3 Ways to Establish Trust in a Negotiation (with a Counterpart You Have Never Met Before)
How do you establish trust when negotiating with a new counterpart? Harvard Business School Professor Deepak Malhotra offers three suggestions.
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Concept Summary
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We have all heard that to unlock the most value in any negotiation, we should work collaboratively, strive for win-win solutions, and not treat the negotiation as a zero-sum game. Good as they are, all these require a great deal of trust between the negotiating parties, as they require disclosure of real interests — not mere demands/positions — of each party.
Unfortunately, when we negotiate with a new counterpart, trust is (by nature) not something that is already established.
Fortunately, according to Prof. Deepak Malhotra of Harvard Business School in his book Negotiating the Impossible: How to Break Deadlocks and Resolve Ugly Conflicts (without Money or Muscle), there are ways you can do on your end to ensure that you project the correct signals to pave the way for trust as you conduct the negotiations.
The concept summary is posted below, with descriptions following.
1. Reciprocate the sharing of sensitive information
As mentioned, value-creating negotiations require all parties to disclose real interests (often reconcilable due to different importance placed on different issues) as opposed to demands (often irreconcilable due to each side asking for more than what is at the table).
However, the dichotomy here is that disclosing your underlying interests may result in the other side using it to squeeze you out of a good deal. This is why seemingly innocuous information like “we really care more about stability of supply than price of the goods” can be sensitive in, say, a vendor negotiation.
So, when your counterpart discloses sensitive information that helps to move the deal forward, you should reciprocate and share information from your end, too. Keep in mind that the information shared should be: (1) on equal level with what was shared by the other party, and (2) helps the deal move forward constructively.
2. Follow through on commitments
This should go without saying: don’t go back on your word after a deal is done. Not only do you taint the workings of that particular deal, you also sour a relationship with a potential future negotiation partner (your counterpart, who will be pissed off), as well as cause reputational damage to yourself as a negotiator (as your pissed-off counterpart will talk shit about you to everyone who will listen).
Now, you can potentially find yourself breaching a commitment unintentionally. Your boss might change his mind after the deal is done, or some unforeseen downturn happen and you can’t fulfill your promise. You should prevent this by keeping your stakeholders in full alignment throughout the organization, and ensuring that you are on top of what you bring to the table so that there will be no surprises. However, if a breach is unavoidable, then it is best to communicate openly with your counterpart with a plan to rectify the situation.
In regards to intentional breach, what you need to watch out for is the especially tempting situation where not only you stand to gain a lot of value by reneging on a deal, but also where the definition of reneging is a gray area, be it caused by vague wording or loopholes in the deal. However, remember to weigh the gains you’ll gain today against the costs you potentially will need to pay in the future if you don’t follow through on your word.
3. Where possible, show flexibility
To show good faith, you should show flexibility on the deal where it is possible. This doesn’t mean that you should concede value from your end.
One practical way to be flexible is to list down all the items on the table — in a commercial negotiation, this could be price, terms of payment, delivery lead times, stringency of quality, and others — and rank them based on the importance you place on them. As the negotiation goes on, you can map how your counterpart rank said items in order of importance.
Differences between these two rankings can help you identify flexibilities you can afford without destroying value.
By showing that you are willing to work with your counterpart in a give-and-take interaction towards a deal, as opposed to, you know, being a dick that puts “winning” over everything else, you are building a reputation that you are a sensible party to negotiate with — paving the way for a more collaborative environment for your future negotiations.
