How Time Pressure Affects The Outcome Of A Negotiation
Learn how the time factor can add pressure and be a problem for either side in the negotiation process. Use it's power to negotiate to your advantage.
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In Puerto Prince, Haiti, former President Jimmy Carter, Colin Powell, and Senator Sam Nunn were in intense negotiations with Haiti’s military commander, General Cedras. The telephone rang and it was President Clinton calling who advised them that he had already begun the invasion and they had 30 minutes to get out of there.
That was putting extreme time pressure on the negotiation, and people become pliable under time pressure. When do your children ask you for something? Just as you’re hurrying out of the door, right? When my daughter Julia was attending the University of Southern California, she resided in a sorority house and would sometimes come home for the weekends and require money for books. When would she ask me? Seven o’clock on a Monday morning, just as she was running out the door she’d exclaim, “Dad, I’m sorry, I forgot; I need $60 for books.”
I’d reply, “Julia, don’t do this to me. I teach this stuff. How come you’ve been home all weekend, and we didn’t have a chance to discuss this before?”
“Oh sorry, Dad, I just didn’t think about it until I got ready to leave, but I’m late now, and I’ve got to get on the freeway, or I’ll be late for class. If I can’t buy my books today, I won’t be able to get my assignment handed in on time. So please, can I have the money now, and we’ll talk next weekend?”
Children are not especially manipulative, but instinctively, over all those years of dealing with adults, they learn that under time pressure people become more flexible. The problem was that President Carter was putting time pressure on the wrong side.
Power Negotiators know that an interesting question is raised when both sides are closing in on the same time deadline, as was the case in Haiti. Think of this in terms of you renewing your office lease for example. Let’s say that your five-year lease ends in six months, and you must negotiation a renewal with your landlord. You might think to yourself, “I’ll use time pressure on the landlord to get the best deal. I’ll wait until the last moment to negotiate with him. That will put him under a lot of time pressure. He’ll know that if I move out the place will be vacant for several months until he can find a new tenant.” That appears like a great strategy until you realise that there’s no difference between that and the landlord refusing to negotiate until the last minute to put time pressure on you.
So, there you have a situation in which both sides are approaching the same time deadline. Which side should use time pressure and which side should avoid it? The answer is that the side that has the greatest power could use time pressure, but the side with the least power should avoid time pressure and negotiate well before the deadline. Fair enough, but who has the most power? The side with the most options has the most power. If you can’t reach a negotiated renewal of the lease, who has the best alternatives available to them?
To determine this you might take a sheet of paper and draw a line down the middle. On the left side, list your options in the event that you can’t renew the lease. What alternative locations are available to you? Would they cost more or less? How much would it cost you to move the telephones and print new stationary? Would your customers be able to find you if you move?
On the right hand side of the page, list the landlord’s options. How specialised is this building? How difficult would it be for him to find a new tenant? Would they pay more or would he have to lease it for less? How much would he have to spend on improvements or remodelling to accommodate a new tenant?
Now you must do one more thing. You must compensate for the fact that whichever side of the negotiating table you’re on, you always think you have the weaker hand. After all, you know all about the pressure that’s on you, but you don’t know about the pressure that’s on the leaseholder. One of the things that makes you a more powerful negotiator is understanding that you always think you have the weaker hand and are learning to compensate for that. So, when you list each side’s alternatives in this way, you’ll likely end up concluding that the landlord has more alternatives than you do. So, compensate for that, but if you do so, and clearly the landlord still has more options than you do, he’s the one who has the power. You should avoid time pressure and negotiate the lease renewal with lots of time to spare. However, if clearly you have more alternatives available to you than the landlord does, put him under time pressure by negotiating at the last moment.
When President Clinton phoned President Carter to tell him that he had already begun the invasion, and Carter had 30 minutes to leave the country, it was an ultimate example of applying time pressure to a negotiation. The only problem was that Clinton was putting time pressure on the wrong side. We had all the power in that negotiation because we had all the alternatives. It should have been Carter putting time pressure on Cedras, not Clinton putting time pressure on Carter.
Because being under time pressure weakens your hand, you should never disclose to your counterpart that you have a deadline.
Let’s say for example, that you have flown to Dallas to resolve a negotiation with a hotel developer and you have a return flight at 6 o’clock. Sure, you’re eager to catch that flight-but don’t tell the other people. If they do know you have a 6 o’clock flight, be sure to let them know you also have a 9 o’clock back-up flight or, for that matter, you can remain for as long as it takes to work out a mutually satisfactory arrangement.
If they’re aware you’re under time pressure, they could delay the bulk of the negotiations until the last possible minute. Then there’s a real danger that you’ll give things away under that kind of time pressure.
In my Power Negotiating seminars, I set up exercises so the students can practice negotiating. They may have 15 minutes to complete a negotiation, and I impress on them the importance of reaching agreement within that time period. As I stroll around the room eavesdropping on the progress of the negotiations, I can tell that during the first 12 minutes they have difficulty making any progress. Both sides are stonewalling the issues and there is very little give and take. At 12 minutes, with 80 percent of the time used up, I take the microphone and tell them they have only 3 minutes left. Then I continue periodic announcements to keep the time pressure on them and end with a countdown of the seconds from five to zero. It’s very clear to see that they make 80 percent of the concessions in the last 20 percent of the time available to negotiate.
So, the rule in negotiating is that 80 percent of the concessions occur in the last 20 percent of the time remaining to negotiate. If demands are presented early in a negotiation, neither side may be willing to make concessions, and the entire transaction might collapse. If, on the other hand, additional demands or problems surface in the last 20 percent of the time available to negotiate, both sides are more willing to make concessions.
Think of the last time that you purchased a piece of real estate. It probably took about 10 weeks from the time you signed the initial contract to the time you actually became the owner of the property. Now think of the concessions that were made. Isn’t it true that during the last 2 weeks when things came up to be renegotiated, both sides became more flexible?
Some people are unethical enough to use this against you. They hold out, until the last minute, elements of the negotiation that could have been brought up earlier and easily resolved. Then when you’re getting ready to complete the arrangements these problems come up because they know you’ll be more flexible under time pressure.
Another thing that the principle of time pressure tells you is that you should always tie up all the details up front. Don’t leave anything to, “Oh well, we can work that out later.” A matter that seems to be of little importance up front can become a very huge problem under time pressure.
I remember being in Kalispell, Montana, to do a seminar for the Montana graduates of the Realtors’ Institute. These are the highest trained residential real estate people in the state. We were doing an all-day seminar on Power Negotiating and during the break an agent came up to me and said, “Perhaps you can help me. I have a huge problem. It looks as though I’m going to lose a big part of my commission on a very large transaction.”
I asked her to tell me more, and she said, “Two months ago a man came into my office and wanted me to list his $600,000 home. Well, I had never listed anything that big before, and I guess I didn’t express as much confidence as I should have, because when he asked me how much commission I would charge, he flinched, and I fell for it. I told him six percent. He said: ‘Six percent. That’s $36,000! That’s a lot of money.’ So I said: ‘Look, if you have to come down much on the price of the property, we’ll work with you on the commission.’ That’s all I said, and I never gave it a second thought.
“As luck would have it, I ended up not only getting the listing, but I found the buyer as well. He didn’t have to reduce the price very much, so now I have almost the full $36,000 commission coming into my office, and the property is due to close next week. Yesterday he came into my office and said: ‘I’ve been thinking about the amount of work that you had to do on that sale. You remember you told me that you’d work with me on the commission?’
“I replied, ‘yes.’
“‘Well, I’ve been thinking about the amount of work you had to do, and I’ve decided that $5,000 would be an adequate commission for you.'”
$5,000 when she was due $36,000. She was practically panic-stricken. This illustrates that you shouldn’t leave anything to “We can work that out later” because a little detail up front can become a huge problem later when you’re under time pressure.
That story also shows how we always think we have the weaker hand in negotiations-whichever side we’re on. In fact, the real estate agent in Montana was in a very strong position wasn’t she? As I explained to her, she possessed a written contact for the six percent. If anything, she had verbally modified it with a vague comment that wouldn’t hold up in court anyway. So in fact she had all the power, but didn’t think she had any.
However, why expose yourself to that kind of problem? Tie up all the details up front. When the other side says to you, “We can work that out later, it’s not going to be a big problem,” alarms should start to ring and lights should start to flash. Do not allow people do that to you.
Understand also that the longer you can keep the other side involved in the negotiation the more likely the other side is going to move around to your point of view. The next time you’re in a situation in which you’re starting to think that you’ll never budge the other side, think of the tugboats in the Hudson River off Manhattan. A tiny tugboat can move that large ocean liner around if it does it a little bit at a time. However, if the tugboat captain were to back off, rev up its engines, and try to force the ocean liner around, it wouldn’t do any good. Some people negotiate like that. They reach an impasse in the negotiations that frustrates them, so they get impatient and try to pressure the other side to change their mind. Think of that tugboat instead. A little bit at a time, it can move the liner around. If you have enough patience, you can change anybody’s mind a little bit at a time.
Unfortunately, this works both ways. The longer you take in a negotiation the more likely you are to make concessions. You may have flown to San Francisco to negotiate a large business deal. At 8 o’clock the next morning, you’re in their office feeling bright, fresh, and determined to hang in and achieve all of your goals.
Unfortunately, it doesn’t go as well as you hoped. The morning lingers on without any progress, so you break for lunch. Then the afternoon passes, and you’ve reached agreement on only a few minor points. You call the airline and reschedule for the midnight flight. You break for supper and return determined to get something done. Look out. Unless you’re very careful, by 10 o’clock you’ll start making concessions that you never intended to make when you started that morning.
Why does it happen that way? Because your subconscious mind is now screaming at you, “You can’t walk away from this empty handed after all the time and effort you’ve spent on it. You need to be able to put something together.” Any time you pass the point where you’re prepared to walk away, you have set yourself to lose in the negotiations.
Time is comparable to money. They are invested, spent, saved, and wasted. Do invest the time to go through every step of the negotiation; do use time pressure to gain the advantage, and don’t surrender to the temptation to hurry a conclusion. Power Negotiators know that time is money.
Roger Dawson is a negotiation consultant and a sales and management speaker. He is the author of “Secrets of Power Negotiating”.