Perils of ambitious goals

Attendees of our highly successful High Impact Fee Negotiation programme and readers of High Impact Fee Negotiation and Management for Professionals as well as other negotiation text books will know how important setting ambitious goals is to negotiation performance. The research data we have collected over the last three years, covering over 700 negotiators demonstrates quite clearly that ambitious targets setting has the single largest impact on the outcome of the negotiations we observe. For every percent a negotiator can set a more effective target i.e. as close as possible to the counterpart’s veto they are likely to get almost 1% more in outcome, irrespective of anything else.

Great negotiators know this and will spend inordinate amounts of time and effort honing their target setting in part by collecting as much information on their counterparts’ vetoes as possible. They will also spend significant time reviewing their performance as negotiators, in particular in terms of how well they set their targets and how much of their target they got. We often see untrained negotiators set unambitious targets and being satisfied with relatively unspectacular outcomes.

This is a valuable and important skill to learn and master. However – there is a major problem attached to this approach – potential dissatisfaction with the outcome of a negotiation.

The key reason, as reported in a recent blog by Harvard Program on Negotiation (PON) staff, citing a number of research studies, is that although negotiators setting challenging goals, consistently outperform those that do not set challenging goals, they are also tend to be less satisfied with the outcome of their negotiations. This in turn could result in de-motivating negotiators in setting ambitious targets.

The research also found that this dissatisfaction effect was significantly reduced when the negotiators were asked to compare the outcome of their negotiation not with their targets but with their vetoes or reservation prices. The reasons for this seem obvious. No matter how good a negotiator you are, if the target set was really ambitious, by definition it is not likely that you will achieve it fully (otherwise it will not have been ambitious). An ambitious target however is very likely to have helped get more than the absolute minimum or the outcome that was expected at the outset. To keep motivation going it is therefore best to set an ambitious target but to analyse performance against the veto or expected outcome.

Inexperienced negotiators can choose to be happy by setting unambitious targets (they are known as satisficers) or unhappy but successful by setting ambitious targets. Experienced negotiators know how to be both.

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