The tactic of the ticking clock : the Impact of Time Pressure & Deadlines on Negotiations

Almost all of us have heard of the Pareto principle – the 80/20 rule – I bet he never studied the role of time in negotiation. Experienced negotiators will however tell you that inevitably ~80 percent of the concessions occur in the last 20 percent of the time remaining to negotiate.

Why? Impact of time-pressure and deadlines on negotiations

•  ‘Time pressure’ has a way of hypnotising us and can often cause us to make decisions we may not have made otherwise, and at times, this can result in long-term regret.
• Deadlines pressure negotiating parties into making ‘either-or’ choices, and they are used as a tactic to create movement in negotiations. I’ve heard this story of a Japanese property investor who used to leave his chauffeur outside and claim to be on the 9pm flight to Tokyo when entering critical negotiations. Once the deal had been made under pressure of time, he’d invite the other party out to dinner, even as they were expecting him to rush off for his flight!

Sure, they are stressful — but they force action and make things happen. The reason for this is that if people don’t know how long a negotiation will last, they tend to hold back in their bargaining — keeping as much as possible for later. With a deadline in sight, they are more inclined to play all their bargaining chips. It is no accident therefore that soccer player transfer deals are concluded just before the deadline (remember Jan 31 every year, for European clubs) and legislatures pass crucial bills just before a scheduled adjournment.

• We therefore need to find a way to make deadlines work for us.

There are various occasions when we as negotiators should not be afraid to set deadlines and to commit to them. If negotiators who have even a slight negotiating leverage, highlight their deadline, they usually end up getting better deals. First, by revealing your cut-off, you reduce the risk of an impasse. And second, when the counterpart knows your deadline, they’ll likely get to the real deal more quickly.

In some negotiations, if the Other Party is operating under pressure of a deadline, they’ll be most willing to make concessions as the deadline starts to approach (as a rule of thumb, you should be able to squeeze better terms from most salespersons as the end of a calendar quarter approaches).

Let us consider another example - If you are a tenant looking to renew the lease on a premise, in general, you should avoid time pressure and negotiate the lease renewal with lots of time to spare. However, if clearly you have more alternatives available to you than the landlord does, you can put him/her under time pressure by negotiating at the last moment.

• At the very least, we have to take care to prevent deadlines from working against us.

Ideally, we should not let deadlines cause us to make too many concessions! Of course, if you are looking to sell your car before you relocate to another country and want to use the car until the last week, then that time-pressure is a fairly real one and you cannot afford to be too cute in the negotiations. Let me share another example.

Recently, after I had (at least I thought I had) concluded terms, including workshop dates, for a training workshop with the HR leader of a client, I was waiting for a formal Purchase Order (PO). Instead, the procurement executive of the client called and e-mailed me to apply last minute pressure for better terms. I was eager for the PO. However, I held my cool and politely reassured him that I’d offered my best terms and am willing to wait for as long as it takes for them to get the approvals. I also politely indicated that the workshop dates had been finalised and if the PO gets delayed, we may have to postpone those dates. As it happened, I got my PO in a day’s time.

In the process of negotiations, time leverage occurs when the parties have asymmetric time constraints during negotiations, and/or perceive ‘ongoing happenings’ as strengthening one party’s relative position. The party who is under greater time pressure often

• grants quicker concessions and places more moderate demands;
• fosters cooperative behaviour (many times, simply ‘submissive behaviour’);
• is less willing and able to explore alternative options, thus leading to sub-optimal outcomes.

So, what are some ways in which one can handle the pressures caused by timelines and deadlines during negotiations?

1.      To try and neutralize a deadline, TEST IT. Question if the deadline is real?

Say you hear from the other party - “If I don’t get your order by Thursday, then there is no deal.” Ask questions to see how real and how firm it is. The person setting the deadline is betting on the axiom that it’s human nature to believe deadlines are real. It is in your best interest to be sceptical.

For instance, in response to the above, you could subtly challenge them in the guise of seeking a clarification thus, “So are you saying that if I am only able to place the order on Friday rather than Thursday, and the terms are close to your ask, yet you would not be able to do the deal?”

If the deadline is real then the only possible answer this question is “Yes”. However, more often than not, you will get a conditional response e.g. “I’m not exactly saying that… there is pressure on me to get the deal done quickly”. If you get that kind of answer then you know that the deadline is not real.

2.      If you find out that the deadline is real, seek to find out - where it comes from, whether an extension is possible, and what the consequences would be of missing the deadline.

Are there stakeholders (or influencers) away from the negotiating table who are driving the pressure of deadlines? Many negotiators ignore this and land in difficulties since they were only focused on the person at the negotiating table.

Further, as you would have realized in daily life, many deadlines are actually negotiable. We’ve all managed to extend our stay in hotels, sometime or the other, for a few hours beyond the check-out deadline. At least it is worth trying.

3.      The two things you have full control over during a negotiation is your preparation and your process for decision making during negotiation.

Preparation

·      As part of your preparation - Identify what, if any, deadlines already exist for your side and for your counterpart.  e.g. sales targets, product launch, contract expiry

·      And don’t just look on the surface for the obvious deadlines. Sometimes, a party’s personal deadline, like an upcoming vacation, can have an impact on the negotiation.

Having a process for decision-making

·      At no time is having a process and timeline more important than when deadlines loom large. Neutralise the pressure of deadlines by putting in place a mutually agreed process for the Negotiations. e.g. if a soccer team like Real Madrid or Manchester United is trying to acquire a player, they’ll have assigned talent scouts to research the player, got inputs from key stakeholders, and identified the parameters for signing on. The constraints of an outside deadline shouldn’t usually alter those.

·      Incorporating milestones & checkpoints into that process will also take some of the pressure off, when you are negotiating under time constraints.

·      Of course, in any negotiation you must be nimble enough to recognise if new variables pop up last minute, which alter some of your assumptions. Identifying deal-breakers in advance will tell you if you can still negotiate with these changes, within the timeline. If your preparation had included multiple scenarios, you may already have anticipated some of the changes and can manage in the timeline.

4.      Other Party makes a last-minute request for a small discount – a tactic called Nibbling.

Typically, at the end of long drawn negotiations, exhausted parties who think they've finally reached an agreement will feel relieved that they resolved the big complex issues and hammered out a solution. And, crucially, they tend to relax. That's when they are vulnerable to an extra squeeze.

e.g. You're at the point of signing the contracts, with agreed-upon terms, when the Other Party demands a further discount OR the deal is off. They may say, "I spoke over phone to my boss last night and he says that all other terms being equal, unless you can offer a further 5% lower price, the deal is off. He seems confident of negotiating better terms with another supplier." What's likely going on here is that they are checking to confirm that you've given them the best deal. If you accede to the discount request, they’ll think – ‘This guy was trying to overcharge me!’ If instead you are able to say something like – “Look here, I don't play the games that some of my competitors play. You will always get the best price from me the first time around. If we need to remove something from the quote to meet your budget, we can certainly do that.” Most of the time they are likely to fall in line and agree to proceed on the originally negotiated deal. For an alternate way to dealing with the nibble, see the next point.

5.      Maintaining valuable relationships and Saving the Other Party’s face:

I recommend that overall if you have a good deal that you are more than happy with, and sense that responding favourably to the other party’s last minute nibble may help them ‘save/maintain their face’ (面子) with their stakeholders, do consider it favourably, especially if it is a long term relationship that is to be nurtured.

Sometimes you can do this not with a price reduction but by offering some additional value. For instance, I offered a complimentary 40-minute lunch N learn session to the team by way of additional value to an Executive Coaching Client who was nibbling for that something 'extra'.

Experienced negotiators in a relationship-oriented culture, usually keep in reserve (of course, not disclosed in advance to the Other Party) a few small concessions as a contingency, to be released in case of last minute hiccups.

Having said that, I recall an occasion in 2003-4 when my team and I were at the final stages of closing a large sales deal on very favourable terms, and decided to accede to a last minute ‘nibble’ by the counterpart’s CEO for a volume discount in prices. Now, this volume discount was only to kick in for incremental volumes once the customer crossed a (rather high) volume threshold and my previous research (as part of the preparation process) showed me that, even with the most optimistic projections, they were unlikely to hit that threshold except in the final year of the long-term deal that we were in the process of concluding. My then boss actually chided me for recommending the discount, but I convinced him that it was worth conceding. To cut a long story short, I outlived the longish deal and the volume discount I had conceded never materialised during the deal's life, since they never reached those volumes. But, it is my belief that agreeing to the CEO’s last minute request had helped us close the deal on time and strengthen a great relationship.

6.      Last but not the least - Negotiators are often focused on their own constraints and pressures, and fail to find out about the deadlines that might constrain the Other Party.

We tend to over-focus on our own time pressure. Remember, we are not the only ones who have pressures, stresses, deadlines & priorities. The more we know about those things for the Other Party, we can achieve a better result for our side. The best negotiators invest in understanding the needs and drivers of the other party with

·      questions like "Can you explain more..." or "Help me understand that..."

·      trial scenarios such as "What if we are able to...." or "What would you be willing to offer in return if we did..."

Prof. Deepak Malhotra of Harvard Business School says, “When you are overly concerned with your own alternatives, and especially when your outside options are weak, you think in terms of ‘what will it take, at a minimum, to get them to say yes?’ When you make the negotiation about what happens to them if there is no deal, you shift the frame to the unique value you offer, and it becomes easier to justify why you deserve a good deal.”

Whatever the nature of the negotiation you are involved in, these six tips will prove handy while operating under tight timelines and pressure, to deliver good results. What other tips have worked for you? Please add in the comments.

About the writer

Raju is a Coach & Leadership Trainer with a wealth of C-suite experience and his work experience spans multiple industries – Media & Entertainment, Pharmaceuticals, Chemicals, Engineering and Apparel. His latest corporate role was as CFO & Head of Strategy for Walt Disney South East Asia.

As an Executive Coach and a Career Coach, he has helped leaders from Oracle, Logitech, ExxonMobil, AngloAmerican, Commerzbank, ANZ, Credit Suisse, PayPal, MasterCard, GE, Rockwell Automation, LyondellBasell, LafargeHolcim, Roche, J&J, Turner Broadcasting, Collins Aerospace (to name a few)  develop positive behavioural and mindset changes as well as learn needed skills and strategies to propel them towards their career goal.

Raju also delivers impactful training workshops on a variety of topics and speaks on topics such as ‘Personal Excellence amidst change & disruption’, ‘Negotiating win-win deals’, ‘Handling difficult conversations skillfully’, ‘finance-business partnering’ etc.

He lives in Singapore and serves clients worldwide