Inquiring about Common Day-to-Day Negotiations: Is it Wise to Bargain Over Service Costs?
Haggling Over Services: When Negotiation Might Backfire
Let's say you're about to hire someone for a job, whether it's fixing your leaky roof, designing a new website, or hosting an event. You receive an price quote - should you try to beat it down with some negotiation skills?
At first, it seems like a no-brainer. Negotiating for a better deal could potentially save you some cash, right? But professor Einav Hart and Maurice E. Schweitzer from the University of Pennsylvania have another perspective, as shared in their article "When Negotiation Harms Post-Agreement Performance" in the Organizational Behavior and Human Decision Processes.
The Drawbacks of Negotiation
Hart and Schweitzer found that while negotiating might score you a better deal initially, it could potentially have negative consequences down the line. When service providers feel demotivated after a negotiation, they are less likely to perform at their best, causing subpar results.
To test this theory, Hart and Schweitzer set up experiments involving participants who played the role of employees working on tasks for an employer. In one experiment, some participants negotiated their compensation for a subsequent task, while others were given their compensation without an opportunity to negotiate.
Those who had negotiated their wage were less productive than those who hadn't, completing an average of 24.7 strings of letters accurately compared to 34.2 strings by the non-negotiators. The negotiation process seemed to make the employees view their relationship with the employer as adversarial, leading to a lack of motivation and effort.
Interestingly, this study is one of the first to examine the effects of negotiating in everyday negotiation situations and how negotiators and non-negotiators behave after reaching an agreement. As Hart and Schweitzer point out, the impact of a service contract might not be immediately evident, particularly in instances like roof repair where the quality of work may not be fully appreciated until weeks or months later.
Building a Strong Working Relationship
However, the study showed that a friendly and interested employer could mitigate the negative impact of negotiation on employees. By showing empathy and attempting to build rapport, you can get a good deal without compromising on the service provider's motivation.
Navigating Contract Negotiations
It's essential to recognize that the success of service negotiations depends on various factors. In industries where no-negotiation policies are common, such as law or consulting, negotiating may not be an option. But in everyday situations like long-term marketing contracts, aggressive bargaining may harm the service provider and reduce motivation and performance over time.
Our negotiation strategies and skills should include the ability to assess when not to negotiate, as over-negotiating can damage relationships and lead to poorer service.
Practical Advice:
- Maintain Open Communication: Engage in open discussions to minimize unexpected issues and promote joint problem-solving.
- Prepare with Data: Gather data and understand your value to negotiate effectively.
- Focus on Long-term Relationships: Weigh the potential consequences of negotiation on your ongoing relationship with the service provider.
- Post-Agreement Management: Implement diligent post-agreement processes to ensure high-quality service and long-term value.
- Engage Specialized Teams: For complex negotiations, assemble an interdisciplinary team of experts, including legal, operational, pricing, and analytics professionals.
Take Action:
Don't forget to download our special report, Negotiation Skills: Negotiation Strategies and Techniques to Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.
Related Posts:
- Principled Negotiation: Focus on Interests to Create Value
- Identify Your Negotiation Style: Advanced Negotiation Strategies and Concepts
- To Achieve a Win-Win Situation, First Negotiate with Yourself
- 10 Real-World Negotiation Examples
- What Is Distributive Negotiation?
- In the realm of business, it's crucial to consider the potential drawbacks of negotiation during service contract negotiations, as discussed in the study "When Negotiation Harms Post-Agreement Performance."
- Service providers who feel demotivated due to negotiation may perform subpar work, resulting in poor outcomes, as evidenced by the experiments conducted by Einav Hart and Maurice E. Schweitzer.
- To maintain a strong working relationship and prevent negatively impacting the service provider's motivation, employ empathy and attempt to build rapport, following the practical advice from the study.
- In business careers, understanding when not to negotiate and acknowledging the importance of long-term relationships is vital to ensure high-quality service and long-term value, as over-negotiating can damage relationships and lead to poorer service.
