The first proposal has a tremendous influence on any negotiation.
In what is known as “anchoring bias,” the first offer or proposal in a negotiation becomes a psychological mooring that sets the baseline. Even though people can counter with whatever they choose, most people allow this anchor to define the parameters of the exchange.
In other words, the first offer becomes a stake in the ground — a stake that is difficult to pull up. Once the first offer is put on the table, people begin rationalizing counteroffers in proximity to that number.
For instance, if a prospective team member is offered a position with a starting salary of $120,000, that number typically constrains any counteroffer.
Even if the team member were convinced that $160,000 reflects the true market value, they normally won’t ask for that salary because of the anchor. They are more likely to counter with a much lower number than they believe they are worth.
Although this anchoring effect is well-known and documented, it often influences even the most skilled negotiators. The key is to stay alert to it and prepare for it before the negotiation begins.
Smart negotiators immediately label the first offer as an option that may or may not be tied to market comparables, precedents, or sound reasoning. Viewing the first offer as an “opening move” allows the negotiator to separate the proposal from any justification offered for it.
If the anchor is aggressive and far from reasonable, it is essential to demonstrate disappointment or surprise, so it is not implicitly legitimized. Good negotiators frown, shake their heads, or act bewildered, and then ask the proposing party to explain why they believe it is a fair or reasonable starting point.
If the first offer is reasonable but still significantly lower or higher than ideal, fighting the anchoring bias requires the negotiator to adopt a choice mindset. This is the strong belief that there are many more choices that have yet to be explored.
Because the anchor dominates the negotiation, any suggestion that more choices exist can weaken its pull. A reminder of choice helps loosen the anchor’s grip.
The goal in an effective negotiation is not to counter with the most aggressive proposal possible, but to generate credible options that undermine the constraints of the first offer.
The anchoring bias exists in nearly all negotiations, so it is critical to remember that whoever offers the first proposal implicitly sets the tone for the negotiation.
Good negotiators don’t let the opening proposal dictate their approach. They insist on exploring all the options available as if the opening offer were written in pencil, not ink.
