In negotiation, anchoring your counterpart means ensuring that a first offer has plenty of so-called “stickiness” to it. The offer will be rejected but like glue to fingertips it sticks in the mind of negotiators as the reference point for any further offers and concessions. As a rule, a very ambitious first offers translates into a better final deal for the party making the first move.
While anchoring is a well-known negotiation technique, doing so in very extreme fashion can easily backfire in several ways. Your counterpart may take you less seriously, become irritated or attempt to counter-anchor in the extreme. At best, negotiations take more time and need to deal with more relationship friction than otherwise necessary. At worst, they break down because the party being anchored decides its counterpart is not negotiating in good faith towards a reasonable outcome.
In diplomacy there is an additional significant risk to extreme anchoring: the party being anchored is very likely to see through your strategy. It will, for example, closely follow the media in your home country, including the wide array of leaks by critical civil servants, or by analysts unpicking your every move. Extreme anchoring also makes managing expectations at home a difficult and risky task. Large anchors can set unreasonably high expectations for the outcome.
This makes it harder to cover the final and toughest stretch towards a deal, the part that includes making some painful compromises. If you have a great alternative at the ready (see post #1 on BATNA), setting the bar high may help you improve your final deal. You can claim so-called “audience costs” back home and insist on walking away if your side of the deal is not a whole lot sweeter. But if you lack a good or even reasonable alternative, not managing expectations well will only result into harsh criticism from your constituencies.
“Extreme anchors can set you up for a far greater negotiation challenge: dealing with an angry public”
In the Brexit talks early public statements from the UK, whether intended as such or not, could be easily read as attempts at extreme anchoring. Prime Minister May declared that an agreement on future relations had to be concluded at the same time the divorce deal would be agreed, in sharp contrast to Article 50. On the UK’s outstanding financial commitments, the divorce bill to be settled, UK Foreign Secretary Boris Johnson famously quipped in Parliament that nothing should be paid at all. On free trade and continued access to the Single Market, Johnson declared in September 2016 that “our policy is having our cake and eating it”.
It was one instance that gave rise to the term “cake-ism” in Brussels, an approach that is denied to EU members, let alone those outside the bloc. In negotiations, there is no such thing as acoustic separation, whereby arguments to one’s own constituencies are not overheard by the other side. In the end, all the extreme anchoring in public meant a much tougher climb-down for the UK government when it finalised the Withdrawal Agreement in November 2018. It was the prelude to the far tougher negotiation that was about to ensue at home and which is still enduring today: dealing with a very angry public (the topic of our next post).