Negotiation Skills — Part IV

Should you lie in a negotiation?

The answer, in short, is NO. The trade-off for such behavior in a negotiation is your reputation. Remember in the first article, second article, and the third article, the goal of a negotiation is not only claiming value but also creating value and a strong relationship. Usually, the negotiator is lying because they make common mistakes of not seeing blind spots such as:

  1. Not identifying the parties that are not at the bargaining table. Whenever two companies know that the loser of a bidding war will incur a loss of market value once the bidding begins, each has an incentive to continue bidding beyond the value of the target.
  2. Not identifying how the other parties are likely to make a decision. For most negotiators, the decision rules of other parties lie outside the bounds of awareness. In contrast, negotiation geniuses understand that they need to consider not only the interests of the other side but also how the other side will evaluate and make their decisions.
  3. Information asymmetries. In this case, you should always seek out objective expert advice and make your offer on a contingency basis. The preparation also takes a great part to avoid these mistakes.
  4. Not identifying the strength of competitors. The good news is that it is possible to fix this problem by explicitly focusing on the unique capabilities of the competition. When we focus on our competitors individually, we can more accurately assess the other side’s likelihood of success (and by extension, our likelihood of failure).
  5. Not identifying the information that is not immediately relevant but that will be critical in the future. If it is this easy to miss an image that is (literally) right in front of your eyes, imagine how much easier it is to miss issues, interests, and perspectives that are important to the other party, but which are not in plain sight right now because they are less critical to you.

Certainly, the ability to focus narrowly on a problem is a critical skill that allows us to complete many tasks effectively and efficiently. But the research on bounded awareness should cause you to wonder what you may have missed during periods of intense focus in negotiation. When you are busy estimating the other side’s maximum willingness to pay, are you ignoring the effect that this deal will have on your competitors? When you are focusing on the potential for synergy with your acquisition target, are you overlooking the possibility that influential and self-interested decision-makers could derail the negotiation? When you are busy explaining to the customer how many of their problems your product or service will solve, are you ignoring other interests and concerns that could push them toward your competitors? When, as a new player in the industry, you are doing everything possible to increase your firm’s revenue, are you ignoring future difficulties you could face when you want to transition into a high-margin business model? If these problems sound familiar, you probably want to know how to have the best of both worlds in negotiation: focusing intently when necessary and expanding your awareness to include elements that are typically in your blind spot.

Confronting Lies and Deception

While no one can ever be entirely safe from the lies and deceptions of others, negotiation geniuses understand what it takes to tackle and diffuse a wide variety of nefarious tactics. We will confront the darker side of negotiation head-on and present the following strategies:

  1. How to make people less likely lying to you
  2. How to detect when someone is lying to you
  3. What to do when you catch someone in a lie
  4. How to eliminate your desire — and need — to lie

The best defense against lies and deception is to eliminate your counterpart’s temptation to lie. To eliminate their motivation to do so, we can do many things such as:

  1. Look and be prepared. It is easy to see why it helps to look prepared when it comes to issues related to price. But negotiators often overlook the value of appearing prepared more generally. We can signal the other parties by many things such as arriving on time, being well prepared to discuss the details of myriad issues, look well organize and efficient, speak with intelligence, and full of confidence.
  2. Signal your ability to obtain information. If you give this signal to the other party, most of the time, the other party will doubt their willingness to lie to you.
  3. Ask less threatening, indirect questions. Imagine that you are interested in finding out the production costs of a vendor with whom you are dealing. If you ask her directly to reveal her company’s costs, you are inviting her to lie to you because she knows that as soon as you know these costs, you are in a position to make an offer just above cost. Here are some alternative questions she would be more likely to answer truthfully: “Can you please give me some information regarding your production process?” ”Can you explain to me how your supply chain operates?” ”Do you purchase your materials domestically?”
  4. Don’t lie. You’d love to be entirely honest, you might say, but, unfortunately, you live in a world where other people lie. Being the only truthful person would put you at a disadvantage. Sounds reasonable.“This strategy will not dissuade those who want to exploit your honesty, but it will dissuade those who are lying out of self-defense. As time goes on, and your counterpart discovers that you have been honest with him, he will find it easier to be more honest with you. How can you signal your desire for this kind of relationship? By revealing information that makes you somewhat vulnerable. In other words, reveal something that the other side recognizes is somewhat costly to you. What kind of message would this move send? Your counterpart may view you as naive or unprepared, but it is also highly likely that she will appreciate the trusting gesture and reciprocate in kind.

How do you detect the lie your counterpart made?

Instead of asking direct questions, the book recommends us to use these strategies:

  1. Gather information from multiple sources, this strategy aligns with the principle of the whole negotiation skill, which is preparation skills. We need to exhaust all sources of information before, during, and after negotiation. The more information you have, the easier it will be for you to detect lies.
  2. Set a trap, the common to test honesty is to ask questions which you already know the answer. By using the strategy, you can know the level of honesty of your counterpart.
  3. Triangulate on the truth, the point is you may never discover a lie if you only ask one question. Instead, you need to ask many different questions that relate to one another. If you fail to detect the logic of the answer to the questions, there might be lies in the answers.
  4. Look out for responses that do not answer the question you asked. Our most useful advice regarding lie detection stems from this critical insight: most people do not like to lie, but they are usually very comfortable with you being deceived. In other words, people will often go to great lengths to avoid saying something that is technically untrue (i.e., a lie), but they will be happy to mislead you indirectly with their response
  5. Use contingency contracts. Ask them to “put their money where their mouth is” by proposing a contingency contract. Contingency contracts are an excellent device for allowing honest people to stake financial outcomes on their differences in expectations. They are also an excellent device for diagnosing when the other side is lying about their beliefs and expectations. If they are unwilling to agree to a contingency contract, you can be more certain that they do not believe their claims.

After you caught them lying using that defense strategy, what you need to consider next

  1. Was it a lie? Is it possible that your counterpart does not even know that what she said was untrue? In other words, she may not have intended to lie, but was simply uninformed. In most negotiations, it is best to give the other side the benefit of the doubt — but to also be more careful as you move forward. If you think you were lied to, but aren’t sure, investigate using the strategies outlined above. But unless you are certain that the other side lied, you will likely gain little by calling her a liar. Almost certainly, she will deny the allegation, and you will find yourself in an escalating conflict.
  2. Do I want to continue the negotiation?
  3. Do I need to warn them or confront them? If you would like to continue the negotiation, you probably should not scream “Liar!” Instead, you need a strategy that allows you to signal that you are aware of the lie, while also allowing the other side to save face. There are two ways of doing so; the strategy you choose depends on what you are trying to accomplish. If you are not particularly upset about the lie but want to discourage your counterpart from lying in the future, you should use a “warn” script. If the lie was more egregious, and you want to extract an apology or concession in exchange for your willingness to continue negotiations, you should use a “confront” script.

Smart alternatives of lying

Whether your motivation is to improve your character or to reduce the costs associated with ill-conceived lies, the strategies that follow will help you negotiate more honestly without putting you at a disadvantage against others who are dishonest, corrupt, or — more likely — complex individuals with virtues and vices just like you.

  1. Incorporate reputation and relationship in your calculus, Those who do adopt a more long-term perspective find it much easier to be truthful and honest — even if this costs money in the short run — because the long-term payoff is worth it.
  2. Prepare to answer difficult questions, One of the biggest reasons people lie in negotiation is that they do not know how to answer tough questions. Caught off guard, and worried that they will say something that puts them at a disadvantage, they opt to lie. You can learn to avoid this reaction. Those who anticipate the tough, probing questions the other side will ask can prepare truthful responses that will not hurt them.
  3. Try not to negotiate or respond to questions while under time pressure, regardless of how prepared you are, there will be times when a question catches you off guard. What to do? To the extent possible, avoid answering the question until you have had an opportunity to think more carefully about your response. Another way to avoid answering tough questions under time pressure is to structure your negotiation differently. For example, you may have some preliminary discussions aimed at raising difficult questions over e-mail; this will allow you to respond at your own pace. Similarly, instead of negotiating by phone (which may make you feel compelled to answer questions immediately), you could set up an informal lunch meeting where you would feel less pressure to answer every question as soon as it is “your turn” to speak.
  4. Refuse to answer certain questions, you do not need to answer every question that your counterpart asks. If he asks you to reveal your reservation value, for example, you should not feel compelled to answer. Suppose that the other party asks, “What’s the lowest price you will accept for this shipment?” One way to respond, and to defuse the awkward moment with humor, is to say: “I think you already know the answer — it happens to be the most you are willing to pay for it!”
  5. Offer to answer a different question, if you feel uncomfortable about refusing to answer a direct question, you can mitigate your unease by offering to answer a different, related question. Here, the idea is to be upfront about your inability or unwillingness to respond to the specific question, then to offer a concession by providing other useful information. By providing information that the other side values, and which does not put you at a disadvantage, you serve multiple purposes simultaneously: you avoid lying, you give them information that is of value to them, you appear reasonable and forthcoming, and you make it more likely that a deal will be consummated.
  6. Change reality to make the truth more bearable, why, fundamentally, are human beings tempted to lie? We often lie because reality is not what we want it to be. When you are tempted to lie or to deceive, take some time to think about why you feel the need to portray a false reality. Is it because you are embarrassed or ashamed of your situation? If so, can you do something to change your reality instead of lying about it? Using if-statement is one of many powerful ways to state a different reality.
  7. Eliminate constraints that tempt you to lie, often, our honesty (and that of others whom we label unethical) is constrained by rules, policies, time pressures, and incentive systems. It is fine to argue that a “truly” ethical person would be honest despite these constraints. Nonetheless, it behooves us — and our organizations — to try to create the kinds of environments that encourage rather than discourage truthful and honest behavior.

To sum up, negotiation genius is not only focusing on how to win a negotiation but also on maintaining a great relationship. A great relationship always has great trust as the foundation. So, to have a great relationship with your counterparts, you should avoid telling a lie to your counterpart. Try to use the smart lie alternatives strategy to avoid sacrificing your relationship.

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