Learn the best strategies to maximize your share of the value in distributive bargaining, a type of negotiation where the parties compete over a fixed amount of value.

Look beyond traditional bargaining tactics and explore creative solutions that expand the pie for both parties. This might involve long-term agreements, strategic partnerships, or other innovative arrangements that maximize value. Other important considerations include: - Time Management - Risk Assessment (Evaluate potential risks and uncertainties associated with various negotiation outcomes. Anticipating and mitigating risks can safeguard your interests and prevent leaving money on the table) - Cultural Sensitivity

Last updated on Nov 21, 2024

What are the best strategies to avoid leaving money on the table in distributive bargaining?

Distributive bargaining is a type of negotiation where the parties compete over a fixed amount of value, such as money, time, or resources. In this situation, one party's gain is another party's loss, and the goal is to claim as much of the value as possible. However, this can also lead to leaving money on the table, which means failing to reach an optimal or mutually beneficial outcome. How can you avoid this pitfall and maximize your share of the pie? Here are some strategies to help you in distributive bargaining.

1 Know your BATNA

Your BATNA, or best alternative to a negotiated agreement, is the most favorable option you have if the negotiation fails. Knowing your BATNA can help you set a realistic reservation point, which is the lowest acceptable offer you are willing to accept. If the other party's offer is below your reservation point, you can walk away and pursue your BATNA. This can prevent you from accepting a bad deal or leaving money on the table.

Add your perspective

Load more contributions

2 Do your homework

Before entering a distributive bargaining, you should do your homework and gather as much information as possible about the other party, the market, and the issue. This can help you estimate their BATNA, reservation point, and zone of possible agreement (ZOPA), which is the range of outcomes that both parties can accept. By doing your homework, you can also identify their interests, needs, and preferences, which can help you craft a persuasive argument and anticipate their objections.

Add your perspective

Alex Medaglia

Mergers & Acquisitions | Helping business owners maximize their business exit value potential.
Report contribution
Preparation is key. Research market rates, understand the other party's potential motivations, and developing a comprehensive understanding of your own bottom-line requirements and alternate options. During negotiations, strategically make calculated concessions that demonstrate goodwill and build trust, while simultaneously ensuring these concessions are linked to reciprocal actions that incrementally advance your core objectives, thereby creating a collaborative atmosphere that can lead to more favourable overall outcomes.

Like

Load more contributions

3 Anchor high

Anchoring is a cognitive bias that influences how people perceive and evaluate offers based on the first information they receive. In distributive bargaining, you can use anchoring to your advantage by making a high but realistic opening offer that reflects your aspiration point, which is the best possible outcome you hope to achieve. This can set the tone and direction of the negotiation, and create a favorable contrast for your subsequent concessions. However, be careful not to anchor too high, as this can backfire and damage your credibility or rapport.

Add your perspective

Harshal Kalambe

I am Integrating Sustainability (ESG) Into Reality | Sustainable Supply Chain | Circular Economy
Report contribution
Similar to how Amazon sets ambitious sustainability targets, we propose ambitious initial reduction goals for emissions or sustainable practices. This sets a strong precedent for the negotiation.

Like

Load more contributions

4 Make smart concessions

Concessions are inevitable in distributive bargaining, as both parties need to show some flexibility and willingness to compromise. However, you should make smart concessions that are proportional, conditional, and strategic. Proportional concessions mean that you should match the other party's concessions in size and frequency, and avoid making large or frequent concessions that signal weakness or desperation. Conditional concessions mean that you should link your concessions to their concessions or demands, and avoid making unilateral or unconditional concessions that reduce your leverage. Strategic concessions mean that you should plan and sequence your concessions in advance, and avoid making premature or hasty concessions that leave money on the table.

Add your perspective

Andrea L. Albright

Lawyer | Champion of DEI & Compliance
Report contribution
Mirroring actions enhance smart concessions in distributive bargaining. By matching the size and frequency of the other party's concessions (proportional), linking concessions to their actions (conditional), and planning deliberate, timely concessions (strategic), you build trust and maintain leverage. Moreover, this type of approach can be predictable, and bringing a sense of control in this way to the other party can allay worries that are inherent in large negotiations. This can, in turn, foster rapport and ensure that concessions are earned, preserving your position and achieving favorable outcomes.

Like

Load more contributions

5 Use objective criteria

Objective criteria are external standards or benchmarks that can help you justify your position and evaluate the other party's offer. For example, you can use market prices, industry norms, expert opinions, or legal precedents as objective criteria. Using objective criteria can help you avoid emotional or subjective arguments, and increase your legitimacy and persuasiveness. However, be aware that the other party may also use objective criteria to support their position, and be prepared to challenge or question their sources or validity.

Add your perspective

Load more contributions

6 Build rapport

Even though distributive bargaining is competitive and adversarial, it is still important to build rapport and trust with the other party. Rapport can help you establish a positive and respectful relationship, reduce tension and hostility, and facilitate communication and cooperation. You can build rapport by using active listening, empathy, humor, compliments, or common ground. Building rapport can also help you avoid leaving money on the table, as it can increase the likelihood of reaching a mutually satisfactory agreement or creating value in other ways.

Add your perspective

Andy Koh

Product Management| Product Marketing | Partnerships | Growth Marketing | P&L | Digital | Subscription Model | Start Up
Report contribution
I've learnt to establish common ground and build rapport by being authentic and genuine in my interest in understanding the other party. Often, it takes time to uncover common interests and topics but often what bonds parties together are key trends and perspectives that revolve around you. Try it

Like

Load more contributions

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Add your perspective

Luis Fortunato de Abreu Branco, PMP®, PMI-ACP®, PMO-CP®, ATP® Instructor

CEO na Business Insight, Consultores de Gestão, Ldª | PMP®| PMI-ACP®| PMO-CP®| ATP® Instructor
Report contribution
Look beyond traditional bargaining tactics and explore creative solutions that expand the pie for both parties. This might involve long-term agreements, strategic partnerships, or other innovative arrangements that maximize value. Other important considerations include: - Time Management - Risk Assessment (Evaluate potential risks and uncertainties associated with various negotiation outcomes. Anticipating and mitigating risks can safeguard your interests and prevent leaving money on the table) - Cultural Sensitivity

Like
Corina Taban

Sr. Strategic Partnerships Manager | Negotiation, Relationship Building, Market Expansion
Report contribution
Look for ways to create additional value before dividing it. This might involve creative problem-solving, exploring joint ventures, or identifying complementary interests. Both sides should identify, recognize and agree on the extra value created through collaboration to avoid ambiguity. Since both parties are responsible for creating the delta, consider splitting this piece of the pie equally, regardless of each party's power or resources. Equitable sharing of the extra value is particularly important in the case of long-term sustainable partnerships.

Like

What are the best strategies to avoid leaving money on the table in distributive bargaining?

1

2

3

4

5

6

7

1 Know your BATNA

2 Do your homework

3 Anchor high

4 Make smart concessions

5 Use objective criteria

6 Build rapport

7 Here’s what else to consider

Strategic Negotiations

Rate this article

Thanks for your feedback

More articles on Strategic Negotiations

More relevant reading