Welcome back to my blog. To start the year I thought I would write about one of the most powerful weapons in a negotiator’s armory – the anchor.
Anchoring is an extremely well researched phenomenon and most experts consider this to work just about in all cases even unless one is up against very experienced negotiators. Only the most self disciplined and experienced are capable of ignoring a well delivered anchor.
Anchoring is thought to be particularly effective because it has been shown to impact both people’s analytical (i.e. slow) and heuristic (i.e. fast) thinking processes. Daniel Kahnemman’s book Thinking Fast and Slow is a great source of further details on this phenomenon.
To give just one illustration of the power of anchoring, it has been shown that highly analytical people such as judges were significantly influenced by the outcome of throwing dice when deciding the sentences for convicted offenders.
Anchoring works well in a negotiation for two reasons. First because most people will relate the progress and outcome of a negotiation to the number that was first mentioned, i.e. the anchor. That is why it is usually better for a service provider to deliver a high anchor first so that any subsequent negotiation downward will be perceived as positive by clients. If the client were to go first and throw out a low anchor then the negotiation upwards will not generate the same positive feeling about the negotiation, even if the outcome were to be identical to the first scenario, when the service provider went first.
The second reason is that a good anchor can prime people’s’ views in relation to an outcome. I have heard of one instance in which one of the negotiation parties insisted on scheduling a negotiation at 10 am and on using room 10. Not surprisingly they were going for a fee that started with a 10 rather than a 6. I do not know how successful this approach was. I think however that this effect is less influential than the first, because most fee negotiations take place between two sides that will have engaged in significant preparations and will thus be less swayed by being anchored.
There are two ways to counter an outrageous anchor. One is to make a big scene and walk out (or threaten to walk out) making it clear that the negotiation will not continue unless the anchor is off the table. This may work well in a situation like a bazaar but may not be acceptable in the context of a fee negotiation.
An alternative technique is to ignore the anchor set by the other side. Do this by focusing on your own anchor, especially in terms of the arguments supporting your perspective and the cost/ disadvantages for the counterpart if an agreement is not reached.
Wishing all readers a great and successful (negotiation) 2016!