3 Reasons Why Calling An offer “Final” Could Undermine Any Negotiation
In negotiations, it’s often tempting to show strength by saying something early on, like “this is my final offer”. It’s supposed to emphasise that you won’t take any nonsense, you are fed up with the way things are going or that your position is so strong, you can afford to let the opportunity to settle go.
In a recent case I was handling, a trainee solicitor acting for the other side insisted that their first offer was final. It was an abysmally, insulting ‘offer’ which did nothing but insult us. We carried on with legal proceedings. Later on, following a short, unsuccessful mediation, another “final” offer was sent to me. It had barely improved from the last. A further two “final” offers were made. You probably get the point I’m making: if you say an offer is final, it roughly translates as “take it or leave it.”
Here’s why you should resist using this term:
- You will back yourself into a corner by calling an offer final. Instead of offering more opportunity to discuss potential settlement ideas, you are indicating that you will be making no further offers. Either your opponent accepts it or negotiations are terminated. Before taking this step, you need to consider what the alternative is to negotiation. If it’s litigation, then think about the costs, time, resources and stress of it. If it’s maintaining an unsatisfactory status quo, how will this benefit you? A key conflict consideration to always keep in mind is the benefit to you of taking certain actions, whether that’s walking away, ignoring or attempting to settle.
- Labelling an offer “final” is intended to show strength but instead, it can make you look inexperienced and disrespectful. Negotiators sometimes use this term at the outset to indicate that not only are they strong but that they will not take any nonsense. That’s problematic if I know that my opponent is negotiating because it’s not in their interests to litigate! In any case, skilful negotiators can always persuade their opponent to consider another offer by reframing it differently, using empathy or if you see that somebody is losing patience or feeling impatient, take a break.
- Negotiation is a process. The exchange of offers to settle is really a way of communicating preferences. You should always be prepared with a range of values that you would be settle at and of course, when you will walk away. Usually, that’s when the benefits of doing so outweigh staying. If you receive a first offer which is below that range, remember that this is normal! It may look insulting (and sometime, it is intended as such!) but in general, your opponent will be checking to see what your reaction is to it. We never really know what is acceptable until we test it and sometimes, the results can be surprising. If you feel that the offers and counter-offers made are not taking you any closer to settlement, it’s a sign that something else needs to be communicated or that you need distance to re-think your strategy or the information that should be disclosed. Can you sweeten the deal with something? Have you identified correctly, your opponent’s interests and are you really attempting to satisfy them? Clearly, if you still feel it is not getting you anywhere, why not tell your opponent this politely and respectfully? It could actually help you build trust!
Negotiation isn’t always about complex deals which attempt to satisfy diverse interests and stakeholders. However, it is an interaction between people in a relationship with each other involving communication. That requires a certain level of trust to reassure each other that information may be handled sensitively and that you have faith in each other that you will act with integrity and honesty. The real danger of labeling an offer final is that you don’t really mean it. This undermines your image, it puts you in a weaker position and could damage trust. Think carefully before you do that!
As always, I’d love to know what you think about this!