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This article is republished with permission from Scotwork Australia

Negotiations run on concessions, in fact negotiating is simply a process of trading concessions!

If you think about most commercial negotiations, there will be a range where deals can be done. We call this range the ‘bargaining arena’. Any positions outside the bargaining arena simply don’t add up.

The beautiful thing about concessions is we can move someone towards our end of the bargaining arena on one variable by trading off concessions of lessor importance in other areas. For example, “If you are prepared to reduce the price, I can sign a longer term.”

If we get creative enough with these variables, they can be so impactful as to shift the limit positions and move entire bargaining arenas.

So, why are they so often overlooked and under-utilised as a source of power?

Reason 1 – “We thought concessions were bad…”

The first reason concessions are overlooked as a source of power is a school of thought that making concessions is a bad thing. If all you did was to ‘concede unilaterally’, we would agree that making concessions would not be good.

This type of negative thinking often features around highly emotive negotiations such as enterprise bargaining negotiations.

Any unilateral concessions would indeed make you worse off, however creative low cost/low difficulty positions could be traded to create additional budget for salary!

So, in fact it isn’t the concession itself that is bad, it is a lack of negotiation strategy and skill in deploying it effectively that erodes value.

Clever negotiating concessions can allow you to achieve more than was ever possible without them.

In your next negotiation, think about what you could do for your counterparts that would allow them to move further for you.

Reason 2 – “We already gave all our concessions…”

The second most common way concessions are overlooked is because they have already been given away (not traded)!

Concessions are generally a precious resource; in other words, you can only make so many concessions before you run out.

The problem is that if you have deployed all your available concessions, then you have little left to negotiate a better deal with.

To give you an example, it may be in your interest to load how-to product videos on your website, however that might also be high value to your counterpart through helping them sell more. Simply agreeing would be a missed opportunity to trade concessions. Instead, in exchange for making these videos available on your website, you could propose that they wear shirts with your logos or engage desirable influencers for any video content created.

To wrap up…

Consider what concessions your organisation typically makes in commercial negotiations, how your counterparts value those concessions, and what you could get in return if you traded them instead of unilaterally conceding.

Happy negotiating!

Contact Scotwork Australia |[email protected] | +61 2 9211 3999)