Research shows giving people different offers or ‘choices’ when negotiating can reduce their stress and lead to win-win outcomes.

Going into any business negotiation can be stressful, whether it’s thrashing out the details of a new salary package or selling your skills to clients, getting a deal over the line can be a taxing and tense battle of wills.

But what if the endless shuffling of offers could be dissipated by a simple strategy?

New research shows that if you give people multiple offers at the same time, they are more likely to be receptive to your proposed offers, come to an agreement and work collaboratively to create a successful outcome for all parties.

Offers on the table

Multiple Equivalent Simultaneous Offers (MESOs) is the technique that has been shown to reduce the natural tension in negotiations and increase the likelihood of better economic and relational outcomes.

In other words, give the person a few choices that are all equivalent from your perspective and they will more likely be open and receptive to the proposed options.

Alternatively, if you give them just one option, they can more easily come up with a reason to dismiss your offer and the battle lines are drawn for an exhaustive and tense process.

Dr Jun Gu is a senior lecturer in the Department of Management at Monash Business School and co-author of the paper, ‘Multiple equivalent simultaneous offers (MESOs) reduce the negotiator dilemma: How a choice of first offers increases economic and relational outcomes’.

He and his co-authors, Geoffrey Leonardelli (University of Toronto), Victoria Husted Medvec (Northwestern University), Adam Galinsky (Columbia University) and Geordie McRuer (Bastet Strategy, Toronto, Canada) tested whether presenting a choice among first offers reduces the negotiator dilemma and increases economic and relational outcomes.

“Giving more than one offer at a time increases the other side’s perception that you are sincere and genuine in trying to reach an agreement with them as well as the odds that an agreement will be implemented,” Dr Gu says.

“Our research shows that those who use MESOs arrive at improved outcomes compared with those who make a single packaged offer.”

The key appears to be having enough MESOs to give people the choice they desire without sending them into decision paralysis.

The research conducted six experiments comparing MESOs to a single offer revealed three effects:

• MESOs produced stronger anchors and better outcomes for the offerer because the recipients perceived MESOs as a sincerer attempt at reaching an agreement;
• They yielded greater joint outcomes because they were more likely to include an economically more attractive starting point for those receiving the offer; and
• They allowed the offerer to secure a more cooperative climate where they were able to create more economic and relational value.

Interestingly, MESOs also helped reduce the dilemma for the negotiator, namely the tension that negotiators face between claiming and creating value, which is particularly apparent when exchanging offers.

Art of the deal

“When you present multiple equivalent simultaneous offers or MESOs, you show other parties the issues you value most. In turn, their reactions to your offers tell you about their priorities. Together, you can craft an agreement that accounts for everyone’s most important interests,” Dr Gu says.

One of the examples of the study involved 82 MBA students who were paired up as part of a class negotiation exercise with one choosing to be the buyer the other the seller.

The negotiation involved a US website called moms.com and five issues regarding the sale of a television show. The show’s licensing fee was the most important issue, while the number of runs per episodes and the financing terms were the next two most important factors in the negotiation.

There were also two optional issues that negotiators could choose to include in their offer: the licensing of a second show – Juniors; and the addition of extra advertising revenue generated by the show’s performance in the viewer rating system.

True to their expectations, 38 of the 41 pairs reached an agreement, while all participants correctly produced the right number of offers, with MESOs yielding a higher value than any single package offers.

How many options should you give?

You might be thinking, “next time I’m in a financial negotiation, what’s the right number of options to put forward?”

Dr Gu suggests the best approach could be issuing three equivalent offers simultaneously.

“Across our studies, we found that it did not matter whether two or three MESOs were presented to produce the predicted effect. However, it raises the question that too many could potentially be choice overload. Two to three would be optimal,” Dr Gu says.

The key appears to be having enough MESOs to give people the choice they desire without sending them into decision paralysis.

How to prepare your offers

Doing your research and being prepared should be your aim before going into a negotiation. Preparing a list of where you are prepared to negotiate and what you are prepared to give up will help you understand what the other side may be keen to have in their negotiation wish list.

For example, write your top three non-negotiable terms and then list another three areas where you are prepared to concede. Then do the same from the other person’s perspective. What are the most likely areas they will want to have included in any deal and where do you think there may be some wiggle room?

If you are negotiating a salary, perhaps your hands are tied on the level of the remuneration yet you could be more flexible with hours and willing to come to a compromise.

“We are continuing to undertake research in the area of preparation and determining the key issues of negotiation.  The simple answer is to collect as much information as possible and make sure you prepare multiple offers to be presented in the negotiation,” Dr Gu says.