It's not the information you convey so much as the order in which you say it that's the clincher when it comes to negotiating, as our talent doctor Rob Yeung explains
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This article was first published in the June 2017 international edition of Accounting and Business magazine.
How many times have you had to negotiate in the last year? Many people think of negotiation as something that is required only in occasional, formal situations, such as when an employer and candidate discuss terms of employment or when suppliers deal with customers and clients. But life – both working and personal – is, in truth, full of opportunities for negotiation.
When you and any colleague discuss the nature of a task or project and decide who will do what, that’s a negotiation. In your personal life too, even the process of coming to an agreement over the household chores with your partner or a flatmate is a type of negotiation.
Some standard negotiation skills courses teach that negotiation should be approached as an almost mathematical exercise: the application of logic in finding an agreement that best suits all parties. However, psychologists continue to discover that human beings are far from rational – and that we can use this irrationality to achieve better outcomes for ourselves.
Imagine you are negotiating with a client over the price of a product that your company sells, such as a pallet of bricks. You could say ‘I would like you to pay €1,000 for a pallet of bricks’ or ‘I will give you a pallet of bricks for €1,000’. From a logical point of view, the two are identical statements. Both contain the same information: that a certain financial sum should be exchanged for a specified number of bricks.
But from the point of human decision-making, it turns out that these two statements are not perceived in the same way at all. In a series of studies conducted jointly by Leuphana University and Saarland University, in Germany, the researchers discovered that the choice of wording made a material difference to how these opening bids were perceived.
Across eight studies, the researchers led by Leuphana University’s Roman Trötschel discovered that sellers always obtained better financial outcomes when they phrased their proposals as an offer (eg ‘I will offer you my services for €800’) rather than a request (eg ‘I would like €800 for my services’). In other words, if you are selling a product or service, you should be sure to mention what you can do for your customers or clients ahead of what you want in return.
However, the reverse was true for buyers. Buyers who opened the discussion with an offer (eg ‘I can give you €1,200 for your car’) tended to come away with better deals than buyers who began with a request (eg ‘I would like your car in return for €1,200’). Putting it another way, if you are a customer and looking for the best deal possible, remember to open the negotiation with the fee you can offer.
The order in which you phrase offers or requests matters because it affects the degree to which the person hearing it is reminded of either gain or loss. When people hear something like ‘I will offer you this computer for €620’, they are more likely to focus on what they can gain (the computer) rather than what they will have to part with in return (€620). On the other hand, when people hear the request ‘I would like €620 for this computer’, they focus more on what they would lose from it (€620) rather than what they would gain from it (the computer).
This effect holds even though the different forms of wording result in sentences that are equivalent from a logical perspective. It is a quirk of human psychology that we seem to be more persuadable when we think we are gaining something rather than losing something.
Summarising all of this research, the underlying principle is to phrase your proposals in terms of what the other person can gain rather than what they lose. In the opening stages of any negotiation, therefore, be sure to talk about what you are offering before you mention what you would like in return.
In practice, it can be quite difficult to remember the particular order in which you need to phrase opening offers should you be improvising. To give yourself the best chance of choosing the right wording, it could be worth writing down the precise statements that you intend to use.
By making the most of this loophole in the way that the human mind makes decisions, you may ultimately achieve a better outcome for yourself.
Dr Rob Yeung is an organisational psychologist at leadership consulting firm Talentspace.
CPD technical article
"Your choice of wording makes a material difference to how your opening bid is perceived"