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BT MindRush 2013: Madan Pillutla says trust is basic for negotiations

Madan Pillutla, Professor of Organisational Behaviour at London Business School  said he has pondered many fundamental questions in the course of his career. Among them: are humans basically cynical, mistrusting and evil? Are we born fair minded or do we always seek unfair advantage?

Anilesh S. Mahajan        Last Updated: April 11, 2014  | 16:36 IST
BT MindRush 2013: Madan Pillutla says trust is basic for negotiations
Madan Pillutla, Professor of Organisational Behaviour at London Business School

"Without a bottom line, there is no point in negotiating," said Madan Pillutla, Professor of Organisational Behaviour at London Business School and an expert on negotiations. He was speaking on the second day of Business Today's MindRush conclave before a packed audience of CEOs and other management leaders.

Pillutla said he has pondered many fundamental questions in the course of his career. Among them: are humans basically cynical, mistrusting and evil? Are we born fair minded or do we always seek unfair advantage?

FULL COVERAGE: Business Today MindRush 2013

He began his talk quoting from Lewis Carroll's Alice in Wonderful, a book he maintained he had read many times, which has the Mad Hatter telling Alice: "It does not matter where you go if you do not know where you should go". He went on to spell out 10 basic principles of negotiating. But he emphasised that essential for negotiations was trust. "The product of negotiation should be getting a good deal. The goal should not be agreement at all cost," he says.

Pillutla's 10 principles of negotiations:

1. Start negotiations only when you are fully prepared and know what you want. "When you don't get what you want, you will start wanting what you get."

2.  Get a foot in the door: "Agreement on small issues makes it more likely that the other party will attempt to move on the more difficult ones."

3.  Reduce the costs the other side will incur. "It is important you make other party believe you can help them reduce their losses, They are more likely to reach an agreement with you then."

4. Reciprocity and trade-offs give the other party what they really value-but at a cost.  "During the negotiations, we must understand what the other party wants and values, and give it to them ... at a price,"

5. Human beings are egocentric in advocacy of the fairness and other principles. "As humans we are egocentric in our advocacy of fairness or other principles. We must give understand this and be a little sympathetic, and may thus increase our chances of a better outcome."

6. Anchoring: Be the first to make the offer. It is always said that the first impression is the last impression. This works in negotiations as well. "Be prepared and make the first offer, other offers will anchor around it."

7. Make the issues relating to the negotiations familiar to the other party. Bring out difficult issues, a few times before negotiating them. Exposure leads to liking. He believes bringing up difficult issues before negotiations helps.

8. Showing emotion is harmful to the negotiation process. Behavioural economics experts believe that a show of anger compromises negotiations. Be it deliberate or genuine, it impacts the final decision.

9. Begin with trust: Trust always helps in negotiations. " Too much of cynicism does not help either"

10. Deal with the right person(s): the golden rule: deal among equals.

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