Preface
Negotiation is fundamental to your life and the way you distribute, create, protect, resolve, and manage anything of value. It is central to the viability of every business, for even non-profit-making organizations. It has delivered peace in war, resolved bedtime tantrums with our children, helped avoid millions of court cases, and has probably helped save a few marriages along the way too. It is how you resolve differences and form agreements based on mutually acceptable terms. It can represent the difference between viability and insolvency, profit making or loss, growth or decline; such is the power of the outcomes.
Chapter 1: So You Think You Can Negotiate?
“It is what we know already that often prevents us from learning.” - Claude Bernard
It is often difficult to work out how good a deal you really have secured following a negotiation. This would be far easier to work out if, when we reviewed our performance, self-justification was left out of the equation. Have you ever asked yourself: “If I had performed differently or taken different decisions, could I have secured a better deal?” It is easier to move on rather than reflect on our performance and consider the what and the why, and of course the resulting quality of the deal we finished up with. Learning something from each negotiation ensures that, where unplanned compromises have taken place, you take away some value from the experience. This requires honesty with yourself. The following four areas provide a useful frame of reference for review, and as preparation for your next negotiation.
The four challenges we face:
Challenge 1: This is all about you
So, the first challenge is you. It is people who negotiate; not machines, or companies. We all have prejudices, values, ideologies, preferences, pressures, objectives, and judgment, as will the other party in your negotiations. So one part of our journey will involve you understanding why your greatest challenge in negotiation is yourself and how, by nature, you naturally see the world from your perspective rather than that of others. The simple process of an exploratory meeting, patience, and seeking to work with someone rather than to assume and then impose ideas on that person, is key to understanding how others see the world and what their objectives are when you are both selling and negotiating. As an effective negotiator you need to be able to understand the dynamics of any situation from “inside” the other party’s head. Without this insight, you will remain in a state that we at The Gap Partnership call “being inside your own head,” which is a dangerous place to be during negotiation. If you really want to negotiate effectively, you first have to get your thinking this way round.
Challenge 2: There are no rules
In negotiation there are no rules. No set procedures, no cans or cannot(s). Negotiation is often likened to a game of chess – the difference being that in most negotiations you are not necessarily trying to beat an opponent, and are not restricted to alternate moves.
Challenge 3: Knowing when you have performed well
Have the humility to face such questions as:
• What might I have done differently?
• Might I have timed things differently?
• Might I have included other issues?
• Might I have tabled proposals that were better thought through?
• Might I have not agreed so easily at the end?
No good, bad, right, or wrong
In negotiation there is no good or bad, right or wrong. Negotiation is about doing things that are appropriate to each situation you face with the information as you see it at that moment in time.
Appropriateness
Knowing how a car was built and how it works does not make you a good driver. When driving with so many obstacles on the road, the challenge is to be able to maintain confidence, navigate, interpret, and, where necessary, respond to situations in the most appropriate way when there is no absolute answer that suits all situations.
The same applies to negotiation in business.
• Should you set out to compete or to work with the other party?
• Should you seek to manipulate the situation or collaborate instead?
• Should you trust them or work on being trusted by them?
• How will your options influence the balance of power?
• Is the perception of power and dependency between you and the other party based on reality?
Challenge 4: Nothing happens by accident
The essence of negotiation is doing what is appropriate for your circumstances. This means being conscious of everything that happens before, during, and after your negotiation. In negotiation, nothing happens by accident; everything happens for a reason.
Chapter 2 – The Negotiation Clock Face
To make sense of how different approaches to negotiation could serve us, and because each negotiation presents unique challenges, I developed a model called the Negotiation Clock Face.
The “engineering of variables”
The opportunity to build value through the “engineering of variables” and each party’s relationship with the other is more likely to take place where there is collaboration in play, that is, on the left-hand side of the clock. Collaboration of course requires some degree of common purpose, interest, or dependency between those involved. No matter how proactive or committed you are to developing a joint agreement, creating more value opportunities through negotiation requires the commitment of both parties, or such power on one side that the other has no option but to collaborate. Maximizing value through the engineering of variables need not be detrimental to the other party. They remain responsible for their actions and decisions as you remain responsible for yours. However, you should never allow complacency or the idea of fairness to affect your drive for improved terms as you will inevitably face resistance and challenge along the way, however you build your agreements.
The clock face, then, is a model for helping you, to determine what is “appropriate for each of your situations.” The clock face in simple terms defines capitalism. One way or another it reflects how most deals "get done". This model was designed to help negotiation practitioners differentiate between negotiations and consciously adopt the appropriate approach to each of their negotiations.
The clock face model is not good or bad, right or wrong, any more than north, south, east, or west is the right direction for any journey. It just “is” and, wherever capitalism exists, the clock face serves to offer a simple range of definitions within which your negotiations will take place. It is important to remember that the direction you take, decisions you make and results you achieve still remain y our responsibility. The clock face is simply a compass.
KEY TAKEAWAYS
There are no right or wrong ways to negotiate, and no fixed way of ensuring that you will always get the best agreement. The clock face helps to differentiate and recognize those behaviors and strategies in play and what these are likely to do to value, rather than simply suggesting a right way of negotiating, which would be highly exposing.
• The clock face simply serves as a compass to help you adopt the appropriate approach for each of your negotiations.
• Many negotiations will move around the clock during the negotiation, so never assume a constant.
• Your approach and behavior can help you to move the other party around the clock face to suit your preferred strategy.
• It’s easier to build and grow value cooperatively and collaboratively between 8 and 12 o’clock.
• The right-hand side of the clock face typically represents more competitive and transactional negotiations.
• Where the balance of power is strongly in favor of one party, the tendency is for the negotiation to take place or end up in the 1–6 o’clock environment.
Chapter 3 – Why Power Matters
So why is power so important in negotiations? Quite simply, it provides you with options and, if understood, will enable you to control where on the clock face your negotiation will take place.
• Holding the balance of power. If you hold the balance of power in your relationship(s), you have greater scope to control the agenda, the process, and ultimately influence the negotiation in your favor.
• Power to influence the climate, style, strategy, and possibilities. Power provides you with the opportunity to choose between being competitive or collaborative, depending on which suits your purpose and objectives.
HOW DOES POWER INFLUENCE NEGOTIATIONS?
Influencing factors - Those factors which have the greatest influence on where negotiations take place on the clock face are made up of the following:
1. The level of dependency.
Who needs who the most, or the level of dependency between both parties, directly influences the balance of power between you and those you negotiate with.
2. The power of the brand and the relative size of both parties.
Imagine you are responsible for selling an established mega-branded soft drink. You know that any retailer will sell more of your brand than their own brand or a lesser branded soft drink. The retailer accepts that margins will be lower due to the high investment in the brand itself, but this is offset by being able to sell higher quantities.
The retailer will probably sell their cheaper, higher-margin own brand as well, resulting in their overall product and margin mix being optimized.
Significant amounts of money are invested in building brands. As part of establishing the brands some manufacturers have even, for limited periods, supplied products to the distributors or retailers at no margin at all, or even at below cost. The aim here is to expose their product to the market as part of creating demand, brand awareness, and attracting market share. In the long term, brand power and the terms that can be negotiated with a strong brand will more than outweigh the market entry costs.
3. History/precedents.
History and precedents also play a part in influencing how people seek to rationalize and legitimize their position: “Last time we agreed to a discount of 15% on volumes in excess of $3 million so let’s start at 15%.”
Current terms can serve as the rationale for an anchoring position. Previous positions, all else remaining equal, serve to shape expectations.
4. Competitor activity and changing market conditions.
The unpredictability of change affects the degree to which people are prepared to commit and the level of risk they are prepared to accommodate. In other words, stability and certainty promote a basis for longer-term commitments. In our ever-changing and fast-paced world, the issue of change plays an important part in any negotiation, in terms of what is being discussed, the length of any agreement and which party is more exposed to the influence of uncontrollable change.
5. The party with more time.
Time and circumstances offer the greatest of power levers in negotiation. If you have been effective at getting inside the other party’s head and understand their time pressures, you will have more power to exert. How you choose to use this will depend on your objectives, the dependency within your relationship and the overall shape of the deal.
6. The nature of the product, service, or contract.
Negotiating a complex construction deal or business merger is, by its very nature, more challenging than buying a car from your local garage. Alternatively, agreeing a contract for IT services, by its very nature, requires a different type of process and agenda than, say, agreeing a settlement following a marriage breakdown. The different relationships in play and the nature of the outcomes required result in most negotiations being unique.
7. Personal relationships.
In every culture, relationships and trust play a part in the climate of negotiations. Building an understanding of each other’s position and needs through exploratory meetings is critical if broader agendas other than price are to be entertained. Most people prefer doing business with people they trust and respect.
KEY TAKEAWAYS
Power influences strategies and tactics employed, provides one party over another with more options and therefore advantages, yet should not be assumed. With the right strategy, those with the power stacked against them can still negotiate very good deals.
• The balance of power is not a constant and can easily move as time and circumstances or supply and demand dynamics change.
• Proactive positioning can help you create enough power to defend your position.
• Real and perceived power can be equally effective in gaining advantage.
• The common laws of capitalism do not always apply. It really does depend on whose head you are in.
• The stronger your options, the more powerful you become.
• If they have power, expect them to use it.
Chapter 4 – The Ten Negotiation Traits
1. NERVE
Believe in your position, never offend, and always remain calm.
Nerve helps us to exercise patience and to remain calm when the pressure is on.
2. SELF-DISCIPLINE
To understand what to do, and to do that which is appropriate.
Self-discipline: it’s an everyday term, yet in negotiation it requires you to separate your behavior from your feelings and emotions.
3. TENACITY
The negotiator's equivalent to stamina
The times you hear the words “no, can’t, won’t” are the occasions where you will have to turn to “how.” Rather than simply concede on the issue, you should examine the rejection from different perspectives to find out what other conditions or circumstances you could introduce as part of maintaining control and managing their expectations. For instance, in tennis if your opponent breaks your serve, you don’t give up on the set, you work harder in the next game to regain your position.
4. ASSERTIVENESS
Tell them what you will do, not what you won't do.
The best way to determine the future is to create it.
Being in control of the negotiation primarily comes from being proactive, and demonstrating confidence from being prepared and having a well-defined strategy. Then it’s about how well you perform.
5. INSTINCT
Trust it – you will be right more often than not
Instinct helps the Complete Skilled Negotiator:
• to hear not just what is being said but the meaning behind the words; and
• to gauge honesty, and sense if the deal is too good to be true or if there is more scope to negotiate.
6. CAUTION
If it seems too good to be true, it probably is.
7. CURIOSITY
Asking why because you want and need to know.
Effective questioning used to seek information and uncover facts, data and circumstances, which may be not be obvious or may even be concealed, must be a precursor to making any proposal.
• What are their priorities and why?
• What are their time pressures and why?
• What are their options and why?
• How might any of these be changed?
8. NUMERICAL REASONING
Know what it's really worth, know what it really costs.
9. CREATIVITY
Exploring and building on possibilities.
10. HUMILITY
It is people who make agreements and humility that breeds respect Exercising diplomacy and empathy during negotiations to help manage the appropriate climate sounds like common sense. However, with the tensions that can exist, it’s humility that often serves to bring discussions to an adult-to-adult level, cutting through the tactics and gamesmanship in play. Humility removes the need for ego to feature and helps you to demonstrate your intention of working with the other party, rather than against them, to create a mutually beneficial relationship.
KEY TAKEAWAYS
Some traits will be more reflective of you and your strengths than others. No individual trait will ensure better results, but understanding them and yourself offers you opportunity to become a truly outstanding negotiator.
• There is going to be some pressure, some tension, maybe even conflict. Control your nerve, stick with your plan, never off end, and always remain calm.
• Everything happens for a reason and they will try to influence you and your position. Keep your self-discipline and only act as you had planned.
• Some negotiations may wear you down. Your energy levels and tenacity will help you to get the best possible deal.
• Take control of your negotiation by exercising your assertiveness and self-assurance. Remain firm and yet engaging.
• Trust your instinct. If you think it could be too good to be true or if they are not to be trusted, don’t continue blindly. Recognize it and act accordingly.
• Before agreeing to any new terms, exercise caution by working out the potential consequences or hidden risks.
• Information is power. So, always use your curiosity and ask questions throughout your negotiation.
• Make the time to calculate options and alternatives using your numerical reasoning before and during the negotiation.
• Creativity, building on possibilities, and identifying synergies will help you to problem solve as well as optimize value.
• It is you who will make agreements and your humility that will promote the trust needed for your agreements to get across the line.
Chapter 5 – The Fourteen Behaviors that Make the Difference
“If all you have is a hammer in the toolbox, everything looks like a nail.” - Bernard Baruch
1. Think clearly when faced with conflict.
2. Do not allow your sense of fairness to influence behavior.
3. Maintain your self-control, use silence, and manage discomfort.
4. Open extreme yet realistically to shift their expectations.
5. Read their break point.
6. Listen and interpret the meaning behind the words.
7. Plan and prepare using all information available.
8. Question effectively.
9. Always trade concessions effectively and conditionally.
10. Apply analytical skills to manage the value of the deal as the negotiation unfolds.
11. Create and maintain the appropriate climate for trust.
12. Develop and use your agenda to help control the negotiation proceedings.
13. Think creatively to develop proposals which help move the deal forward.
14. Explore options to help gain agreement.
The first five behaviors are more commonly, although not exclusively, used on the right-hand side of the clock face (1–6 o’clock negotiations), yet the self-control associated with them can also underpin those behaviors used further around the clock face.
The next three behaviors are based on listening, planning, and questioning, and relate to all positions on the clock face.
The final six behaviors, which build on the former behaviors, help us to perform in more complex agreements where relationship, dependency, and total value are more important.
1. Think clearly when faced with conflict.
• Gather your thoughts and remove any emotion from your thinking; if you do not do this you will lose composure and will more likely underperform.
• Demand clarity as a condition of continuing.
• Remain focused on your purpose at all times.
• Control the negotiation by restating your position and letting them do the talking.
• If you are not sure about the deal or what it adds up to, then take time out. You can always return once you have taken time to consider your options.
2. Do not allow your sense of fairness to influence behavior.
• Aim to look for the optimum solution rather than simply a fair one.
• Remember that the easy, fair route to splitting the difference is rarely the optimum way to the best deal for all concerned.
• If the other party offers to split down the middle, it usually means that they would probably accept less.
• If you concede they will want more – all trade-offs should be conditional.
3. Maintain your self-control, use silence, and manage discomfort.
• Let the other party do the talking and focus your attention first on what they are saying, rather than thinking too much about how to respond.
• Listen to what the other party is saying in order to establish how far they will move from their current position.
• If you are not ready to make your proposal, either ask a question or say nothing.
4. Open extreme yet realistically to shift their expectations
The process will do three things for you.
1. First, it will help you to position your offer appropriately.
2. Second, it will help you to counter the position of the other party.
3. Third, it will ensure that you provide the other party with the satisfaction of having got a better deal than they believed was originally available.
• Ensure your opening position is extreme enough for them not to accept it – but not so extreme that they will immediately walk away.
• Make your position credible by cutting out any soft exposing statements: avoid the use of words like “around,” “in the region of,” “I was hoping for …,” “we were expecting …”
• Use a non-verbal reaction to their opening position – tactically known as the professional flinch, this is designed to clearly demonstrate to the other party your surprise at their position.
• Apply self-control when making your offer, state your figure – then shut up.
• Learn to be at ease with silence.
5. Read their break point
In any hard bargaining negotiation, you should define your break point first. That is:
• The point at which you have other options that you could take.
• The point at which the deal is not viable.
• The point at which you will walk, rather than do business.
You can read the other party’s limits through:
• the types of proposals they make;
• the language they use to justify their movements;
• the timescales they are working to; and
• the size and frequency of their concessions or counter proposals.
In practice:
• Remember you are negotiating with a person, not a company, and each will carry a set of circumstances that will be unique to them.
• Assess where their break point is by examining previous agreements (if you have dealt with them before), researching the market, and speaking to competitors.
• Identify the issues of high value to them and try to establish the issues in which they are prepared to be more flexible.
• One way of working out your own break point is to define your Best Alternative to a Negotiated Agreement (BATNA).
• Test your own assumptions by stating them as facts and waiting for their response.
6. Listen and interpret the meaning behind the words
• As a Complete Skilled Negotiator, understanding their position, priorities, interests, pressures, and needs is a critical part of your job.
• The value of listening is far greater than that which can be achieved by what you have to say.
• Listen and interpret their true position. How much do they need this deal? How many options do they really have? How dependent are they on an early decision?
• Think about why they are asking a particular question, and ask in return why this is important to them.
• Actively listen for information that will help you to progress the negotiation, rather than thinking about what you want to say next.
7. Plan and prepare using all information available
You should plan:
• what questions to ask;
• what position or statement to open with;
• what type of agenda to use;
• how to present your opening position;
• how to respond;
• what information they will need;
• when and where the meeting will be held;
• who needs to be involved; and
• when discussions will commence, and much more.
In practice:
• The time to start getting into their head is during your preparation.
• Focus your attention on each variable you are likely to discuss and be precise about the information you need or questions you plan to ask.
• Keep a record to simplify future planning.
• Involve others in your preparation – it will strengthen your discipline to plan in the first place, as well as keeping you grounded and objective in your assessments.
• Plan the agenda and map out the variables you can employ.
• Ensure you understand the values of the trade-offs involved against each of the variables from inside their head.
8. Question effectively
The following approach, STROB, enables you to plan out how you can extract more information than might otherwise be forthcoming. It helps you to create five open-ended questions which enable you to open up or expand your knowledge and understanding.
1. Examine broadening the SCOPE of the agreement as part of broadening or narrowing your relationship. This could include considering the longevity of the relationship, dependency, risk, or other factors, which create greater scope for maximizing value.
2. List the TERMS you think will feature and their relative value to them. This could include their basic requirements, issues, or could be related to how the individual negotiator will be measured.
3. List any issues they or you may regard as RISK related. This could include time scales, third-party relationships, market assumptions, etc.
4. List any/all of the OPTIONS you believe they may have if your negotiations run into difficulties. In the event of deadlock what would they do?
5. List the potential BARRIERS, issues, or objections that are likely to be presented.
QUESTION TYPES
• Contact questions help you to establish rapport: “How have you been since we last met? Did you have a good holiday? How is business?”
• Probing questions help you to seek further information: “What do you think about your competitor’s latest activities?”
• Interrogative questions help you to encourage them to think about solutions for themselves: “Why is that important to you?”
• Comparative questions help you to explore in detail: “What has business been like since the introduction of product A? How have things changed since your new promotion began?”
• Extension questions challenge: “How do you mean? How else could we do that? What are you thinking of specifically? What do you mean when you say …? How can you be sure of that?”
• Opinion seeking questions test their knowledge and thinking: “How do you feel about …? What do you think about …? What are your views on …?”
• Hypothetical questions help you to test their knowledge and thinking: “What if we were to order 500 units? What if we included all the costs? What if I paid you in advance?”
• Reflective/summary questions draw ideas together and test their understanding, and summarize what has been said: “So, you think that we need to introduce this new range? You think that the product will achieve X? As I understand it, you reckon that you can deliver it?”
• Closing questions help you to secure agreement: “When should we start – during May or at the beginning of June? I can deliver on the first or second week of that month; which would suit you best? How much?”
• Mirror questions serve to reverse the question and confirm the point: “We think we can deliver this for you.” “You think you can deliver this?”
• Leading questions help you to secure a desired answer. “You can’t deny that …? Isn’t it a fact that …? You wouldn’t say that …? It’s a great offer, isn’t it?”
• Rhetorical questions help you to prevent them from saying anything as they do not require an answer: “Do we really want to do that? And how did that happen?” Implying that you already know.
• Multiple questions help you to gain agreement to a package: “You did say that you could meet the deadline? Oh, and you will meet our specification and, ah, by the way, you can do this for us can’t you?”
• Closed questions help you to establish specific facts/information: “Will you do this? Have you the ability to deliver? Can you meet our requirements? Do you need help with this offer?”
In practice
• Use the STROB technique to put your questions into order of importance.
• Make a conscious effort to work on the different questioning types in order to maintain control.
• If they are reluctant to answer, try asking your question in a different way.
• Be careful to avoid being seen as interrogating – you’re likely to attract suspicion and resistance.
• Also be wary that you can sometimes give away your own interests unintentionally by the way you ask questions.
9. Always trade concessions effectively and conditionally
• Identify what is important to the other party through your planning and questioning.
• Build proposals that involve concessions of least cost to you, but greater value to them.
• Use “What if …?” questions to explore the value and measure reactions to particular suggestions.
• Always place your condition first, rather than the concession (i.e. “If you … then we …”) as they will be less likely to interrupt you in order to hear what’s in it for them.
• Be creative when identifying options for trading – change the shape of the deal rather than focusing on what can’t be done.
10. Apply analytical skills to manage the value of the deal as the negotiation unfolds
• Ensure that you understand the implications of the other party’s response in order to work out what your next proposal might be.
• Track your, and the other party’s proposals so that you can monitor each issue’s progress and movement.
• If you struggle with figures, take your time, or ensure you take someone as your “figures person”.
• Make it your business to qualify the worth of all the issues under discussion.
11. Create and maintain the appropriate climate for trust
• Trust takes time to build so patience is needed; yet it can be destroyed in a moment if you cross the other party.
• Offer information in a controlled and considered manner to demonstrate that you are prepared to be open and can be trusted.
• Drive at a broader agenda with the aim of building a sustainable agreement rather than engaging in a bruising battle over price.
12. Develop and use your agenda to help control the negotiation proceedings
• The broader the agenda, the greater scope there is for shaping the deal.
• Aim to trade off no more than three issues at a time.
• Watch out for hidden agenda points or “red herrings” introduced by the other party with the aim of trading off against them.
• Position price, fee, or cost about halfway down your agenda – too early and it can promote unnecessary friction; too late and it could limit room for maneuver.
• If you are going to “lose” or concede on an issue, then trade it conditionally and reluctantly – if it is truly important to the other party, they may give ground to secure it.
13. Think creatively to develop proposals that help move the deal forward
• Understand what is really important to them and why.
• Differentiate the people from the issues.
• Extend your mutual agenda to create more possible variables.
• Consider any risks involved and trade these off where possible.
• Identify low-cost, high-value trade-off opportunities.
14. Explore options to help gain agreement
• Convert thoughts of “no,” “can’t,” or “won’t” into “HOW,” no matter how frustrating this might feel at first.
• Take time to explore options and continuously consider the deal from their perspective.
• Use “positive energy” rather than “defensive energy” to explore options.
• Make use of the planning tools in Chapter 9 to help visualize possible or different relationships between the issues.
• Ask the question: “Under what circumstances could we bridge the difference?”
KEY TAKEAWAYS
The fourteen behaviors offer a framework for The Complete Skilled Negotiator to develop and perform across all types of negotiations effectively. The more conscious you become at using these skills, where appropriate, the more likely you are to optimize your negotiation opportunities.
• Understand the behaviors you need to employ to perform at your best. Different stages of the negotiation will require the use of different behaviors.
• Work out what your behavioral strengths are and compensate for those which do not come naturally.
• Planning and preparation (7) is the most important activity you will undertake so don’t “wing it.”
• Behaviors help you to understand how to perform but do not help you with the “why.” Be clear in your mind what you are trying to achieve and the various ways of arriving there.
• Disciplined behaviors alone will not make you an effective negotiator. You need to understand patience, nerve, power, and time before you can truly excel.
• Think as if you were inside their head – behave as an objective, conscious, competent negotiator.
• Comment on the link at the back of the book allowing the reader to profile themselves against the 14 behaviors and attract personal development recommendations.
Chapter 6 – The “E” Factor
Experienced negotiators:
• are conscious of what they are looking for;
• are calm in their thought process;
• are aware of the sensitivities in play; and
• send you the messages they want you to read.
The role of emotion: Emotion has its place when used in a considered and controlled manner:
• when the risks have been considered (walk out, outburst, deadlock);
• when its purpose is to attract a desired reaction; and
• when the seriousness of the issue needs conveying and you are confident that you will not ruin the chances of progress.
THE TELL-TALE SIGNS OF STRESS
Effective negotiators learn to adapt to becoming more comfortable with being uncomfortable. This is achieved through heightened levels of self-awareness and becoming experienced in doing what is necessary from an objective standpoint, rather than allowing themselves to be victims of their emotion.
If you witness negotiators exhibiting these fidgety types of behaviors it may well mean nothing, other than an adjustment of their position. Reading body language, tends only to be relevant when change, speed, or the timing of movement correlates with something that has happened. If the other party responds to your proposal immediately, insisting that they will not or cannot accept the offer, observe their physical behavior as they respond. It is likely there will be some emotion involved. It is possible they mean it but it is also possible that they don’t. Look for a correlation in body language or facial expressions if there is more than one of them negotiating. This is usually most recognizable when they are stating a position, rejecting a position, or making a statement.
• Listen to what they are saying, the way they are saying it, and what they do not say.
• Listen to whether they justify what they are saying.
• Listen to whether they go on to sell what they have just said.
BECOMING A CONSCIOUSLY COMPETENT NEGOTIATOR THROUGH UNDERSTANDING TA
Back in the 1950s, Dr. Eric Berne defined the ego states known to us today as transactional analysis (TA). In the book I’m OK, You’re OK, the author Thomas Harris analyzed Berne’s work, which was made up of definitions of ego states and how they affect the way we communicate with each other. These are defined as the roles of:
• parent (critical and nurturing);
• adult (sees the things as they are); and
• child (free and adaptive).
These are communication styles that we all use subconsciously whilst communicating with others. Within negotiation, these ego states resonate in the language and behavior used, which can directly impact on expectations, respect, irrationality, arrogance, and other attitudes exercised during discussions.
EMOTIONAL INTELLIGENCE
If there is one critical competency central to effective negotiation, I would suggest it is emotional intelligence. It underpins the balance of communication between you and those you negotiate with, and promotes the concept of negotiating from inside their head.
In his 1995 book, Emotional Intelligence, Daniel Goleman describes how emotional intelligence is made up of two parts. He claims that to be effective in business, you need to have a high level of self-awareness and self-control around your emotions and those of the other party:
• first, by understanding yourself, your intentions, your responses, and your own behavior;
• second, by understanding others and their feelings.
This is critical in negotiations because you are responsible for the feelings of those you negotiate with. Antagonize the other party and watch any hope of cooperation dissolve. Goleman goes on to describe the five “domains” of emotional intelligence:
1. Knowing our emotions.
2. Managing your own emotions.
3. Motivating yourself.
4. Recognizing and understanding other people’s emotions.
5. Managing relationships and the emotions of others.
THE ART OF LOSING
Negotiation is about the art of losing, or the art of letting others have your way. With your ego out of the way, and your attitude firmly focused on the outcome of the agreement, you are free to behave in any way you believe to be appropriate to your interests. Being what you need to be and doing what you need to do includes allowing the other party to enjoy the “symbols of success” whilst you focus on the total value of the agreement. This means understanding others and their needs and then trading off no more than you need to in order to optimize your net position. It means letting them win on items of less significance whilst you focus on the more significant, value-adding variables. You could argue that you cannot afford to set precedents by allowing them to win the psychological battle even on some issues (depending on whether there is an ongoing trading relationship or not), or that if you concede on certain issues they will expect this in the future. However, your job as a negotiator is also to help the other party to feel as though they have won.
KEY TAKEAWAYS
Careful planning ahead of your negotiation may help your confidence and provide you with considered options. However, emotional behavior and the actions of the other party, together with circumstantial changes, require nerve, self-awareness, and self-control, otherwise your composure and performance may be compromised.
• Understand yourself, your intentions, your responses, your emotions, and your own behavior.
• Try to understand the deal from inside the other party’s head and the priorities, interests, pressures, and emotions they will be feeling.
• Listen, understand, calculate, think, and slow down. It will increase your mental capacity and will make a real difference to your performance.
• Even where strong dependent relationships exist, with pressure and tension, emotion is never far away.
• Planning and preparation, starting with an agenda, will help you promote order, options, and more collaborative dialog.
• When unclear, feeling under pressure, or without the clarity you feel you need, take time out – otherwise you may find yourself facing the unintended consequences of your rash actions.
• Don’t be seduced by large concessions. Their extreme opening position may well have been designed to shock and then satisfy you.
• Keep your ego in check. Only then are you free to behave in any way you believe to be appropriate to your interests.
• Never take for granted how others may behave. Human beings under pressure can become irrational in thinking and in their behavior.
Chapter 7 – Authority and Empowerment
The Complete Skilled Negotiator will understand empowerment in terms of:
• how it can be used to protect you;
• how it affects your ability to be creative;
• how it affects your ability to build value; and
• how it affects the other party’s thinking and behavior.
The more empowered you are; the more risk you have to deal with.
EMPOWERMENT WITHIN TEAM ROLES
There are four distinct team roles that are typically adopted:
• the spokesperson;
• the figures person;
• the observer; and
• the leader.
Each is designed to help your team perform to the best of its varied abilities.
The spokesperson
The spokesperson is empowered. Their role is to:
• conduct most of the dialogue;
• table proposals within agreed parameters with the leader in the negotiation team; and
• trade variables on behalf of the team, while still needing to refer to their leader to get final agreement.
That is not to say that others should not or cannot talk, but they should do so through invitation from the spokesperson. The team is there to support the spokesperson.
The figures person
The figures person should not typically be involved in the dialog unless invited to do so. They:
• understand the implications of movement on each of the variables;
• advise on possibilities, calculate movements, possibilities, and proposals;
• understand the total value of the agreement at any given point in time; and
• advise the leader as the negotiation proceeds.
The observer
The observer is also disempowered. Their role is to:
• watch and monitor the other party;
• hear the things that others may be too preoccupied to hear;
• understand the motives, interests, and priorities of the other party; and
• read the size, timing, and nature of the moves that are taking place.
The purpose of the role is to help you to understand what is driving the other party. The observer is your eyes and ears in the room. They generally workout what’s happening in the room when others are too preoccupied.
The leader
The leader is usually the person with the greatest level of authority. They are the person who speaks least, but speaks loudest. Their role is to:
• set out the agenda and form the climate for the meeting;
• allow the spokesperson to manage the trading on behalf of the team; and
• summarize from time to time where clarity is required and make the final decision.
KEY TAKEAWAYS
Empowerment works just like authority. The more empowered you are; the more scope you have to negotiate. The positives are that with greater scope you can be more creative by working with a broader agenda and more variables. The negatives are that you can become exposed to pressure because you are empowered to say yes. In other words, it is often those with the authority who need protecting, which is why the act of negotiation is often delegated to others.
• Seek a higher authority as a way of disempowering yourself when necessary.
• Agree to whom and when you should escalate discussions or decision making before you start.
• Agree (and negotiate if necessary) the scope and parameters of your empowerment before you start.
• Always qualify the level of empowerment of those you are dealing with.
• When they say they are unable to agree, seek to escalate the matter to someone who can.
• Agreed team roles and discipline provides greater protection from tactics others may use.
• If you are empowered to negotiate around a broad range of variables, understand the value of each issue from inside the other party’s head.
Chapter 8 – Tactics and Values
KEY TAKEAWAYS
Influential tactics in negotiation have been used for thousands of years as a means of gaining leverage and advantage. They can be as subtle as providing misleading information or as blatant as an outright lie. As you never need to lie in negotiation, many tactics are regarded as a fast route to destroying trust.
• Recognize tactics being used and qualify them by challenging their consequences.
• The type of the tactics you use should be limited to how much trust and dependency you require in the relationship once the deal is done.
• The risk/benefit of employing tactics is something you must judge based on your own circumstances, objectives, motivation, and values.
• More than one tactic at a time will often be combined to increase pressure as others will seek to manipulate your actions.
• Performing as a conscious competent negotiator will help increase your awareness of the tactics in play and will help you recognize, qualify, challenge, and navigate through the gamesmanship.
Chapter 9 – Planning and Preparation that Helps You to Build Value
“There is only one good, knowledge and one evil, ignorance.” – Socrates
UNDERSTANDING VALUE
There are five things that can happen to value in negotiation. You can:
1. give it;
2. create it;
3. share it;
4. protect it; and
5. take it.
The three dynamics of value
In negotiation, as in business, the general offer is that you can have “it” quick, good, or cheap. Now pick any two.
THE SIX PRIMARY VARIABLES
There are six primary variables that tend to feature across any type of deal from business to politics. This helps to capture all the issues that are likely to affect the total value of your agreements. Once defined, you can use them to broaden out the scope of the agreement and to consider the consequences of performance around each of these variables. During your planning this also provides you with the opportunity to introduce a range of conditions linked to each variable.
1. Price, fee, or margin (how much will be paid).
2. Volume (how many, how much, or what types).
3. Delivery (when, where, response times).
4. Contract period (when it will start, how long it will run for, under what circumstances it will or can be terminated, when it will be reviewed, etc.).
5. Payment terms (when, how, currency, etc.).
6. Specification (what the product, service, or agreement will include, the quality, or how it will be supported).
List of planning tools:
KEY TAKEAWAYS
• Without preparation before you enter the “negotiation arena,” all the theory in the world (and indeed in this book!) will add up to nothing.
• Map out all the possible variables and value each from inside the other party’s head.
• Focus on the potential total value of your agreement.
• Identify ways you can change the shape of the deal, which allows the other party to move, in order to build solution-based proposals rather than seeking to simply drive down their terms.
• There are six primary variables that feature across most deals (price, payment, timing, specification, volume, delivery), which, once defined, can be used to introduce a range of risk-based conditions that you can link to each variable.
• Use the six negotiation planning tools to help scope the potential of your deal, work out the relative values, plan out your initial proposals, and then monitor the value of your agreement as your discussions unfold.
Final thoughts:
Negotiating effectively is firstly about accepting that it is only you who can influence the situations you are faced with. You can blame the market, personalities, timing, your options, the power balance, or any circumstance that you may think happens to be working against you, but ultimately it is you who can turn around situations (including deadlock situations) into workable and profitable deals.
No comments:
Post a Comment