Getting negotiations right
Everyone is a negotiator. Irrespective of your job title, rarely a day goes by in business when you are not negotiating something with someone, whether it is a supplier, customer, employee, co-worker or partner.
It does not matter whether you are in the middle of a make-or-break deal or simply trying to influence the choice of venue for the end-of-year office function, you should not take negotiation skills for granted.
It is important to critically examine your negotiation style and preferences, and improve any areas of weakness. Let’s review some of the ground rules for successful negotiations.
Before you start
Before you start a negotiation, you should ask yourself why you are doing it.
Validate your thinking and confirm that the proposed deal is beneficial for the long-term before you embark on a negotiation. You cannot ‘fix’ a bad deal through negotiation.
Negotiation 101
- Understand your weaknesses. Objectively review the weakness of your current position and have a strategy for ameliorating any disadvantages. If you cannot afford to walk away from the negotiations, you have no negotiating power.
- Know what you want. It is crucial to have a clear understanding of precisely what your objectives and requirements are, so you can communicate them effectively at the appropriate juncture. Lack of clarity around the scope, nature or objectives of a deal can unnecessarily prolong the negotiation or, worse, cause it to derail.
- Understand what the other side wants. Invest time prior to meeting and then during the initial stages of the negotiation, gaining a clear perspective of what they seek to achieve from the negotiation. This will help you to cast your position on various issues and outcomes in language that addresses their needs.
- Explain what you want. Some people feel uncomfortable about disclosing their objectives for securing a deal. Yet negotiating is about two parties working together to solve a problem. You can only solve a problem if all parties understand it.
- Hone your people skills. People skills (active listening, demonstrating and encouraging trust, empathy and awareness of cultural and conversational nuances) will play a far greater role in achieving a successful outcome than bargaining skills. Remember, tone and body language comprises over 80 percent of communication during a face-to-face conversation.
- Appoint a facilitator. Negotiations are usually more efficient and less acrimonious where an independent party facilitates the discussions and ensures all parties play fairly.
- Focus on intent. When two (or more) teams are in a negotiation, there will be times when each will use different language to discuss an issue. Focus on the intent first. Do not allow the momentum to stall by squabbling over language. The actual language of the deal is only relevant once you reach agreement on intent.
- Plan for disagreements. Once there is agreement on intent, switch your focus to identifying areas of potential future dispute. Explore how the deal might be refined or reworded to avoid disagreements.
- Simplify, and then simplify some more. Good deals are simple deals. Avoid convoluted arrangements that require thick documentation and explanatory memorandum. Do not assume the dealmakers will be around to ‘interpret’ later, and keep the terms uncomplicated.
- Get the framework right. Each person enters a negotiation with a preconception of how the negotiation will unfold. This ‘mental model’ has a significant impact on their approach to the negotiation, which in turn affects the outcome. You should make every effort to frame the negotiations as communal, rather than adversarial.
- Everything is negotiable. A common mistake for novices is to treat the first brick wall as the end of the negotiation. Every issue, hurdle and compromise is negotiable. In the end, it boils down to who wants something more.
Above all, know what your BATNA – Best Alternative To a Negotiated Agreement – is.
You should never accept an outcome that is worse than what you may have done in the absence of the agreement. Otherwise, why bother to negotiate? Have a plan in place for what you will do in the event that you cannot reach an agreement. Being able to walk away from an unsuitable deal is your primary source of power in negotiations.
Equally, you should have an idea of what the other party’s BATNA is. What are their alternatives to doing a deal with you? Who else could they negotiate with?
Awareness of how either party would respond in the absence of an agreement helps to narrow down the areas of consensus and the areas that require negotiation, which will dramatically decrease the time required to achieve a win-win deal.
Mark Neely is a lawyer, technology commercialisation consultant and author of ten books, including The Business Internet Companion. You can read his blog at www.infolution.com.au. You can view his LinkedIn profile at www.linkedin.com/in/markneely
