394 / SETTING YOUR STYLE
Developing mutual trust
Understanding the benefits
Trust involves a willingness to take risks.
It has to do with how vulnerable one is
willing to make oneself to a counterpart.
There are many benefits to having trust
between negotiators: it promotes
openness and transparency, and makes
the negotiators more flexible. Negotiators
who trust each other take each other’s
words at face value and do not have to
verify their statements. This reduces
emotional stress and other transaction
costs, and makes the negotiation process
more efficient. Trust also means that the
likelihood of achieving good and lasting
agreements is also higher.
Developing trust
Reciprocation is important for
building trust. When negotiators offer
information or concessions, they expect
the other party to reciprocate. Without
reciprocation, no further gestures
of goodwill will be offered. With
reciprocation, the negotiating parties
will be able to find ways to collaborate
and create value for both.
It is also important to be seen to be
fair. As fairness is a subjective matter,
however, make sure that you understand
the standard of fairness that your
counterpart adheres to. Past behavior
is often used as a predictor for future
behavior, so try to behave consistently.
Keeping your commitments
Building trust is difficult but losing it
is easy, especially if you break your
commitments. The French diplomat
Francois de Callier, who wrote the
first negotiation book in 1716, stated
that a relationship that begins with
commitments that cannot be maintained
is doomed. Shimon Peres, the former
President of Israel, has said that
promises have to be kept, otherwise
one’s reputation is at stake. Although
people do sometimes make genuine
mistakes and promises in good faith that
they ultimately cannot keep, if you want
to build trust, you need to make every
effort to keep your commitments.
Trust is an essential component of success in all types of negotiation,
whether business, diplomatic, or legal. Ambassador Dennis Ross,
former US Coordinator of the Middle East, has stated that the ability of
negotiators to develop mutual trust is the most important ingredient
of successful negotiation, and that without it, negotiations fail.
TREAD CAREFULLY
Although there are many
benefits to a trusting
relationship, it is not always
possible to build trust. Some
individuals and groups are
simply untrustworthy, so
be cautious in your efforts
to develop trust.
Tip
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DEVELOPING MUTUAL TRUST / 395
Building your reputation
One of the most important currencies
negotiators have is their reputation. It
may sometimes be tempting to maximize
short-term gains by overlooking the
long-term consequences, but
experienced negotiators know that
people prefer to do business with
those that they trust, and guard their
reputations fiercely.
Developing trust
Reciprocation is important for
building trust. When negotiators offer
information or concessions, they expect
the other party to reciprocate. Without
reciprocation, no further gestures
of goodwill will be offered. With
reciprocation, the negotiating parties
will be able to find ways to collaborate
and create value for both.
It is also important to be seen to be
fair. As fairness is a subjective matter,
however, make sure that you understand
the standard of fairness that your
counterpart adheres to. Past behavior
is often used as a predictor for future
behavior, so try to behave consistently.
In 1873, US financial
markets were in poor
shape and “king of steel”
Andrew Carnegie needed
to cash in a $50,000
investment with J.P.
Morgan. Expecting a
$10,000 profit, he asked
Morgan to send him
$60,000. Morgan sent
$70,000—the investment
had made a $20,000 profit.
When Henry Hollis sold the
Palmer House in Chicago to
Conrad Hilton, he shook
hands on Hilton’s first offer
of $19,385,000. Within a week
Hollis received several offers
more than a million dollars
higher. However, he never
wavered on his first
commitment to Hilton.
Examples of actions used by negotiators to build trust
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