The Art of Negotiations: Creating Win-Win Outcomes
Unlike many other forms of training, the benefits of negotiation training are quantifiable and nearly immediate, and whether we recognize it, we negotiate daily with nearly everyone we encounter! It might be something related to your business, or deciding whose turn it is to walk the dog. I saved $10,000 just four days after taking my first negotiation workshop, so I’d like to share a few tips on getting more of what you want through negotiation.
Anything Can Be Negotiated. Yes, anything can be negotiated, but you have to ask. In other words, you have to choose to negotiate. People won’t arbitrarily decide to offer you a better deal. In her book, Women Don’t Ask: The High Cost of Avoiding Negotiation – and Positive Strategies for Change, author Linda Babcock tells us that women are four times less likely to initiate negotiations than men, a situation which, at least in part, accounts for the gender pay gap. Just choosing to negotiate will get you more in business and in life.
Don’t Assume You’re in the Weaker Position. Often, women assume they are in a weaker position than our counterparts, but this assumption is unfounded because we most likely don’t know what position they’re in. They may be in a weaker position than we are! Furthermore, they don’t know what position we’re in either. And, it’s not necessarily about reality; it’s a matter of perception. Expectations drive behaviors, so if we enter a negotiation feeling strong and confident, we will come across as such and will perform better in a negotiation.
Planning. Many negotiations happen incidentally, precluding the opportunity to plan for them, but when you know in advance you’ll be negotiating with someone, you’ll be well served to do some homework. Learn as much about the other party as possible. Try to ascertain what the other side might want – not what they say they want, but rather, what motivations, concerns and fears lie behind that. You’ll also want to examine your own position; do you really know what you want? If you don’t know what you want, you won’t know when you get it!
If I tell you, for example, that I want my elderly mother to move into an assisted living facility, what I’m really telling you is that I’m concerned about my mother’s safety and security. Are there other ways to resolve this? I could hire a live-in caretaker, or she could move in with me. Finding out your counterpart’s true motivations will open the door for crafting an agreement that meets both of your needs. It allows the two of you to create value, rather than just claiming it. This is the essence of win-win.
Who Should Make the First Offer in a Negotiation? This is a question I’m often asked. People wonder whether they should speak first, or wait for the other side to make the initial offer. In most cases, you want to make the first offer because that first offer acts as an anchor for the negotiating range – an anchor against which the other party must now negotiate. If you’re the seller, you will want to set it high; if you’re the buyer, you’ll anchor low. This anchor may deflate the other side’s expectations, and as we know, expectations drive behaviors.
Let’s consider the example of a job interview: Do you want the employer to make you an offer, or do you think it’s better for you to put your number on the table first? Do you honestly think the employer is going to make you an offer that’s above the amount you’d like to earn? Not likely. Instead, the employer will probably anchor with a low-ball offer, and then you’ll be left to negotiate against that offer.
When setting our target in negotiation, it’s important to aim high because research shows that those who aim high do better. So, ask for more than what you would ultimately accept because you need to leave yourself some room to move. Setting a target. and then stubbornly refusing to budge, will most likely offend the other party and cause them to walk away. Negotiation is a two-way street.
What should you do if the other side makes you a ridiculously low or high offer in a negotiation, one that would have a very negative anchoring effect for you? Don’t engage and don’t negotiate against that offer. Instead, say something like, “I’m willing to work with you on this, but first you have to make me a reasonable offer.”
Justify Your Positions
Your goal when you make an offer is to get a counteroffer, so you want to make as extreme an offer as you can, without causing the other side to just shrug its shoulders and walk away. I can’t tell you exactly where to start your negotiations, but I can tell you that any offer is reasonable, providing you can justify it. Use objective criteria, such as competitive bids, hourly wage, precedents or published documents (such as Kelley Blue Book, if you’re buying or selling a car), to justify your offer. And, be sure to ask the other side to justify its position as well. Ask, “What are you basing that on?,” or “Help me understand how you arrived at that number.”
Getting Information. To learn as much about the other side, you need to ask open-ended questions and listen actively to the response. In order to reach an agreement, your counterpart needs to feel that you have truly heard and understand the other side’s viewpoint. Empathizing statements, such as “That’s interesting, I hadn’t thought of it that way. Tell me more,” or “If I understand you correctly, your main concern is …,” will set the tone for collaborative problem solving.
Making Concessions. Concessions are an integral part of every negotiation, but they should be made strategically. Here are three tips:
- Try not to be the first one to make a concession, but if you have to, make a small one because it sends a loud message about how much more room you have to move. Listen carefully for clues in the other side’s concessions.
- If you make a concession, be sure to ask for one in return. This is the norm of reciprocity, and even though negotiation may not be ingrained in American culture, the norm of reciprocity definitely is. If I give you something, you will probably feel obliged to give me something in return.
- Don’t accept the other party’s first offer, even if it meets or exceeds your target. The goal is to make the other party feel good about the agreement you reach, so you want them to work hard for concessions. If you accept their first offer, they are likely to feel that they could have done better!
Opportunities to negotiate are abound, so I hope you will start negotiating – start asking – regularly, so you can get more in life.
Editor’s note: Nancy Fox was a featured speaker at QuickBooks Connect 2016. Download her slides here from OWNIT.com.