Using Threats in Negotiation

2 Jul ’05

Harvard Business School’s Working Knowledge features a short but powerful article by professor Deepak Malhotra on how to make negotiation threats more credible. Briefly:

  • Increase your costs of not following through on your threat
  • Visibly restrict your options
  • Visibly incur sunk costs
  • Delegate authority to someone who will follow through on the threat
  • Create and leverage a reputation for making credible threats
  • Leverage the shadow of the future
  • Much more detail in the article.

    It’s important to realize that some of the these tactics are effective because they limit your own choices and options in whatever follows them. Accordingly, one needs to understand that choosing threats as a tactic is itself a limiting choice. At some level though, every negotiation includes threats in each direction, even though they may often be implied – threats are effectively implicit in the process of satisfying a need through exchange.

    One last point – a threat not backed up is almost always worse than no threat at all. Negotiation is very much about the process of creating belief / faith / trust in the truth of the other’s statements. The loss of this belief almost always neuters a party’s ability to advance its theory of the negotiation.

    Previous post:

    Next post: