As we know, currently there is something of a spat between the House of Lords and the Commons. Last week, the House of Lords voted in favour of unilaterally guaranteeing EU nationals’ right to stay in the UK after Brexit. Ministers, on the other hand, maintain that in order to protect the rights of UK expats overseas, the issue must be part of the wider negotiation which will take place once Article 50 is triggered. It would be wrong, they say, to give away such an important concession before the negotiation has even started.
While I don’t wish to get into the politics of this debate, what I am more interested in is the negotiation context: the disagreement highlights one of the issues which, in my experience, people wrestle with the most. The question is: is it ever appropriate, in a negotiation, to make a concession with no strings attached?
Conventional wisdom says that you should never give anything away without getting something of equal or greater value in return. This model of trading concessions works universally. It’s based on the principle of conditionality – “You scratch my back, I scratch yours”. Adopting this basic principle enables the negotiating parties to mitigate risk – nothing is given away for free, concessions are exchanged simultaneously. Safest strategy.
The issue with making a unilateral concession, on the other hand, lies in the assumption that people generally value what is costly to obtain; if your counter-party is not required to do anything, or give you anything in return for your concession, they may not value it, or, worse, they may get greedy and pretend even more from you. This may turn out to be the effect of your concession. It’s the law of unintended consequences.
Are there, then, any advantages of breaking the golden rule of conditional trading?
Well, to trust is to risk. By making a unilateral concession you are taking a risk, as outlined above, but in doing so you are also sending a powerful message to the other party that you are willing to trust them. You are showing them that you trust that they will not be greedy and pretend more value. You are trusting that they will, in time, give you something in return. In effect, you are saying “I consider you someone I can do business with”. As discussed above, this may backfire. The other party may abuse your trust. There is another possibility though, and that is, that your concession may actually create trust. Because you are showing that you trust them, they may then behave in a trustworthy manner as a result. Sometimes, you give someone a hat and they wear it. So, there is an argument that says that in order to create a climate of trust, sometimes we may need to take the first step, show trust and take the risk.
A unilateral concession may also create another human response: reciprocity, the social unwritten rule that makes somebody feel obliged to return a favour, or a compliment, or indeed, in a negotiation, a concession. Reciprocity is a very powerful human instinct. It is also hard to argue with it…“We moved, now it’s your turn…”
Therefore, making a unilateral concession does not necessarily mean jettisoning the whole notion of conditional trading; you may simply have decided that, to create a climate of trust and collaboration, you are willing to make the first move. Because you have calculated that it is probable that your concession, in time, will be reciprocated by this other party.
The spat between the House of Lords and the ministers raises an interesting and highly complex issue, and is a sobering reminder that negotiation is ultimately art as much as science. There are some general principles, and then, in day-to-day business life, many exceptions. Many ways to skin a cat.
Consider what is your ultimate desired outcome. Try to think beyond your financial objectives – are there strategic considerations you need to think about? What are your options? What type of negotiation do you want this to be?
And how well do you know the other party? Given past experience, what behaviours can you expect from them? What are their pressures right now, their options, their objectives and goals?
Everything you do involves an element of risk, and only you can evaluate the risks and choose the most appropriate strategy. It won’t come from text books or, dare I say, negotiation training workshops.
Ultimately, it can only come from your experience, your understanding of human nature, and your commercial acumen.