When two sides sit down at the bargaining table, they're putting something on the line—be it concessions or sensitive information. Thus, trust is crucial in all negotiations because of this ever-present element of risk. Talks can break down when each side doubts the other's abilities and intentions. And being overly cautious and withholding tradeoffs, concessions and information is not the way to go either—as each side will only let big opportunities slip them by. Harvard Business School professor Deepak Malhotra outlines six ways you can foster trust at the bargaining table:

1) Talk their talk. Show the other side that you're committed to the negotiation and to the relationship by learning their history, culture and point of view. This entails getting fluent in their technical lingo as well as understanding the implications and subtleties behind what they're saying. Watch closely how the other party expresses their ideas. And before the negotiation even begins, tell them that as much as you have worked to understand their perspective, you still have a lot to learn. Communicate the hope that in the event of a mistake or a misunderstanding, both sides will not be deterred, acknowledging that it's a normal part of the learning process and intensifying efforts to better understand each other.

2) Leverage your reputation. Don't take the power of your reputation for granted; if you have a bad one, it can be a deal-breaker, and conversely, if you have a good one, it can help overcome a deadlock. To turn your reputation into an effective tool, give references from third parties whom both of you trust. If appropriate, a third party could get in touch with the other side before the negotiation begins or even act as the mediator during it. You can also provide documents that prove your past successes in similar relationships, including media or trade reports.

3) Stress how much you are needed. Dependence on someone increases our willingness to trust that person. The extreme form of this phenomenon is the Stockholm syndrome, in which hostages' psychological dependence on their captors lead them to trust their kidnappers. In negotiation, when both parties think that they need each other in order to accomplish their goals, trust will naturally intensify. You can prompt this trust-building process by stressing the exclusivity of your offer and by highlighting the high cost of failing to reach an agreement. This strategy can be especially effective when an impasse seems likely and alternatives are undesirable.

4) Use concessions wisely. When making concessions, don't focus too much on what you're gaining and what you're losing. Instead, try to make unilateral concessions, those that demand no commitment or concession from the other side. This sends the message that you don't think of the relationship as adversarial but friendly, with both sides standing to gain in the long run. Such concessions should not involve a huge risk or cost to the provider but should provide a significant benefit to the recipient. Well-made unilateral concessions not only engender trust but also prove your competence, showing the other side that you know what they value.

5) Don't let them take your concessions for granted. Remember that your concessions will only be effective in establishing trust or inspiring reciprocity if they are viewed as such. Be sure to let the other side know just how big of a concession you're making. In this way, they won't discount it—as people in negotiations are prone to do—and appreciate the extent of your goodwill. They'll also be more willing to trust you and to reciprocate.

6) Justify your demands. If you're negotiating with someone new, that person will likely question your motives and intentions. That person could view your unwillingness to budge as proof of your greed, mean-spiritedness or lack of fairness, even though the real reason might be more practical—like a budget concern. Thus, it's imperative that you explain your moves in a negotiation and give reasons for your demands. An offer that is unaccompanied by an explanation could be seen as unreasonable and could therefore be detrimental to trust. In contrast, a fully explained and justified offer could keep trust intact and even increase it.

In short, by using these six techniques for building trust in a negotiation, both sides will become more willing to take risks and will therefore be more likely to reach an outcome that maximizes their joint gain.

Source:

Six Ways to Build Trust in Negotiations
Deepak Malhotra
Harvard Business School Working Knowledge, April 5, 2004
http://hbswk.hbs.edu/item.jhtml?id=4033&t=career_effectiveness