Readers of this blog and alumni of my fee negotiation workshops know that anchoring is one of the most effective tools at the disposal of a negotiator.
Benefits of good anchoring
Good anchoring allows negotiators to optimise their negotiation flexibility. It also helps to implement ambitious and realistic opening positions. Good anchoring will help uncover a counterparty’s likely veto position without too much of a risk of overshooting.
When used well, anchoring also supports a negotiation process. Anchoring helps to manage clients’ expectations. The anchor will help set the negotiation as constructive and positive.
In the study, analysing 22 negotiations, researchers found that in just under half the cases making a first offer did not result in a substantial improvement of outcome from the perspective of the first mover. In the other cases, making a first offer did result in a significant advantage to the side making the first offer.
The researcher found that the effect of the first offer was significantly influenced by the pre-offer dialogue. They identified four specific power gaining or losing behaviours. These either contributed to or detracted from the impact of the first offer/ anchor.
Power gaining behaviours included:
- information seeking/ asking questions
- refusing to share information
Power losing behaviours included:
- failing to seek information
- being patronizing
- sharing information or making proposals that provide non-public information to the other side
Although the research is based on a relatively small sample, it does support the notion that the conversation(s) taking place before an offer have a substantial impact on the outcome of a negotiation. This influence , especially if either of the negotiators engage in power gaining or power losing behaviours.
The findings also support two specific recommendations: that information sharing needs to be done carefully and that preserving good relationships by avoiding negative behaviours (such as being patronising) can generate significant benefits.
The key conclusions I draw from the research however is that good negotiation requires preparation both in terms of content and process and that there is real value in thinking through both the sequence and timing of the elements of a negotiation.