Better Negotiating
Who needs negotiating skills? We all negotiate minor issues on a daily basis, of the ‘if you iron my shirt, I’ll mend your handbag’ variety. But at some stage in your job or domestic life, circumstances will arise where the outcome is much more important. This article outlines negotiating skills crucial to achieving winning outcomes, particularly in more difficult circumstances. (Theresa May take note.)
Defining Negotiation
What is true negotiation? Although negotiating skills are decidedly useful when buying a car, this process is more accurately described as competitive bargaining. There can be only one of two outcomes – either you buy the car or you don’t. True negotiation is more complex, with the outcome much more uncertain. Between two parties, it has three possible results –
Win / Win Win / Lose Lose / Lose
Therefore, true negotiation –
can vary the outcome, as well as the terms
concerns a limited / scarce resource
has overlapping or mutual interests
has the potential for conflict inherent in the process
Have you the right temperament?
Many people believe they are good negotiators; few are. And the more you are dependent on an unknown and uncertain outcome, the more difficult you will find the process. Most negotiations will be with people you know but have the potential for conflict (think…divorce). If you are dealing with a professional, they are likely to use various tactics. The more unethical will use tricks, particularly if the negotiation is a one-off.
Can you cope with protracted uncertainty? Do you know how to use or counter negotiating ploys? Are you still convinced you are the best person for the job?
Solicitors and Legal Advice:
If you doubt your negotiating ability, don’t automatically appoint a solicitor. Solicitors’ training is adversarial; their very appointment may send a negative message. Many are poor negotiators, much preferring the written word. If you must use one, ask for evidence of good negotiated settlements. Obtaining legal advice is completely different; it is essential you understand the legal position. And where an outcome has legal obligations, a solicitor (preferably yours, stretching a point here and there) should draft a document based on the negotiated Heads of Agreement.
How Strong is Your Position?
Time, cost and uncertainty are key factors. The more urgently one party needs a settlement (e.g. to pay bills), the weaker its position. The cost of obtaining a settlement increases with time, both in actual money (charges, loss of interest, inflation) and lost opportunity. A strong negotiating position is said to be one from which you can walk away. You must assess both parties’ positions as objectively as possible.
When weighing your position, never confuse your right (legal or moral) with strength. For example, let’s assume you have supplied IT services to a company which then disputes your invoice. You may have a water-tight legal case (is there such a thing?) but they have the use of a non-reclaimable service and your money. The old adage ‘possession is nine-tenths of the law’ is absolutely true, and very difficult to surmount.
Vital Preparation
The best prepared side will usually ‘win’ (this could mean conceding less than you anticipated). Having assessed your own position, research the other side; are you good or bad news, a major or minor element in their dealings? Are they pushed for money? Are you a lifeline, a nuisance or even a threat? What is the character of their principal (decision maker) and, if different, their negotiator (employee or agent). And how secure / confident are they in their positions?
How do you find this out? By using common sense and making enquiries to mutual acquaintances, credit agencies, business suppliers etc. Be discreet with business contacts. Say something like, “We may have the opportunity to do some work for X; how do you find them?” It is astounding what people will tell you.
Setting Your Aims
Having assessed the strengths / weaknesses of both parties, decide your highest aspiration and your walk-away point. Your highest aspiration should be ambitious, at the very top of what you think is achievable. Then determine whether you have the luxury of a walk-away point. This can range from clear cut (e.g. the point at which your commitment becomes onerous / risky) to the distinctly unpalatable (e.g. unwillingness to pursue legal action). Be warned; aspirations and w.a.p. can change radically over time (see below).
The Role of Time
The role of time is often underestimated in negotiation. Delay particularly erodes the aspirations of the more eager party, hence its use as a powerful tactical ploy. Where time is against you, draw as little attention to this fact as possible, or it may cost you dear. Make an estimate of negotiating time and then monitor progress. If there are delays, is it an indication of the other side’s low priority or are they testing your position / resolve? Will significant delay reduce your options or otherwise weaken your position? Watch time slippage like a hawk and be aware of its effect.
Conducting Negotiations
Let’s assume you have reached the stage of face-to-face negotiations and consider conduct. First, be sure to make full use of two important free resources: spoken words, through pitch and tone, convey messages beyond their direct meaning but body language is even more instructive.
Commencing negotiation, you should aim to –
keep your arguments few, simple and strong (weak arguments dilute a strong case). If your case is clear and strong, avoid straying or being dragged into marginal issues.
persuade the other side towards agreement. Point out how your proposals are mutually beneficial – “You will get X, I will get Y and we will both save large amounts of money by avoiding lawyers.” Remember the other side is always thinking WIIFM - “what’s in it for me?”
seek and recognise areas of agreement. If something is proving sticky, move on to another point.
never make a concession without asking for something in return (a very important principle)
give advance warning of questions or proposals (but not attack) e.g. “Here’s a point I would like us to consider / discuss.”
keep involved by asking questions e.g. “How will that work in this context?” Questions allow you to keep or regain control, so prepare some in advance. Questions also indicate attention, involvement, and scrutiny, and are an essential negotiating tool
These are the core principles for successful negotiation; master them and you won’t go far wrong. In addition, there are a number of tips which help you keep control -
know how to answer a question with a question (to gain time or avoid answering)
know when to flinch. Your demeanour should be cordially businesslike but if a poor proposal is put to you, give early warning with a frown / audible intake of breath
when necessary, attack should be unannounced, short and sharp – and not referred to again
beware use of such words as fair, reasonable, generous etc. You may think it fair, reasonable or generous but the other side may disagree vehemently
‘telling’ is not persuading. Categorical statement of ‘facts’ is hardly likely to engender agreement
a proposal instantly countered (even by ‘improvement’) is unhelpful in the psychology of persuasion
Overcoming Difficulties
Difficulties are an occupational hazard of negotiation; most are simply obstacles to progress. Here are a few of the more common -
Fixation
The other side seem fixated on some abstruse point, not always immediately apparent. They may believe they have been ‘wronged’ in some way. Whether real or perceived is irrelevant; you must define and address the issue. After all, a fulsome apology costs nothing. However, if, like a client of mine, they seem hell-bent on calling a financial settlement ‘dilapidations’, then play along, provided it costs you no more and assists a settlement. (“If I apologise and agree to call it dilapidations, will you settle for £ xxx?”)
Take It Or Leave It:
This classic tactic appears insurmountable. But the answer is simple – ignore it! Go straight on and talk about something else (here’s the advantage of prepared questions or subjects).
Principals v Agents
In theory, a principal (final decision maker) should not negotiate directly with an agent or employee. As a principal you are at a disadvantage because an agent can negotiate and agree terms but not necessarily commit to them. You may think you have an agreement, until the agent / employee returns and regretfully introduces amendments imposed from above. Therefore, establish at the outset whether the other side’s negotiator is an authorised decision-maker, even to the point of obtaining confirmation in writing.
Bridging the Gap:
Quite simply, the greater the difference between parties, the less likely is a negotiated settlement e.g. a claim for £50,000 met with an offer of £500. This is where imagination, lateral thinking and the ability to convince the other side how they will benefit from your proposals, is most severely tested.