Why Your Negotiations Are Doomed (And How to Rescue Them) (Videocast and Podcast of the “Wise Decision Maker Show”)
We intuitively overestimate how well others read us and how well we read others, a dangerous judgment error called illusion of transparency. This mental blindspot leads to disastrous results in negotiations and communications. That’s the key take-away message of this episode of the Wise Decision Maker Guide, which describes why your negotiations are doomed and how to rescue them.
Videocast: “Why Your Negotiations Are Doomed (And How to Rescue Them)”
Podcast: “Why Your Negotiations Are Doomed (And How to Rescue Them)”
Links Mentioned in Videocast and Podcast
- Here’s the article on Why Your Negotiations Are Doomed (And How to Rescue Them)
- The book Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters is available here
- You are welcome to register for the Wise Decision Maker Course
Transcript
Welcome to another episode of the Wise Decision Maker Show. Today we’ll talk about negotiations and why they fail, how to make them succeed. Unfortunately, they fail too often. Negotiators, even super professional ones, people with a lot of experience in negotiation, make surprisingly many wrong decisions about how to negotiate effectively. They really doom negotiations occasionally because they make these bad decisions. It’s very common and happens a lot and the research shows that it’s solvable. We can address this, If we understand what’s going on about the dangerous judgment errors called cognitive biases. If you’ve been checking out the Wise Decision Maker Show for a while, you know our brains are wired in pretty screwy ways for the modern environment. They are a great fit for the Savanna environment, when we were hunters and foragers living in small tribes in the Savanna environment. Not a good fit for the modern business environment. One of the biggest problems in terms of negotiations and communications has to do with how much and how effectively we communicate information to other people and the difference between conveying the information and our perceptions about how we convey information.
For example, interesting studies shows that negotiators who sought to conceal their desires about what they wanted from the other party actually did a better job than they thought they did. They were asked how well they thought they did and then the people from whom they sought to conceal their desires asked what their desires were, and the negotiators underestimated their ability to hide their desires. On the other hand. a different story show that Monday wanted to convey their desires what they actually wanted, Succeeded much less well. They Did much more poorly on conveying their desires to the other party than they thought they did. So, this is a typical human problem of communication called the illusion of transparency. It refers to us really overestimating the extent to which we effectively communicate our intentions, our mindset, what we really are thinking, what we are feeling to other people when we speak to them when we use body language, whatever. We are really actually much worse at communication than we think we are. That includes negotiators, that’s one of the dangerous judgment errors, the cognitive bias of the illusion of transparency.
I observed a clear instance of the illusion of transparency when the electric company brought me into address stalled negotiations between the union contractors and the management. Both sides thought that the other side was stubborn, intransigent and unwilling to give anything and the union demanded substantial wage hikes, strong job protections, high retirement increases, and management didn’t want to give any of this, naturally right? That’s the way things work. So, they thought that they didn’t really have any way forward and were heading toward a strike. They brought me in.
Now, I talked to both sides and quickly noticed the illusion of transparency Was harming both sides. My private conversation with the union negotiators, and with the Management negotiators showed that there was a lot of overlap in areas of potential give and take That they weren’t taking advantage of. They thought that there weren’t any areas to negotiate but there actually were. So, why did it happen? I asked both sides why they weren’t being more clear And explicit in stating what they wanted. Both sides said the same thing, Not surprisingly, they thought that the other side would take advantage of Them being more clear and explicit if they communicated their minimum acceptable Standards, what they could minimally accept and they would Actually get less than they would get otherwise if they kept pressing For lots of stuff.
Both sides tried, they told me, to convey what is really important to them through negotiating, through highlighting various areas and so on. Through their communication. They thought that the other side would get it. They thought that the other side understood much more about their priorities than the other side actually did in both cases. That’s a big problem because it didn’t give any opportunities for a win-win compromise.
I talked to both sides and to address this what we did was the decision-making techniques of weighing their priorities. And this is a quite effective technique, I describe in much more detail in other places, for this case it wasn’t that difficult. What I asked them to do was look at their priorities, their top 3 priorities. What was the most important of their top priorities, what was the second most important priority, and what was the least important. So the union Negotiators said that their most important thing, by the way that was at a time when unemployment was somewhat high, so it wasn’t in a period of low unemployment, their biggest priority was job protection. The second priority was retirement benefits for the union and the 3rd priority was Wage hikes. That was their listing of priorities.
Now, talk to management they surprisingly enough actually had the opposite priorities: their primary priority was not to give any wage increase, the secondary priority was to not give a retirement increase and the 3rd priority was to not strengthen job protections. By clarifying these priorities both parties were able to find room for effective compromise so the final compromise involved much strengthened job protections, a modest retirement increase and small wage increase that was just under inflation. The management really appreciated this outcome because it involved much less capital outlay, so they didn’t have to spend as much money on labor and the union appreciated this, both the new negotiators and their membership because it provided quite a bit higher job projections than at a time of high unemployment. So that was a concern for union members.
So, remember in any negotiations situation, as in this one, or when you are negotiating with your boss, you’re negotiating with a business partner, not simply a union. Whatever, you are very likely overestimating the extent to which you are communicating your priorities to others parties and the extent to which the other party and the extent to which the other party actually wants you to achieve from the negotiations. You are likely underestimating your capacity to understand both. So that’s a big problem, the illusion of transparency and of course the other party is making mistakes about you. An easy way to address this problem is to use the decision strategy of weighing your priorities. Clarify top 3 or top 5 priorities, it depends on how complex it is. What is the most important thing, second, third and so on, and the same thing for the other party. It gives you a clear structure for what’s most important, what’s least important and then you can trade off your highest priority for their highest priority and so on down the list. Of course, this is somewhat simplistic And it depends on each negotiation. Each negotiation is different, but it gives you a basic structural outline That can help you come to a win-win compromise. Where both parties, you and the other party can have the biggest gain for what’s important for them and the least losses for what’s important for them. Much more of this is described in the blog on this topic which is linked in the show notes. And so are a variety of relevant blogs that you can check out. You like this episode, I hope. if you did please click Like and share it with other folks and please leave a review of the episode on wherever you are getting this episode from. Of course, follow the Wise Decision Maker Show and follow us on social media. Check us out. To learn more about making the wisest and most profitable decisions, please make sure to register for my Wise Decision Maker course, it’s free, with 8 video-based modules. It’s going to be at DisasterAvoidanceExperts.com/subscribe and that’s also linked in the show notes. For more information about these topics, please check out my book. It’s called Never Go With Your Gut: How Pioneering Leaders Make The Best Decisions And Avoid Business Disasters.
I hope to see you on the next episode of the “Wise Decision Maker Show” and as always, I’m wishing you the wisest and most profitable decisions.
—
Bio: Dr. Gleb Tsipursky is an internationally-recognized thought leader on a mission to protect leaders from dangerous judgment errors known as cognitive biases by developing the most effective decision-making strategies. A best-selling author, he wrote Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters (Career Press, 2019), The Truth Seeker’s Handbook: A Science-Based Guide (Intentional Insights, 2017), The Blindspots Between Us: How to Overcome Unconscious Cognitive Bias and Build Better Relationships (New Harbinger, 2020), and Resilience: Adapt and Plan for the New Abnormal of the COVID-19 Coronavirus Pandemic (Changemakers Books, 2020). He has over 550 articles and 450 interviews in Inc. Magazine, Entrepreneur, CBS News, Time, Business Insider, Government Executive, The Chronicle of Philanthropy, Fast Company, and elsewhere. His expertise comes from over 20 years of consulting, coaching, and speaking and training as the CEO of Disaster Avoidance Experts, and over 15 years in academia as a behavioral economist and cognitive neuroscientist. Contact him at Gleb[at]DisasterAvoidanceExperts[dot]com, Twitter @gleb_tsipursky, Instagram @dr_gleb_tsipursky, LinkedIn, and register for his free Wise Decision Maker Course.
