BE A “PRO” COMMUNICATOR
Negotiations, overt or otherwise, are an integral part of everyone’s personal and professional existence. In fact, most day-to-day things in life involve some form of negotiation. Like it or not, your future success and even happiness depend in part on your negotiating skill to achieve what you deserve and want.
Negotiations at work include asking for a raise or more benefits, dealing with customers and suppliers, and gaining support from people in other departments of your organization. As you advance in management, you will become engaged in more formal negotiations where the stakes are higher.
There are four types of negotiators — mediocre, good, excellent and perpetual. Often, individuals overestimate their negotiating ability. Only a few are innately skillful at negotiating. The difference between “good” and “excellent” negotiators is frequently dependent on the amount of time spent on research, planning and preparation beforehand. Perpetual negotiators are people who think everything is negotiable and never stop negotiating even after a deal has been reached. They are compulsive about it and drive everyone wild.
Negotiations should not be approached as a battle or contest over who can get the most from the other party. The best negotiations result in win-win agreements arrived at by both sides working collaboratively to find the optimum way of coming as close as possible to meeting the majority of each other’s objectives. This is essential if the two parties are going to maintain any form of on-going medium- to long-term relationship. Unfortunately, ego and macho instincts often become an obstacle to what I call the wise approach to negotiations. Seymour Schulich, one of Canada’s most successful businessmen, said he learned from his father the importance of “Don’t be too smart. Don’t be too tough.”
While every negotiation is unique, there are certain practices, procedures and principles for you to follow to improve your ability to negotiate a successful outcome in any large-stakes, formal negotiation. Many of these also apply to less formal and even personal situations, such as negotiating your salary or purchasing a car.
Most excellent negotiators share a number of common traits. First, they understand that the key to achieving a successful outcome is in making every effort to know more than the other side about what is being negotiated. This gives such negotiators self-confidence and credibility with both sides in supporting their position.
Second, excellent negotiators have a great deal of empathy in understanding the feelings, thoughts and sensitivities of others, regardless of any differences in background or culture. This means they are able to project themselves into the shoes of the people on the opposing side and “read” their emotions, fears and hopes.
Third, excellent negotiators usually have a quick and easy sense of humor. They are skillful at using humor to help people relax and to defuse tense situations before negotiations become deadlocked. Such individuals put some fun into negotiations for both sides and draw everyone together through humor. They also do not take themselves too seriously.
Fourth, excellent negotiators possess lots of patience. They appreciate the benefits of investing the time it takes to gain a fuller understanding of the other side’s perspective, issues and expectations. They do not let themselves get rushed into revealing their own position nor in making concessions. They take whatever time is necessary “to do it right”. To anyone in a hurry, they say, “If you don’t have the time to do it right, when are you going to have the time to do it over?”
Last, excellent negotiators are not insecure and anxious to be well liked. They are comfortable with disagreement, confrontation and conflict. They have the courage to walk away if the other side makes an unreasonable demand, acts in bad faith, or is abusive.
Most negotiations are won or lost before they begin as a result of the amount of effort and time spent in preparation for them. The first issue to decide is who should be on your negotiating team. In some cases, you may end up negotiating alone with your counterpart but for serious negotiations the best approach is to use a team of individuals to help you, even if it is only in the preparations beforehand.
It obviously is helpful to know who is going to be involved in the negotiations for the other side. Sometimes, it is necessary to use a larger number of people to assist you in preparing for the negotiations than the number who engage in the actual negotiations face-to-face. Usually, you should match both the number and qualifications of your team to those of the other side. If they are bringing a lawyer to the negotiations, you probably should too. The same applies to the use of “experts”.
The second issue is where to hold the negotiations. When you are confident that your side has done a better job of preparing for the negotiations than the other side, pick a place that will make the other side most at ease. Otherwise, hold the negotiations on your premises where you are most comfortable or select a neutral location. Ideally, you want to meet where there will be the least amount of noise, distractions and interruptions. The meeting facilities should also have the required space and a proper heating and air conditioning system.
Next, you need to think through the likely pace and form of the negotiations. Here you must be sensitive to the cultural differences of the other side and adjust your negotiating approach accordingly. North American negotiators like to be direct and decisive. On the other hand, Japanese negotiators tend to proceed more slowly as they build consensus and often change negotiators at different stages in the negotiations. Similarly, certain types of negotiating behavior may be acceptable in some countries and not in others. When you are not familiar with the negotiating character of the nationality of the other side, obtain guidance from an experienced person who is.
Having determined these factors, now the real work begins. The key to a successful outcome is possessing superior knowledge than the other side about the issues and object of the negotiation. The more in-depth knowledge you have concerning each issue and everything influencing its “value”, the higher the likelihood that the other side will agree with your position.
This requires utilizing every available resource to do the necessary research, including finding out what other parties did in similar situations. For example, in real estate negotiations, you need to know beforehand what prices were paid for comparable properties and what were the range of issues determining each property’s market value. Then, you can apply this information to substantiate the purchase or sale price for the negotiated property.
In the case of major negotiations, work with your team to formulate a negotiating road map outlining the full range of issues and variables to be negotiated for both sides, starting with the most important ones. With each point, brainstorm what are the options for dealing with it, what position the other side is likely to take, and what tradeoffs are acceptable in terms of giving the other side what it wants in return for what you want. Anticipate what important issues may cause a deadlock in the negotiations and what your response should be.
Be careful about your assumptions regarding what the other side will do, especially what they will or will not accept and what is negotiable. Misguided assumptions can be costly. Think of your assumptions as unproven guesses until they are actually confirmed by the other side. Start by thinking that everything is negotiable.
Determine exactly what questions your team needs to ask when the negotiations begin in order to better understand your opponent’s position and to test the validity of your assumptions. Conversely, try to anticipate the questions the other side is probably going to raise and decide how best to answer them, including what information to omit in responding.
The hardest part of any pre-negotiation preparation is to establish your objectives for each of the negotiating points involved in the transaction and your starting position or opening offer on them. Countless studies on negotiating have shown that people who aim high get more, people who ask for more get more. While you need to develop some rationale for your position, your objectives need to be set as high as possible without seeming to be foolish or greedy. There are no prizes given for “being reasonable” but there are for being creative in justifying each of your opening offers.
For every major point, you always have to give yourself some negotiating room but be cautious in establishing beforehand the specific minimum you will accept. You and your team have to be absolutely committed and tenacious about achieving your objectives. Psychologically, it is too easy for one side to back off its position when a lower level has previously been established as being acceptable.
Going into the negotiations, it is advantageous to know as much as possible about the other side’s organization and its lead negotiator. Research the history and character of the other party. Use search engines on the Internet to access the organization’s Web site, if one exists, and to obtain any related newspaper or magazine articles written over the past three years. Similarly, try to find out as much as you can about the lead negotiator, preferably by talking to others who have had dealings with that person but also through the Internet.
When both sides agree to have the negotiations follow a set agenda, try to have the agenda drawn up by your side so you can decide what is to be placed on it and in what order. If you have to use the other side’s agenda, ask to review it in advance. Think through how their agenda will play out. Do not hesitate to ask that items be added or that the sequence be changed.
While everyone likes to be a hero, sometimes there is an advantage to going into a negotiation on the basis of you being able to reach agreement, subject to the final approval of someone higher in your organization. It usually is not a good idea to involve an organization’s most senior person directly in a negotiation. If the other side’s most senior decision-maker is directly involved in the negotiations, however, then your senior decision-maker should also be involved.
Depending on the complexity of the negotiations, it may be advantageous to involve your lawyer or other professional advisors in preparing for the negotiations and in attending the actual negotiations. The lead role in any negotiations, however, should be played by those who have the greatest financial stake in the outcome. It is generally a mistake to let a lawyer or professional advisor negotiate on your behalf, especially if you are not present at the negotiations.
Another word of caution — there are few instances in business history when a mouse successfully negotiated a long-term, win-win agreement with an elephant. If the mouse starts to prosper under such an arrangement, the elephant ultimately gets resentful and figures out a way to put the squeeze on the mouse.
The first rule in commencing negotiations is do not start to do so until you are confident that you have completed all of your necessary preparations and research. When you are, begin by asking a lot of questions to better understand the other side’s position on the various issues involved. Seek clarifications. Probe for their weaknesses, plus what is really important to them. Test your assumptions.
Work off your list of questions prepared beforehand. Assign the responsibility for asking them to different members of your team. Be diplomatic in the manner you phrase your questions and in the tone of voice used. Do not be antagonistic or come across like an interrogator. Have someone on your team take notes on the answers. Instruct everyone not to interrupt the other side when it is answering questions. Always let people finish what they are saying.
Often the winner in a negotiation is the side that does the best job of listening, of really concentrating on fully understanding what the other side is both saying and not saying. The only time you learn anything in a negotiation is when you listen, not talk. If something is said that is unclear or ambiguous, ask for clarification or paraphrase what you think was said back to the speaker by asking, “Am I correct in understanding that you said … ?”
A Canadian business friend of mine, Lou MacEachern, was on the right track when he said that the four most important principles of negotiating are:
When it is time for you to answer questions, make sure you understand what the other side is asking. Take the time to think before responding. If you are lacking some of the information you need to answer the question, say so and indicate when you can have it available. Sometimes, you need to give non-answers or only part of an answer to a question. It is acceptable to be evasive but not to lie. With some questions, it is legitimate to say: “I’m not prepared to answer that at this time.” Always refuse to answer hypothetical questions such as, “If our side were to agree to do this, would you agree to … ?”
After each side has finished asking its initial questions, back and forth, begin the negotiations with the easy-to-settle points, not the difficult, contentious ones. It is extremely important to avoid negotiating against yourself. Move heaven and earth to get the other side to disclose its position and demands first. This always gives you a big advantage. Ask, “What do you think is reasonable?” If you are forced to go first, table your position to the smaller issues but then ask the other side to table its position on the larger points.
To get the negotiations moving ahead on a positive track, start with points the other side can say “yes” to. Give in on the nothing points. Do not get into a battle over who is going to put the stamp on the envelope.
Be reluctant to negotiate any part of the agreement on the phone. It is too easy to make mistakes when you do not have time to think. If you have no way of avoiding phone negotiations, listen to what the other side has to say, ask questions so you fully understand its position, and then say you will call back with your response.
One of the leading American authorities on negotiations, Chester L. Karrass, wrote an excellent book titled Give & Take: The Complete Guide to Negotiating Strategies and Tactics. In it, Karrass rightly stated: “The Catch-22 of negotiations is ‘dumb is smart and smart is dumb’. It is not smart to be decisive, brilliant, quick, fully knowledgeable or totally rational. You’ll probably get more concessions and better answers if you are slow to understand, less decisive and slightly irrational.”
Other strategies and tactics to keep in mind include:
Additional negotiating strategies and tactics to follow are:
In formal negotiations, both sides should make notes on what was agreed on each point as you progress in covering all of the material issues and concerns. Prior to the conclusion of this stage in the negotiations, it is usually advisable to confirm everyone’s understanding of what was agreed by preparing a written “memorandum of understanding” for the senior member of both sides to sign. This document is then used by the lawyers involved to prepare the final formal agreement or contract.
There is an adage that whoever controls the paper, controls the negotiation. Consequently, always propose that your side draft the memorandum of understanding for everyone to review and then offer to have your lawyers draw up the final understanding or contract afterwards. The objective of the memorandum of understanding should be to record all of the terms and conditions agreed to by both sides without going into small details that are not material.
Both parties should be presented with a draft of the memorandum of understanding to ensure that it accurately reflects what was agreed to. At this point, if you realize you have made a mistake in agreeing to something, face up to it promptly, apologize and say that you have to change your original decision.
In reviewing the draft of the memorandum of understanding, always work out the math on what you are paying or receiving in total cash figures. As the saying goes, do your sums using real money, especially when the negotiations included percentages figures and per unit amounts. Everyone is prone to making mistakes so have someone else on your team double-check the arithmetic.
Be wary about doing a deal too quickly. Never let yourself get rushed into agreeing to something. Trust your instincts. If you have an uneasy sense about committing to something of consequence, pull back and ask for more time to consider it.
Similarly, be cautious about entering into an understanding that is too one-sided in your favor. Such transactions always have a way of coming back to haunt you, especially if the other party does not realize all of the consequences of what it agreed to. As Benjamin Disraeli said, “Next to knowing when to seize an opportunity, the most important thing in life is to know when to forego an advantage.”
Finally, prior to signing the final agreement, always read it over carefully and double check it against the memorandum of understanding and your own notes to ensure that nothing was added, omitted or changed. If it was, you need to resolve that point as soon as possible, even if it means resuming the negotiations.
Mutual integrity is an essential part of any negotiations and in adhering to any agreement afterwards. If either side lacks integrity and good faith, any agreement is of limited value regardless of how well it was drafted by the lawyers.
Do not waste your time by trying to negotiate with people and organizations whose ethics and integrity are questionable. This obviously includes any party that you suspect has ties to an organized crime group. If you are unable to trust someone, do not do so. In these circumstances, you may benefit from a short-term gain but you always experience long-term pain.
Habit #4 in Stephen Covey’s bestselling book 7 Habits of Highly Effective People is “Think win/win” as there is plenty for all. Covey was once asked by Alvaro Uribe, the president of the country of Columbia, how Habit #4 might apply to terrorists. Covey replied: “You have to hunt them down and kill them. It’s win-win or no deal. In this case, it’s no deal.”
The American electric shaving entrepreneur, Victor Kiam, was right when he said: “Though negotiations are a rough game, you should never allow it to become a dirty game. Once you’ve agreed to a deal, don’t back out of it unless the other party fails to deliver as promised. Your handshake is your bond. As far as I’m concerned, a handshake is worth more than a signed contract. As an entrepreneur, a reputation for integrity is your most valuable commodity. If you try to put something over on someone, it will come back to haunt you.”
In summary, the ten commandments of negotiating are:
If you are ambitious about maximizing the success of your business or professional career, it is a good idea to do some additional studying on the subject of negotiating. Much of this chapter is based on the thinking of Chester L. Karrass, the director of the U.S.-based Center for Effective Negotiating. I strongly recommend that you read his book, referred to earlier, Give & Take: The Complete Guide to Negotiating Strategies and Tactics. Karrass has also written two subsequent books, The Negotiating Game and In Business As in Life, You Don’t Get What You Deserve, You Get What You Negotiate. Another book to read is Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher and William Ury of Harvard’s Global Negotiation Project.
In addition, many colleges and universities offer courses in negotiations that will help improve your negotiating ability. Attending such courses is definitely worthwhile for anyone who is likely to be involved in protracted, complex and frequent negotiations.