of a question. It establishes rapport and indicates that you have listened. It also encourages the other person to clarify or provide more information. Example: Your counterpart says, “I can’t commit to that offer because it limits the hotel’s profitability.” The response: “ You can’t commit because of limited profitability?” Pause and wait for additional comments. Pausing can also be useful when responding to the other side’s first offer or when making a counteroffer.

Some negotiation researchers think making the first offer can yield a psychological advantage. According to a study published by Harvard Business School, making the first offer sets an ‘anchor number’ that nails down the highest financial range, causing the other party to make the first adjustment with a counteroffer. Also, according to some experts, making the first offer shows confidence and bolsters the perceived value of the offer.

However, other experts think making the first offer puts one at a psychological disadvantage because it communicates weakness.

According to Jenkins, “I don’t believe making the first offer necessarily demonstrates confidence. The first offer by the other side can be viewed as ‘getting the ball rolling’ by offering something that may or may not fly, but merely serves as a starting point.”

He adds, “Your counter-offer may be the one that demonstrates you have a firm grasp of the value of what something is worth and how much the services should cost. That shows confidence, too, without making the first offer.”

If the other side’s first offer is exactly what’s requested or exceeds expectations, don’t accept it immediately. Doing so can make your counterpart feel as if he or she gave in too easily and should have pushed for a better deal. Instead, pause before accepting the offer or make a modest counteroffer.

Reason: You want to reduce negative feelings about the agreement. This is especially important if there’s a possibility of eventually negotiating with the person again. In addition, don’t offer meeting budget specifics because doing so can diminish psychological and strategic negotiating clout.

According to Reuben, “It’s weakness to tell your budget up front. Provide a range but not a top line. If someone asks what your budget is, and you say $30,000 dollars, what do you think you will pay? Know what the bottom line on your budget is and be willing to walk away if you don’t get it.”

Notice Non-verbal Cues

Whatever a planner says and thinks about a counterpart’s offer can be reinforced with non-verbal behavior at key points during negotiation. A vast body of research shows that most of what people truly communicate to each other face-to-face in any situation is mostly nonverbal.

According to Howe, “Non-verbal behavior is extremely important when you are sitting face to face, but it’s not much of a factor if you are communicating by email or phone. Having said that, a form of non-verbal communication is silence. I always say that, when an offer is made, pause and wait and see what evolves.”

Howe also urges caution when interpreting another’s non-verbal behavior.

“So many times, body language can be misinterpreted,” Howe says. “Crossed arms might mean the person is inflexible. Or it might mean the person is cold. Does the person form a temple with their hands in front the face? That can be seen as trying to assert authority, or the person might be praying. Sometimes you don’t know.”

When it comes to non-verbal negotiating behavior, Reuben offers this advice: “Just relax your own body language. If you show any tension, you are going to get in trouble during the negotiation because it’s seen as weakness.”

Experts suggest the following nonverbal strategies:

Use nonverbal mirroring to subtly reciprocate certain behaviors. Social science research shows that nonverbal mirroring engages the other person and builds empathy. Example: When the other person leans forward and smiles, do likewise.

Use the ‘pained pause’ — a pause in talking accompanied by a slight grimace, to show disappointment.

Feign indifference when reaching an impasse. Downplay a sense of urgency and time as issues by being relaxed. This can create slight psychological tension in the other party and improve chances for an agreement.

Cross your arms to reinforce inflexibility just before you make a final offer or refuse an offer. Psychologists say it’s a powerful move.

Spread arms or use other ‘open’ gestures to indicate receptiveness to what the other person is saying.

Pay attention to the other person’s body language, tone of voice and word choice. Do the verbal and nonverbal cues match? If not, there may be an opening to gain an advantage.

Some planners absolutely love the challenge of negotiating while others don’t. But even veteran planners who like negotiating may feel tinges of uncertainty and anxiety during the process.

Howe offers this advice: “The basic thing to remember is that both sides are there to make a deal and nobody wants to make a bad deal,” he says. “My rule is you make the deal, and if you develop a friend from the other party — you’ve done good. If you develop respect — you’ve done better. And if you achieved all of them — you’ve done best.”  C&IT

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