فصل 06

CHAPTER 6

BEND THEIR REALITY

One Monday morning in Haiti’s capital, Port-au-Prince, a call came in to the FBI office from the nephew of a prominent Haitian political figure. He spoke so fast he had to repeat his story three times before I understood. But finally I got the basics: kidnappers had snatched his aunt from her car, and their ransom demand was $150,000.

“Give us the money,” the kidnappers told him, “or your aunt is going to die.”

In the lawless, chaotic wake of the 2004 rebellion that toppled President Jean-Bertrand Aristide, Haiti surpassed Colombia as the kidnap capital of the Americas. In fact, with between eight and ten people abducted every day in the Caribbean nation of eight million, Haiti earned the dubious honor of having the highest kidnapping rate in the world.

During this onslaught of abductions and death threats, I was the FBI’s lead international kidnapping negotiator. And I had never seen anything like it. Reports of abductions—increasingly bold, daylight attacks right in Port-au-Prince—seemed to roll into the office hourly: fourteen students abducted on their school bus; American missionary Phillip Snyder shot in an ambush and seized along with a Haitian boy he was taking to Michigan for eye surgery; prominent Haitian politicians and businessmen bundled from their homes in broad daylight. No one was spared.

Most of the abductions went down the same way: ski-mask-clad kidnappers surrounded a house or a car, forced entry with a gun, and snatched a vulnerable victim—usually a woman, child, or elderly person.

Early on, there was the possibility that the kidnappings were driven by politically aligned gangs seeking to destabilize Haiti’s new government. This proved to be wrong. Haitian criminals are famous for employing brutal means for political ends, but when it came to kidnappings, it was almost always all business.

Later on, I’ll get to how we pieced together the clues to discover who the perpetrators were and what they really wanted—invaluable information when it came to negotiating with and destabilizing these gangs. But first I want to discuss the crystallizing feature of high-stakes, life-and-death negotiating: that is, how little of it is on the surface.

When that Monday ransom call came in to the politician’s nephew, the guy was so petrified he could only think of doing one thing: paying the thugs. His reaction makes sense: when you get a call from brutal criminals who say they’ll kill your aunt unless you pay them immediately, it seems impossible to find leverage in the situation. So you pay the ransom and they release your relative, right?

Wrong. There’s always leverage. Negotiation is never a linear formula: add X to Y to get Z. We all have irrational blind spots, hidden needs, and undeveloped notions.

Once you understand that subterranean world of unspoken needs and thoughts, you’ll discover a universe of variables that can be leveraged to change your counterpart’s needs and expectations. From using some people’s fear of deadlines and the mysterious power of odd numbers, to our misunderstood relationship to fairness, there are always ways to bend our counterpart’s reality so it conforms to what we ultimately want to give them, not to what they initially think they deserve.

DON’T COMPROMISE

Let’s go back to the $150,000 ransom demand. We’re always taught to look for the win-win solution, to accommodate, to be reasonable. So what’s the win-win here? What’s the compromise? The traditional negotiating logic that’s drilled into us from an early age, the kind that exalts compromises, says, “Let’s just split the difference and offer them $75,000. Then everyone’s happy.” No. Just, simply, no. The win-win mindset pushed by so many negotiation experts is usually ineffective and often disastrous. At best, it satisfies neither side. And if you employ it with a counterpart who has a win-lose approach, you’re setting yourself up to be swindled.

Of course, as we’ve noted previously, you need to keep the cooperative, rapport-building, empathetic approach, the kind that creates a dynamic in which deals can be made. But you have to get rid of that naïveté. Because compromise—“splitting the difference”—can lead to terrible outcomes. Compromise is often a “bad deal” and a key theme we’ll hit in this chapter is that “no deal is better than a bad deal.” Even in a kidnapping?

Yes. A bad deal in a kidnapping is where someone pays and no one comes out.

To make my point on compromise, let me paint you an example: A woman wants her husband to wear black shoes with his suit. But her husband doesn’t want to; he prefers brown shoes. So what do they do? They compromise, they meet halfway. And, you guessed it, he wears one black and one brown shoe. Is this the best outcome? No! In fact, that’s the worst possible outcome. Either of the two other outcomes—black or brown—would be better than the compromise.

Next time you want to compromise, remind yourself of those mismatched shoes.

So why are we so infatuated with the notion of compromise if it often leads to poor results?

The real problem with compromise is that it has come to be known as this great concept, in relationships and politics and everything else. Compromise, we are told quite simply, is a sacred moral good.

Think back to the ransom demand: Fair is no ransom, and what the nephew wants is to pay nothing. So why is he going to offer $75,000, much less $150,000, for the ransom? There is no validity in the $150,000 request. With any compromise, the nephew ends up with a bizarrely bad result.

I’m here to call bullshit on compromise right now. We don’t compromise because it’s right; we compromise because it is easy and because it saves face. We compromise in order to say that at least we got half the pie. Distilled to its essence, we compromise to be safe. Most people in a negotiation are driven by fear or by the desire to avoid pain. Too few are driven by their actual goals.

So don’t settle and—here’s a simple rule—never split the difference. Creative solutions are almost always preceded by some degree of risk, annoyance, confusion, and conflict. Accommodation and compromise produce none of that. You’ve got to embrace the hard stuff. That’s where the great deals are. And that’s what great negotiators do.

DEADLINES: MAKE TIME YOUR ALLY

Time is one of the most crucial variables in any negotiation. The simple passing of time and its sharper cousin, the deadline, are the screw that pressures every deal to a conclusion.

Whether your deadline is real and absolute or merely a line in the sand, it can trick you into believing that doing a deal now is more important than getting a good deal. Deadlines regularly make people say and do impulsive things that are against their best interests, because we all have a natural tendency to rush as a deadline approaches.

What good negotiators do is force themselves to resist this urge and take advantage of it in others. It’s not so easy. Ask yourself: What is it about a deadline that causes pressure and anxiety? The answer is consequences; the perception of the loss we’ll incur in the future—“The deal is off!” our mind screams at us in some imaginary future scenario—should no resolution be achieved by a certain point in time.

When you allow the variable of time to trigger such thinking, you have taken yourself hostage, creating an environment of reactive behaviors and poor choices, where your counterpart can now kick back and let an imaginary deadline, and your reaction to it, do all the work for him.

Yes, I used the word “imaginary.” In all the years I’ve been doing work in the private sector, I’ve made it a point to ask nearly every entrepreneur and executive I’ve worked with whether, over the course of their entire careers, they have ever been a witness to or a party of a negotiation in which a missed deadline had negative repercussions. Among hundreds of such clients, there’s one single, solitary gentleman who gave the question serious consideration and responded affirmatively. Deadlines are often arbitrary, almost always flexible, and hardly ever trigger the consequences we think—or are told—they will.

Deadlines are the bogeymen of negotiation, almost exclusively self-inflicted figments of our imagination, unnecessarily unsettling us for no good reason. The mantra we coach our clients on is, “No deal is better than a bad deal.” If that mantra can truly be internalized, and clients begin to believe they’ve got all the time they need to conduct the negotiation right, their patience becomes a formidable weapon.

A few weeks after the Haitian kidnapping boom began, we started to notice two patterns. First, Mondays seemed to be especially busy, as if the kidnappers had a particularly strong work ethic and wanted to get a jump on the week. And, second, the thugs grew increasingly eager to get paid as the weekend approached.

At first, this didn’t make any sense. But by listening closely to the kidnappers and debriefing the hostages we rescued, we discovered something that should have been obvious: These crimes weren’t politically motivated at all. Instead, these guys were garden-variety thugs who wanted to get paid by Friday so they could party through the weekend.

Once we understood the pattern and knew the kidnappers’ self-imposed deadline, we had two key pieces of information that totally shifted the leverage to our side.

First, if we let the pressure build by stalling the negotiations until Thursday or Friday, we could cut the best deal. And, second, because you didn’t need anything close to $150,000 to have a good weekend in Haiti, offering a lot, lot less would suffice.

How close we were getting to their self-imposed deadline would be indicated by how specific the threats were that they issued. “Give us the money or your aunt is going to die” is an early stage threat, as the time isn’t specified. Increasing specificity on threats in any type of negotiations indicates getting closer to real consequences at a real specified time. To gauge the level of a particular threat, we’d pay attention to how many of the four questions—What? Who? When? And how?—were addressed. When people issue threats, they consciously or subconsciously create ambiguities and loopholes they fully intend to exploit. As the loopholes started to close as the week progressed, and did so over and over again in similar ways with different kidnappings, the pattern emerged.

With this information in hand, I came to expect the kidnappings to be orderly, four-day events. It didn’t make the abductions any more pleasant for the victim, but it certainly made them more predictable—and a whole lot cheaper—for the families on the other end.

It’s not just with hostage negotiations that deadlines can play into your hands. Car dealers are prone to give you the best price near the end of the month, when their transactions are assessed. And corporate salespeople work on a quarterly basis and are most vulnerable as the quarter comes to a close.

Now, knowing how negotiators use their counterpart’s deadlines to gain leverage would seem to suggest that it’s best to keep your own deadlines secret. And that’s the advice you’ll get from most old-school negotiation experts.

In his bestselling 1980 book, You Can Negotiate Anything,1 negotiation expert Herb Cohen tells the story of his first big business deal, when his company sent him to Japan to negotiate with a supplier.

When he arrived, his counterparts asked him how long he was staying, and Cohen said a week. For the next seven days, his hosts proceeded to entertain him with parties, tours, and outings—everything but negotiation. In fact, Cohen’s counterparts didn’t start serious talks until he was about to leave, and the two sides hammered out the deal’s final details in the car to the airport.

Cohen landed in the United States with the sinking feeling that he’d been played, and that he had conceded too much under deadline pressure. Would he have told them his deadline in retrospect? No, Cohen says, because it gave them a tool he didn’t have: “They knew my deadline, but I didn’t know theirs.” That mentality is everywhere these days. Seeing a simple rule to follow and assuming that a deadline is a strategic weakness, most negotiators follow Cohen’s advice and hide their drop-dead date.

Allow me to let you in on a little secret: Cohen, and the herd of negotiation “experts” who follow his lead, are wrong. Deadlines cut both ways. Cohen may well have been nervous about what his boss would say if he left Japan without an agreement. But it’s also true that Cohen’s counterparts wouldn’t have won if he’d left without a deal. That’s the key: When the negotiation is over for one side, it’s over for the other too.

In fact, Don A. Moore, a professor at the Haas School of Business at the University of California, Berkeley, says that hiding a deadline actually puts the negotiator in the worst possible position. In his research, he’s found that hiding your deadlines dramatically increases the risk of an impasse. That’s because having a deadline pushes you to speed up your concessions, but the other side, thinking that it has time, will just hold out for more.

Imagine if when NBA owners set a lockout deadline during contract negotiations they didn’t tell the players’ union. They would concede and concede as the deadline approached, inciting the union to keep negotiating past the secret deadline. In that sense, hiding a deadline means you’re negotiating with yourself, and you always lose when you do so.

Moore discovered that when negotiators tell their counterparts about their deadline, they get better deals. It’s true. First, by revealing your cutoff you reduce the risk of impasse. And second, when an opponent knows your deadline, he’ll get to the real deal- and concession-making more quickly.

I’ve got one final point to make before we move on: Deadlines are almost never ironclad. What’s more important is engaging in the process and having a feel for how long that will take. You may see that you have more to accomplish than time will actually allow before the clock runs out.

NO SUCH THING AS FAIR

In the third week of my negotiations class, we play my favorite type of game, that is, the kind that shows my students how much they don’t understand themselves (I know—I’m cruel).

It’s called the Ultimatum Game, and it goes like this: After the students split into pairs of a “proposer” and an “accepter,” I give each proposer $10. The proposer then has to offer the accepter a round number of dollars. If the accepter agrees he or she receives what’s been offered and the proposer gets the rest. If the accepter refuses the offer, though, they both get nothing and the $10 goes back to me.

Whether they “win” and keep the money or “lose” and have to give it back is irrelevant (except to my wallet). What’s important is the offer they make. The truly shocking thing is that, almost without exception, whatever selection anyone makes, they find themselves in a minority. No matter whether they chose $6/$4, $5/$5, $7/$3, $8/$2, etc., they look around and are inevitably surprised to find no split was chosen far more than any other. In something as simple as merely splitting $10 of “found” money, there is no consensus of what constitutes a “fair” or “rational” split.

After we run this little experiment, I stand up in front of the class and make a point they don’t like to hear: the reasoning each and every student used was 100 percent irrational and emotional.

“What?” they say. “I made a rational decision.”

Then I lay out how they’re wrong. First, how could they all be using reason if so many have made different offers? That’s the point: They didn’t. They assumed the other guy would reason just like them. “If you approach a negotiation thinking that the other guy thinks like you, you’re wrong,” I say. “That’s not empathy; that’s projection.” And then I push it even further: Why, I ask, did none of the proposers offer $1, which is the best rational offer for them and logically unrejectable for the accepter? And if they did and they got rejected—which happens—why did the accepter turn them down?

“Anyone who made any offer other than $1 made an emotional choice” I say. “And for you accepters who turned down $1, since when is getting $0 better than getting $1? Did the rules of finance suddenly change?” This rocks my students’ view of themselves as rational actors. But they’re not. None of us are. We’re all irrational, all emotional. Emotion is a necessary element to decision making that we ignore at our own peril. Realizing that hits people hard between the eyes.

In Descartes’ Error: Emotion, Reason, and the Human Brain,2 neuroscientist Antonio Damasio explained a groundbreaking discovery he made. Studying people who had damage in the part of the brain where emotions are generated, he found that they all had something peculiar in common: They couldn’t make decisions. They could describe what they should do in logical terms, but they found it impossible to make even the simplest choice.

In other words, while we may use logic to reason ourselves toward a decision, the actual decision making is governed by emotion.

THE F-WORD: WHY IT’S SO POWERFUL, WHEN TO USE IT, AND HOW

The most powerful word in negotiations is “Fair.” As human beings, we’re mightily swayed by how much we feel we have been respected. People comply with agreements if they feel they’ve been treated fairly and lash out if they don’t.

A decade of brain-imaging studies has shown that human neural activity, particularly in the emotion-regulating insular cortex, reflects the degree of unfairness in social interactions. Even nonhuman primates are hardwired to reject unfairness. In one famous study, two capuchin monkeys were set to perform the same task, but one was rewarded with sweet grapes while the other received cucumbers. In response to such blatant unfairness, the cucumber-fed monkey literally went bananas.

In the Ultimatum Game, years of experience has shown me that most accepters will invariably reject any offer that is less than half of the proposer’s money. Once you get to a quarter of the proposer’s money you can forget it and the accepters are insulted. Most people make an irrational choice to let the dollar slip through their fingers rather than to accept a derisory offer, because the negative emotional value of unfairness outweighs the positive rational value of the money.

This irrational reaction to unfairness extends all the way to serious economic deals.

Remember Robin Williams’s great work as the voice of the genie in Disney’s Aladdin? Because he wanted to leave something wonderful behind for his kids, he said, he did the voice for a cut-rate fee of $75,000, far below his usual $8 million payday. But then something happened: the movie became a huge hit, raking in $504 million.

And Williams went ballistic.

Now look at this with the Ultimatum Game in mind. Williams wasn’t angry because of the money; it was the perceived unfairness that pissed him off. He didn’t complain about his contract until Aladdin became a blockbuster, and then he and his agent went loud and long about how they got ripped off.

Lucky for Williams, Disney wanted to keep its star happy. After initially pointing out the obvious—that he’d happily signed the deal—Disney made the dramatic gesture of sending the star a Picasso painting worth a reported $1 million.

The nation of Iran was not so lucky.

In recent years, Iran has put up with sanctions that have cost it well over $100 billion in foreign investment and oil revenue in order to defend a uranium-enriching nuclear program that can only meet 2 percent of its energy needs. In other words, like the students who won’t take a free $1 because the offer seems insulting, Iran has screwed itself out of its chief source of income—oil and gas revenue—in order to pursue an energy project with little expected payoff.

Why? Again, fairness.

For Iran, it’s not fair that the global powers—which together have several thousand nuclear weapons—should be able to decide if it can use nuclear energy. And why, Iran wonders, is it considered a pariah for enriching uranium when India and Pakistan, which clandestinely acquired nuclear weapons, are accepted members of the international community?

In a TV interview, former Iranian nuclear negotiator Seyed Hossein Mousavian hit the nail on the head. “The nuclear issue today for Iranians is not nuclear,” he said, “it’s defending their integrity [as an] independent identity against the pressure of the rest.” You may not trust Iran, but its moves are pretty clear evidence that rejecting perceived unfairness, even at substantial cost, is a powerful motivation.

Once you understand what a messy, emotional, and destructive dynamic “fairness” can be, you can see why “Fair” is a tremendously powerful word that you need to use with care.

In fact, of the three ways that people drop this F-bomb, only one is positive.

The most common use is a judo-like defensive move that destabilizes the other side. This manipulation usually takes the form of something like, “We just want what’s fair.”

Think back to the last time someone made this implicit accusation of unfairness to you, and I bet you’ll have to admit that it immediately triggered feelings of defensiveness and discomfort. These feelings are often subconscious and often lead to an irrational concession.

A friend of mine was selling her Boston home in a bust market a few years back. The offer she got was much lower than she wanted—it meant a big loss for her—and out of frustration she dropped this F-bomb on the prospective buyer.

“We just want what’s fair,” she said.

Emotionally rattled by the implicit accusation, the guy raised his offer immediately.

If you’re on the business end of this accusation, you need to realize that the other side might not be trying to pick your pocket; like my friend, they might just be overwhelmed by circumstance. The best response either way is to take a deep breath and restrain your desire to concede. Then say, “Okay, I apologize. Let’s stop everything and go back to where I started treating you unfairly and we’ll fix it.” The second use of the F-bomb is more nefarious. In this one, your counterpart will basically accuse you of being dense or dishonest by saying, “We’ve given you a fair offer.” It’s a terrible little jab meant to distract your attention and manipulate you into giving in.

Whenever someone tries this on me, I think back to the last NFL lockout.

Negotiations were getting down to the wire and the NFL Players Association (NFLPA) said that before they agreed to a final deal they wanted the owners to open their books. The owners’ answer?

“We’ve given the players a fair offer.”

Notice the horrible genius of this: instead of opening their books or declining to do so, the owners shifted the focus to the NFLPA’s supposed lack of understanding of fairness.

If you find yourself in this situation, the best reaction is to simply mirror the “F” that has just been lobbed at you. “Fair?” you’d respond, pausing to let the word’s power do to them as it was intended to do to you. Follow that with a label: “It seems like you’re ready to provide the evidence that supports that,” which alludes to opening their books or otherwise handing over information that will either contradict their claim to fairness or give you more data to work with than you had previously. Right away, you declaw the attack.

The last use of the F-word is my favorite because it’s positive and constructive. It sets the stage for honest and empathetic negotiation.

Here’s how I use it: Early on in a negotiation, I say, “I want you to feel like you are being treated fairly at all times. So please stop me at any time if you feel I’m being unfair, and we’ll address it.” It’s simple and clear and sets me up as an honest dealer. With that statement, I let people know it is okay to use that word with me if they use it honestly. As a negotiator, you should strive for a reputation of being fair. Your reputation precedes you. Let it precede you in a way that paves success.

HOW TO DISCOVER THE EMOTIONAL DRIVERS BEHIND WHAT THE OTHER PARTY VALUES

A few years ago, I stumbled upon the book How to Become a Rainmaker,3 and I like to review it occasionally to refresh my sense of the emotional drivers that fuel decisions. The book does a great job to explain the sales job not as a rational argument, but as an emotional framing job.

If you can get the other party to reveal their problems, pain, and unmet objectives—if you can get at what people are really buying—then you can sell them a vision of their problem that leaves your proposal as the perfect solution.

Look at this from the most basic level. What does a good babysitter sell, really? It’s not child care exactly, but a relaxed evening. A furnace salesperson? Cozy rooms for family time. A locksmith? A feeling of security.

Know the emotional drivers and you can frame the benefits of any deal in language that will resonate.

BEND THEIR REALITY

Take the same person, change one or two variables, and $100 can be a glorious victory or a vicious insult. Recognizing this phenomenon lets you bend reality from insult to victory.

Let me give you an example. I have this coffee mug, red and white with the Swiss flag. No chips, but used. What would you pay for it, deep down in your heart of hearts?

You’re probably going to say something like $3.50.

Let’s say it’s your mug now. You’re going to sell it to me. So tell me what it’s worth.

You’re probably going to say something between $5 and $7.

In both cases, it was the exact same mug. All I did was move the mug in relation to you, and I totally changed its value.

Or imagine that I offer you $20 to run a three-minute errand and get me a cup of coffee. You’re going to think to yourself that $20 for three minutes is $400 an hour. You’re going to be thrilled.

What if then you find out that by getting you to run that errand I made a million dollars. You’d go from being ecstatic for making $400 an hour to being angry because you got ripped off.

The value of the $20, just like the value of the coffee mug, didn’t change. But your perspective of it did. Just by how I position the $20, I can make you happy or disgusted by it.

I tell you that not to expose our decision making as emotional and irrational. We’ve already seen that. What I am saying is that while our decisions may be largely irrational, that doesn’t mean there aren’t consistent patterns, principles, and rules behind how we act. And once you know those mental patterns, you start to see ways to influence them.

By far the best theory for describing the principles of our irrational decisions is something called Prospect Theory. Created in 1979 by the psychologists Daniel Kahneman and Amos Tversky, prospect theory describes how people choose between options that involve risk, like in a negotiation. The theory argues that people are drawn to sure things over probabilities, even when the probability is a better choice. That’s called the Certainty Effect. And people will take greater risks to avoid losses than to achieve gains. That’s called Loss Aversion.

That’s why people who statistically have no need for insurance buy it. Or consider this: a person who’s told he has a 95 percent chance of receiving $10,000 or a 100 percent chance of getting $9,499 will usually avoid risk and take the 100 percent certain safe choice, while the same person who’s told he has a 95 percent chance of losing $10,000 or a 100 percent chance of losing $9,499 will make the opposite choice, risking the bigger 95 percent option to avoid the loss. The chance for loss incites more risk than the possibility of an equal gain.

Over the next few pages I’ll explain a few prospect theory tactics you can use to your advantage. But first let me leave you with a crucial lesson about loss aversion: In a tough negotiation, it’s not enough to show the other party that you can deliver the thing they want.

To get real leverage, you have to persuade them that they have something concrete to lose if the deal falls through.

1. ANCHOR THEIR EMOTIONS

To bend your counterpart’s reality, you have to start with the basics of empathy. So start out with an accusation audit acknowledging all of their fears. By anchoring their emotions in preparation for a loss, you inflame the other side’s loss aversion so that they’ll jump at the chance to avoid it.

On my first consulting project after leaving the FBI, I received the honor to train the national hostage negotiation team for the United Arab Emirates. Unfortunately, the prestige of the assignment was tempered during the project by problems with the general contractor (I was a subcontractor). The problems became so bad that I was going to have to go back to the contractors I’d signed up, who normally got $2,000 a day, and tell them that for several months, I could only offer $500.

I knew exactly what they would do if I just told them straight out: they’d laugh me out of town. So I got each of them on the phone and hit them hard with an accusation audit.

“I got a lousy proposition for you,” I said, and paused until each asked me to go on. “By the time we get off the phone, you’re going to think I’m a lousy businessman. You’re going to think I can’t budget or plan. You’re going to think Chris Voss is a big talker. His first big project ever out of the FBI, he screws it up completely. He doesn’t know how to run an operation. And he might even have lied to me.” And then, once I’d anchored their emotions in a minefield of low expectations, I played on their loss aversion.

“Still, I wanted to bring this opportunity to you before I took it to someone else,” I said.

Suddenly, their call wasn’t about being cut from $2,000 to $500 but how not to lose $500 to some other guy.

Every single one of them took the deal. No counteroffers, no complaints. Now, if I hadn’t anchored their emotions low, their perception of $500 would have been totally different. If I’d just called and said, “I can give you $500 per day. What do you think?” they’d have taken it as an insult and slammed down the phone.

1. LET THE OTHER GUY GO FIRST . . . MOST OF THE TIME.

Now, it’s clear that the benefits of anchoring emotions are great when it comes to bending your counterpart’s reality. But going first is not necessarily the best thing when it comes to negotiating price.

When the famous film director Billy Wilder went to hire the famous detective novelist Raymond Chandler to write the 1944 classic Double Indemnity, Chandler was new to Hollywood. But he came ready to negotiate, and in his meeting with Wilder and the movie’s producer, Chandler made the first salary offer: he bluffly demanded $150 per week and warned Wilder that it might take him three weeks to finish the project.

Wilder and the producer could barely stop from laughing, because they had been planning to pay Chandler $750 per week and they knew that movie scripts took months to write. Lucky for Chandler, Wilder and the producer valued their relationship with Chandler more than a few hundred dollars, so they took pity on him and called an agent to represent Chandler in the negotiations.

Similarly, I had a student named Jerry who royally screwed up his salary negotiation by going first (let me say that this happened before he was my student).

In an interview at a New York financial firm, he demanded $110,000, in large part because it represented a 30 percent raise. It was only after he started that he realized that the firm had started everybody else in his program at $125,000.

That’s why I suggest you let the other side anchor monetary negotiations.

The real issue is that neither side has perfect information going to the table. This often means you don’t know enough to open with confidence. That’s especially true anytime you don’t know the market value of what you are buying or selling, like with Jerry or Chandler.

By letting them anchor you also might get lucky: I’ve experienced many negotiations when the other party’s first offer was higher than the closing figure I had in mind. If I’d gone first they would have agreed and I would have left with either the winner’s curse or buyer’s remorse, those gut-wrenching feelings that you’ve overpaid or undersold.

That said, you’ve got to be careful when you let the other guy anchor. You have to prepare yourself psychically to withstand the first offer. If the other guy’s a pro, a shark, he’s going to go for an extreme anchor in order to bend your reality. Then, when they come back with a merely absurd offer it will seem reasonable, just like an expensive $400 iPhone seems reasonable after they mark it down from a crazy $600.

The tendency to be anchored by extreme numbers is a psychological quirk known as the “anchor and adjustment” effect. Researchers have discovered that we tend to make adjustments from our first reference points. For example, most people glimpsing 8 × 7 × 6 × 5 × 4 × 3 × 2 × 1 estimate that it yields a higher result than the same string in reverse order. That’s because we focus on the first numbers and extrapolate.

That’s not to say, “Never open.” Rules like that are easy to remember, but, like most simplistic approaches, they are not always good advice. If you’re dealing with a rookie counterpart, you might be tempted to be the shark and throw out an extreme anchor. Or if you really know the market and you’re dealing with an equally informed pro, you might offer a number just to make the negotiation go faster.

Here’s my personal advice on whether or not you want to be the shark that eats a rookie counterpart. Just remember, your reputation precedes you. I’ve run into CEOs whose reputation was to always badly beat their counterpart and pretty soon no one would deal with them.

1. ESTABLISH A RANGE

While going first rarely helps, there is one way to seem to make an offer and bend their reality in the process. That is, by alluding to a range.

What I mean is this: When confronted with naming your terms or price, counter by recalling a similar deal which establishes your “ballpark,” albeit the best possible ballpark you wish to be in. Instead of saying, “I’m worth $110,000,” Jerry might have said, “At top places like X Corp., people in this job get between $130,000 and $170,000.” That gets your point across without moving the other party into a defensive position. And it gets him thinking at higher levels. Research shows that people who hear extreme anchors unconsciously adjust their expectations in the direction of the opening number. Many even go directly to their price limit. If Jerry had given this range, the firm probably would have offered $130,000 because it looked so cheap next to $170,000.

In a recent study,4 Columbia Business School psychologists found that job applicants who named a range received significantly higher overall salaries than those who offered a number, especially if their range was a “bolstering range,” in which the low number in the range was what they actually wanted.

Understand, if you offer a range (and it’s a good idea to do so) expect them to come in at the low end.

1. PIVOT TO NONMONETARY TERMS

People get hung up on “How much?” But don’t deal with numbers in isolation. That leads to bargaining, a series of rigid positions defined by emotional views of fairness and pride. Negotiation is a more intricate and subtle dynamic than that.

One of the easiest ways to bend your counterpart’s reality to your point of view is by pivoting to nonmonetary terms. After you’ve anchored them high, you can make your offer seem reasonable by offering things that aren’t important to you but could be important to them. Or if their offer is low you could ask for things that matter more to you than them. Since this is sometimes difficult, what we often do is throw out examples to start the brainstorming process.

Not long ago I did some training for the Memphis Bar Association. Normally, for the training they were looking for, I’d charge $25,000 a day. They came in with a much lower offer that I balked at. They then offered to do a cover story about me in their association magazine. For me to be on the cover of a magazine that went out to who knows how many of the country’s top lawyers was priceless advertising. (Plus my mom is really proud of it!) They had to put something on the cover anyway, so it had zero cost to them and I gave them a steep discount on my fee. I constantly use that as an example in my negotiations now when I name a price. I want to stimulate my counterpart’s brainstorming to see what valuable nonmonetary gems they might have that are cheap to them but valuable to me.

1. WHEN YOU DO TALK NUMBERS, USE ODD ONES

Every number has a psychological significance that goes beyond its value. And I’m not just talking about how you love 17 because you think it’s lucky. What I mean is that, in terms of negotiation, some numbers appear more immovable than others.

The biggest thing to remember is that numbers that end in 0 inevitably feel like temporary placeholders, guesstimates that you can easily be negotiated off of. But anything you throw out that sounds less rounded—say, $37,263—feels like a figure that you came to as a result of thoughtful calculation. Such numbers feel serious and permanent to your counterpart, so use them to fortify your offers.

1. SURPRISE WITH A GIFT

You can get your counterpart into a mood of generosity by staking an extreme anchor and then, after their inevitable first rejection, offering them a wholly unrelated surprise gift.

Unexpected conciliatory gestures like this are hugely effective because they introduce a dynamic called reciprocity; the other party feels the need to answer your generosity in kind. They will suddenly come up on their offer, or they’ll look to repay your kindness in the future. People feel obliged to repay debts of kindness.

Let’s look at it in terms of international politics. In 1977 Egyptian president Anwar Sadat dramatically pushed negotiations on the Egypt-Israel peace treaty forward by making a surprise address to the Israeli Knesset, a generous gesture that did not involve making any actual concessions but did signify a big step toward peace.

Back in Haiti, a few hours after the kidnappers had snatched his aunt, I was on the phone with the politician’s nephew.

There was no way their family could come up with $150,000, he told me, but they could pay between $50,000 and $85,000. But since learning that the ransom was just party money, I was aiming much lower: $5,000. We were not going to compromise. It was a matter of professional pride.

I advised him to start off by anchoring the conversation in the idea that he didn’t have the money, but to do so without saying “No” so as not to hit their pride head-on.

“How am I supposed to do that?” he asked in the next call.

The kidnapper made another general threat against the aunt and again demanded the cash.

That’s when I had the nephew subtly question the kidnapper’s fairness.

“I’m sorry,” the nephew responded, “but how are we supposed to pay if you’re going to hurt her?”

That brought up the aunt’s death, which was the thing the kidnappers most wanted to avoid. They needed to keep her unharmed if they hoped to get any money. They were commodity traders, after all.

Notice that to this point the nephew hadn’t named a price. This game of attrition finally pushed the kidnappers to name a number first. Without prodding, they dropped to $50,000.

Now that the kidnappers’ reality had been bent to a smaller number, my colleagues and I told the nephew to stand his ground.

“How can I come up with that kind of money?” we told him to ask.

Again, the kidnapper dropped his demand, to $25,000.

Now that we had him in our sights, we had the nephew make his first offer, an extreme low anchor of $3,000.

The line went silent and the nephew began to sweat profusely, but we told him to hold tight. This always happened at the moment the kidnapper’s economic reality got totally rearranged.

When he spoke again, the kidnapper seemed shell-shocked. But he went on. His next offer was lower, $10,000. Then we had the nephew answer with a strange number that seemed to come from deep calculation of what his aunt’s life was worth: $4,751.

His new price? $7,500. In response, we had the cousin “spontaneously” say he’d throw in a new portable CD stereo and repeated the $4,751. The kidnappers, who didn’t really want the CD stereo felt there was no more money to be had, said yes.

Six hours later, the family paid that sum and the aunt came back home safely.

HOW TO NEGOTIATE A BETTER SALARY

One of the critical factors in business school rankings is how well their graduates are compensated. So I tell every MBA class I lecture that my first objective is to single-handedly raise the ranking of their school by teaching them how to negotiate a better salary.

I break down the process into three parts that blend this chapter’s dynamics in a way that not only brings you better money, but convinces your boss to fight to get it for you.

BE PLEASANTLY PERSISTENT ON NONSALARY TERMS

Pleasant persistence is a kind of emotional anchoring that creates empathy with the boss and builds the right psychological environment for constructive discussion. And the more you talk about nonsalary terms, the more likely you are to hear the full range of their options. If they can’t meet your nonsalary requests, they may even counter with more money, like they did with a French-born American former student of mine. She kept asking—with a big smile—for an extra week of vacation beyond what the company normally gave. She was “French,” she said, and that’s what French people did. The hiring company was completely handcuffed on the vacation issue, but because she was so darned delightful, and because she introduced a nonmonetary variable into the notion of her value, they countered by increasing her salary offer.

SALARY TERMS WITHOUT SUCCESS TERMS IS RUSSIAN ROULETTE

Once you’ve negotiated a salary, make sure to define success for your position—as well as metrics for your next raise. That’s meaningful for you and free for your boss, much like giving me a magazine cover story was for the bar association. It gets you a planned raise and, by defining your success in relation to your boss’s supervision, it leads into the next step . . . SPARK THEIR INTEREST IN YOUR SUCCESS AND GAIN AN UNOFFICIAL MENTOR

Remember the idea of figuring what the other side is really buying? Well, when you are selling yourself to a manager, sell yourself as more than a body for a job; sell yourself, and your success, as a way they can validate their own intelligence and broadcast it to the rest of the company. Make sure they know you’ll act as a flesh-and-blood argument for their importance. Once you’ve bent their reality to include you as their ambassador, they’ll have a stake in your success.

Ask: “What does it take to be successful here?”

Please notice that this question is similar to questions that are suggested by many MBA career counseling centers, yet not exactly the same. And it’s the exact wording of this question that’s critical.

Students from my MBA courses who have asked this question in job interviews have actually had interviewers lean forward and say, “No one ever asked us that before.” The interviewer then gave a great and detailed answer.

The key issue here is if someone gives you guidance, they will watch to see if you follow their advice. They will have a personal stake in seeing you succeed. You’ve just recruited your first unofficial mentor.

To show how this can be done to near perfection, I can think of no better example than my former MBA student Angel Prado.

While Angel was finishing up his MBA, he went to his boss and began to lay the groundwork for his work post-MBA (which the company was paying). During his last semester, he set a nonspecific anchor—a kind of range—by suggesting to his boss that once he graduated and the company was done investing in his MBA (around $31,000 per year), that money should go to him as salary.

His boss made no commitment, but Angel was pleasantly persistent about it, which set the idea as an anchor in his boss’s mind.

Upon graduation, Angel and his boss had their big sit-down. In an assertive and calm manner, Angel broached a nonfinancial issue to move the focus away from “How much?”: he asked for a new title.

Angel’s boss readily agreed that a new role was a no-brainer after Angel’s new degree.

At that point, Angel and his manager defined what his roles and responsibilities would be in his new role, thereby setting success metrics. Then Angel took a breath and paused so that his boss would be the first to throw out a number. At last, he did. Curiously enough, the number showed that Angel’s earlier efforts at anchoring had worked: he proposed to add $31,000 to Angel’s base salary, almost a 50 percent raise.

But Angel was no rookie negotiator, not after taking my class. So instead of countering and getting stuck in “How much?” he kept talking, labeling the boss’s emotions and empathizing with his situation (at the time the company was going through difficult negotiations with its investors).

And then Angel courteously asked for a moment to step away and print up the agreed-upon job description. This pause created a dynamic of pre-deadline urgency in his boss, which Angel exploited when he returned with the printout. On the bottom, he’d added his desired compensation: “$134.5k—$143k.” In that one little move, Angel weaved together a bunch of the lessons from this chapter. The odd numbers gave them the weight of thoughtful calculation. The numbers were high too, which exploited his boss’s natural tendency to go directly to his price limit when faced by an extreme anchor. And they were a range, which made Angel seem less aggressive and the lower end more reasonable in comparison.

From his boss’s body language—raised eyebrows—it was clear that he was surprised by the compensation request. But it had the desired effect: after some comments about the description, he countered with $120,000.

Angel didn’t say “No” or “Yes,” but kept talking and creating empathy. Then, in the middle of a sentence, seemingly out of the blue, his boss threw out $127,000. With his boss obviously negotiating with himself, Angel kept him going. Finally his boss said he agreed with the $134,500 and would pay that salary starting in three months, contingent on the board of directors’ approval.

As the icing on the cake, Angel worked in a positive use of the word “Fair” (“That’s fair,” he said), and then sold the raise to his boss as a marriage in which his boss would be the mentor. “I’m asking you, not the board, for the promotion, and all I need is for you to agree with it,” he said.

And how did Angel’s boss reply to his new ambassador?

“I’ll fight to get you this salary.”

So follow Angel’s lead and make it rain!

KEY LESSONS

Compared to the tools discussed in previous chapters, the techniques here seem concrete and easy to use. But many people shy away from them because they seem manipulative. Something that bends your counterpart’s reality must be cheating, right?

In response, let me just say that these tools are used by all the best negotiators because they simply recognize the human psyche as it is. We are emotional, irrational beasts who are emotional and irrational in predictable, pattern-filled ways. Using that knowledge is only, well, rational.

As you work these tools into your daily life, remember the following powerful lessons:

? All negotiations are defined by a network of subterranean desires and needs. Don’t let yourself be fooled by the surface. Once you know that the Haitian kidnappers just want party money, you will be miles better prepared.

? Splitting the difference is wearing one black and one brown shoe, so don’t compromise. Meeting halfway often leads to bad deals for both sides.

? Approaching deadlines entice people to rush the negotiating process and do impulsive things that are against their best interests.

? The F-word—“Fair”—is an emotional term people usually exploit to put the other side on the defensive and gain concessions. When your counterpart drops the F-bomb, don’t get suckered into a concession. Instead, ask them to explain how you’re mistreating them.

? You can bend your counterpart’s reality by anchoring his starting point. Before you make an offer, emotionally anchor them by saying how bad it will be. When you get to numbers, set an extreme anchor to make your “real” offer seem reasonable, or use a range to seem less aggressive. The real value of anything depends on what vantage point you’re looking at it from.

? People will take more risks to avoid a loss than to realize a gain. Make sure your counterpart sees that there is something to lose by inaction.