Eating Their Cake: Understanding the Instinct of Reciprocity.

As I recently noted, the secret to good negotiation is excellent preparation . One key part of your preparation is not only considering the elements of your negotiation/transaction, but also who you are negotiating with, and whether you are building a long-term relationship or not. Be mindful of whether you are negotiating with the person that you want that long-term relationship with, or a proxy or representative of the person, carefully consider the motivations of each party that will be sitting at the negotiating table, and understand the instinct of reciprocity.

The instinct of reciprocity is that uncomfortable feeling you get when someone unexpectedly does something for you or gives you something. You're at a lunch with a group of people, and someone you don't know picks up the check--you get that weird feeling in your stomach. You're at a Christmas party and get a gift from someone who you weren't expecting to give you a gift...and you have that immediate feeling like you owe them a gift in return. This is the instinct of reciprocity. We intuitively want to balance out giving--to respond to a gift with a gift in kind. A gift can be something physical/tangible, or it can be something as simple as a compliment or kind gesture. As a skilled negotiator, you can use this human instinct to your advantage.

If you start a negotiation with a "gift", the other side will feel an intrinsic, subconscious urge to reciprocate. Ever wonder why you get a mint with the check when you're paying at a restaurant? There are a myriad of studies showing that when the server gives you a mint, they get a better tip. (Side note for servers--if you want to double your tips, here's the play: drop one mint, turn to walk away...turn back around and drop another mint and say, "you were really a fantastic diner--for you, I have to leave an extra mint!" Trust me, it works).

So when you're preparing for negotiation, think about how you can engage this powerful instinct. Also, remain aware of it throughout your negotiations, to ensure it is not used against you.

Case in point, I was once asked to negotiate a contract dispute on behalf of a client, to try to resolve the dispute before litigation ensued. In short, a consultant had a contract to do certain work for a fixed price. During the project, a need for additional work was identified, and the consultant discussed that need with a low-level employee of my client, who agreed the work was needed. Unfortunately, that employee was not in a position to give approval to the spending of tens of thousands of dollars...and the situation was compounded by the consultant's failure to document the change in scope and price in writing. When the invoice came and included the extra work, my clients balked. In an effort to avoid litigation or a high-profile public discussion of the issue, we agreed to meet informally with the consultant and see if we could "work things out."

In my preparation for the negotiation, I reviewed the circumstances with my client. My client concluded that their primary objective was to avoid having to incur the additional expense, at any cost--even if it meant litigation. On my end, I had to devise a strategy that was most likely to produce this result. My client had never used this consultant before, and did not have a particular desire to use them again in the future.

Going into the negotiation, the very first point that I made was that my client appreciated the hard work and diligence that the consultant had shown, and that we were looking to find a fair and equitable way of resolving the dispute that respected the position of each party and was collaborative in nature. I told them that their work was very well done, and we appreciated their diligence and professionalism. I thanked them for their efforts and hard work and said how rare and appreciated it was that they were meeting us to talk rather than running into court--a true mark of professionals.

Wherever possible, I try to start negotiations from a positive framework of mutuality--that the parties need to work together to resolve the dispute. As I spoke, I could see the body language of my opponents soften, and I could see them relax their previously stern faces. Body language is a critical component of negotiation, and I had prepared for this negotiation in detail, down to the angle at which our chairs were placed around a table (in this case, opting for a position where we were seated at the corner of a table in a non-confrontational fashion, rather than face-to-face in harsh opposition). They weren't prepared for a kind opening and the gift of a compliment.

The consultant should have had a well-prepared and well-reasoned opening statement, a prepared opening offer, and a strategy for how they would work towards their objective of maximizing the amount of money that they would receive. Critically, they also should have realized that they were not negotiating with the client, but rather with a proxy for the client. A quick internet search would've told them that they were negotiating with someone who at the time taught negotiation for a living. Fortunately for my client, the consultant was under-prepared.

The first comment that the consultant made, 3 minutes into the negotiation, was a stunner.

"We too appreciate the collaborative approach, and we are really interested in making this relationship work in the long term. In fact, if it came down to it, we would forego this entire bill, rather than sour [Client's] perspective on us. If we had to walk out of here with nothing, it would be worth it to us."

They made this statement offhandedly, without preparation and without thinking it through. When I said I wanted to be collaborative, I gave a compliment but I didn't offer any concrete outcome or suggested resolution; I was merely setting a tone. In offering kindness, their natural human tendency was to reciprocate with kindness. They wanted to return the gift.

However, they went beyond tone setting and made an offer to resolve the case by taking nothing. They made a kind gesture of saying that they'd do something extreme to be collaborative. It sounds shocking, but it's human nature. It's the negotiating equivalent of offering someone else the last piece of cake when: 1) you really want that piece of cake; and, 2) you're hoping that they will recognize your offer of the cake is insincere.

In a normal social setting, we recognize this kind of "insincere sincerity" and we say, "oh no--of course you can have the cake." In this negotiation, the other side was expecting I would say, "oh, that's very kind. Let's work together and find a collaborative solution."

The risk of such kind gestures is that someone will accept, and eat your cake.

In this circumstance, I was an attorney representing a client and acting at their direction. I didn't have the luxury of building long-term relationships; after lengthy pre-negotiation discussions with my client, I knew their informed and carefully considered goal was simply to not have to pay extra money. We had prepared for the negotiation in detail, and my clients had no interest in a long-term relationship with a firm that couldn't manage their contracts and invoicing better.

Accordingly, I responded in the only way that I could. I ate their cake.

I responded that I was greatly appreciative of their kind offer, and I was confident that my clients would accept the gesture in the spirit in which it was intended--and of course, my clients accept the offer and consider this matter resolved.

I quickly jotted out a sparse agreement that the invoice was being withdrawn and the parties mutually agreed that the amount contemplated in the original agreement would be due.

The other side was frozen in disbelief.

It's not that they did not realize their mistake. Rather, having made an extremely kind gesture, they were then unwilling to walk back that offer and look foolish for making an offer that they never should have made. They thought I'd glance past their statement and dig into negotiation. However, I knew their offer could literally never get better, and so I surprised them with the two words they never expected: I accept. Flummoxed, the consultant signed on the line and left disheartened, and tens of thousands of dollars poorer.

I truly had been hoping for a collaborative resolution. However, I was also an attorney representing the interests of a client. Had the consultant been better prepared, and had they better controlled their emotions, they could have had a far better outcome. For that matter, had they been willing to admit that their kind gesture was an overreaction and a mistake, they could have recovered from the terrible tactical move. It would have been embarrassing for them to say, "I'm sorry; I didn't really mean that as an offer to take nothing; I was simply trying to say that we value this relationship. I'm sure you can understand, and we are looking forward to continuing this conversation." But how much more embarrassing must it have been to have a silent car ride back to the office, and then explain to their company that they had foregone the entire invoice?

Their behavior, which was entirely typical of a party that is not prepared for negotiation, cost them tens of thousands of dollars, in all of 3 minutes.

We have to be aware of this instinct so that we don't give away our proverbial cake like the consultants did. But we can also use this powerful instinct to extract benefits from people we are negotiating with (against?) by giving them some item of consideration and letting the pressure of that "gift" go to work for us, compelling them to give something in return. If I'm in a negotiation and I know that there's something I'll have to give up, I will carefully consider when and how I offer that item up, making sure that I secure something I want or need in return.

Negotiation often involves give and take; we call it the exchange of consideration. A thing for a thing. That is to be expected. What you have to remember is that when you "get" something in a negotiation, you have to control your natural impulse to automatically "give" something in return, and make sure you're carefully considering and controlling the dynamics of the exchange.