Is Splitting the Difference a Winning Negotiation Strategy or a Flawed Approach?
Unpacking the Pros and Cons of Splitting the Difference in Negotiations
Negotiation is a dynamic art that requires a deep and thorough understanding of negotiating strategies, tactics, techniques, and tips and the ability to adapt to various situations. One common and often misunderstood and misapplied strategy in negotiation is “splitting the difference.”
This is especially true in commercial negotiations involving monetary and non-monetary concessions that provide value.
While “splitting the difference” may seem straightforward and fair, there are pros and cons to consider when deciding whether to employ this strategy in your negotiations. In our negotiating skills training programs and negotiation coaching sessions, we encourage “splitting the difference” when the circumstances support using this negotiating gambit (chess parlance meaning manoeuvre for advantage.)
CONTINUE READING ... SUBSCRIBE TO UNLOCK THE COMPLETE ARTICLE
Gain access to our library of complete articles that contain proven negotiation strategies, tips, and expert insights when you subscribe.
Enhance your negotiating skills and achieve better results!
The Pros of Splitting the Difference:
- Quick Resolution: Splitting the difference can expedite the negotiation process, making it an attractive option when time is of the essence. It’s a simple way to find a middle ground and move forward.
- Fairness: This method can create a perception of fairness in the negotiation. Parties may feel both sides are making equal concessions, promoting goodwill and cooperation.
- Maintaining Relationships: When dealing with long-term “partners” or maintaining professional relationships, splitting the difference can prevent hard feelings and keep lines of communication open.
- Simplicity: When appropriately taught and understood in the proper context, splitting the difference is easy to understand and execute, making it accessible for experienced and novice negotiators. When splitting the difference, people must learn and use correct verbal and written phrases and scripts – or using this negotiation gambit could backfire.
The Cons of Splitting the Difference:
- Missed Value: Splitting the difference might mean leaving value on the table. It must consider each party’s specific needs and priorities, potentially resulting in a suboptimal outcome.
- Lack of Creativity: This strategy can stifle creative problem-solving. Instead of exploring innovative solutions, negotiators settle for the middle ground.
- Ineffective in Complex Negotiations: In intricate or high-stakes negotiations, splitting the difference often needs to be revised. It needs to have the sophistication required for complicated deals.
- Presumption of Equal Concessions: While it may seem fair, in some cases, one side may be making a more significant concession, creating an imbalance.
How Splitting The Difference Can Be Used to Your Advantage
The Negotiating Gambit: It’s generally a good strategy in a negotiation not to offer to split the difference. There are some situations during a negotiation where it’s an excellent strategy to get the other side to split the difference.
The use of this negotiation strategy depends on where you are in your negotiating range during the negotiation. Your negotiating range is between your opening negotiating position (initially, ask for more than you want and expect to get – based on the Maximum Plausible Position – MPP) and your desired outcome (your goal).
Suppose you are on the high side of your desired outcome (goal), between your desired outcome and opening negotiating position. In that case, you can suggest to the other side to split the difference, which would result in your successfully being able to bracket between your high position on your negotiating range. It creates the perception that you made a concession, and what you did was simply bracket to achieve a better outcome.
Example: In a sales negotiation, you proposed a price for a new piece of equipment to a customer at $31,997.95, plus taxes and shipping. The price you proposed is based on your opening negotiating position. Your desired outcome (goal) for the negotiation is to sell the equipment at $26,995.95, plus taxes and shipping.
The customer doesn’t have the budget for your proposed asking price and suggests a price of $25,000.00. Based on this, you’re $6,997.95 lower than your opening negotiating position and $1,995.95 lower than your desired outcome. Now, it’s an intelligent strategy to suggest to the other side to split the difference.
You could say something like this to the customer: “We’re not that far apart, so does it make sense to split the difference? We’ll each compromise $3,498.55 and agree on the purchase price of $28,499.40, plus taxes and shipping.”
By suggesting to the other side to split the difference and by properly bracketing between your opening negotiating position and your desired outcome, you have effectively indicated that the equipment be sold for $1,503.45 more than your desired outcome (your goal). You’ve created a Win-Win outcome by conceding some of your negotiating range to the customer.
The Negotiating Countergambit: You can protect yourself from splitting the difference yourself in a negotiation by using the Higher Authority gambit.
You can say the following to a customer: “We’re only a few thousand dollars apart on a piece of equipment that will improve your operations. It seems a shame to walk away from this after the time we’ve both invested. If you propose a reasonable compromise between our initial competitive price proposal and your counteroffer, I’ll take it to my finance people and see what I can do.”
Why a Former FBI Hostage Negotiator’s Approach Differs:
A former FBI hostage negotiator advocates for an alternative approach in his co-authored book, “Never Split the Difference.” In the book, the co-author proposes that splitting the difference only sometimes serves a person’s best interests. The co-author emphasizes using “tactical empathy, active listening, and calibrated questions” to uncover your counterpart’s true motivations and priorities.
In contrast to splitting the difference, the co-author encourages people to seek out “black swans” –unexpected and valuable concessions that might result in a more favourable deal.
At negotiatingcoach.com, we call this “Broadening the Scope” of the negotiation. It’s important to understand when and how to properly split the difference in a negotiation.
While splitting the difference can be a quick and straightforward way to resolve negotiations and maintain relationships, it may not always be the most effective strategy. Understanding the pros and cons of this approach is essential for any negotiator. There are alternative perspectives on this topic that challenge the status quo.
In your next negotiation, consider the specific circumstances and your counterpart’s motivations before deciding to split the difference – or aim for something more. Remember, successful negotiation requires a versatile toolkit of strategies and tactics, and the right one depends on the situation.
Take Action and Invest in Our Expert Negotiating Training and Negotiation Coaching Packages, Negotiation Tools, and Online Course to Become a Better Negotiator.
» Negotiating Skills Training: Book a tailored in-house presentation, seminar or learning workshop for your organization.
» Negotiating Coaching Packages: If your company is facing a challenging high-value negotiation and you need an expert to help you or your team – or you own a small business – or you’re an individual who needs practical negotiation advice, you can benefit from my investing in one of my three proven, results-producing negotiation coaching packages for individuals, small business owners or corporations.
» Digital Negotiation Learning Products: You can purchase my three E-books containing powerful strategies and tips. E-books: Forensic Blueprinting Questions For Effectively Selling and Negotiating Price or Fee Increases and Managing the Price-driven Sale, Selling and Negotiating Price or Fee Increases in Any Economic Environment, and Strategies and Tips on How to Effectively Manage the RFP/RFQ/RFI or Bid/Tender Process to Optimize Results and Outcomes.
You can also purchase the Negotiating Personality Type and Corresponding Negotiating Style Self-Assessment Questionnaire and Interpretation Results and my NEW Digital MP3 “Greatest Hits” Verbal Negotiating Phrases, Scripts, Questions, and Questioning Techniques. These helpful tools are in digital format and can be easily downloaded.
I provide a discounted Master Negotiator Bundle with all my Digital Learning Products.
» Online Sales Negotiation Course: If you’re in sales, sales management or a cross-functional role that supports sales, you can benefit from enrolling in my NEW self-paced Negotiating for Sales Success online course.
No part of this copyright material can be used without written permission from Selling Solutions Inc.