“Let’s not negotiate out of fear, but let’s not fear to negotiate”- John F. Kennedy
Negotiation, often this term has been associated with commercial bargaining. However, negotiations happen at every step of our life. Be it the recent Brexit negotiations between EU and UK or a hostage situation in which one negotiates to gain the confidence of the abductor, the truth is, we are always negotiating at every step in our life.
Most executives delight in upcoming business negotiating sessions with about the same enthusiasm as they have about a root canal at their local dentist. The stakes are high. Negotiate too hard and the deal is lost. If you’re too timid then you will leave money on the table, which in today’s economy is nearly as bad as losing. Having been a strategic negotiator for a lot of years, I realize that successful negotiation is an art, rather than a science. It’s the foundation of a solid relationship where both parties shift to a Win-Win mode. It’s not transactional as it looks. Please refer to my video here in order to understand the context of my description about negotiation.Play Video
The three most important concerns in any negotiation are, first, relationship, then risk, and lastly, value. These concerns are the actual decision criteria that underlie any business transaction leading forward into the future. My starting goal is always to seek a win-win outcome. A win-win outcome is usually possible, but there are those unusual cases where win-lose or walk/run away become the only practical outcome. It should only be the other party’s intransigence that necessitates the latter results.
First, however, in order to have a successful negotiation, there are three important mental bridges that must be crossed over before you enter the room to negotiate. These are:
- Clarify the relationship – Simply put, what is the current real and perceived business and personal relationship and its true value to your organization’s future? All too often, we hold on to the past, not realizing that often we must be willing to let go of what we have in hand if we are to be free to reach out for something better. We must cautiously determine what could be lost in this negotiation but alternatively look for new doors which may open before us, given the new-found freedom we would gain without the existing relationship. As business leaders, we frequently continue to pursue existing relationships beyond their prime, simply because it is easier and more comfortable than striking out to develop a new relationship that better suits our organization’s future. Thus we must place a well-focused thought on value in continuing the relationship, and be mindful of the pending negotiations.
- Clearly Structure the Outcome Desired by Both Parties – I often find that teams will start a negotiation with the drive to win or even win-win, but have never committed to paper beforehand precisely what that means. Oh yes, they have a general idea, i.e., to place the contract at the best price or cost. However, the teams have not defined what is the optimal combination of price/cost and all other terms that reflect both teams’ best long-term interests. What is that magic package that permits everyone involved to believe they have been dealt with fairly and therefore, the relationship blossoms? I like to begin by preparing a written scenario that outlines what each team should view as a “great deal.” This is the optimum “win-win”agreement.
- Determine Your “Walk-Away” Point – This is sometimes the hardest, but usually the most important, pre-negotiation decision it is important to reach. It is not a decision to be considered later, in the heat of the negotiation. The walk-away point must be approached calmly and with the prior two points in mind, for we truly must understand what each team needs to make it a “great win-win” agreement. Then, if the other team becomes unreasonable and prevents a win-win from occurring, we must weigh the predetermined value we placed on the relationship as well as ask the question, “do we really have a mutual relationship or merely one party taking undue advantage of the other?”
Lots of us don’t negotiate even when we know we should. As a group, women are especially guilty.
Whether we realize it or not, we don’t negotiate because we’re afraid. I asked readers to describe the reason they don’t negotiate more often. Here’s what they said:
- I’m afraid of looking ridiculous.
- Too afraid to lose an opportunity.
- Because (I’m afraid) most of the times the other person becomes stubborn or defensive.
- I am afraid I am the less knowledgeable person in the situation at hand.
- I feel that I might come across as pushy, but more often it is because it is so stressful to do.
- Generally afraid of being shot down. Hard to take rejection.
- Set pricing too often (you don’t really walk into Home Depot and say I’d like to pay less for that paint). Might even get laughed at.
- I prefer to avoid the potential to offend/anger the other party involved. I know that I am personally capable of engaging in a controlled and respectful negotiation, but it’s difficult to predict how a stranger will react in the same situation.
See a trend? Whether they used the word “fear” or not, all of these are fears. We can categorize them into three categories:
- Fear of rejection. (Hearing “no”.)
- Fear of being judged. (Having the other person think you’re pushy, ridiculous, an idiot or that you don’t know what you’re doing.)
- Fear of losing the opportunity.
Only one of these fears is rational: losing the opportunity.
The others, however, are irrational fears. Nobody wants to hear “no”. We don’t want to hear “no” from somebody we ask on a date and we don’t want to hear “no” to a raise request form our boss. But hearing “no” isn’t the end of the world. Nor is having the other person think you’re pushy. As long as it doesn’t cost you the opportunity, these things might matter it our head, but not in reality.
With the answers to these three questions firmly in mind, we are prepared to start negotiating. I am not a believer in much of the posturing that some negotiators put great stock into, such as who opens first and how, etc.
Furthermore, if your counterpart has not arrived at this determination beforehand, you can gradually educate them to this conclusion through the bartering process. Knowledge is indeed power. Most importantly, you clearly know when you are approaching the point of no return or that point where you have already concluded in the quiet calm preceding the storm of collapsing negotiations, and when you will walk away. Thus, you have the opportunity to steer the negotiations away from falling unnecessarily into a lose-lose downward spiral where relationships deteriorate and from which it is virtually impossible for the parties to recover. The chart below provides a visual reminder for your negotiating strategy.
In negotiations, silence is golden. One of the biggest negotiating mistakes people make is not knowing when to shut up. As soon as we’ve asked for something, the little neurons in our brain responsible for fear go haywire. So we talk because we’re nervous. Not only does that show we’re nervous (and maybe weak), we may even offer concessions before the other person pushes back.
Sometimes the hardest thing to do is to simply be silent.
When I worked in sales and had to present a prospective customer with a price quote, I instinctively wanted to immediately begin explaining it. But that only made it look like I was trying to justify the price rather than letting the value of the product speak for itself.
I learned to give them the quote and be silent—often for several minutes! It’s not a comfortable situation, but it conveys confidence, both in yourself and the value you bring to the deal. Even slowing down when you talk and inserting small pauses can have an effect.
Negotiating is an art, and you can easily devote days, weeks, even years to its study. (Indeed, top dealmakers and attorneys spend years learning and perfecting their negotiating skills.) If you want to delve into negotiating skills beyond this post, I recommend Getting to Yes: Negotiating Agreement Without Giving In—perhaps the most popular accessible book on the subject. Getting To Yes teaches non-adversarial negotiating methods you can use in almost any situation to get more of what you want more often.
What about you? Have you struggled with negotiating but overcome your fears or reluctance to negotiate? How did you do it? And how did you benefit? Have you learned any negotiation techniques that have proven especially valuable? Let us know in a comment!
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