Ultimatums In Negotiation

Ultimatums, such as “Take it, or Leave it!” are little like hand grenades – you better have total clarity about your strategy and the consequences of using them, because once you’ve pulled the pin, there’s no going back without detonating your credibility.

So let’s explore how “Take it, or Leave it” and other ultimatums play out in negotiations and if / how they should be used.

Like all the good things, this starts with a story…

Have you heard of Thomas Hobson? No? Not surprising, as he was a livery stable owner in Cambridge, England over 500 years ago. So, what makes him remarkable, you may ask? Hobson was famous for his “Take it or Leave it” way of dealing with his customers, ordering them to “choose” between taking the horse in the stall nearest to the door, or none at all.

Clearly, Hobson was duly known for his horses, but not his negotiation proficiency! Here is why…

Why are ultimatums dangerous in your negotiations?

1. When you reduce the number of options available in a negotiation, you increase the level of tension at the table.
   Consequently, if you choose to put an ultimatum on the table, be prepared to deal with dramatic consequences, such as:
   Your counterpart walking away
   your counterpart threatening you in return
   escalation of sanctions
   the relationship detonating
2. No one likes to be cornered!
   Our job as negotiators is to get agreements across the line. However, best agreements are reached when parties commit to entering in a voluntary relationship, not an obligatory one. In fact, the deals obtained by one party twisting the other’s arm, rarely “sticks” and gets implemented. (read more on how this plays out infamous deals)
3. You’re gambling with your personal credibility and reputation as a negotiator.
   By drawing that line in the sand and declaring something as “Non Negotiable”, you invest your “face” and reputation in the deal mix, and in that regard, you often have more to lose than to win. So, if you do deliberately use an ultimatum, don’t play games, bluff or change your mind down the track, as any backpedalling will inevitably jeopardize your credibility. As one of the most renowned professional negotiators, William Ury, says: “Bluffing is only for card games”

Once your personal credibility is on the line, you have nowhere else to go. And if your counterpart has chosen to do the same, the question is not only who will win and who will lose, but what happens to the loser? It is for this reason that we often advise our CEO/MD clients not to be personally involved in high stakes situations and delegate the negotiation to their trained team. If the “top dog’ is leading the negotiation and conflict escalates, who will then have “a higher authority” to step in and break the deadlock? This very situation played out recently on the political arena in France, where the Prime Minister and a key Union Leader are in a fierce conflict. What they do share in common is a weak position in their own camp, and using inflexibility in this conflict to regain personal credibility. Inevitably, their use of opposing ultimatums in their respective declarations show that they can’t/won’t back up. So the only question left is whether one or both leaders will lose their career and reputation at the end of the process. Clearly, this is not a place where a professional negotiator would allow themselves to be…