When negotiations take a turn: Understanding the pendulum effect

Imagine this scenario...you walk into a negotiation ready to face a counterpart whom you deem to be a long-term business partner. However, when you get to the table, the situation is far from how you imagined it to be. You are treated in a hostile manner, the focus is on price only, and your counterpart is doing everything they can to squeeze you, with zero care or concern for the total value. As a trained negotiator you understand that price isn’t everything because total value is what really counts.??

This situation, in a negotiation context, is what I call the pendulum effect, where you are swinging from what was supposed to be a long-term, value creation and trust centric negotiation, to a hostile, win-lose, price-focused one. As a result, you are left feeling frustrated, confused, and potentially in deadlock. It is important to note that like a pendulum, the circumstance could swing back to the intended scenario depending on how the situation is handled.??

However, for the sake of argument, considering the first scenario, you might think to yourself, “What on earth happened?”??

A few things spring to mind.?

Fundamentally, you weren’t as prepared as you could have been. Who had the balance of power and was this perception of power a shared sentiment? Was your counterpart able to dictate how they wanted to negotiate???

We don’t negotiate with companies, we negotiate with people. In this situation, did we fully appreciate the needs of the person sitting across the table from us? If not, the absolute minimum we needed to know was the persons KPIs. If our counterpart was a purchaser for example, then more often than not, their understanding of total value in a negotiation might be limited and an important aspect of their KPI would be cost reduction. In this case, it’s no wonder they may be hostile and price focused.??

What could you do differently next time??

- Conduct a pre-conditioning exercise with the counterpart before the negotiation, to limit their ability to dictate the negotiation scenario?

- Analyse the balance of power?

- Focus on value creation, instead of a win-lose scenario?

- Consider that you might have been negotiating with the wrong person in the organization so find out who is the right person?

It’s in our best interest to ensure the counterpart understands there is so much more to gain by considering the added value that more variables bring.??