Five Mental Hurdles Resulting in a Bad Deal

Published 7 December 2024

In the world of negotiations, not every agreement leads to success. Sometimes, deals fall short of expectations or result in a failure to achieve a favourable outcome. What are some of the reasons that lead to an ineffective result? Often, it's not about bad interactions or a lack of effort but rather subtle pitfalls that undermine the effort put into the negotiation and the approach in the negotiation. This article explores five such mental hurdles that can derail even the most well-intentioned negotiations, thereby offering insights to help you avoid these common mistakes and navigate toward better outcomes.

1. Undermine the Power of Readiness: 

   
   

Negotiation is not just a regular activity but a well-thought process. In the competitive and complex world of deals that every party expects to get great value from, readiness is not just good to have, it's a necessity. It is often the focus on the end result (and the euphoria of it) and attention to a singular outcome that divert the attention from thorough readiness. Key criteria, other than just the end result, which are useful while undertaking proper preparation are sometimes overlooked in the process. 

Adequate preparation allows you to approach negotiations with confidence and make well-informed decisions. It enables one to enter the negotiation with knowledge, data, and insights that strengthen your position at the negotiation table, thereby achieving deals that align with your interests and business's goals. Without a well-informed effort, your negotiation might lack the leverage needed to achieve terms that are important to you and to your objectives.

For strategies of effective preparation refer to READYFORYOU  framework.

2. Tendency to avoid a conflict or to maintain peace:

The fear of conflict or a lack of knowledge in addressing conflicts can result in weakening your negotiating power. Maintaining peace is absolutely valid.  However, choosing to prioritize peace over prudence can inadvertently lead to settling on bad deals that have adverse consequences. Often, there is also an element of over-trust that can lead to similar consequences.

In avoiding or not addressing conflict as well as maintaining peace as stated above, you might be more willing to (a) accept a status quo instead of pursuing a strong result, (b) make concessions or accept terms that might not be favorable to your  business, and  (c) diminish your ability to speak up for your interests effectively. Such decisions are more likely to result in unfavorable terms due to the absence of strategic thinking.  It is important to make a conscious effort to make rational decisions and pull out of this mental hurdle to achieve stronger results.  

3. Want to stop the other party from getting a good deal:

Often, negotiating parties focus on disclosing scarcely, hindering the process or withholding information so that the other party doesn’t get a good deal. This approach takes the attention away from value creation, leading to missed opportunities for mutual benefit and agreements that may risk achievement of own interests. Such behavior can damage relationships, making future collaborations less likely, and might provoke retaliatory actions from the other side, creating conflicts, and prolonging or derailing the negotiation process. 

Instead of adopting a win-lose mindset, it is far more effective to aim for solutions that align with both parties’ priorities, fostering collaboration, trust, and outcomes that deliver value for everyone in the negotiation. This is particularly important in multiple party negotiations.

4. Believe that it's now or never:

   
   

We often experience the situation where the phrase "now or never" generates anxiety and a sense of urgency, sometimes causing desperation to take immediate action, thereby lacking the proper preparation and analysis that is necessary for well-thought decisions. This hasty approach might lead to irrational decisions and bad deals. 

One of the primary reasons bad deals happen under the "now or never" mindset is that it

results in adopting an intuitive approach due to the lack of thorough research and due diligence. When there's a rush to make a decision, individuals or organizations may overlook critical information that could affect the outcome of the deal. This can result in accepting terms that are less favorable than what could be achieved with more time for negotiation.

5. Being committed to a certain result in our mind:

A rigid inclination towards a decision or the euphoria that a deal is good, are examples of a commitment to a result. When this commitment makes one rigid and inflexible in deal-making scenarios, it can lead to adverse consequences. In some other cases, the euphoria about a deal might be the tendency to accept and be happy about the deals one is making, even if it might be adverse.

When you're mentally committed to a specific outcome, you might lose the ability to consider various options, thereby not being open to factors such as change in circumstances, shift in market dynamics, or new information that might arise. Such commitment leads to a confirmation bias, and the tendency to ignore warning signs. Being open to adjusting your goals, considering alternative paths, and adapting to changing circumstances is essential for successful deal-making. Remember, the best deals are often the ones that result from a dynamic and collaborative approach, rather than an unwavering commitment to a single outcome.

The 5 mental hurdles presented above can often hinder the effectiveness of negotiations. However, the good news is that with the awareness and the right strategies, these hurdles can be identified, addressed, and ultimately overcome. By recognizing them and implementing practical techniques, negotiators can shift their approach to foster stronger preparation, better understanding, and collaborative problem-solving, resulting in more effective and productive outcomes.

For more insights or reach out to us at info@propelurs.net, follow Propelurs on LinkedIn and visit our website.

-Anuj Jagannathan

CEO Propelurs Consulting

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