At a certain point in every mediation, the haggling over money starts. Inevitably, one party or the other will tell me that they do not want to make the first offer or demand because they do not want to appear “weak” or to bid against themselves.
In response, I tell them that making the first offer or demand provides them with a golden opportunity: it allows them to set the playing field, to affect the expectations of the other party. Sometimes, the party will accept this wisdom; other times, they want to follow the “conventional wisdom” of letting the other side make the first offer or demand.
In this month’s One Minute Negotiation Tips published on-line by the Los Angeles County Bar Association, Linda Bulmash explains the benefits of defying “conventional wisdom” and of making the first offer. She explains:
“First offers act as an anchor point, drawing the other side into your suggested range. In fact, studies have shown that 85 percent of the time, first offers correlate with the final outcomes. And even if the first offer is not within a reasonable range, it still affects the negotiation’s outcome.”
“For those of us who think we are hip to the game, savvy, and sophisticated, the impact of first offers shows that we are still suggestible. As proof of that theory, participants in a college study were asked to state their Social Security number before estimating the number of physicians in Manhattan. They all picked numbers that correlated with and were close to their Social Security number.”
“Before deciding whether to make the first offer, ask yourself:
1. What do I want to achieve by making this offer?
2. Do I have enough information to make this offer?
3. How do I want to affect the other side’s expectations?
4. How will this offer affect the other side’sexpectations?
5. What kind of offers and counteroffers do I need to make to strategically move them closer to my bottom line?
6. Should my offer be firm or flexible?
7. How can I propose the offer in a way they can accept?”
. . . Just something to think about.