By: Donald L Swanson
Once a negative impression is formed about an individual, there is a tendency to view everything else about this person in negative terms. [Fn. 1]
A Loss-of-“Trust” Story
I remember mediating a commercial dispute, many years ago, between two parties: let’s call them Party A and Party B. One of the disputed issues, out of many, is this: how much money should Party A pay to Party B?
Throughout the mediation that day, Party A insists they could only pay $XXXX dollars—because that’s all their bank would advance them for settlement. They check with their bank several times that day by telephone and insist that their bank wouldn’t allow them to pay a penny more.
Party B waffles throughout the day on whether to accept the offered number but ultimately decide against it.
As the mediation approaches its conclusion that day, without a settlement, Party A makes a surprise offer: to pay 20% more. Whereupon, Party B does a version of Miss Piggy’s “Hummpff,” declares the mediation “Done!!,” and stomps out the door muttering about “liars” and “never could trust them.”
Post-mediation negotiations continued, I’m told, in which Party B takes a self-righteous and hard line posture, frequently citing the 20% increase as evidence of Party A’s lack of trustworthiness. And, in the end, Party A pays dearly for a settlement.
“Trust” in Negotiations and Mediation
I’m reminded of this story, recently, upon reading an article discussing the role of “trust” in negotiations and mediations. [Fn. 1]
“Trust” is explained as follows:
- It is an individual’s “belief in and willingness to act on the words, actions and decisions of another”;
- Beliefs about another party’s trustworthiness can derive from secondary sources (reputational effect) or from personal experiences;
- People will assess another’s trustworthiness in opening moments of a negotiation;
- Once a negative impression is formed, a counterparty will have doubts about any subsequent behavior or proposals, even when the individual is being conscientious, straightforward, and honest (e.g., a justifiable late arrival at a mediation or slow reply to an offer are likely perceived as delay tactics when trust is lacking); and
- A snowball effect can follow: initial negative impressions harm a negotiator’s willingness to share information, which further increases perceptions of distrust and harms the ultimate outcome.
Negotiating Strategies and “Trust”
Negotiators often utilize strategies that are less-than-forthcoming. Such strategies can be placed into two categories:
- The first involves traditional negotiation tactics, such as exaggerated first offers and hidden bottom lines. Such tactics are accepted behavior in negotiations (commonly known as “puffing”) and are often viewed as constructive behaviors in the dance of negotiation toward reaching an agreement.
- The second involves false promises, misrepresentations of information, and other forms of deceit. Such tactics are not acceptable behavior and carry high reputation risks.
Rather than jumping in to either of such strategies, however, negotiators would do well in a mediation to focus, first, on building trust. That’s because trust is most fragile at the outset.
In building trust, relational capital (i.e., goodwill between individuals) will develop. This also has a snowball effect: relational capital dampens perceptions of opportunistic behavior, which in turn increases opportunities for a settlement.
Relational capital can emerge from such sources as:
- familiarity with the other party’s pattern of speech or written word; and
- shared personal information, especially when commonalities are identified—this creates a sense of similarity and belonging that leads to cooperation and favorable outcomes.
What happened in the story above is this: Party A’s late-in-the-day and increased offer contradicted everything they had said before.
- There may have been a legitimate explanation for what happened (e.g., the banker might have called, unexpectedly, to authorize a new amount); but
- It didn’t matter, because the new offer confirmed everything Party B had already thought: that Party A cannot be trusted. So, everything blew up.
On the other hand, I’ve often wondered if the highly-offended and self-righteous posture taken by Party B thereafter might have been more feigned than real:
- perhaps their expressions of offense are merely an excuse, providing traction for the hard line posture they always wanted to take?
Trust is an important part of negotiations in mediation. A loss of trust can have negative consequences—and, occasionally, such consequences can be severe.
Footnote 1: Information and quotations here are from, “Dancing on the Slippery Slope: The Effects of Appropriate Versus Inappropriate Competitive Tactics on Negotiation Process and Outcome.” Its authors are (i) Roger J. Volkema, of COPPEAD Graduate School of Business, Federal University of Rio de Janeiro – UFRJ, Rio de Janeiro, Brazil, and (ii) Denise Fleck and Sergio Pereira of IAG/PUC-Rio, Rio de Janeiro, Brazil. It is published in Group Decision and Negotiation, Springer, vol 25(5), pages 873-899, September 2016.
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