How do you signal your willingness to make concessions without losing leverage?

Be prepared. Anticipate outcomes and how you will deal with different scenarios. Know well your BATNA, but know better your ZOPA. Be ready to step out of your comfort zone by concentrating on bigger picture and long-term prospect.

Here's how I signal willingness to compromise without losing leverage in ESG related negotiations: 1. Know Your "Best Alternative To a Negotiated Agreement" (BATNA): This means having a clear understanding of the minimum acceptable outcome you're willing to walk away with. This could be a specific emissions reduction target, a certain level of transparency on sourcing, or a commitment to specific sustainability practices. 2. Frame concessions as "investments": Instead of framing concessions as giving up something, present them as strategic investments in a mutually beneficial outcome. Highlight how your concession will lead to greater long-term sustainability gains or demonstrate flexibility for the bigger picture.

Mastering negotiation finesse entails skillfully signaling concession readiness while safeguarding leverage. Central to this art is understanding your BATNA (Best Alternative to a Negotiated Agreement). Armed with this knowledge, you possess a robust yardstick to assess offers and demands. Your BATNA serves not only as a shield, empowering you to walk away if terms sour, but also as a sword, justifying concessions sought. Thus, navigate the negotiation tightrope with aplomb, balancing concession hints with steadfast BATNA-backed resolve.Every negotiator must hone their BATNA for strategic advantage."

Know your BATNA, but don't rely on it too much. Situations without a BATNA are rare, but there are cases where no real alternative to negotiation exists. Such situations can arise when one is entirely dependent on the negotiation’s outcome or when no other options are available. Examples include: Monopoly situations: When there is only one supplier or buyer, there are no alternatives. Life-threatening crises: In critical decisions, such as medical emergencies, there is often no alternative to negotiation. Legal obligations: When legal requirements necessitate a negotiation and no alternatives exist. In these cases, one remains dependent on the outcome of the negotiation.

While it's important to be responsive in negotiations, you really want to set firm expectations for your client from the beginning, especially with your BATNA. All too often, negotiators can feel over-confident in their position with the information they have, and consequently set a high BATNA based on their biased view. It's no surprise then, that their BATNA later needs to be shifted when, during negotiations, more information comes to light that leaves the party in a less advantageous position. Changes at this point can frustrate the client because it is happening in the midst of negotiation tensions. My advice is to reflect on what assumptions you are making when developing your BATNA at the outset, and adjust accordingly.

Part of planning your concessions is understanding your counterpart's values & goals. The first step is to listen with that goal, and then evaluate if concessions are even necessary. Often both parties can meet their underlying goal. Once you know this, you can plan your consessions by anchoring away from your true priorties. Meaning, if you cannot pay more than X, then you should anchor the conversation at X + 25%.

Na negociação, a regra principal é que você nunca deve fazer uma concessão sem pedir uma em troca. Concessões não correspondidas abrem um precedente perigoso e fazem você parecer uma “presa” fácil. Na negociação, você pode capitalizar a norma de reciprocidade fazendo concessões em aspectos que são mais “fáceis” ou menos importantes para você. Um exemplo seria um fornecedor que tem flexibilidade para atender um cliente em prazo menor usar tal condição como uma concessão em troca de uma melhor remuneração ou um maior volume de compra.

Never give away something for free. Keep in mind the mantra of “be positive but not naïve”. Therefore closely monitor the counterparty and always act one step at the time, don’t commit or give away value before you get something in return. This counts for value, but also for information sharing.

Be positive but not naïve. Be constantly aware that the counterparty is able to go for a win-lose, power using approach even if the negotiation was going very collaborative until then. Therefore always handle one step at the time and constantly evaluate and diagnose the situation and power balance. Giving away information is in orde to build trust among parties and give the other party more possibilities to come with a better offer and solution for you. But watch out with every extra information you have shared that the initial power balance will not shift in the wrong direction. So therefore also for information sharing stand the saying of give and take.

It may seem awkward to restate what you think was implicitly agreed, but it is very useful to review the agreement verbally when it happens, and then in writing via meeting minutes or similar after the session ends.

While the BATNA is crucial for negotiation, it tends to be somewhat defensive. In contrast, the ZOPA is proactive, focusing on finding common ground and crafting mutually beneficial solutions. By emphasizing the ZOPA, negotiators can shift from a defensive stance to a proactive approach, fostering collaboration and driving towards optimal outcomes.

Never negotiate against yourself. Oftentimes folks are overly willing to offer up concessions without receiving something of value in return in large part because they don't realize what leverage they actually have. For example, normalized benchmark data that's vetted to be comparable to your organization's size, scope, complexity, and regulatory environment can help you understand what your peers have accomplished through negotiation. Use this information to help set boundaries for ZOPA and determine your BATNA. Armed with relevant data you can safeguard yourself against yourself so to speak. Asking insightful questions and actively listening to the other party's response can help frame your negotiation as well.

The ZOPA, or Zone of Possible Agreement, delineates the range where parties' interests overlap, allowing for mutually beneficial agreements. It's where potential concessions from both sides are acceptable. Navigating and maximizing the ZOPA demands a nuanced understanding of each party's needs and limits, coupled with effective communication to craft creative solutions. Harnessing the ZOPA is pivotal for achieving satisfactory and enduring agreements while preserving relationships and averting impasses.