What is Positional Bargaining?

Getting a deal on the table is hard enough. Getting a deal that all parties are happy with is even more difficult. Negotiation strategies are often employed to help propel the discussion towards a certain outcome. One such strategy that might be used is positional bargaining.

Knowing when to use this strategy, as well as its strengths and weaknesses, will help give negotiators the power and understanding to know when it can be best used. Let's dive into positional bargaining to help you understand when to leverage this strategy, and when you should try another technique.

What is positional bargaining?

Positional bargaining is not the most collaborative of techniques. Some parties may not appreciate its usage during the negotiation process, which is why it is so vital that negotiators fully understand it. Rather than bumbling through this negotiation tactic, they understand the implications of its use and know when they can apply it for the best results.

It is often viewed as polarising because it seeks to claim value or potentially claw back from another party. This self-serving attitude might not be looked at kindly by others, especially if they value a more collaborative negotiation over an aggressive one.

What are the types of positional bargaining?

Positional bargaining has several different approaches. Though some may see it as an extreme position to start in, there are some easier ways to spin it so you can have a better outcome for all. The main types of positional bargaining are:

Soft positional bargaining

Soft positional bargaining is often mistaken for another approach because it is less combative and not quite as self-serving as other variations of positional negotiation. It seeks to keep the other party happy and to give some weight and consideration to their needs, too, rather than just prioritising your own.

Being willing to come to an understanding will always help contract negotiations to move forward. Using positional bargaining usually means that one party is on the back foot and unwilling to give up anything in case they lose more of the little they have. Soft positional bargaining does allow for some concessions, making it a favourable option for some over harder styles.

Hard positional bargaining

Hard positional bargaining takes a more concrete approach than its soft cousin. It is typically what we envision when we think of a negotiation strategy. Both parties will start in their respective position, and will negotiate their way to a conclusion, often losing value along the way.

This can crop up in single-issue disputes where both parties have something to lose, but it can also become a problem in multi-issue disputes. In the latter, parties tend to think of each issue as its own problem rather than a small part of a larger one, and they, therefore, try to solve each one individually instead of looking at the big picture.

Blended positional bargaining

Positional bargaining might seem fairly fixed in approach—either you will stand firm or allow a little balance—but the truth is that you can actually use a blended approach. When one party is fixated on a particular outcome, the other may find that they have more room to drive a bargain and obtain a little value for themselves.

Positional Bargaining vs Principled Negotiation

Positional bargaining is often mentioned in the same breath as principled negotiation. Though the two are quite different in nature, they compare very well.

Principled negotiation is a theory first coined by Roger Fisher and William Ury. Their approach to principled negotiation is to see the creation of a solution to the problem rather than a scramble to secure a favourable outcome for the dispute at hand.

They split principled negotiation into four areas for base understanding:

1. Separate the people from the problem: remove ego from the situation and consider the emotions and viewpoints of the other party.

2. Keep the focus on interests, not positions: try to find the mutual and underlying interests of both parties.

3. Work towards mutual gain: use these interests to overcome obstacles and make proposals that directly target the needs of the other party.

4. Base arguments on objective criteria: don't allow ego to come back into play as this might destroy progress, instead jointly establish a path forward and don't yield to pressure or threats.

In situations where an outcome can be negotiated and pushed back and forth a little, principled negotiation might be the better option. As one can see from above, it encourages both parties to come together, put their egos aside, and find a route that works for all. However, there are situations where this cannot come to pass.

What are the benefits of positional bargaining?

Though positional bargaining is a strategy that is not often greeted with enthusiasm from others, there are a few benefits that could give you an advantage in a negotiation. Remember, positional bargaining has its time and place, just like every other negotiation tactic you may choose to use. The benefits we usually see from positional bargaining include:

Quick and speedy negotiations

In many cases, positional bargaining can result in a quick and speedy negotiation. Both parties are aware of each other's positions and will respect that. Less time is needed to debate certain issues since opponents know that they are not going to be able to influence a decision.

Mutually beneficial agreements

Positional bargaining can, on occasion, lead to mutually beneficial agreements. Since everyone is clear on what they want and don't want from the discussions, it can be easier to aim for a mutually beneficial agreement where both sides are clear on their goals and how much they wish to claim instead.

Non-negotiables

Positional bargaining can prove useful if you think your non-negotiables aren't being respected. If you feel like you are constantly and consistently having to defend the clauses that you will not be addressing, switching to positional bargaining can be a very aggressive tactic to get the other party to back down. Be very cautious about doing this, though; it could cause the other party to put up walls of their own and shut down conversations even further.

Are there negatives to the positional bargaining approach?

Yes, as with any negotiation strategy, there may be some pitfalls to positional bargaining. These can include:

Lose-lose agreements

Everyone wants to get a win-win agreement when they negotiate. Unfortunately, if both parties come to the table with a positional bargaining mindset, it is going to be very difficult to reach a good conclusion that satisfies all.

Lose-lose agreements leave us feeling like failures and like there is nowhere to go in the negotiation. Since all the focus is put towards our position and how to not lose ground, the true purpose of the negotiation can become lost.

Reputational harm

If you often come out of the gates with a positional bargaining mindset, you will quickly develop a reputation with both current and potential partners. No one wants to work with someone who can't be persuaded or reasoned with.

It could damage existing partnerships who simply don't want to bow to your demands constantly without seeing something in return. This can be dangerous to any ongoing relationship, especially if you suddenly adopt a positional bargaining mindset after years of cooperation and collaboration.

New potential partners may also be hesitant if they think that they can't bargain or negotiate with you as you create your relationship. If you are viewed as a difficult partner to work with, why should companies pick you over your competitors?

Drawn-out negotiations

Positional bargaining can speed things up, but it can also result in long, drawn-out negotiations that feel like they are going nowhere. After all, one party has dug their heels in and is refusing to budge around a single point. Another party might come back to them again and again with new techniques and strategies to try to get the first to give up their position. Whether they are successful or not, all it is going to do is draw out negotiations and make them longer than they need to be.

This is not a good use of anyone's time. Both parties have put a lot of work into finding a good time for everyone to come together, the prep work for the negotiation has been done, but progress can't be made simply because one party is refusing to budge. All this will do is drag out the negotiation process longer than it needs to be, building frustrations between the two parties for as long as this behaviour continues.

When to use positional bargaining

Though many negotiators would do well to avoid positional bargaining, there are some times when it can actually be the right tactic to pull out. Your negotiation skills should help you get out of many different scenarios, and with that should come an understanding of when it is appropriate to use each tactic. With that said, here are some of the scenarios where you may wish to consider positional bargaining.

Underdogs

When you know that you are headed into a negotiation as the underdogs, it can be helpful to adopt a positional bargaining strategy if you know the other party is likely to be aggressive in return. They may try to use their own positions and advantages to encourage you to concede on certain key points. Adopting a positional bargaining approach can help you to stand your ground.

Known conflicting interests

Sometimes, we can end up sitting down for a negotiation with a party that we know has conflicting interests compared to our own. This can lead to a difficult and potentially contentious negotiation unless both parties agree to avoid the conflicting interests and not bring them into discussion. Such a move can naturally cause positional bargaining to arise, allowing both parties to find a workable solution while respecting one another's boundaries.

Master the power of bargaining with Scotwork

Is an understanding of positional bargaining important? Yes, as with many other areas of negotiation, you need to have an understanding of positional bargaining. It might be a tactic that you never choose to use yourself, but you never know when someone might adopt it against you. Having a thorough understanding of both this and other strategies can help you prep for any eventuality.

Scotwork's negotiation training can help you build your skills and gain confidence, no matter whether you have been negotiating for years or you are just a beginner. Our experts have over 45 years of experience that they are waiting to pass on to you. Negotiation is a skill that can be developed and honed, and we firmly believe that everyone, regardless of their position in a company, deserves to know how to negotiate for themselves and the business at large.

Get in touch today to find out more about our negotiation training courses.