Negotiation
“If we could read the secret history of our enemies, we should find in each man’s life sorrow and suffering enough to disarm all hostility.”
The poet Henry Wadsworth Longfellow
Focusing On Interests Rather Than Positions
We can take positive steps to prepare for the decision-making process and we can monitor our own behaviour - and that of other participants — as the process goes forward. By following a few common sense rules we can reduce conflict and turn it into co-operation and reach solutions that really work for all the participants.
- Separate the people from the problem.Religion teaches us to hate the sin not the sinner. If we view the problem as that which needs to be resolved rather than viewing someone holding a contrary viewpoint as a person to be defeated, the odds of a successful collaboration increase.
One specific technique that can work is to change the shape of the table rather than sitting opposite your ‘opponents’, arrange the seating so that all the parties are sitting together facing a flip chart or blackboard where the problem is presented. That makes it clear that all the participants are facing the problem together, that instead of it being ‘us’ against ‘them’, it is a case of ‘all of us’ against ‘it’.
- Distinguish between interests and positions.The classic story to illustrate this describes two sisters fighting over the only orange in the family larder. Each sister must have the entire orange for herself, any less is impossible. A wise parent asks each of the girls (in private) why she wants the orange. One explains she wants to drink the juice; the other wants to use the rind to cook a pudding. What each sister wants is her position, why she wants it is her interest. In this case, the simple solution is to give the cook the rind after the juice has been squeezed for the thirsty sister - thus meeting the interests of both.
When preparing for a negotiation, or after it has begun, don’t just ask “What do they want?” It is also important to ask, “Why do they want it?” It is equally important - and often more difficult - to ask the same questions about your own views. Many successful negotiators find they will be more successful if they focus on understanding their interests as they enter discussions. If they haven’t started out with a perfect package, the ideas of others may actually improve their final result.
Negotiators who arrive with a complete package can create real problems. Modifications to their ideas might be taken personally, they may be stubborn, and reaching a satisfactory resolution is made more difficult.
- Consider your “Best Alternative To a Negotiated Agreement”.If you do not reach an agreement with the other, does that really make things worse for you? When you’re selling an antique Rolls Royce and have received an offer of $43,250, you know what another potential buyer has to do to get you interested. Of course, the first offerer may plan to use the car for chauffeuring wedding parties while a second offerer collects and restores antique cars and preserves them indoors. In determining you BATNA, a straightforward review of your interest will give you the clearest picture.
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There’s an old American country & western song about playing poker that summarizes the concept of BATNA: “You have to know when to hold and know when to fold.” If you accept your BATNA, you know when you can simply turn your back on the negotiations. But it is important not to ignore the other party’s BATNA. The relative strength of each party’s BATNA will determine the balance of power each can exercise.
- Silence is golden.This is true for two reasons: If one party is highly opinionated or emotional, if their approach is threatening or extremely demanding, keeping quiet after they finish speaking can be quite unsettling to them. It is like jujitsu; you allow them to be tripped up by their own forcefulness. Most people are troubled by silence in the midst of heated discussion. Sometimes silence is viewed as disapproval — but since no specific disapproval has been voiced, it cannot be treated as an attack. It has happened on many occasions that, when met with silence, people have modified their previous statements to make them more palatable.
Silence is an important element in the crucial tool called active listening. The job of a good negotiator is to listen to and understand what others are saying. After all, you can’t make an intelligent response to an opinion you do not understand. The discipline of active listening requires that you focus on what another person is saying; don’t spend your time shaping a stinging response that will put them in their place.
Active listening has some interesting consequences: The listener may actually be able to get a clearer picture of the other party’s ideas. And when the listener’s response shows just how good a job he or she has done listening, it can shock the other party: “Good grief, they actually paid attention to me!”
One other terrific result of active listening is that the discipline of focusing on other opinions can also give the listener the chance to reflect on the process and strategy. Stepping aside and taking a dispassionate view of the goings-on can make one a far more effective negotiator.
- Pursue Fairness.If all the participants view the process as fair, they are more likely to take it seriously and ‘buy into’ its result. Moreover, the focus on fairness can have an important impact on the substantive result. If the parties to a negotiation can agree on standards against which elements of the agreement can be measured, it can give each a face-saving reason for agreeing. Referral to the Base Rate of the other major lending institutions, an industry standard of marketability, or other common measures, can validate the agreement the parties reach.
To be considered successful, an agreement must be durable. Parties who walk away from the table grumbling may regret their commitment and only honour it grudgingly. If they end up looking for excuses to get out from under an unwanted result, the gains achieved by the other side may prove to be short-term indeed.
- Only one person can get angry at a time.This is yet another means to help individuals keep a cool head and pay attention to the process and the strategy, as well as the substance of the negotiation. If it’s not your ‘turn’ to be angry, the exercise of restraint can be turned into a positive opportunity to observe what is going on with a clear eye. No less important, yelling at each other is not negotiation; it is confrontation. In those situations there may possibly be a ‘winner’; but it is even more likely there will be a ‘loser’.
In times past, when two property owners had a disagreement, they would hire knights and wage war to reach a conclusion. Then somebody invented lawyers, and the problem-solving process became one of waging law. Our society has reached a level of sophistication in which we recognize that the costs of waging war - or waging law - are terribly high. With the use of good negotiation skills, we have the capacity to reach conclusions in a more satisfactory manner: we can wage PEACE.
The Rule of Three
When most of us think of negotiating, we assume one of two things will happen; either we’ll win or we will lose. But the pros don’t look at it that way. They know that a successful negotiation is one in which both sides feel like winners...at least to some degree.
When you sit down to bargain, don’t feel you have to win on every issue. Score major victories, but concede small points. Ask yourself, “What can I give up that will please the other person without putting a major dent in what I want out of this?”
Everything Is Negotiable
Many corporate workers like to think that certain company policies and procedures are unchangeable, as commandments etched in stone. The fact is, nothing is unchangeable—and everything is negotiable.
Knowing this fact is a powerful advantage in bargaining. For example, an graphic designer, negotiating his fee with a client, was told that the company could not go along with his request for partial payment in advance. “I don’t see anything wrong with it, but my hands are tied,” explained the project manager. “Company policy doesn’t allow payment until at least part of the work is completed.”
The designer knew better than to accept this at face value. “Bill,” he replied, “I appreciate that that may be the way you normally deal with suppliers. But as an independent designer, I receive payment up front from people who want to hire me. I know that this ‘policy’ is just a guideline set by management, and management can break it if it wants to. And I am telling you that you have to break it—if you want me to take on this project for you.” A week later, the designer received a purchase order and a check for one-third of his fee.
The Rule of Three
Before you sit down to bargain, you should have three figures or positions fixed firmly in your mind:
- The maximum—the highest figure. The most you dare ask for without fear of blowing away your opponent.
- The minimum—the bottom line. the lowest figure you’d settle for.
- The goal—a realistic figure you have a good chance of getting. The goal is probably between 50 and 75 percent of the maximum.
When negotiating, try for your goal but be prepared to accept any offer between the minimum and the maximum. In some cases you may be surprised to find that the maximum is approved without argument. At other times, your opponent may not even grant you the minimum. If this happens, you may be forced to consider more drastic action.
You Set the Rules
The person who controls the negotiation is usually the one who has set the guidelines. Make sure this person is you—and not your opponent.
To do this, say, “Before we get started, I’d like to go over the situation as it stands, and outline what we hope to accomplish here.” Then go on to state things as you see them. The other person will generally agree, interjecting only to make a few minor modifications to what is basically your point of view. Thus, when you begin to negotiate, you’re in control of the situation—because you defined it.
You Pick the Time and Place
To succeed in a negotiation, you must be prepared—physically, mentally and psychically.
To throw you off guard, the other person may try to force you into a surprise negotiation. A boss, for example, sticks his head in the door and makes a request to which he wants an immediate answer. Or, the phone rings, and a customer suddenly wants an on-the-spot price quotation on a project you and he discussed in vague terms months ago.
Don’t be bullied into a negotiation you’re not prepared for. Say to the boss, “Gee, I’m in the middle of a rush job. Why don’t I drop by your office later this afternoon.” Say to the customer, “I’m with someone right now, and it will take me some time to put the figures together. I will call you back tomorrow.” No reasonable person would deny these requests, and you will gain time to prepare your case. You’ll also enjoy the advantage that comes from holding the negotiation at a time and place of your choosing.
An Arsenal of Facts
The best way to prepare for a negotiation is to gather all the facts, statistics, precedents, case histories, documents and other evidence supporting your position.
Printed evidence is especially potent. People are skeptical of oral arguments, but they assume that words printed in an article, book or report are true. Collect surveys, studies and article clippings; make copies; and highlight or underline key facts to make them leap off the page. Unleash this powerful support when you feel you are losing ground on a key point.
You may end up using only a small percentage of this material, but you’ll negotiate with greater confidence knowing it is available. Experience proves that people who succeed in debates and negotiations are usually the ones who have the most facts.
Don’t Be Hasty
Engineers and other people who think logically are eager to achieve what psychologists call “closure.” Closure is a neat, final, well defined solution to a problem. Technical people seek closure because they are trained to find precise solutions.
But life isn’t an equation; negotiations and other “people problems” can’t always be wrapped up as neatly as a mathematical proof or engineering design.
When negotiating, you should expect—and be willing to accept—at least some ambiguity in what is resolved. If 90 percent of the issue is settled, and people in the meeting are beginning to grow restless, let the other 10 percent go for a while. Don’t insist that every last detail be buttoned down that day; otherwise, you risk angering people and losing the ground you’ve gained.
On the other hand, don’t start giving in to your opponent just because you’re tired and cranky and ready to go home. Instead, call for a break. Sum up where you are so far, and suggest wrapping it up in a future session...when, thanks to a few days rest and contemplation, everyone will be able to approach the situation with fresh ideas—and fresh minds.
The Human Touch
Above all, remember that you’re dealing with human beings, not machines or chemicals.
You’ll have an edge if you learn as much as you can about your opponents before you sit down to negotiate. Be aware of the personalities involved and adjust your “sales pitch” accordingly. Top executives, for example, usually want to get to the bottom line in a hurry. They are concerned with the “big picture” and don’t want to waste time with minutia.
Technical managers, on the other hand, like to prove that they’ve kept up with the latest developments in the industry...even though they’re managers now, and not working engineers. So, before they approve your project, they might want you to explain every detail down to the last nut, bolt, fan and filter.
The poet Henry Wadsworth Longfellow once said, “If we could read the secret history of our enemies, we should find in each man’s life sorrow and suffering enough to disarm all hostility.” You may dislike your opponent or be angry at him for blocking your way, but your negotiations with him should be civil and friendly not argumentative and hostile. Keep your cool when attacked, and respond with sound arguments and supporting facts, not an outburst of temper or shouting.
Try to highlight, whenever possible, the common goals and points of agreement between you. After all, this isn’t war, it’s a negotiation. The two of you have, for the most part, similar goals; it’s your ideas on how to achieve these goals that differ. When responding, use phrases that show your empathy with the other person’s position, such as “That’s a good point” or “I agree with most of that, but...” Make the other person feel like a winner and both of you will be.
Getting to the Point with Interest-Based Negotiations
Heal thyself first
No matter where you’re doing business, it’s important to reach a common understanding with other people, whether it’s across the street or around the world. But reaching common ground can sometimes be difficult if you’re dealing with a different national or corporate culture. How can you get to the heart of a negotiation despite these issues?
What interest-based negotiations do, in a nutshell, is determine what both parties’ interests are and any other special interests they might represent. In other words, it isn’t what they want, but why they want it that’s more important.
By concentrating on the overall interests of both parties, issues of personal and cultural negotiation style can often be overlooked. If you do a good job of negotiating, people from other cultures will respect you.
An important element is to ask questions and listen closely, not so much to what issues they may propose or discuss, but as to the reasons why they are doing so. Once the reason behind the other party’s stance is identified, it becomes much easier to try to reach common interests.
People want to negotiate with someone who is confident that they can deliver. According to popular business mythology, one thing that drives Western negotiators crazy in some countries is that the person they are negotiating with is only a messenger, with no authority to make a decision. In many countries, especially in Asia, this allows the company to privately reach a group consensus on a business decision without any one particular person having to take responsibility for it.
While this face-saving method is used by these cultures, what they may not understand is that someone trained in Western-style negotiation may lose face if he or she does not deliver as a consequence of going through the negotiations process. Here the ability to reach common ground is very important. So one party saves face by not making a decision, and the other party saves face by making a decision on the very same issue.
Sources of Power
Power in negotiations comes from:
- 1. Constructive Power
- This is your ability to satisfy the other party’s interests (needs). What are they really after? You need to ask questions, watch body language and do your research.
- 2. Obstructive Power
- You have power that comes from you ability to block the satisfaction of the other side’s satisfying their interests (needs).
- 3. Jumping Power
- This is your ability to leave a negotiation and is typically linked with how good your alternatives are.
- 4. Personal Power
- This is your desire, confidence, skills, and knowledge to succeed. Some describe these components as the intangibles or art of negotiation.
Some other sources of power:
- The power to satisfy another’s interests (underlying needs)
- The power of knowledge, expertise, and/or a particularly elegant, moral, or ethical solution
- The power to give another credit or special recognition
- The power to apologize
- The power of your alternatives: your alternative(s) if you do NOT do the deal
- The power of alliances
Job Offer Negotiation Strategies
How does the job offer process develop? Although there are many ways to deliver an offer, they are typically presented from two different viewpoints. I’ve found that companies fall into one of these two categories depending upon their attitude about flexibility. Here are those different philosophies and what the difference might mean to you:
“First Offer, Best Offer”
A company with this philosophy analyses the employment market and what they already pay others doing similar work. They may even have someone on the human resources team who specializes in compensation analysis. When they extend an offer, they typically believe that they are being competitive and that the package represents a fair wage and the best that they can offer. There is no conscious effort from their side to “lowball” in order to snag a bargain. They believe that negotiation is distasteful in this process, and have found that they accomplish nothing by bringing in an underpaid employee.
“Negotiation is OK and expected”
This is a philosophy that can either be part of the company culture, or an attitude of one of the hiring managers. Big company employers, which usually have a very scientific process of extending offers, can have a department head who likes to operate a little differently. Perhaps the manager has made this last step, negotiating your way into a decent offer, the final test of your aptitude for the new job! Some people feel that this step is also taken by a manager seeking to establish a dominant relationship right upfront. Not all companies that expect to negotiate are doing so in a quest for a bargain, or to establish dominance, however. Some fine employers approach offers this way. However, you’ll find most of those companies known as the “better employers” using the more scientific approach of a “first offer, best offer.”
After describing these two distinctly different approaches, your first question is likely to be “How do I tell them apart?” I’ve always found that you can respond to them both in the same way — and it is in how they answer that you know from which direction they are coming.