Risk is a powerful motivator, and it factors into almost every serious negotiation. Aggressive negotiators use it to pressure their counterparts into a deal by trying to make them focus on the risks they’ll face if they don’t get a deal. They want their counterparts to think about the negative consequences of saying “no.” “You heard my offer, and if you don’t take it you’ll have to go home empty-handed.” “The longer we take discussing these terms, the more market share you’re going to lose.” “You won’t get better terms anywhere else, if you can even get a deal anywhere
If there is a strategy behind that aggressive use of risk—and often, it’s just an instinctive move by negotiators who think aggression is a substitute for a good strategy—it is to make it harder for the other side to say “no.” If they’re afraid of the consequences of walking away, theoretically they’re less likely to do it. But this is a problematic strategy, because any unnecessarily aggressive pressure tactic is likely to make the counterpart defensive. Negotiators who have turtled up and adopted a defensive mindset are less likely to listen to you, less likely to believe what you have to say, and even less likely to remember what you were saying in the first place. They’ll focus instead on the fact that you were putting pressure on them, which redefines and erodes your relationship. That’s not to say that using risk aggressively can’t work in negotiation, only that it can be much more expensive and less effective than aggressive negotiators expect.
There is a more subtle way to think about risk. Often, rather than the risk of saying “no,” people focus on the risk of saying “yes.” Everything is possible during the negotiation, but once an agreement is reached negotiators have to face the consequences. Will I be able to live up to this commitment? Will they? Will it work out? If not, will I be blamed for negotiating a bad deal? Those worries make it harder to say “yes,” even if rationally the proposal should be acceptable. The perceived risks of agreement incentivize people to keep negotiating past the point where they could agree. A negotiator focused on these risks feels the need to compensate themselves; for example, if they’re worried they’ll be criticized for agreeing to a deal, they’ll feel like they have to get a more aggressive agreement in order to protect themselves from that criticism. So they wind up demanding more, even if it puts them at risk of losing the agreement that satisfies their core interests.
A careful negotiator knows that my managing her counterpart’s perception of these risks, she can make it easier for him to say “yes.” It also helps build the negotiators’ relationship, as opposed to using risk aggressively, which can damage it. There are two steps to this strategy. The first is identifying, as specifically as possible, what risks the counterpart sees in an agreement. These tend to fall into three major categories:
Financial risks. These are relatively simple. It’s simply the fear that the deal on the table isn’t good enough yet, so saying “yes” will be too expensive. Negotiators often disclose their feelings about these risks; in fact, some negotiators don’t want to talk about anything else. “I won’t make enough money if I agree to this deal.” “The margins aren’t big enough.” “I could get better terms if I waited.”
Emotional risks. One of the more problematic risks. This is the counterpart’s fear that he will feel bad if he agrees with the proposal. That might be because will feel he could have done better, and so worries about feeling like a weak or incompetent negotiator. Or perhaps he’s focused on the idea that if he leaves value on the table, he’s letting you win. In a business setting, it’s often the case that negotiators worry about losing face. These risks are rarely on the surface of the negotiation, so they can be tricky to identify. “If I say yes right now, my boss will think I’m weak.” “If I don’t push them around a little more, my employees won’t respect my skills as a negotiator.” “These guys will walk away feeling like I’m a pushover if I agree to this proposition.”
Measurability risks. Another subtle risk is the inability to see the future. A negotiator who doesn’t know whether the deal on the table will work out has an incentive to push for a better deal, not just to give themselves better odds of an agreement that meets their interests in the long run but also so that they will feel like they’re more in control of the future. What matters for these purposes is just that very specific feeling that the unknown future is worrisome, and pushing for a better deal helps alleviate that worry. “There’s no way to know for sure what our supply costs will be like next year; we’ll probably make a profit under this contract, but I’d feel better about it if we got a little higher price.” “I think we could probably meet these volume commitments, but just in case I’d better demand they reduce the penalties in the final agreement.”
Remember, it doesn’t matter for these purposes whether the counterpart’s fears are rational. What matters is that they’re genuine. A negotiator who feels that saying “yes” entails one of these risks has a reason to say “no,” because it’s one way to control those risks. In practice, this often results in a negotiator demanding more value in an agreement to buy themselves out of the risk. With a rich enough deal, they’d worry less about whatever it is that’s blocking their agreement.
The second step is to help reverse the counterpart’s risk for them. If you can resolve their fear about saying “yes,” you’re removing an obstacle to the agreement. For example, if the counterpart is worried about the financial risk, emphasizing the value on the table or working together on more reliable projections can allay some of their fears. Emotional risks are more difficult to identify, but sometimes easier to resolve. A good relationship between the parties is usually the best first step, because people worry less about being taken advantage of (or, more importantly, being seen as being taken advantage of) by a trusted partner. If the negotiator is mostly worried about their reputation or the opinion of their own people, it can help to give them a narrative: show them why they’re negotiating the right deal, in terms they can use to explain to the people whose opinions concern them. The more they feel like they’ll be able to explain that they negotiated a good deal, the easier it is for them to say “yes.” This isn’t about whether they’ll actually ever have to defend their decision, just making them feel like they could if they needed to. Measurability risks are best reversed by giving the counterpart a reason to believe they can project the future, for example by showing them that someone else has profited under similar terms. That doesn’t actually predict what’s going to happen in this case, but makes the counterpart feel as if they have a grip on the future.
Ideally, these sorts of discussions can help reverse the perceived risk of saying “yes.” In the real world it’s not always so easy. Often you must find some middle ground, giving up some value to help reverse the perceived risks. For example, if simply telling the counterpart they have no need to worry about criticism isn’t enough, you may need to give them some point in the negotiation they can use to resolve their own concerns. A negotiator is likely to feel more comfortable saying “yes” if they know they’ll be able to go back to their people and say, “I got them to agree to this extra value we didn’t expect to get.” Finding a way to make the other side feel, and look, like a strong negotiator is one of the most effective tactics in the long run.
Reversing the risk of saying “yes” doesn’t take the risk of saying “no” off the table. Those risks still need to be addressed and carefully framed. But handling the risks of “yes” can avoid the hidden landmines that disrupt too many negotiations, and help build a positive relationship between the parties. In your next negotiation, ask yourself: other than wanting more value in the deal, why are they saying “no”? If you can find and reverse those reasons, you’ll make it easier for them to agree to the terms you prefer and happier that they did so.