The Intelligent Negotiator (24 page)

C
HAPTER
7
S
TAGE
T
HREE:
T
HE
C
LOSING
S
TAGE

I
f you have made it to the end of the Distributive Stage, you and your bargaining counterparts can safely assume that an agreement is going to be achieved. You experience a sense of relief, pleased that the uncertainty of the negotiating process is about to be replaced by definitive terms—a deal. If you observe carefully, you will see signs of relief around the mouths of everyone at the table. They, and you, will assume more relaxed postures. Once this stage is reached, and all the participants become psychologically committed to final agreement, they often begin to move quickly toward the conclusion of their interaction.

P
ATIENCE
I
S
C
RITICAL

Don’t rush to close a deal. A majority of all concessions made during the bargaining encounter are made during this stage. While the concessions themselves are generally smaller than earlier position changes, their total amount can become significant. If you are overly anxious and move too quickly toward final terms, you stand to lose much of what you gained during the distributive stage. It is important that you remain patient and allow the closing stage to develop in a deliberate manner.

When the Closing Stage begins, many bargainers recognize that the conclusion is in sight and speed up, eager to complete the interaction. Instead of being a time for swift action, this is a time for perseverance. Continue using the techniques that took you this far, because those tactics have been successful. Keep the process heading inexorably toward a final accord, and do so patiently. To accomplish this objective, avoid disruptive tactics, such as a walk-out or the slamming down of the telephone. If you break off talks now, you may need days or weeks to return to this point in the transaction if you are able to get back to the table at all.

Be aware of your own concession pattern and that of the other side. Try to make smaller and, if possible, less frequent concessions than your counterparts. If you ignore this recent history and try to reach final terms too quickly,
you
will close most of the distance that still separates you from the other party.

Less proficient negotiators make excessive and consecutive position changes during the Closing Stage in an effort to seal the deal. They are afraid to risk the possibility of impasse at this point in the transaction. They know that the terms to be achieved through settlement will be
better than their non-settlement alternatives. They fail to appreciate the fact that their counterparts are feeling the pressure, too. Take your time at this stage, and always remember how much the other side wants to obtain final agreements.

T
ECHNIQUES
Y
OU
C
AN
U
SE

By the conclusion of the Distributive Stage,
both sides
have become psychologically committed to agreement. Neither side wants its prior bargaining efforts to culminate in failure. Less proficient participants focus entirely on their own side’s desire to achieve final terms, disregarding the settlement pressure impacting their opponents. This causes them to heighten the pressure that influences them, and to discount the anxiety their adversaries are experiencing. They thus feel a need to close more of the gap remaining between the two sides.

By the time the Closing Stage is reached,
both sides
want an agreement. They would not have spent the time and effort needed to get this far if an accord was not preferable to an impasse. Both sides should move together toward the final resolution. Protect the hard work you’ve done up to this point in the negotiation. Don’t make concessions that are not reciprocated by your counterparts. Avoid excessive position changes that are not matched by the other side. Consider larger concessions at this point only when it is clear that your counterparts made greater position changes earlier and seem to be approaching their bottom line.

Skilled bargainers often obtain significant gains during the concluding portions of interactions. A particularly
effective technique for the Closing Stage is
the promise technique.
If you want your counterparts to alter their position, use the promise technique (rather than disruptive threats or warnings) to induce them to move in a face-saving way. Indicate your willingness to make another concession if they change their position. You can often overcome temporary impasses by doing this, for your opponents will be likely to make position changes that you have promised to reciprocate.

Patience
and
silence
are two of the most powerful devices to use during the Closing Stage. Each time you announce a position change, succinctly indicate the amount and reason for your new offer and become quiet. It is the other side’s turn to respond. Say nothing. Continued babble will be perceived as a sign of anxiety and weakness. Don’t contemplate further movement without reciprocal movement by the other party, and don’t hesitate to remind unyielding opponents of your previous position changes to generate guilt and to convince the other side that it must make the next move.

Intelligent Negotiators often project a
personal indifference
that is designed to scare their counterparts. They want those individuals to think they do not care whether they achieve final accords. The more you can indicate a willingness to walk away if better terms are not forthcoming, the more you can induce opponents to close the remaining gap between you. By getting your counterparts to make larger and more frequent position changes at this stage, you can regain much of what you gave up during the Distributive Stage.

The distance between the parties once they reach the closing stage is not usually large—but it can still be significant. A $1,000 or $5,000 difference is important to someone with limited financial resources. A $50,000 gap
is significant to most people, while a $5 million difference is huge to almost everyone. When overly anxious participants give up most of the $1,000, $5,000, $50,000, or $5 million gap, they regret their unnecessary generosity. If they patiently allow the Closing Stage to develop, they can increase the probability that their side will obtain more of the remaining gap.

I have often seen impatient negotiators give up thousands of dollars during the final minutes of the Closing Stage to guarantee agreements. In some instances, I have seen people concede hundreds of thousands of dollars—and occasionally even millions of dollars—near the end of bargaining encounters. I can recall a corporate sales transaction involving a $1 billion business deal. Near the end of the interaction, the parties were about $30 million apart. The negotiators broke off talks to consult their respective principals. The buyer concluded that he should have accepted the seller’s proposal, and decided to call the seller first thing in the morning to accept his offer. The buyer did just that, but the seller interrupted before the buyer could accept. The seller rushed in to say that he should not have let the buyer leave the evening before, and agreed to accept the buyer’s last offer—closing the entire $30 million gap. The call recipient (the seller) apparently feared that the buyer was thinking of withdrawing his last offer, and quickly accepted the buyer’s outstanding proposal from the previous day, before the buyer, who initiated the telephone call could change his mind. Had the seller been more patient when receiving the phone call, he would have gained millions of dollars.

At this stage of the process, you must remember to look across the bargaining table and ask how much
your counterparts
want or need the deal. Your opponents usually want to achieve final terms as much as you do—and
they may be more anxious to do so in some situations. Ignore this likelihood, and you will concede all your bargaining power to your counterparts.

W
RAPPING
U
P

Despite the seemingly cooperative aspect of the Closing Stage, this is a highly competitive portion of the interaction. It involves a substantial number of position changes. Negotiators who do not ensure reciprocal movement by their counterparts may lose their hard-won gains. Do not succumb to your counterparts’ efforts to get you to close most of the remaining gap, thereby causing you to accept inferior terms. Always remember how much your
opponents
desire an agreement. If you keep this firmly in mind as you close the deal, you should be able to induce the other side to make the concessions needed to solidify the deal.

Near the very end of the Closing Stage, there is often a small gap remaining between the participants. Both sides are certain that an agreement is going to be achieved, but who should make the final concession? If you are an adversarial negotiator, you will probably try to induce your counterparts to close the remaining distance. This approach may provide you with a slight monetary gain, but it may also leave your counterparts with negative feelings. If you two have future dealings, those negotiators who were forced to make the last concession may be out for revenge. Both Innovators and Cooperatives recognize the goodwill to be generated by final position changes on their part. This cooperative gesture leaves your counterparts with the sense that they got a good deal, a psychological
benefit that will likely outweigh the relatively insignificant monetary concession involved. It also creates a positive negotiating environment that should enhance the cooperative discussions that are to follow.

The closing stage of Felicia’s employment negotiations proceeds slowly and steadily, despite her temptation to rush things.

Felicia informs Solomon that she is still concerned about two issues. She asks whether President Andersen might consider a slightly higher starting salary. Solomon wants to know whether she would accept $62,000 if he could get President Andersen’s approval. When Felicia responds affirmatively, he promises to request such approval. Felicia then says that she would like to know how much the firm would be willing to pay each year for training programs. When Solomon proposes a $5,000 limit, she says this would be acceptable. He says how pleased he is to have Felicia joining the firm.

Felicia finally tells Solomon that she would find it difficult to begin full-time work within the next two months. Solomon asks if she might be able to begin within six weeks, and she indicates that she could probably do so.

S
UMMARY
P
OINTS

• The Closing Stage is marked by developing certainty, relaxation, and increased commitment to final agreement.
  

• Participants should move steadily toward a successful conclusion, but never rush the process. Keep your opponents’ desire for final agreement firmly in mind.
  

• Effective techniques include promises, patience, silence, and feigned indifference.
  

• Near the end of interactions, negotiators must be patient and avoid unreciprocated concessions.
  

C
HAPTER
8
S
TAGE
F
OUR:
T
HE
C
OOPERATIVE
S
TAGE

T
he Closing Stage has been successfully completed. You and your counterparts have agreed upon mutually acceptable terms. Many negotiators now consider the bargaining process completed. It is
not
finished. This conclusion may be warranted (but not always) with respect to interactions that involve only the immediate payment of money (in which case neither participant could gain without a corresponding loss by the other side); but it is not correct when multi-issue interactions are involved. Once the Closing Stage ends, you enter Stage Four, the cooperative stage, also called Maximizing the Joint Return. Intelligent Negotiators take this opportunity to expand the pie and seek the most efficient distribution of items. You should use this stage to go beyond “acceptable terms” and improve the returns for both parties.

While many bargaining interactions appear to involve only monetary transfers that include no room for
cooperative exchanges, some of these can be modified to permit joint gains. For example, in a home sale negotiation, the current owners believe they should get $250,000, but the prospective buyers can only afford $230,000. The sellers might agree to carry a $20,000 personal loan that the buyers will pay off over the next ten years, which will enable the purchasers to pay the full $250,000 price. The sellers would also get the benefit of the interest on that loan over the ten-year period. Or, in another cooperative bargaining scenario, the buyers may have a contracting business that will enable them to pay $230,000 in cash and promise to provide $25,000 in contracting services for the sellers in the new house they plan to buy across town. The sellers receive $230,000 plus $25,000 in services, resulting in their receiving a selling “price” of $255,000. Providing the additional services may only cost the buyers $15,000, resulting in their paying a purchasing “price” of $245,000. In both of these situations, the buyers and the sellers obtain what they want, despite the fact that their initial positions seemed irreconcilable.

Other situations involve much higher stakes. For example, a company that wants to purchase another firm lacks the cash to pay the $50 million asking price. The purchasing party may offer $40 million in cash and $10 million in stock, or may alternatively offer $35 million in cash and $15 million in goods or services it knows the selling firm wants that it can provide. The selling firm values those goods and services at the $15 million they would have to pay to buy those items, while the purchaser values them at the $9 million it costs them to generate the items.