Stress and aggression trigger the brain’s threat system
So many negotiations are unsatisfactory because we dive into money and numbers before uncovering the needs or hot buttons of the other side. Negotiation then becomes a battle of wills to see who can squeeze the most from the other side. This makes negotiation a stressful, negative experience, triggering the brain’s threat system. This can undermine long-term trusting business relationships, creating a win-lose mentality rather than win-win.
What’s important to the other party?
Before negotiations begin in earnest, it is essential to find out what is important to the other side. It is also the time for you to demonstrate real listening and ask questions to show that you fully understand their needs. This will help maintain rapport and activate the brain’s reward circuitry, getting negotiations off to a healthy start. Think for a moment about the last time you chose a builder to work on your house. You may have told them that price was critical, but in actual fact, there would have been many other factors that influenced your choice, for example, their reputation, trustworthiness, guarantees, quality of workmanship, personal recommendations etc. Similarly when you choose a web designer or marketing expert, price is in the mix, but probably not at the top.
Before negotiations begin in earnest, it is essential to find out what is important to the other side.
This is backed up by research by Neil Rackham showing that business-to-business purchasing decisions are based firstly on the vendor relationship, then vendor stability, followed by responsiveness. Price is only fourth on the list. However when we are the seller, and the other side tells us that price is the key driver of the purchasing decision, it is all too easy for us to accept the statement at face value and offer concessions out of fear of losing the deal.
Find out their interest vs position
Asking questions and listening provides a much gentler and less hostile start to the negotiation. It helps to reduce the fear factor on both sides. It gives both parties a clear understanding of each other’s needs and helps to uncover the interests behind the position as demonstrated by the following story:
Two sisters were fighting over an orange. After a lot of arguing, they took half each. One sister ate her half and threw away the peel. The other grated her half of the peel to make marmalade and threw away the flesh.
How many opportunities for a win-win deal are you throwing away through insufficient or too narrow discussion? Next time you negotiate, make sure you spend a significant proportion of the time discussing the interests at play, rather than haggling over your position.
So what are tradeables?
Let’s take an airline as an example. In years gone by you bought a ticket and that was that. Today, we have to consider how much hold luggage, hand baggage, meals, how flexible the ticket is, penalties for changes, speedy boarding, allocated seats, airmiles payment and redemption, loyalty points and the list goes on. Airlines were forced to change their pricing strategy because of market pressures introduced by the low-cost flyers. Yet many businesses I talk to today stick to inflexible pricing strategies and then moan that their customers think they are too expensive.
In the case of a one-off purchase, for example buying a car, the relationship element is less important than when we are dealing with a customer, supplier or third party over time. In this case the relationship is just as important as the negotiation outcome itself. What’s at stake is future business, reputation and of course the ease of working together after the negotiation. The key error that most of us make is not spending enough time identifying our tradeables. As a result the relationship can suffer.
What neuroscience says…
Imagine you’re selling website design services, your tradeables might be licence fee, training, maintenance, guarantees, hosting, periodic upgrades, support etc.
Being clear about exactly what you’re selling puts you in a much stronger position if the customer demands a discount. Without tradeables you will either have to agree to a discount which will directly impact your bottom line, or you will have to say no, which risks spoiling the relationship and could even blow the deal.
Tradeables allow you to provide options for the other party. And neuroscience demonstrates that options create a sense of control which triggers the brain’s reward system. Whereas being told sorry, that’s our bottom line triggers our threat system and impacts the relationship negatively. In essence what you’re trying to achieve in any negotiation is to find something that will cost you little but is of significant value to them, and vice versa. Thus win-win!
All too often people believe they have no option other than to yield to price concessions - with a certain amount of resentment or resignation. However, careful consideration of your tradeables and pricing options provides a route to better outcomes and better relationships.
Give them options
We were recently negotiating with a large corporate to roll-out a global training programme. Their procurement department was trying to squeeze us on price. We knew if we started yielding, that would be the thin end of the wedge! So instead, we offered them a series of pre-prepared tradeables – online follow-up, certification, refresher webinars. So rather than saying no to a discount (which would have triggered a threat response), tradeables enabled us to demonstrate flexibility and a willingness to work with them to arrive at a mutually beneficial agreement.
All too often people believe they have no option other than to yield to price concessions – with a certain amount of resentment or resignation. However, careful consideration of your tradeables and pricing options provides a route to better outcomes and better relationships.
I recently got into an argument with a family member and with Christmas coming up it reminded me that this is often a time for conflict. Understanding its scientific roots might help reduce its impact.
The part of the brain that is responsible for detecting threats is called the amygdala. In our hunter/gatherer days a threat would have been a large predator so this was critical for our survival.
Today physical threats are rare, however our brain hasn’t evolved at the same pace as our environment so our threat-detection circuitry is still highly attuned. Threats today are more likely to be to social threats, and the brain treats these in exactly the same way as physical threats.
A particularly powerful threat is what David Rock of the NeuroLeadership Institute refers to as a status threat, where we feel someone is belittling us or trying to get one over on us.
We are particularly sensitive to status threats because in our hunter/gatherer days, being further up the hierarchy, meant more food and mating opportunities. Being lower down the pecking order meant less food and sex!
When somebody upsets us, this triggers a threat, and instantly engages our non-conscious brain in a freeze, fight, flight response.
A fight response will mean we argue back, verbally attacking them to re-assert our status. We must win the argument. We must be right! We are hijacked by our emotions. Our non-conscious brain is doing what it is designed to do.
However once we’ve calmed down we may regret our hasty reaction. But by then it’s often too late – the damage has been done. The old adage ‘words said in anger are hard to take back’ bears much wisdom. As does the advice from my grandmother, ‘count to 10 dearest’.
If the perceived ‘attack’ is from our boss, fighting back might be detrimental to our career prospects! In this case our non-conscious brain might choose a freeze or flight response. This will mean we disengage, bear a grudge or harbour resentment – often ruminating for days about what we’d like to have said.
Whether at home or at work, managing social interactions is a fundamental necessity. It is one thing to do it when things are going well, but to do it in the face of conflict and adversity is the sign of real mastery
The brain is a social organ
According to neuroscientist, Matt Liebermann, rehearsing social interactions in our imagination is evolution’s way for us to get more skilled in being social. Our brain is a social organ and our human competitive advantage comes from collaboration with others.
So how do you best manage conflict? Firstly recognise that your brain is designed to react to emotional triggers. These are your survival instincts and, whether you like it or not, you will respond on autopilot with a fight, flight or freeze response.
The trick is to interrupt these automatic non-conscious responses by engaging the conscious brain. One technique for doing this is called labelling. This literally means trying to label the emotion we are feeling. In my case the emotion was humiliation. By forcing our conscious brain to identify our emotional state, this diverts attention and blood-flow away from our non-conscious brain.
Once I did this, I was able to actually feel empathy towards my antagonist and the poignant sting I’d felt greatly receded. This short-cuts pointless battling, entrenched opinions and the risk of escalation.
Whether at home or at work, managing social interactions is a fundamental necessity. It is one thing to do it when things are going well, but to do it in the face of conflict and adversity is the sign of real mastery.
The perfect opportunity to engage your people and boost performance?
Sadly, performance reviews are all too often the source of grief for employees and managers alike, focusing on missed targets and shortcomings.
If an employee anticipates an adversarial review, they’re going to waste a disproportionate amount of time preparing their defence and gathering supporting evidence. Stress and negativity trigger the freeze, fight, flight response, releasing cortisol and adrenaline which shuts down our ability to think clearly and relate positively to others.
Friend not foe
There is another way. A strengths-based approach to performance reviews focuses on successes, learnings and things to do differently next time. This triggers the brains reward circuitry, unleashing insight, innovation and interpersonal ability. Businesses that adopt this approach are generally fulfilling places to work where individuals grow and the organisation prospers.
The naysayers amongst you may be wondering ‘what if the employee has under performed and needs to be pulled up’. The truth is that we are all our own worst critics and your criticism will only rub salt into the wound. Recent research by the Neuroleadership Institute shows that 17 times out of 20, negative feedback (even when positively intentioned) does more harm than good as employees attempt to justify themselves, make excuses and blame others. All this causes resentment on both sides and undermines performance still further.
Focus on what's been achieved and the potential of the employee (rather than criticising their current performance)
Solutions not problems
Focusing on problems and underachievement only embeds the behaviours you are trying to change, thereby having the opposite effect than you intend. In contrast, a solution-focused approach looks at what has been achieved and focuses on the potential of the employee (rather than criticising their current performance). It is progressive and forward looking, which is energising for all involved and is important for developing new brain networks that encourage personal insight and change, and feed the brain’s reward circuits.
Resilience: how to bounce back from setbacks
Some people seem to deal with whatever is thrown at them. Deadlines, back-to-back meetings, long hours, presentations, staff issues, family, etc, etc. They take it all in their stride.
Traditional thinking leads us to believe these lucky people are born with a natural ability to deal with stress – while the rest of us struggle to cope with life’s constant demands. For some, stress is just too overwhelming.
However, neuroscience shows us that learning to handle stress and develop an optimistic outlook is within everyone’s grasp because we all have the power to literally re-wire our brain.
The science of optimism and how it affects you
Just as the brain enables us to learn a musical instrument or a new sport, it can also become hardwired to respond automatically to negative stimuli. This unconsciously learnt thought process keeps us stuck in problem-mode and stops us even noticing possible solutions – the glass is always half empty.
Left to its own devices, our brain will focus on the negative. The brain’s threat detection centre is the amygdala. This evolutionary survival mechanism keeps us continually alert to potential danger. Unfortunately the result is that many of us carry a level of background anxiety and are permanently looking for things that could go wrong.
The destructive power of pessimism…
The results of stress and a pessimistic outlook on the human body are well documented. Impaired immunity, increased risk of heart disease, cancer and other diseases; prolonged stress literally kills brain cells. Stress also impacts our professional and personal relationships and overall quality of life.
The positive thinker is healthier, happier and lives longer
So how can we combat negative thinking?
One effective solution, offered by Shawn Achor, is ‘Three Good Things’: My phone alarm goes off at 7:15pm every evening and this is my cue to remember three good things that happened during the day. This habit trains my brain to scan for good news, rather than threats. If my family are present, we take turns at the dinner table to recite three good things. In a similar vein, at work, we start every team meeting asking each person for one piece of good news. Creating this cycle of positivity really does shift the mood, and gets the meeting off to a great start.
The reason employees often complain about feeling criticised is because their manager is unconsciously scanning for threats, looking for deficiencies and perceived shortcomings, instead of praising good work. My phone alarm comes in handy here as well – at 12pm everyday it tells me to ‘compliment someone’. Again, this creates a new habit, making not only the other person happy, but also creating positivity in me.
Being positive will strengthen your resilience to setbacks and enable you to achieve where others struggle. The good news is that it is entirely possible to switch your mindset – even if you’re currently buried deep-within negativity.
If you’re like me, when you get into a lift (or elevator if you’re American) you may have to stop and think (perhaps only for a second) which button to press to open the doors, and which to close. The problem is the triangle symbol isn’t as intuitive as a simple arrow. I always think the close door sign looks more like the HSBC logo! The complex button layout (left) means you have to consciously think about which button to press. The symbols on the right are more intuitive. We don’t need to think about arrows; their meaning is innate within us.
In sales, if your customer has to stop and think in order to decode your message, you are adding an unnecessary barrier. Research shows that buying decisions are made by the non-conscious brain. So if your sales message isn’t clear and simple, you are forcing customer to use their energy-hungry conscious brain rather than their intuitive brain. This causes them to think rather than act and can put the brakes on sales.
Why have 'a policeman in an automobile' when 'a cop in car will do'?!
With any written sales message, the simpler the better. All too often we see marketng messages describing features as‚ ‘a next-generation scaleable integrated architecture‘. Nothing about this is intuitive. We have to stop and think about every word, and then what those words mean together. This is hard work for the buyer, and diminishes the likelihood of a successful sale.
The same message could be phrased in simple language‚ ‘it grows with your business needs‘ This doesn’t require us to engage our conscious brain; the meaning is directly and instantly apparent. The result is that your customer is far more likely to engage with you.
Put another way, why have a policeman in an automobile when a cop in car will do!
Cognitive biases – invisible thinking traps
When we negotiate it is often under tense conditions, where there is potentially a lot at stake. We have to think quickly and make important decisions on the spot. Experience can help, but even the most seasoned negotiator can make fundamental errors if they are unaware of the invisible forces at play.
Creating emotional value
A cognitive bias is a systematic unconscious error in our thinking that has a huge influence on decision-making. For example, most of us have a bias towards short-term thinking over the long-term – this is known as temporal discounting.
During seminars I ask participants if they would rather have £75 now or £118 in 3 months time. Incredibly, 80% of the audience would prefer the immediate payout despite the smaller amount. This is backed up by research showing that £75 now has the same emotional value as £118 in 3-months time. Instinctively, the brain always favours instant rewards over long-term gain.
Temporal discounting operates as a subconscious filter and plays a huge part in business negotiations. All too often it means we focus on immediate monetary gain – very often at the cost of healthy, long-term, win-win partnerships.
An example of this is the reward and commission system for sales people. Often rewarded on a quarterly basis, sales teams become overeager for a quick win at the expense of nurturing a partnership that will pay dividends in the long term.
We also see corporate short-termism where CEOs are answerable to the board and are judged on the last quarter’s figures. They are under pressure to make the company look good in the short term but often fail to plant seeds for long-term growth. Many economists argue that corporate short-termism contributed to our most recent global recession. Interestingly, short-termism has a cultural dimension – it is more prevalent in the West. In Japan, investing for a future harvest is more culturally acceptable.
Without being aware of cognitive biases like overconfidence and temporal discounting we are likely to remain trapped within their gravitational pull.
The overconfidence effect
The overconfidence effect is a cognitive bias that is particularly common among those who negotiate on a regular basis. Social psychologist Scott Plous calls overconfidence “the most pervasive and potentially catastrophic of all the cognitive biases to which human beings fall victim.”
It is well documented that around 80% of negotiation time should be preparation – but very few of us actually put in this time. Instead we think it’ll be alright on the night. It is only when we sit down at the negotiation table we come to realise we could have been better prepared. We don’t have all the facts and figures in the correct formats. And if the other side rejects our first proposal, we don’t have satisfactory alternatives at our fingertips.
When we feel unprepared, our confidence saps away. Anxiety levels increase and stress takes over, releasing adrenaline and cortisol, which shuts down the part of the brain that governs our cognitive abilities. When this happens a negotiation can fall apart – just when we really need our thinking brain, we don’t have it. All because we didn’t prepare sufficiently!
Preparation is the key to confidence!
Without being aware of cognitive biases like overconfidence and temporal discounting we are likely to remain trapped within their gravitational pull. However, if we are conscious of their existence we can use them to our advantage and be better prepared for negotiations. For example in construction, it is common practice to have an upfront fee and a retention after completion of the work. If the client asks for a a reduced upfront fee, the contractor should ask for a lower retention figure. This will be easier for the client to accept due to the temporal discounting effect!
Think you know all there is to know about negotiation?
I don’t have time to delegate!
When my children were young, as well as running a demanding business, I was a single parent.
One of the things that really got to me was that my kids couldn’t even load the dishwasher properly. Surely that was the least they could do after I’d cooked the dinner!
They’d put the plates in the wrong section, the cutlery the wrong way round and the glasses upside down. I’d get increasingly irritated as I re-stacked everything. Why bother trying to get them to do it. It was quicker for me to do it myself – at least it would get done properly! Sounds familiar?
After several months of frustration it dawned on me that if I wanted them to stack the dishwasher properly, I’d needed to invest some time training them.
The problem was that I felt I didn’t have any spare time to carry out the training. It was a leap of faith for me to realise that the future reward would compensate for the time invested in training today.
The cost of failing to delegate
We see this type of thinking in the workplace – the time and effort to develop staff is an investment, and the payoff will only occur in the dim and distant future. Too often staff are set up to fail – for example when a high performing technician is promoted to a manager without any training for the new role.
What’s at play here is a cognitive bias called temporal discounting, where we attach a disproportionate value on the here-and-now compared with the future. The future seems vague and distant, whereas now is vivid and Technicolor!
In financial terms, our brain views £70 today as more appealing than £118 in 3 months time. We also see this type of thinking in the board-room where short-term dividends often trump longer-term investment.
So next time you catch yourself thinking “it’s quicker to do the job myself than get someone else to do it –then correct their mistakes”, STOP. Think. What is the cost of failing to delegate?
- Depriving your staff of learning and development opportunities
- Chaining yourself to operational detail rather than strategic initiatives
- Keeping yourself and your staff in their comfort zone
- In short – preventing organisational growth
Harvard Business Review cites that most leadership teams spend just three hours per month making strategic decisions – in fact they dedicate more time choosing the company Christmas card!
Don't fall victim to temporal discounting. Doing everything yourself is not a strategy for growth.
- Don’t fall victim to temporal discounting. Doing everything yourself is not a strategy for growth
- Spend your precious time on issues that exert the greatest impact on your company’s long-term value
- Seek every possible opportunity to delegate, develop others and grow!