Collaborative Negotiation Versus Walk-Away Threats
Of all the questions people ask about negotiations, the most common is when to walk away from a deal. Most people's blood pressure ticks up a few points with the thought of walking away, especially after you've invested a lot of time and energy (especially emotional energy) in a negotiation.
In considering whether to walk away from a negotiation, preparation is key here. Know what your walk-away point is before starting the negotiation so it's a rational and deliberate decision rather than an emotional one made in the heat of the moment.When determining your walk-away position, consider your best alternative to negotiated agreement, also known as BATNA. Specifically, what is your backup plan if you aren't successful reaching an agreement? The answer to this varies wildly depending on the circumstances. Understanding BATNA is important in any negotiation, such as an acquisition (walk away as a standalone company), litigation (settle versus go to court), and customer contract (walk away rather than get stuck in a bad deal).
Before you begin any negotiation, make sure you know where your overall limits are, as well as your limits on each key point. If you've thought this through in advance, you'll know when someone is trying to move you past one of these boundaries. It's also usually obvious when someone tries to pretend they are at a boundary when they really aren't. Few people are able to feign true conviction.
At some point in a negotiation, you'll find yourself up against the wall or being pushed into a zone beyond where you are willing to go. In this situation, tell the other party there is no deal, and walk away. As you walk away, be very clear with what your walk-away point is so the other party will be able to reconsider their position. If you are sincere in walking away and the other party is interested enough in a deal, they'll be back at the table and will offer you something you can stomach. If they don't reengage, the deal wasn't meant to be.
Finally, don't ever make a threat during a negotiation that you aren't willing to back up. If you bluff and don't back up your position, your bargaining position is forever lost in this negotiation. The seventeenth time we hear “and that's our final offer,” we know that there's another, better offer coming if we just hold out for number 18.