Five Negotiation tips for mining companies: #3 Don’t hesitate to put in the first offer
- By Pilot Law LLP
Often parties to a negotiation—not only mining companies, but they too—are very reluctant to put in the first offer and prefer to wait to see what the other side proposes, but there are good reasons that you might be better off making the opening offer. Here are some:
- Putting in the first offer allows you to “anchor” the negotiation. In addition to framing the principal terms and issues, you can also establish the timing, location of meetings and suggested participants
- Putting in the first offer means you will likely be more prepared than your counterparty, as putting the offer together will require some thought and planning
- Instead of waiting for the other side, you can get the negotiation started and save time in reaching a deal. You can also more quickly establish if there is a deal to be made at all
The Harvard Law School Programme on Negotiation reports on a study where MBA students were asked to negotiate a single-issue price deal and recorded who made the first offer, the amount of the offer, and the deal outcome. Subjects then were asked questions about their emotional state, such as whether they felt anxious during negotiation scenarios and whether they were satisfied with the outcome. The negotiators who made first offers felt more anxiety than those who did not – and, as a result, were less satisfied with their outcomes. Yet, backing up prior bargaining studies, those who made first offers did better in economic terms than those who did not.
So, don’t be nervous – put in the first offer and you are likely to do better than waiting for the other side!
Don’t be afraid to put in the first offer is the third of five negotiation tips for mining companies that I am sharing with you.
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