So here are some steps you can take to rebuild trust:

1.   Propose a “sit-down”, a personal meeting.

2.   Emphasize the relationship.

3.   Swallow hard and apologize.

4.   Let them blow off steam.

5.   Resist the urge to strike back. Don’t get defensive.

6.   Listen. Ask for clarification. Summarize.

7.   Test to make sure you understand.

8.   Together focus on what you learned and develop a plan so it won’t happen again.

9.   Revisit your relationship. “How are we doing?”

Your reputation is everything. If you cannot be trusted you really have no credibility. The other side can disagree with you, they can argue with you, they can confront you, but they have to be able to trust you.

How do you use this to your advantage? How do you improve the likelihood of getting the other side to comply with your request?

You give something first before asking for a favor in return. On face this seems straight forward but you can use this to your advantage because of the power of the perceived fairness of reciprocity. Often to rid ones self of indebtedness, a party will concede more than is necessary to unburden themselves. While you do not want to get trapped in a series of unilateral concessions, an uninvited favor can often result in an unequal concession from the other side.

You can also enhance your success by using a negotiation tactic I call “the kick-in-the-mouth.” Here you tart with an extreme request that you are sure will be rejected. Then, you retreat to a lesser request (the one you wanted all along) in the hope that the other side will see it as less extreme and thus easier to “yes” to. This rejection-then-retreat technique has the added benefit of often increasing the likelihood that the other side will agree to similar requests in the future.

To protect yourself against this tactic be ready to accept concessions in good faith but be ready to redefine them as deceptions should they be proven to be such in the future. Call them out, calmly and fairly if they use this tactic against you.

It would be great of all negotiators shared common interests, but the reality is that in most bargaining situations negotiators interests are in conflict. So you have to bargain. And power at the bargaining table is too often misunderstood.

Bargaining power originates from the your ability to make a single credible threat. That threat is to walk away from the table if they do not give you what you demand. The source of the power to make that threat is your Best Alternative to a Negotiated Agreement (BATNA).

Since perception is reality, it is not so much the actual quality of your BATNA, but your counterpart’s belief in the power of your BATNA that matters. Where power is concerned, the beauty of a BATNA is in the eye of the beholder.

In most bargaining situations, at least in the short term, the BATNA is to keep bargaining. If you and your counterpart reach an impasse, the negotiator to whom the impasse is least costly has the strongest BATNA.  Thus, patience translates into bargaining power.

It is not a perfect world and misinformation about the other side’s power and BATNA are frequent. Before employing an impasse in a bargaining situation, weigh the costs of angering the other side, reducing future trust, and the true costs of the conflict against the gains you seek

A negotiator with good judgment knows not only how to identify and exploit sources of power but also when not to do so.

1)  You should try to create as much value as possible. Your goal should be mutual gain. You should focus on the interests that can help you and the parties with whom you are collaborating in the negotiation.

2)  Once value has been created, your goal should be to capture as large a share as possible of the created value. Your goal is to advance your agenda. While you want to help others, you should not be too altruistic. Helping others achieve their goal should not be at the expense of your own goals.

3)  You want to build and nourish important relationships. Pareto Optimization is a negotiation terms that means making yourself better off up to the point that you hurt the other party.  Remember that relationships are very hard to build and very easy to destroy. Once a relationship is lost, it is hard to regain.

4)  You want to always enhance your reputation and your credibility. Your goal should not be to be “nice.’ It should be to be creative, tough, and above all, trustworthy. you should view every negotiation into which you enter as an opportunity to reinforce your reputation. Your reputation is a priceless asset. Like relationships, your reputation to also hard to build and easy to destroy.

1)   Contingent contracts allow negotiators to build on their differences. Don’t argue over the future. Bet on it!;

2)   Contingent contracts let negotiators diagnose the honesty of the other side;

3)   Contingent contracts let negotiators reduce their risk through risk sharing;

4)   Contingent contracts create an incentive for the parties to the agreement to perform at or even above the contractually specified levels;

5)   Contingent contracts allow negotiators to manage decision-making biases; and

6)   Contingent contracts solve the problem of trust, especially when one side has information that the other side may lack.

Use contingent contracts to protect yourself. You are not as clairvoyant as you might believe. Leave infallibility to your lawyers (who believe they can protect you from every possible hazard). And while you are at it, negotiate your contract with your lawyers with a contingency to protect you if and when they are wrong.

It seems that there is a positive payoff to angrily responding to someone’s low offer, whether your anger is real or feigned.

Negotiators tend to perceive angry negotiators as tough bargainers. Being perceived as angry sometimes improves your negotiation outcomes. There are, however, situations where anger can actually work against you. If you are perceived as an “angry negotiator” you run the risk of people feeling more comfortable taking advantage of you through deceptive tactics. It is harder to take advantage of a “nice guy.” In addition, people seem to fear angry negotiators less—and consequently give them worse offers—because a rejection of their offer would not appear to damage an already poor relationship.

Anger signals that you are tough and that can help you get what you want. However, when your negotiation counterpart feels that your rejection of their offer will not hurt them all that much, your perceived anger may actually work against you.

The fact is that many people anticipate important negotiations with the same sense of foreboding that they reserve for root canals.

But be aware that stressed-out negotiators tend to be less effective than their calmer counterparts. The more stress you feel before negotiating, the less value you will claim in the task.

The key to success may be to treat a negotiation more like a challenge and less like a threat.

Easier said than done?

When negotiators lack the skills and resources needed to excel, they tend to view a negotiation as a threat, exacerbating their stress. Negotiators who are confident they are up to the challenge of the task see it as a challenge and are less prone to stressing out. They are less fearful, more optimistic, and more confident.

People who view a negotiation as a threat tend to be passive. That passivity leads them to engage in compromise — dividing up the pie rather than seeking tradeoffs that create value and expand the pie. In other words, the threatened negotiator tends to chose exactly the wrong tactic—making requests and demands when problem solving is really the tactic in which they should engage.

So, if you are intimidated by an upcoming negotiation you can improve your pre-negotiation confidence by: 1) preparing thoroughly; 2)making sure you know your BATNA; and 3) remembering that if you are stressed the odds are that the other side might be also.

Whenever possible when you feel your stress level rising focus on staying actively engaged in the process and collaborate with your counterpart.

Well, maybe you ought to consider the following before you rush to compromise. The mid-point between two positions is determined by the opening anchors placed by the negotiating parties. If one or both anchors are placed in an extreme position, the center will be skewed. Thus, a clever negotiator can stake out an extreme opening position, knowing full well that he/she will never get get that demand but by arguing the “fairness” of compromise, the negotiator can achieve a mid-point that is well in excess of what might be deemed fair had the parties made more reasonable opening demands.

Another risk is that a negotiator might be using what i call a “kick in the mouth” tactic — asking for something so extreme knowing full well it will be rejected, and then moderating that demand and sounding much more conciliatory and reasonable. The risk here is that the more reasonable demand (it is relative to the opening demand) is still, in fact, unreasonable. This is a very common ploy and is akin to a one person “good-cop bad-cop” ploy.

Be careful. Rather than focusing on compromise, focus on collaboration — trading on different preferences — to achieve what you want. Don’t rush to compromise because it means giving up on your key principles. And make sure you are not being manipulated into a a position where you will find the mid-point between two positions is in excess of your reservation point.

More on this in the next post.

1)  Expand “the pie.” When faced with scarce resources, your goal should be to find a way to expand or re-align resources so that the negotiating parties can achieve their desired goals.

2)  Logroll. Different interests and differing priorities afford you the chance to trade. The logrolling tactic is a valuable tool you should use when trying to come up with a solution that will work for both parties.

3)  Brainstorm. This tactic is most effective in several small breakout groups rather than in one large group.

4)  Offer nonspecific compensation. You “pay-off” the other side for giving in on an issue by giving in on another area that may not be part of the primary negotiation.

5)  Bridge. Invent new options that meet each other’s needs. To do this both parties need to be very familiar with the needs and interests of the other party.

6)  Survey. Distribute a questionnaire stating the problem and soliciting the respondents for possible solutions.

It is important when seeking a solution that the parties communicate their priorities and preferences. It is equally important to  have an attitude of “firm flexibility.” What do I mean? Be firm about achieving your interests while being flexible about how those interest might be achieved.

I often use the analogy of a river flowing from the mountains to the ocean. The river slams up against a huge rock during its journey. It does not ram through the  rock, it flows over, under, or around the obstacle. When confronted with a seemingly intractable problem, seek a way around the issue rather than hunkering down and slugging it out, wasting time and resources.

There are a number of factors that can trigger a walkout:

1)  Overconfidence can cause the parties to believe that their position is stronger than it really is. When one side does not believe the other side’s claims, a strike seems like a tempting option.

2)  Feeling that you are not being treated fairly can cause you to opt to “punish” the other side as payback for perceived slights.

3) Viewing the negotiations as a competition to be “won” makes the bargaining a battle of egos.

4)  Using agents who may not have aligned interests with those they represent can result in obstacles to achieving an agreement.

5)  Sunk costs on both sides grow as a dispute drags on. Incremental costs seem small yet the incremental costs drag on and on and mount up making a decision to cut your losses harder as time goes on.

So how do you avoid a walkout?

1)  Try to avoid extreme positions. Ultimatums and lines drawn in the sand make matters worse and can escalate into a strike.

2)  Don’t engage in broad stereotypes. You cannot negotiate black and white. A successful negotiation is usually focused on  fine nuances — grey.

3)  Bring in a third party perspective. A third party can often add rationality and objectivity.

4)  Focus on small battles. Winning a succession of small battles, a sort of divide and conquer strategy, is often more effective than taking on a Goliath.

5)  Use contingencies to ease the anxiety over being able to accurately predict the future. Remember, a contract is based on a bet as to what will happen down the road. As neither side wants to be wrong, contingencies that could mitigate the damage from a wrong guess cn often break a logjam at the bargaining table.

If both sides are committed to bargaining in good faith, they should be able to come up with creative solutions that can avoid a strike and the collateral damage a walkout can cause.