The Season Four opener of the HBO series Succession serves as a timely reminder on some key mistakes that can be made in negotiations. The show showcases fundamental flaws people can make in negotiations like offering with overconfidence, letting emotions take the lead and making unjustified offers for the sake of competition.
In the spirit of cooperation, we have compiled some of the key things you should be thinking of if you are engaging in a negotiation.
How will the negotiation process look?
Failing to determine a process can set the negotiation process up for failure before it began. Establishing how the negotiation process will look from the start will provide both parties with a clear understanding of the timeframes surrounding the negotiation, any ground rules to be bound by, parties rights and obligations and establishing the roles of each party.
If the process of a negotiation is organised between the parties prior to the negotiation even commencing, a collaborative relationship has already been formed and there is more likelihood of reaching a mutually beneficial outcome. Examples of questions which will establish a clear route for the negotiation, can include asking the other party:
- How much time will you require?
- Who must be on board?
- What factors might slow down or speed up the process?
- Are there key milestones or dates we should be aware of?
- Meeting particulars, such as Who will be in the meeting? And What will the agenda be?
- Will there be an independent mediator? If yes, how will they be selected?
Control your emotions
Both positive and negative emotions can provide unwanted outcomes in negotiations. Anger, frustration, or disappointment for example, can result in irrational decision making or engaging in hostile behaviour.
On the other end of the spectrum, excitement and enthusiasm can lead to potentially overlooking risks or making overly optimistic offers.
To avoid letting your emotions cloud your judgment it is advisable to keep your emotions in check (whether this is by taking a break, shifting the conversation, or deep breathing), maintain a positive yet assertive attitude throughout the negotiation and ultimately, be respectful.
Setting sturdy anchors
The term anchoring in negotiation refers to focusing heavily on the first price offered as a reference point throughout the whole negotiation.
Anchoring can negatively affect the negotiations in such a way that the term “anchoring bias” has been coined This is the common tendency to give too much weight to the first number put forth in a discussion and then inadequately adjusting from that starting point, or the “anchor”.
Anchors when introduced correctly can be used to alter the other party’s perception of the value of subsequent offers. For an experienced negotiator, dropping the first offer will set the anchor and will sweep the negotiation to their favour.
The outcome of a negotiation depends substantially on each side’s leverage—the better your offer options are or, more importantly, what the other party perceives your offer portions are, the more likely you are to achieve your objectives.
There is a significant amount of power of perception in how we frame an offer and how it is presented to the other party. If an offer is framed to effectively emphasize its benefits and in turn minimise any drawbacks, negotiations will increase the chances of an offer being accepted.
To effectively frame your offer, it is wise to try and control the lens through which the parties view the negotiation from the outset, switch your counterparts focus not on the cost to them but to the value they could have.
Negotiators who provide explanations for their proposals are more likely to reach agreements than those who provide flimsy offers without providing any justification for them.
Prepare for negotiation beforehand specifically listing the value your offer brings, therefore, when asked, you can provide a compelling well-reasoned explanation to show the other side you have given a considerable amount of thought to your offer and are not making a rash decision based off emotion or extenuating circumstances.
If you are currently negotiating, or it is likely you will require a negotiation in the future make sure you take note of the tips we have provided above.
In the first episode of season four of Succession, we see the Roy children and their father Logan Roy all experience various aspects of these flaws in negotiations. This ultimately results in the children paying well over market value for the purchase of the media asset. Whilst most of us are not regularly negotiating billon dollar transactions, the concepts detailed herein are true for any level of negotiations.
If you require assistance with negotiating the terms of a commercial agreement or any part of a commercial dispute resolution process, feel free to contact our office to arrange a consultation with one of our experienced lawyers on 9375 3411.
About the Authors: This article has been co-authored by Chanelle Kane and Steven Brown. Chanelle has been in the industry since 2013 and graduated with a Bachelor of Laws in 2020. Chanelle completed the Graduate Diploma of Legal Practice with the College of Law in 2020 and was awarded the 2020 PLT Professional Excellence Award for the cohort. Chanelle was admitted to practice in the Supreme Court of Western Australia in November 2020 and to the High Court of Australia in January 2021. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.