Why Should You Give to Receive?

The Law May Not be Fair, But it Does Hate Takers

The common rule is that you must be ruthless during negotiations to succeed. This belief couldn’t be farther from the truth; not only will you destroy your relationships, but you’ll also fail to have a legally enforceable deal.

Do You Have a Deal?

You’ve signed a contract with your client to represent him for the sale of his building. The agreement states that you’ll be paid a 2% commission upon sale of the building. You begin working and marketing the building. Given your close interaction with your client, you become good friends.

During one of your dinner meetings your client offers you an extra 0.5% increase in your commission fee, “just because”. Your cousin – who’s a lawyer – tells you to get this in writing. Your client happily modifies the agreement and within a year you sell the building. When you get your cheque, however, doesn’t reflect the promised 0.5% increase in your commission rate. Can you sue for the 0.5% outstanding?

There’s no such thing as a free lunch

For those who guessed “Yes”, you’re wrong. The basic elements that make up a binding contract are: offer, acceptance and consideration. The missing element in the above scenario is consideration. And this doesn’t refer to being nice.

What is Consideration?

It’s generally understood that we make business contracts to exchange goods or services for a variety forms of payment. After all, apart from helping friends and family or giving gifts during the holiday season, profits are gained because we do not give up something of value for nothing in return. This is why courts created the concept of consideration, a concept which requires both parties to give up something.

What Happens if There’s No Consideration?

If there’s no consideration, a contract can be invalid. This is true despite the fact that you get the other party to agree to something and you put in writing. In our example, you and your client already committed in writing to sell the property for a particular fee. You gave your time and effort and your client gave up his money in exchange. Consideration was passed. However, when your client offered you a higher rate, you gave nothing up in return.

How Can I Avoid the Consideration Problem?

To make the renegotiated fee enforceable, you should have offered something nominal in exchange. For example, you could have offered to increase your marketing budget or promised to close the deal ahead of the expected schedule.

Consideration doesn’t have to be of equal value to the concession being given – even changing the font in all of your marketing materials or baking cookies would have been sufficient to meet the consideration criteria.

Should You Renegotiate an Existing Deal?

Renegotiating existing deals is a common practise and an excellent negotiating tactic. This tactic, however, should only be used with a counterpart you trust and with whom you have a great relationship. The reason why renegotiating a deal is a good negotiation tactic is because we typically don’t reach our fullest potential before we stop negotiating.

A variety of Kellogg studies conclude that we leave about 25% of “value” on the table. By reopening the conversation after you’ve signed a binding deal and asking how you both can do better (not just how you can do better!), you not only allow both sides to get a better outcome, but you also ensure that the consideration rule is met. In other words, you both make an exchange to achieve a better outcome.

I’ve seen this renegotiation technique successfully used by one of my students in the negotiation course I teach at the Real Estate Institute of Canada. Both parties made concessions to get a better outcome and both walked out forging a better deal and relationship. Not only did they both “make” more, their mutual willingness to make concessions ensured enforceability.

The golden rule is simple: make sure you give first and receive. If you fail to do this, you’ll not only come off as Scrooge, but you’ll also fail to have a binding agreement.

How to Play Dumb

For years I’ve wanted to bleach my hair blonde. I never did, however, because I feared that blonde hair would unfairly labelled me as a dumb helpless woman. I feared this until I realized: being dumb and helpless is great. Because it works during negotiations. Even for guys.

Weird Tactics to a Successful Negotiation

Chris Voss, author of  Never Split The Difference, was the FBI’s lead international hostage negotiator. He’s known for unconventional tactics such as acting dumb (see below for more), agreeing with character accusations (just take it and apologise, even if you come off as weak!), never splitting the difference and never being direct (you’ll come off as rude, even if you’re trying to be honest).

Although his negotiation heuristics are not the norm, they work. Very, very well. This is because his rules play upon many of Cialdini’s psychological triggers. These triggers are deeply imbedded in the way we behave. For example, most people lower their guard when they don’t feel threatened or if they “like” and feel understood by their counterpart. This is exactly, as Voss alludes to, why acting dumb is smart.

Act Dumb to Create a Non-Threatening Environment

People don’t feel threatened by those who appear less intelligent than themselves. In fact, if you’re perceived as helpless and weaker, your counterpart is more likely to impart information on you or start negotiating against themselves (i.e. making concessions before you ask). They do this to fill the air, out of pity or because they feel like they’ve already “won” and should throw you some scraps.

Leverage this psychological “tick” to not only get information but to avoid pressure tactics, evade angering your counterpart with blunt responses and restarting stalled negotiations.

The best way to get the most out of playing dumb is asking “how am I supposed to do that?” Voss explains:

Calibrated “How” questions are a surefire way to keep negotiations going. They put pressure on your counterpart to come up with answers, and to contemplate your problems when making their demands… The trick to “How” questions is that, correctly used, they are gentle and graceful ways to say “No” and guide your counterpart to develop a better solution — your solution.

Asking “how” gets the other side to feel in control, think about your situation, develop empathy for your position and fall into the “negotiating against yourself” phenomena (i.e. making concessions without you asking for them to do so). The kicker: since the concessions are their idea, they’re more likely to stick with the concessions, even if the concessions don’t suit their purpose or, in hindsight, hurts their position. Voss outlines how this works:

You want to make the other side take an honest look at your situation. It’s the first way of saying “no” where you’re doing a lot of things simultaneously. You’re making the other side take a look at you. You make them feel in control, because it’s a good “how” question. You don’t want to say it as an accusation. You want to say it deferentially, because there’s great power in deference. You want to find out if they’re going to collaborate with you. 9 times out of 10, you get a response that’s really very good.

Don’t be afraid to repeat the question. In hostage negotiations, Voss asked the following ad nauseam: “How do we know the hostage is safe?” “We don’t have that kind of money. How are we supposed to get it?“But how do we deliver the ransom to you?”

I know what you’re thinking. And, you’re right. Just like Voss, you’ll eventually get the response: “You’re just going to have to figure it out.” This is not a big issue. In fact it’s a signal that you’ve negotiated and have gotten as much out of the negotiations as possible:

Of course the one time out of 10 they’ll say to you, “Well, you’re just going to have to figure it out.” But even in that case “How am I supposed to do that?” helps you confirm that you have in fact pulled as much value or gotten as many options as you possibly can out of the other side. You found a solid barrier. Your decision now is, “Okay, do I like this? Do I move in another direction?”

The rule is simple: acting dumb is actually acting smart. That’s is exactly why I’m now a bleach blonde.

Whatever You Do – Don’t Do This

Hate your job or your client? Stuck in your career and you’re struggling to get ahead?

Whatever you do don’t do this: complain. A recent study shows that complaining does nothing to get you ahead or get you the success and outcome you crave; rather, it does the exact opposite. Read on to find out how and what you can do about it.

Your Habits Teach Your Brain

Your brain is a collection of synapses separated by empty space. The empty space is called the synaptic cleft. When you have a thought, a synapse sends a chemical through the cleft where there’s another synapse. This process creates a bridge that allows electrical charges – i.e. your thoughts – to pass through from synapses to synapses with greater ease and efficiency.

Our brains have learned that it take a lot of energy to rebuild the same bridge between two synapses. So it created a solution: to rewire its own circuitry to make the bridge shorter and stronger every time an electrical charge happens. Our brain creates these bridges because it helps us conserve energy and speed up our reaction time – a very useful tool if you can’t find your next meal or if have to figure out whether or not to run when you see a lion. This brain rewiring means our bad thoughts become easier to “access” and our default position.

Complaining Makes You Stupid and Sad

Have you ever had a bad thought trigger despite the fact that there is nothing bad to think about? Enter the snowball effect: every time those bad thoughts come to mind, the shorter and stronger the “bridges” become. The shorter and easier the bridges become, the more bad thoughts you’ll have. And the more bad thoughts you’ll have will make you more negative, depressed and less motivated.

It gets worse! Complaining damages the hippocampus, which is the critical part of your brain that helps you solve problems and develop intelligent thoughts. This means that someone who complains a lot is also more likely to negotiate worse deals, fail to find solutions to problems and be depressed.

How to Stop Complaining?

How to stop a bad habit depends on what makes you stick to promises even when not motivated? If you’re like me, I will stick to a promise if I told someone that I’ll do it or if I am allowed to give myself a big reward for completing the thing I don’t want to do.

A few methods I’ve used:

  • Make bets with friends to stop complaining. Whoever complains first has to treat the rest of the group to dinner, drinks etc.
  • Tell family, colleagues and friends that every time you complain you have to give them a dollar.  Make sure they hold you up to it. 
  • Try not complaining for 2 days. Replace the complaint with a thought of gratitude, appreciation or a solution to the complaint. After two days, evaluate how you feel and promise yourself to do it for 2 more days. If it’s working, extend the “no complaints” period to 5 days and so on.

I’m starting a no complaint week to exercise this muscle. I strongly suggest that you also give it a try – the worst that can happen is….well, I can’t think of a negative thing to say!