Afford Anything - How to Handle 7 Types of Hardball Negotiation Tactics, so You Can Earn More and Spend Less

Episode Date: September 24, 2024

#543: Picture this: You're at a car dealership, trying to get the best price on your dream car. The salesperson hits you with a "take it or leave it" offer. Your palms are sweaty, your heart's racing. What do you do? That's just one of the tricky situations we dive into in this episode. We're tackling seven types of hardball negotiation tactics that can trip you up in all sorts of situations - from asking for a raise to haggling at a flea market. First up, we break down the "take it or leave it" tactic. We share a real-life story of Sarah, a software developer, facing this exact situation in a job interview. You'll hear how she turned it around and got what she wanted. Next, we talk about psychological warfare. Sounds intense, right? It can be. We tell you about Emma, a graphic designer, who had to deal with a client trying to throw her off her game. You'll learn how she kept her cool and came out on top. Ever heard of the "good cop, bad cop" routine? It's not just in movies. We share a story of how this played out in a business deal and give you tips on how to spot it and handle it like a pro. Then there's the "snow job" - when someone dumps so much information on you that your head spins. We break down how to cut through the clutter and focus on what really matters. We also cover what to do when someone's holding back important info, how to spot a fake-out (when someone pretends to care about one thing but really wants another), and the sneaky "nibbling" tactic where people ask for just one more small thing... and then another... and another. For each tactic, we give you the lowdown on: What it looks like in action Why it works (yep, there's some psychology involved) How you can spot it What you can do to counter it We wrap up with a handy checklist for each tactic. Think of it as your negotiation cheat sheet. By the end of the episode, you'll have a toolkit of strategies to help you navigate tough negotiations, whether you're buying a car, negotiating your salary, or just trying to decide where to go for dinner with your friends. Remember, negotiation isn't about "winning" at all costs. It's about finding solutions that work for everyone. With the tips from this episode, you'll be better equipped to do just that, even when things get tricky. For more information, visit the show notes at https://affordanything.com/episode543 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Do you ever find yourself trying to buy a car and the salesperson hits you with a take it or leave it offer? Or maybe you're at work asking for a raise and suddenly you feel like you're being interrogated by the quote unquote bad cop while a different manager plays quote unquote good cop? Or maybe you've been house hunting and the real estate agent is throwing so much information at you that your head is spinning. If any of these scenarios sound familiar, you're not alone. We all face challenging negotiations in our personal and professional lives. And sometimes it feels like we're navigating this minefield of tactics and mind games and psychological warfare. So today, we're going to pull back the curtain on these types of tricky situations. We'll explore seven challenging negotiation scenarios that you might encounter in your daily life.

And we will equip you with the tools and strategies that you need to be able to have. handle them like a pro. Welcome to the Afford Anything podcast, the show that understands you can afford anything but not everything. Every choice carries a tradeoff. And that applies not just to your money, but your time, your focus, your energy, your attention to any limited resource you need to manage. So what matters most? This show is dedicated to exploring that question and we cover five pillars. Financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's double eye fire. Today's show is about those first two pillars, financial psychology and increasing your income, because both of those play out in the real world

in the way in which we negotiate for a discount when we're buying a car, for a house, for a home renovation, or for a raise at work. Let's get started. And we'll begin by quickly outlining the seven challenging scenarios that we're going to be covering in today's episode. Number one, the take it or leave it offer, psychological warfare, good cop, bad cop routines, information overload, information withholding, the opposite, fake outs, and nibbling. All of these are psychological tactics that good salespeople, good bosses are aware of, and by the end of this episode, you're going to know exactly how to deal with each one. So let's dive in starting with the take it or leave it offer.

A take it or leave it offer is exactly what it sounds like. The other party presents an offer and states that that offer is not up for negotiation. They're essentially saying, hey, this is our offer. You can either accept it as is or you can walk away. The challenge with this tactic is that it seems to shut down. any possibility of negotiation before it even begins. And at a deeper psychological level, the take it or leave it offer plays on our fear of missing out, it plays on our fomo and on our aversion to loss.

Psychologically, we tend to overvalue what we might lose compared to what we might gain. This is a cognitive bias known as loss aversion. And the take it or leave it tactic tries to make you feel like you're going to lose. the entire deal if you don't accept immediately. This triggers a stress response that can lead to hasty decisions. Now, the challenge here is figuring out how to negotiate with someone who is positioning themselves as unwilling to budge. The counterparty is trying to take control of the situation by limiting your options and pressuring you to make a quick decision. Let's listen to a scenario in which Sarah, a fictional software developer, negotiating with Mark, a hiring manager,

deals with a take it or leave it scenario. Base situation. Sarah, a talented software developer with five years of experience, has been offered a job at TechPro, a growing startup. The hiring manager, Mark, has presented her with a take it or leave it offer. Here are the parameters. The offer is for $95,000 per year. Sarah's current salary is $85,000.

The industry average for her experience level is between $100,000 to $110,000. Now Sarah has another offer from a less exciting company for $98,000. And TechPro is known for its innovative projects and its growth potential. So with all of that factored into account, Here's the base dialogue. Sarah, we're excited to offer you the position of senior developer here at TechPro. The salary is $95,000 per year. Now, this is our best and final offer.

We don't negotiate on salary. It's a take it or leave it. What do you say? I appreciate the offer, Mark. The role sounds exciting, but I was hoping for a salary more in line with the industry average for my experience level, which is between $100,000. to 110,000. There are a few ways that this conversation could go from here.

Scenario A, Sarah accepts without negotiating. Here's what that would sound like. Yeah, I understand. But as I said, this is our final offer. We believe that the opportunity to work on cutting edge projects at TechPro is part of the overall compensation package. I see. Well, when you put it that way, I can understand the value.

on just the salary, and I'm excited about the opportunities at TechPro, so I accept your offer. Excellent. We're thrilled to have you on board. Welcome to the team. Scenario B. Sarah walks away without negotiating. Also a bad idea. I appreciate the opportunity, Mark, but I'm afraid I can't accept an offer that's significantly below market rate for my skills and experience. Is there any room for flexi? here? I'm sorry, Sarah, but as I mentioned, it's a take it or leave it off her, and we can't make any changes. I understand. When that case, I'm afraid I'll have to decline. I hope for all the best for you in finding the right candidate for the role. I'm sorry to hear that, but hey, I appreciate your directness. Good luck in your job search. Scenario C. Sarah initiates a multi-issue negotiation.

I understand your policy, Mark, but I bring unique skills that I believe add significant value to TechPro. Would you be open to discussing other aspects of the compensation package, such as signing bonus or equity, even if the base salary is firm? Sarah, I appreciate your enthusiasm. But as I mentioned, we have a strict policy on compensation. The 95K salary, it's our final offer. I understand, Mark. However, given that the industry average for someone with my experience is between 100,000 and 110,000, I'm hoping we can find some middle ground.

Perhaps we could explore other components of the package. Okay, what'd you have in mind? Well, for starters, is there the possibility of a signing bonus? That could help bridge the gap between your offer and the market rate. We don't typically offer signing bonuses, Sarah. It's not something we've budgeted for this position. I see. What about equity then?

Given tech pros growth potential, I'd be very interested in having a stake in the company's future. Equity is usually reserved for more senior positions or early employees. You'd be joining as a senior developer, which doesn't typically come with an equity package. I understand that's not typical. But given the gap between the offer and market rate, perhaps we could make an exception. Even a small equity grant would show TechPro's commitment to my long-term growth with the company. Let me think about it for a moment. What percentage did you have in mind?

Well, considering the salary difference, perhaps a 2% equity grant investing over four years. 2%. That's quite ambitious, Sarah. Listen, that's more than what we give some of our directors. I understand it's high, but I'm trying to find ways to make up for the below-market salary. I'm willing to be flexible on the exact number. Hey, I appreciate your creativity, but 2% is definitely, well, that is off the table. Now, I might.

I just might be able to get approval for half a percent grant, but even that's going to be pushing it. I see. Well, 0.5% is a start. could we perhaps meet in the middle at 1%. Well, let me make a note of that, and we'll come back to equity in a moment. Were there any other aspects of the package that you wanted to discuss? Yes, actually. I was wondering about the vacation policy.

What does TechPro offer? Well, we provide the standard two weeks of paid vacation per year, plus major holidays. That's a good start, but in my current role, I have three weeks. Would it be possible to match that? Our vacation policy is standard across the company. Sarah, we really can't make any exceptions as it would create inequity among the employees. I understand. What about sick days and personal days? We offer five sick days and two personal days annually. That's helpful. Now, given the current trends in the industry, I was also curious about TechPro's remote work policy. Is there flexibility to work from home part of the week? Well, we believe in the value of in-person collaboration, especially for senior roles like yours.

So we expect employees to be in the office most days. Oh, I completely agree about the value of in-person collaboration. But having even one or two days a week to work remotely can greatly improve work-life balance and productivity. Is there room for flexibility there? We might be able to allow one day of remote work per week, but it would need to be consistent. and approved by your direct manager. That's great to hear, Mark. I appreciate your willingness to discuss these points.

So to summarize where we are, the base salary is firm at 95,000, we're discussing a potential 1% equity grant, one day of remote work per week might be possible, but vacation time is fixed at two weeks. Is that correct? Almost. I said I might be able to get approval for half a percent equity,

and we're still discussing the 1%. But otherwise, yes, that's where we stand. I see, given that we can't move on the base salary or vacation time, I'd really like to push for that 1% equity. It would go a long way to making me feel valued and invested at TechPro. You're persistent. I'm going to give you that. Okay, let me see what I can do. I can't promise anything, but I'll talk to our CEO about the 1% equity grant.

However, if we do this, I need you to understand. It's a significant exception. I completely understand, and I really appreciate you going to bat for me on this, Mark. It shows that TechPro values its employees and is willing to invest in them. Oh, don't think me yet. I still need to get approval. Is there anything else that you wanted to discuss about the offer? Just one last thing. You mentioned a signing bonus wasn't in the budget. But given that we're still below market rate, even with a potential equity grant, Could we revisit that? Even a small bonus would help ease the transition. Sarah, you are pushing the boundaries here. What number do you have in mind for assigning bonus?

Well, considering the salary gap and the standard in the industry, perhaps $10,000. $10,000? No, no, no. That's not going to fly, Sarah. Listen, you've already got me going out on a limb with the equity discussion. the most that I could possibly do for assigning bonus, you know, like 3,000. And honestly, that's really stretching it. I understand, Mark. I appreciate you considering it. Would it be possible to meet in the middle at 5,000? That would really help me feel confident about accepting the offer.

Okay, you are a tough negotiator, Sarah. I can see why we want you on our team. Okay, here's what I can do. I'll push for the 1% equity grant and a 5% percent. thousand dollar signing bonus. But in return, I need you to agree to be in the office four days a week instead of the three that we discussed earlier. Now, does that work for you? That sounds fair, Mark. I'm excited about the opportunity to join TechPro, and I appreciate your willingness to work with me on this. All right, then. I'll need to get final approval on these terms, but if everything goes through,

do we have a deal? Yes, pending the approval of the equity grant and signing bonus. I'd be thrilled to accept the offer. Excellent. Okay, I'm going to draft up the new terms and run the buyer leadership team. I should have a final answer for you within 48 hours. And Sarah, hey, good job advocating for yourself. That's exactly the kind of initiative that we like to see here at TechPro. Well, thank you, Mark. I'm looking forward to hearing back and hopefully joining the team soon. As long as you fight for TechPro like you fight for yourself, this is going to be a great partnership. Thanks, Sarah. Sarah handled this challenging situation skillfully. Now, here's what worked. She didn't immediately accept or reject the offer even when pressured. She shifted the conversation to other aspects of the compensation package.

She focused on the value that she would bring to the company, and she was creative at finding alternative ways to increase her overall compensation. Even though she was presented in this scenario with a take it or leave it tactic, She focused on mutual benefit, didn't make hasty decisions, and transitioned from single issue to multi-party. Anytime that you're facing a take-it-or-le-le-it scenario, here's a countermeasures checklist for you, and it's called the four C's. Cool-C., clarify, create options, and communicate value. So cool off, don't react immediately. Clarify, ask a lot of questions so you understand the offer fully.

Create options means look for areas of flexibility and communicate. value is to emphasize mutual benefits, similar to what Sarah did within this roleplay that you just heard. So the four Cs are your countermeasures checklist anytime that you encounter a take it or leave it scenario. Scenario two. Psychological warfare. This refers to tactics that are designed to manipulate, intimidate, or throw you off balance

emotionally during a negotiation. This can include personal attacks. or criticism, intimidating body language or tone. It can include creating a sense of urgency, or it can include attempting to make you feel inferior or underprepared. This unfortunately happens a lot at workplaces. And this approach is tough to deal with because it targets your emotions rather than the substance of the negotiation.

The goal that the counterparty has is to make you feel uncomfortable, anxious or insecure, and that would potentially lead you to make concessions or accept unfavorable terms. Psychological warfare in a negotiation situation exploits our emotional vulnerabilities. It aims to trigger our fight or flight response, which pushes us into a stressed state where we are more likely to make poor decisions. Because when we feel attacked or undermined, our amygdala, which is our brain's emotional center, can override our more rational prefrontal cortex leading to emotional responses rather than logical ones. Here are a few strategies that you can use to handle psychological warfare.

First, recognize it for what it is and don't let it rattle you. And that comes with practice. Second, don't take it personally. Remember, these are tactics that the counterparty is using as a lot of the counterparty is using as part of the negotiation, it has nothing to do with you as a person. Third, refocus on the issues. Your job is to continually bring the conversation back to the substantive points. Number four, set boundaries, because if the behavior that you're encountering is particularly egregious, don't be afraid to call it out. Number five, prepare thoroughly. The more prepared

you are, the less effective those types of psychological tactics will be. Number six, take breaks if needed. If you feel overwhelmed, it's okay to ask for a short break and know that the counterparty is unwilling to grant you a request out of the goodness of their heart. So even the request for a break has to be something that you're prepared to negotiate. We'll go over that in, I mean, not in the scope of this particular podcast episode, because that's many layers deep, but we'll unpack how to ask for breaks in a way that they will be granted. So let's hear a fictional scenario in which Emma handles psychological warfare tactics from Alex

during their negotiations. Emma, who is a freelance graphic designer, has to deal with Alex, a client who uses aggressive psychological tactics during their negotiation. Let's have a listen. Hey, Emma. Come on in.

and take a seat. Before we kick things off, I've got a phone call in a couple of minutes. So while we wait, why don't you just tell me about your biggest screw-up in your career? Oh, well, there was this one time when I totally misread what a client wanted. Hang on, hold that thought. Got this call. Listen, Eric, listen, listen. If you don't start trimming the fat on this budget, I'm going to trim it for you. Listen, you're not going to like what I cut out. Now, get it done.

I don't want to hear excuses. Just get it done. Okay. Sorry about that, Emma. Okay, where were we? Oh, okay. Your biggest mess up, go ahead. Right.

So, as I was saying, there was this project where I completely missed the mark on what the client was after, but I worked my butt off to fix it. Interesting. Well, let's talk about your pitch for our... rebrand. Gotta say, your price tag, it's a bit ambitious. Look, I know it might seem high, but trust me, it's worth it. I can break down the costs if you want. Nah, no need. We got a bunch of other designers lined up, you know, quite frankly, they're all cheaper than you. One guy even said that he'd do it for half of what you're asking. I get it, budget's tight, but my work is worth every penny.

My design process is super thorough. Let's just cut the bull. Emma, listen, your portfolio's nice and all, but we're not sure that you can handle something this big. Our brand is everything to us, and we can't risk it on someone who just might drop the ball. I hear you, Alex. But I've nailed projects this size before. Have you ever heard of XYZ Corp? Or ABC Incorporated?

I can get you their numbers if you want. references. Yeah, yeah, those are big names. Too bad they didn't want you for their next rebrand, right? Huh? Wait, what? No, that's not right. I'm still tight with all my clients. Oh, really? Oh, my bad, must have heard wrong. Do you know how people talk? Anyway, about that quote of yours. Alex, I'm getting the feeling you're not sold on this. Why don't we talk about what's really bugging you? I bet we can figure something out that works for both of us. Aren't you eager? I mean, tell me, How bad do you need this gig? I bet freelancing can be pretty rough sometimes, you know?

Whether I need the job or not, doesn't matter. What matters is what I can do for your company. That's why I charge what I charge. Big talk, but let's get real. You're not the only fish in the sea. We've got another designer coming in right after you. I bet they're going to be more flexible. I get it.

You've got options, but I know the value of my projects. Now, I'm happy to talk about changing the scope if we need to fit your budget, but I don't discount my rates. Well, well, well, you've got more backbone than I thought. Okay, let's say I'm interested. How fast could you start? We need to get this done like yesterday. I'm glad that you're interested, Alex. But before we talk deadlines, we need to go back to the scope and the budget. It feels like we're not on the same page, and we need to sort that out first.

Always about the money with you people. Fine, fine. What do you got in mind? It's not just about the cash, Alex. It's about making sure that we both get what we want out of this that our expectations are meant. So let's go through my proposal together. I can explain my process, and we can see if there's room to tweak things. Sure, we can go through it, but don't expect me just to roll over. I've been doing this a little. long time and I know every trick in the book. Hey, I appreciate you being straight with me. I'm not here to sell you something you don't want. I want to make sure that this can work for both of us, and if we can't, no hard feelings. So, shall we check out the proposal? Well, yeah, I guess we should. Let's see what you got. Here, Emma begins going through her proposal, keeping it professional

despite Alex's attitude. As I get into it, Alex starts to chill out a bit. I got it handed to you, Emma. really know your stuff. I can see why you're not the cheapest option out there. Thanks, Alex. I like to cover all my bases. Saves headaches down the road. Fair enough. I think we might be able to make this work after all. But you're going to have to budge a little bit on that price. I'm all ears, Alex. What are you thinking? Emma demonstrated excellent composure in the face of psychological pressure. Here's what she did right. Number one, she didn't take the bait. despite all of Alex's provocations. Number two, she redirected the conversation to focus on the value that she could provide.

Number three, she stood her ground on her worth and didn't let Alex's tactics undermine her confidence. And again, it's very hard to not let someone undermine your confidence. That comes from a lot of practice. And number four, she showed willingness to compromise on the scope of the project rather than on her rates. So the key lesson here is that maintaining your composure and focusing on the value that you bring can help you navigate through psychological tactics. Now here's your countermeasures checklist. There's an approach when you're dealing with this type of psychological warfare.

It's called the calm approach, C-A-L-M. See, center yourself. Take deep breaths. Stay grounded. The A in Calm is for acknowledge the tactic. Recognize it for what it is. The L is for logical focus. You want to keep your attention on the facts and on mutual interests.

And the M is to manage your responses. Use eye statements and set boundaries. So calm, C-A-L-M. Center yourself, acknowledge the tactic, logical focus, manage your responses. That's your countermeasures checklist. Let's move to the third scenario. The Good Cop Bad Cop Routine. This is, of course, made famous in the movies,

but the good cop, bad cop routine is a classic tactic where two people work together with one taking a harsh or aggressive stance, the quote-unquote bad cop, while the other is more understanding and accommodating the quote-unquote good cop. This is a very effective tactic because it is emotionally manipulative. It may make you feel relieved to deal with the quote-unquote good cop, which potentially could lead you to make unnecessary concessions. And it can also create confusion about who actually has decision-making authority. The good cop, bad cop routine leverages what's known in psychology as the contrast effect.

And it also leverages our desire for social connection. Because after you face the aggression that comes from one party, you feel a sense of relief and gratitude towards the quote-unquote good cop. and that makes you more likely to agree to their terms. This tactic also exploits our tendency to reciprocate positive treatment, making us feel obligated to the person playing the role of Good Cop for their apparent understanding. So here are a few strategies for handling the GoodCop bad cop routine if you ever encounter it.

And this can happen at a car dealership. This can happen at work when you're dealing with two managers. this can happen in any number of scenarios. Number one, recognize the tactic. Be aware that this is a coordinated strategy. Number two, don't pick sides. Treat both parties as a single entity and address them equally. Number three, focus on facts.

Bring the conversation back to substance. Number four, ask direct questions because you want to clarify who has the actual authority to make. make decisions. Number five, propose dealing with just one person. Suggest that it might be more productive to deal with a single point of contact. And number six, use the contrast to your advantage. So if the quote-unquote bad cop makes an unreasonable demand, use that to make your own

proposals seem more reasonable to the other party, the party that's playing the quote-unquote good cop. Number seven, stay calm. I know easier said than done, and that's one of the things that comes. with practice, with rehearsal, with going through this, in practice scenarios, you cannot let the aggression rattle you or cause you to overreact. Let's take a listen to a practice scenario. Let's listen to how a fictional character named Tom handles the good cop, bad cop,

routine from Sarah and Mike. So in this scenario, we're going to hear Tom, who is a potential business partner, deal with Sarah and Mike, who are employing this good cop, bad cop routine. Thanks for coming in today, Tom. I'm Sarah, and this is my colleague, Mike. It's nice to meet you both. I'm excited to discuss the potential partnership. Let's cut to the chase.

Your proposal, way off the mark. We're not impressed. I'm sorry to hear that. Can you elaborate on what aspects didn't meet your expectations? Where do I start? The pricing? It's outrageous. The timeline, it's unrealistic.

and frankly, I'm not convinced that you have the expertise to pull this off. Mike, please. I think what my colleague is trying to say is that we have some concerns. But Tom, I personally saw a lot of potential in your proposal. Potential? Potential doesn't cut it, Sarah. We need results, not maybes. I could understand your concerns. Perhaps if we go through the proposal point by point, I can address any specific issues.

We don't have time for that. Either come back with something better, or we'll find someone who can. Mike, let's hear him out. Tom, why don't you walk us through your thinking on the pricing structure? Yeah, of course, the pricing reflects the comprehensive nature of the service we're offering. We're not just providing a product, but ongoing support and customization. That's all well and good, but it's still overpriced. Our budget can't accommodate this. Tom, is there any flexibility in the pricing? Maybe if we adjusted the scope slightly. I am certainly open to discussing adjustments. What specific areas of the scope did you have in mind?

This is ridiculous. We're just wasting our time here. Mike, please. Tom is trying to work with us. I apologize for the tension, Tom. We're all trying to find the best solution here. Perhaps we could focus on the areas where there might be some flexibility. I appreciate that, Sarah. Perhaps we could start by prioritizing your needs and see where we can make adjustments. Our needs are simple. We need it done right, done fast, and done cheap. Can you do it or not? What my colleague means is that we have certain constraints. But Tom, I believe if we work together, we can find a middle ground. Yeah, I'm committed to finding the middle ground. Shall we go through each element of the proposal and see where we can make changes? Okay, this is going nowhere. I'm out of here. Mike, please. Tom, I hate to say it, but Mike has a point. We really need to see some significant changes to make this work.

Yeah, I understand. I'm willing to be flexible. What specific areas are most concerning to you both? Well, the pricing is a major issue. And while I appreciate the comprehensive service you're offering, Mike is right that our timeline is much tighter than what you've proposed. Finally, someone's talking since. Look, Tom, we've got other options. Either you can make this work for us or we'll find someone who will.

What Mike means is that we're under a lot of pressure to get this project moving. Is there any way you could revise your proposal to address these concerns? Okay, I see. I certainly want to make this work. perhaps we could look at scaling back some of the additional services to bring down the cost and the timeline. Scaling back, that's your solution? It's a start, Mike. Tom, we really need to see some dramatic changes here.

Our budget and timeline are pretty much set in stone. Can you work within those constraints? I'll need to know exactly what those constraints are. Can you share those details with me? Now we're getting somewhere. Sarah, show him the numbers. All right, Tom. Here's what we're working with.

It's significantly different from your proposal, but if you can make it work, we have the authority to sign off on this today. Welcome back. Now, here's what Tom did well. First, Tom remained calm and professional despite Mike's aggressive approach. Second, Tom addressed both Sarah and Mike equally. He didn't allow them to divide his attention. Third, Tom consistently brought the conversation back to the specifics of his proposal. proposal. And fourth, he was willing to make adjustments while also standing firm on his expertise and his value. So the key here is to recognize the tactic for what it is and not get pulled into the dynamic. Stay focused on substance. And here's your countermeasures checklist. The acronym is pair, P-A-I-R. If you encounter the good cop, bad cop routine, your job is to pair,

because you're dealing with a pair of people, your job is to also pair up. So P, perceive the dynamic, meaning recognize the tactic. A, address both parties equally. Don't take sides. Think of them as a single entity. I, interests first, meaning focus on substantive issues. And R, request a single point of contact.

P.A.I.R. Perceive the dynamic. Address both parties equally. interests first, request a single point of contact. Okay, we're going to take a break to hear a word from the sponsors who make this show possible. And when we return, we're going to talk about a scenario that happens a lot at real estate showings. And it's the scenario of information overload. The holidays are right around the corner.

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Information overload takes advantage of our limited cognitive processing ability. Our brains can only handle so much information at once, and when we're overwhelmed, we tend to either shut down or grasp at simple solutions. This tactic can lead to decision fatigue where our ability to make good choices diminishes, which could potentially cause us to accept unfavorable terms just to end the overwhelming situation. So a few strategies if you encounter this. Number one, stay focused. Don't let the flood of information distract you from what matters.

Be crystal clear about your key priorities. Number two, ask for summaries. request concise summaries of key points. Number three, take breaks. Number four, prioritize information. Ask the other party to prioritize the most crucial pieces of information. Number five, and this is really, I'm going to star this one. This is very important. Set an agenda and set time limits. You need to structure the discussion in order to focus on the most important topics. Number six, if the information is highly technical, bring in experts who can help you navigate it. This is important when you're dealing with anybody selling you a financial product.

And number seven, request key documents and data in advance of the meeting so that you can review it in anticipation of the meeting that you're going to have. Let's listen to a fictional scenario in which Emma, an IT manager, deals with Alex, a salesperson who's using the information overload tactic. Emma, I'm excited to show you our comprehensive software solution. Let's start with our 200-page technical manual. Oh, that's quite extensive. It sure is. Now let me walk you through each feature. We have 147 unique functions, each with its own set of sub-features.

For instance, our data processing module has 23 different algorithms. Could we maybe focus on the key features? Of course, but they're all key features. Let's look at our compatibility chart. We integrate with 89 different systems. Here's a breakdown of each of the integration points. That's a lot to take in. Don't worry. I have a 50 slide presentation that simplifies it all.

Oh, and here's our pricing structure with 12 different tiers and 37 add-on options. Each option has this own ROI calculation. Okay. I'm feeling a bit overwhelmed here. Perfectly normal. That's why I prepared a 30-page. summary report. It only covers the basics, but it should help. Now let's dive into our implementation process. It has 78 steps, each with its own timeline and resource allocation. Alex, I appreciate your thoroughness, but let's pause for a moment. Of course. I have a 15-page

document on effective meeting pauses if you would like to... Okay, that won't be necessary. Here's what I need. Can you provide me with a one-page summary of your top three features that specifically address our company's main pain points. I'll give you 30 minutes to put that together. In the meantime, I'd like to see your base pricing structure, just the essentials, no add-ons. But our pricing is really designed to be... I understand, but I need to see the base pricing

to even consider moving forward. Can you provide that? Yes, I can do that. Great. When we reconvene, we'll discuss those top three features and the base pricing. If that aligns with our needs and budget, we can then delve into more specifics. Does that work for you? I, yes, that works. 30 minutes later.

Thanks, Alex. This summary is exactly what I needed. Now, let's discuss how these features align with our goals and what the implementation timeline would look like. Certainly, based on your specific needs, I think we could streamline the implementation to just 15 key steps. Perfect. Now we're getting somewhere. All right, Emma did a great job of cutting through the snowstorm of information. First, she recognized the tactic and she immediately redirected the conversation. Second, she clearly stated her needs and she set specific parameters. Third, she took control of the meeting by setting a time limit and setting clear expectations.

And fourth, she focused on only the key essential information that she needed in order to make a decision. So, if you are facing this tactic, then here's your countermeasures checklist. The acronym is filter, F-I-L-T-E-R, filter. F, focus on key objectives. I insist on summaries. L, limit the scope of the discussion. T, take breaks when needed. E, turn to experts.

And R, request prep time, filter. When you are presented with information overload, you want to. filter. The next scenario is the opposite of what we just dealt with, information withholding. Information withholding is a tactic where one party intentionally fails to disclose important information that could influence the negotiation. And this tactic is challenging because it leads to information asymmetry. It puts you at a disadvantage because of the fact that you're in the dark about key pieces of information that would sway your decision. and that can lead to poor decision-making because you have incomplete information,

and it also erodes trust in the negotiation process. Information withholding exploits our discomfort with uncertainty, and it exploits a very, very natural human tendency to fill in any gaps in knowledge with assumptions. When we are faced with incomplete information, we often create narratives in order to make sense of the situation, but those narratives, which we might not even consciously recognize that we're creating, those narratives may or may not be accurate.

This tactic also plays on our fear of the unknown, which can pressure us into making decisions based on limited data. So if you're facing information overload, here are a few things that you can do. First, ask for specific information, ask direct questions for specific information. Second, do your homework, research independently as much as possible. Third, use conditional agreements. You want to make any agreement conditional upon receiving and verifying key information. This is, I can tell you from real estate, very, very, very important because a lot of times

agents will not give you information even if you ask for it over and over and over. And so you want to be, you want to make conditional agreements and they're going to scare you and say you're going to lose the deal, which plays on that fear of FOMO. Conditional agreements. That's the third strategy for dealing with this. Fourth, identify information gaps. You need to know, be clear about what information you're missing and why it matters. Five, be willing to walk away.

Don't give in to the FOMO. If crucial information is being withheld, be prepared to exit. Six, seek third-party verification. You want to get any information verified by an independent source. And seven, use protection clauses. So you want to include clauses in any agreement that protect you if undisclosed information comes to light later. Let's listen to another fictional scenario. Again, we're going to give these characters the names of Emma and Alex.

So in this scenario, Emma is trying to buy a used car from Alex, but Alex is withholding important information. Hi, I'm interested in this sedan. Can you tell me about its history? Oh, it's a great car. Very popular model. What would you like to know about it specifically? Well, has it been in any accidents? We thoroughly inspect all of our vehicles.

Is there a particular area that you're concerned about? That doesn't really answer my question. What about the mileage? The mileage is consistent with a car of that age, hon. More importantly, have you considered its fuel efficiency? I'd still like to know the actual mileage. And what about maintenance records? Our certified mechanics ensure all of our cars that they are in top condition.

Would you like to take her for a test drive? Okay, before that, I'd really like some specific information. How many owners has it had? Our customers value their privacy, so we don't disclose that information. but I can assure you she's been well cared for. Okay, what about the Kelly Blue Book value? Market values fluctuate constantly. We price our cars competitively based on current market conditions.

Now, what color are you thinking of? I'm more concerned about the car's condition in history right now. I understand, rest assured, we only sell quality vehicles. Now, let me tell you about our fantastic financing options. Look, Alex, I appreciate you trying to help, but I need some specific information before we can move forward. I understand, but as I said... Let me be clear. I'm interested in this car, but I won't make a purchase without full transparency.

So here's what I need to know. I need the exact mileage, a comprehensive vehicle history report, and the maintenance records. Without this information, I'll have to take my business elsewhere. Well... I'm happy to wait while you gather this information. In fact, why don't you take about 15 minutes to collect these details? I'll wait here. I'm not sure if I can...

Alex, any reputable dealership should have this information readily available. If you can provide this, we can move forward. If not, I'll understand, but I'll need to look at other options. What would you prefer? Okay, give me a few minutes, okay? Fifteen minutes later. All right. the information you requested, Emma. Thank you, Alex. I appreciate your cooperation. Now that I have

this, I can see the car has relatively low mileage and has been well maintained. This definitely increases my interest. So let's discuss the price, keeping in mind the Kelly Blue Book value, which I've already researched. Well, I'm glad you're interested. Given the car's condition, we're only asking... Before you quote a price, I want you to know that I've researched comparable sales in the area. Based on that and the information that you've provided, I'm prepared to make an offer. Shall we discuss? Emma handled this situation very, very well. She persistently asked for specific information. She did not allow Alex to deflect. She very clearly communicated what she needed to know before she was willing to move forward. She gave Alex a specific time frame to gather that information,

and she was willing to walk away. So the takeaway, is if you face someone who's doing this, be clear about what you need and why you need it and when you need it and be prepared to walk away if that transparency isn't provided. And your countermeasures checklist, the acronym is G-U-E-S-S. So the G is gather information independently, which is do your own research. The U is understand your must-have. So what do you need to know? The E is explicitly ask for specifics. The first S is seek third-party verification, and the second S is set conditions for agreement. If somebody is withholding information, guess. Well, I actually don't guess, but, you know, the acronym for how you countermeasure that is yes. We're going to take one final

break, last ad break of the show, to hear from the sponsors who give us the ability to bring you this information. And when we come back, we're going to walk through the last two challenging tactics that you'll face, one of which is fakeouts and the other one is nibbling. That's coming up right after this. Welcome back. The sixth scenario is fakeouts. Now a fake out in negotiation is a deceptive tactic in which one party pretends to care deeply about a particular issue. in order to gain leverage on another one. Now, this tactic is challenging because you are being misled about the other party's true priorities. This might cause you to make unnecessary concessions, and it can create a false sense of progress in the negotiation.

Fakeouts take advantage of many of our cognitive biases, in particular, the anchoring effect and the reciprocity norm. by strongly emphasizing one particular issue, the counterparty sets an anchor that influences what we think their priorities are. And when they later concede on this quote-unquote important issue, this issue that they're pretending is important, we feel compelled to reciprocate because we think that they just gave ground on a truly important matter. So we have bought into the anchor, the framework and the anchor that's, that we have bought into the anchor, that they have set, and then when they demonstrate that they've moved it, we then feel a sense of

duty or obligation, reciprocity, to move in kind. So here are a couple of strategies on how to handle fakeouts. First, stay focused on what's important to you rather than what's important to the other party. I intro every episode with the idea that we can afford anything but not everything, and that's true for every limited resource, time, money, focus, energy. And so the key question is, what matters most to you? And being deeply, deeply grounded in that, being anchored in that, is the key to a lot of good decision-making. So that's the top strategy, not just for how to handle fake-outs, but really for living a good life.

Number two, ask probing questions. You want to understand not what is important, but why. Why is a given issue important to another party? Number three, look for inconsistencies. So as you're discussing a given issue with another party, pay attention to any contradictions within their stated priorities. And number four, don't rush to make concessions because you want to give yourself the benefit of time so that you can consider the implications of any trade-offs. Number five, consider the whole

package. Evaluate how each element fits into the overall big-picture agreement. And number six, be prepared to call their bluff because if you suspect a fake out, you need to be willing to concede on the quote-unquote important issue and see how they react. Let's hear a scenario in which Tom, a job candidate is negotiating with Sarah, a hiring manager, and Tom employs a fake-out tactic during his salary negotiations. Tom, we're excited about the possibility of you joining our team. Let's discuss the details of the offer. Great, I'm really looking forward to it.

We're offering a salary of $85,000 per year with our standard benefits package. How does that sound? Thank you, Sarah. The salary, it's in the ballpark, but I'm really... really concerned about the vacation policy. Two weeks seems a bit limited. I see. Unfortunately, that's our standard policy for new employees. I understand, but in my current role, I have four weeks of vacation and something that I really value for work-life balance. In fact, it's one of the main reasons that I've stayed at my current job despite having other offers.

That's quite a bit more than we typically offer. We might be able to go up to three Three weeks, but four would be unprecedented for a new hire. I really do appreciate you considering it. The vacation time is really important to me. It allows me to recharge and come back to work being even more productive. Is there any way that we can make four weeks work? Tom, I understand your position, but four weeks for a new hire is really pushing it. Let's discuss other aspects of the offer.

Perhaps we can find some middle ground elsewhere. All right. I'm willing to hear you out. What else can you offer? Well, we have a comprehensive health insurance plan, a 401k with a 3% match, and opportunities for professional development. Those are good benefits. However, I've got to be honest, the salary is lower than I was hoping for. Given my experience and the value that I can bring to the role, I was expecting something closer to 100,000. Oh, that's a significant jump, Tom. We might have some wiggle room, but 100,000 is beyond our budget for this position. I understand it's a big ask.

What if we could find a middle ground, say like 95,000? That's still quite high. The most we could probably do is 88,000. I see. Well, okay, I really want to make this work. What if we did this? I'll accept the 88,000 salary if we keep the vacation at two weeks as you initially offered. And I realize now that the salary, it's really probably more important to me in the long run.

Oh, well, that's certainly something we could work with. You'd be willing to stick with the standard two weeks of vacation? Yes, if we can meet at 88,000, I think we have a fair tradeoff. The increased salary will be more beneficial for me overall. All right. Tom, I think we have a deal. 88,000 with our standard two weeks of vacation. Actually, Sarah, since I'm making such a big concession on vacation time,

which, as I mentioned, was really important to me, I was hoping that we could sweeten the deal a little bit. Could we bump the salary to 90,000? Or perhaps offer a signing bonus? We typically don't offer signing bonuses, but given your flexibility on the vacation policy, I might be able to get approval for $90,000. That sounds great, Sarah.

And since we're both being flexible here, is there any chance that we could include an extra week of vacation after my first year? That would really help me feel good about this transition. You drive a hard bargain, Tom, but yes, I think we could make that work. So to summarize, a $90,000 salary, two weeks vacation to start,

bumping up to three weeks after your first year. Does that work for you? That sounds perfect, Sarah. I'm excited to join the team. Tom used the fake-out tactive effectively. In this scenario, Tom won the game. He initially emphasized vacation time in order to make salary seem less important. He then, quote-unquote, conceded on vacation time to gain leverage in his salary negotiation. And then he used the momentum from this concession to ask for additional benefits. This is an example where someone used a fake out, a job candidate used a fake out, and got a better compensation package as a result.

Now, what could Sarah have done differently? Well, first, Sarah could have kept a more comprehensive view of the entire compensation package throughout the negotiation. In this example that you just heard, Sarah lost sight of the overall picture because she hyper-focused to, much on individual elements like vacation time. Sarah also could have probed deeper. When Tom emphasized vacation time, she could have asked more probing questions to understand why this was so important to him, because that might have revealed his true priorities. She also could have established more clear parameters for the negotiation up front, including which aspects of the offer were flexible and which weren't. She was a little fuzzy on that one.

She could have used silence strategically because noticed that Tom suddenly shifted from vacation time to salary. And Sarah could have used silence as a tool to make Tom elaborate further, but she didn't. Sarah also made too many small concessions, one after the other, after the other. Like she could have bundled her responses. She could have said, hey, if we agree on the salary, then here's what we can offer in terms of vacation title and other benefits. Sarah also failed to use reciprocity. Every time that Tom asked for a concession, Sarah could have asked for something in return,

which would have made it a more balanced negotiation. Sarah also could have regularly summarized the current state of the offer, making it clear at that big picture 30,000-foot-view level how each change affected the overall package. So those are things she could have done differently in order to handle the fake out. But I wanted to give you an example of a time

when a fake out works, and particularly in this example, when it works in favor of a job candidate. So here's your countermeasures checklist. If you are in the wild and you encounter somebody who is employing this tactic on you, and you don't want to be like Sarah, you want to do a better job than her, stay aware. The acronym is aware. A is for assess your own priorities. W is watch for inconsistencies. A is ask probing questions, R is resist rushed concessions, and E is evaluate the whole package.

Aware. That's your countermeasures checklist, your countermeasures acronym. And with that, we move to the seventh and final scenario of today's episode. This one is called nibbling. So nibbling is a tactic where one party asks for a series of small concessions after the main agreement seems to have already been reached. In other words, you make an agreement and then the next party asks for just a little more and just a little more after the agreement's already been reached. There's still the if you give a mouse a cookie effect going on. So what's challenging about this tactic is that each individual request seems small and harmless.

But in aggregate, those individual requests can significantly alter the deal. A lot of times this happens when your feel, feeling a sense of relief because you think that you've already reached an agreement, so you've let your guard down. This is the tactic that's employed after you've let your guard down. Nibbling capitalizes on our tendency to view small requests as insignificant, and it also capitalizes on our desire to be cooperative once we feel like we've reached an agreement with someone. It also exploits the sunk cost fallacy because after we've already invested time and energy into reaching a deal, we're reluctant to jeopardize that deal over what seem like a few minor additional requests. And on top of that, saying yes can sometimes create psychological momentum, which makes every subsequent yes easier and easier.

You get in the habit of saying yes to small things, so you keep saying yes to small things. So if you become aware that the other party is nibbling, here are a few things you can do. First, anticipate it. Be prepared for additional requests even after you think you've reached an agreement. Second, set very clear boundaries about what is on and off the table. Third, ask for reciprocity. Every time they want an additional concession, ask for something in return. Fourth, bundle your responses.

So if they ask for multiple small things, address them together in one bundle rather than one by one. Also, summarize the agreement, same as within the fake out, summarize everything, and be willing to reopen stuff that you've already agreed on. If significant nibbles accumulate, you need to be willing to revisit the entire agreement and reopen things that you'd already agreed on. And learn to say no. You've already reached an agreement, in theory, so it's okay. to firmly but politely refuse any additional concessions. So let's take a look at another scenario, again between Tom and Sarah, in which this time Tom uses the nibbling tactic.

We continue from where Sarah agrees to a $90,000 salary and three weeks vacation after the first year. That sounds great, Sarah. I really appreciate your flexibility. I think we're really very close to a deal. deal here. Excellent. I'm glad we could come to an agreement. Just a couple of small things before we wrap up. Given the responsibilities of the role, would it be possible to adjust my title to senior instead of just manager? Hmm. I suppose we could do that. It doesn't change the role itself, so I don't see why not. Perfect. Thank you. Thank you. Oh, I forgot to ask. Is there a mobile phone

allowance? I'm going to be doing a lot of work on the go. We don't. typically offer that, but I can check with HR. We might be able to provide a small monthly stipend. That would be fantastic. Okay, one last thing. I'm really keen on professional development. Could we include a guaranteed annual budget for conferences or courses? Well, we do support professional development. I guess we could put in writing a specific amount. What did you have in mind? Oh, nothing too extravagant, maybe $2,000 a year. That would cover a conference and maybe an online course? All right. I think we could manage that.

Wonderful. Just to confirm then. We're at 90,000 salary, title of senior manager, three weeks vacation after the first year, a mobile phone stifeng, and $2,000 for annual professional development expense. Did I miss anything? No, that covers everything we've discussed. Excellent. I'm thrilled that we could come to an agreement. I'm really looking forward to joining the team. This is going to be great. We're excited to have you, Tom.

I'll have HR draw up the offer letter with all these details. Once again, Tom's use of the nibbling tactic was really effective. He waited until the main terms were agreed upon before he asked for small additional concessions. He spaced out all of his requests, making each one seem pretty minor in isolation. And he framed each request as a small, small addition to an already agreed-upon deal. Okay, so what could Sarah have done differently? Well, first, Sarah could have used a parking lot strategy.

So every time Tom brought up a new item, Sarah could have suggested putting them in a quote-unquote parking lot for future discussion rather than addressing them immediately. This is verbiage that helps you bundle. Oh, cool, let's table that or let's park that. and that way you can bundle it all at once. Sarah also could have been willing to reopen the entire negotiation because that would make Tom more cautious about making additional requests.

Sarah also could have introduced a deadline for finalizing the agreement. She could have recognized the tactic and addressed it directly. She could have kept the end goal in mind, you know, evaluating whether or not those changes really aligned with the company's goals and with the roles requirement. And she could have documented each stage of the agreement, which would have made it more clear when new requests were going beyond what was initially agreed upon.

So if you are faced with this scenario and you want to do a better job than Sarah did, then here's your countermeasures checklist. The acronym is boundaries. B, be prepared for last minute requests. O, outline all terms clearly up front. You understand the cumulative impact. N, negotiate reciprocal concessions, meaning every time they ask for something, you ask for something back.

D, don't rush to agreement. A, address multiple small requests together, that parking lot strategy. R, reopen the full negotiation, if necessary. And S, say no, firmly but politely. So the acronym Boundaries, that's your countermeasures checklist. Those are seven really challenging negotiation situations, each of which has its own complexities. And if there are any common key takeaways across all of these scenarios, it's recognize the tactics being used against you. Practice, practice, practice.

And that comes from practice sessions. It comes from scrimmages because that will get you used. used to the situation so that you aren't facing it the first time in real life. You've been through the practice rounds before. Also, be crystal clear about what's important to you and on the value that you bring to the table and be ready, be practiced and ready about how to counter each strategy that you recognize. Negotiating successfully is not about, quote unquote, winning. It's about finding mutually beneficial solutions. So really enacting that reciprocity. And when you can recognize challenging situations that come up, like the seven that we just outlined, and you know

how to navigate them and you're practiced at how to navigate them, you will be so much more better equipped to handle whatever comes your way in your next negotiation, whether you are buying a car or buying a home or accepting a job offer or asking for a raise, these are the big ticket moments that can change your financial trajectory to the tune of thousands, tens of thousands, or with compounding hundreds of thousands of dollars. So be aware of what's happening around you, be firm in what you stand for, and practice. That's today's episode. I hope you enjoyed it.

I hope you got value from it. If you did get value from it, then there's a website that I want to invite you to check out. It's afford anything.com slash your next raise. This is the website where we talk about the beta cohort, also known as the Founders cohort, for our course that's currently in development, which is called Your Next Raise. This week and this week only, September 23rd through 27th, 2024, we are opening enrollment to beta testers who want to be part of that initial beta cohort, that founder's cohort, of your next raise.

This is a course on how to negotiate generally with an emphasis, as the name implies, on how to get a raise, but the underlying principles will help you with any type of negotiation. whether it's a freelance contract or lowering your utility bills. You can learn all about it by going to afford anything.com slash your next raise. And again, the beta cohort enrollment is open this week only, September 23rd through 27th, 2024. After Friday, September 27, we are closing our doors to the first beta cohort. We're going to go through the course with that beta cohort, the founder's cohort. everyone in that cohort is going to see the first draft of what we've created.

And after looking at that first draft, watching the videos, going through our initial practice runs, we're going to gather lots of feedback from this founder's cohort and implement that feedback in our revisions of the course. And then we will take a few months to incorporate all of those revisions into what we're creating. and in December of 2024, we're going to open up the cohort to a second beta round. That second beta round, we'll see the second draft. They'll give us feedback. We'll incorporate that into a new set of revisions. And then in early 2025, we then will launch it as a full alpha course.

That's the timeline. That's the trajectory. If you are interested in seeing that first draft and helping us, polish it and being one of the founders cohort members who help shape the course, we would love to have you on board. So again, the website is afford anything.com slash your next raise. Affordanything.com slash your next raise. Available now through Friday, September 27. Thank you so much for tuning in. My name is Paula Pamp. This is the Afford Anything podcast. And if you enjoyed today's episode, please go to afford anything.com slash your next trays.

I'm so thrilled that you are part of this community. And I will meet you in the next episode.