September 26, 2016“Take it or leave it,” he says. “This is a deal-breaker.”  But it’s early on, and you’re not ready to make that decision. How should you react?

Consider these four steps to evaluate the ultimatum and formulate your strategic response.

1.    Evaluate its legitimacy

Is it real or a bluff? Consider:

Counterpart intelligence. Did you learn in talking with those who have previously negotiated with your counterpart and searching online that they tend to bluff? Or do they have a reputation for meaning it when they say it?

Leverage. What will your counterpart do if they don’t do the deal with you? What’s their alternative, or Plan B? If they have a good Plan B, it increases the likelihood the ultimatum is real. If not, it’s more likely a bluff. Parties also often share their Plan B if it’s good and hold their cards close to their vest if it’s bad. Consider your Plan B, too. The easier your walkaway, the more you may not even want to play this “game.”

Their interests. An ultimatum is a position and describes what they want. Find out their interests – why they want it. What is the motivation behind the ultimatum? And does that interest align with it being a deal-breaker compared with their other interests? Ultimatums involving crucial interests tend to be more credible.  

Timing and offer-concession patterns.  Ultimatums delivered early in lengthy negotiations tend to be less true. Ultimatums near real, inflexible deadlines tend to be more true.

Writing. Written ultimatums are a higher level of commitment vs verbal ones.

Of course, these are tendencies, not certainties. But they will give you clues as to the nature of the ultimatum.

So what should you do if you think the ultimatum is true – or if you believe it’s a bluff – or if your assessment is somewhere in between?

2.    Ignore it

Harvard Business School Professor Deepak Malhotra, author of Negotiating the Impossible, recommends in a recent Harvard Negotiation Newsletter that parties “completely ignore [the ultimatum]. I don’t ask the person to repeat what he said or clarify what he meant. Instead, I pretend he never said it and move on to other issues.”

This move has merit, especially if you believe it’s a bluff and/or an offhand comment.

First, as Malhotra notes, ignoring it makes it easier for your counterpart to back off later without “losing face.” After all, your response neither legitimized it nor gave it credibility nor led them to dig in ego-wise and escalate their commitment.

All these would make it harder for your counterpart to conveniently “forget” it later, when it may be in their interests to concede on it.

Second, if it is real they will repeat it anyway.

3.    Reframe it as a suggestion or offer

If you can’t ignore it, Malhotra recommends reframing it as a suggestion before moving forward. Perhaps respond “I understand this would be very hard for you to do at this time” (“very hard” is different than “impossible” and “at this time” suggests it may change later).

Or simply treat it as a suggestion or regular offer by saying “I appreciate how important this is to you. On the other hand, we’ve made a lot of progress so far – so let’s just put that aside for now as an unresolved issue.”

4.    Address it substantively

Of course, you can always address it directly. And this may be best, especially if it appears that your counterpart is testing you, it’s a significant issue, and you think it’s a bluff. If you do this, though, be prepared to go with your Plan B.

Latz’s Lesson:  Ultimatums may be real or not – so assess and then respond (or just ignore).