You may well know many of the ‘Golden Rules’ of Negotiating – such as the importance of preparation, aiming high (‘if you don’t ask, you may never get’), establishing the other side’s full agenda before starting to negotiate (to avoid last-minute demands), keeping all issues linked to avoid ‘salami slicing’, searching for variables in both side’s situation to trade for mutual advantage; and the importance of actually trading concessions rather than just donating them.
Following these tips alone can result in vastly improved outcomes. But there are many other things we can do to ensure an even better deal.
What do WE want?
The first step in planning any negotiation is to be clear what we want, not just what we would ‘like to have’, but quite separately, what we ‘must have’, without which we will be prepared to walk away or apply some other sanction. ‘Must haves’ and ‘would likes’ are very different, and should never be confused in your own mind!
This is really critical because bad deals are most often done when either side loses sight of what was really most important to them.
- For example, it isn’t at all unusual for negotiators to get stuck on what might be quite an incidental issue, because they made a ‘nice to have’ item a ‘must have’.
Very often you will see this in Industrial Relations disputes for example, where one side tries to cover too many issues in the same negotiation. One side seeks to establish a point of principle that just wasn’t worth spoiling the rest of the deal for, or was not even clear what their most important issues truly were. They may then win a battle, but lose the ‘war’… - Just as bad is the reverse, where a really essential part of the deal – a ‘must have’ is conceded in exchange for a ‘would like’ and something that was nowhere nearly as important.
A typical example of this is when a supplier seeks a price-rise for example, which may be really essential, but forgoes this in the face of dealing with a complaint from the customer which may actually be quite spurious on further examination, but somehow becomes the most pressing issue to resolve. (If the customer complaint was genuine, of course it should be resolved – but don’t muddle this up with a price negotiation. Deal with it separately!) - Even worse is the situation where the wrong issues are defined as being a ‘must have’.
How often have you known a salesperson that has been told by an ambitious boss to win a significant price rise at a major customer as a ‘must have’, only to lose the business? On many occasions, perhaps the price rise was actually only a ‘would like’. The real ‘must have’ may well have been “don’t lose the business”!
Strong negotiators are of course adept at making all their demands seem equally important, while diminishing the other side’s, not the least to drag their non-negotiable ‘must haves’ into an optional ‘would like’, subsequently to be whittled away. Only by being absolutely clear of your own ‘must haves’ and ‘would likes’, and not confusing the two, can you avoid this.
Dealing with ‘Must haves’
Knowing how to handle ‘Must haves’ – both yours and the other side’s – is clearly a critical skill.
Needless to say, if there is genuinely no overlap between two side’s conflicting demands and non-negotiable ‘Must haves’, there may never be room for a mutually-beneficial deal, and there will be no negotiation to be done. (Yes, a No Deal really can be far more preferable than a bad deal!)
But here are some really helpful steps you can take.
- Check: Are the ‘Must haves’ really non-negotiable?
Testing the other side’s commitment to their stated ‘Must haves’ is clearly essential.
So check what is most important to them, not the least by asking them to rank their priorities. They won’t all be equally important. (Likewise, check your priorities too!) - Keep your eye on what really matters to you most
Don’t lose sight of your overall objectives. And if your ‘Must haves’ really are non-negotiable, don’t be embarrassed to say so – and be prepared to justify why. - Make Counter-proposals
Just saying “No” to other’s demands promotes a lack of trust and possible Deadlock. Much better is to make counter-proposals. For example: “We couldn’t accept your demands for X as things stand, but if you would consider our requirement for Y, perhaps we could then discuss how we might then help you get to X…?”
[NB: “If you will..., then we could consider...” is a very powerful negotiating formula. But don’t reverse this, as many do, by saying: “If we…, would you…”, because the danger is that they might accept your offer and give you nothing in return!] - Keep looking for variables
Looking for other ways of doing a deal with variables that may not even have been on the agenda, along with asking good questions, are two of any Negotiators ‘best friends’.
So when the other side demands a price-reduction you can’t afford, for example, focus on looking at other non-price matters that might give them a similar benefit they might value (in exchange for what you want, of course). For example, quicker deliveries, emergency stock or specialist technical support? Or even a shared new product or service-development project, training, joint marketing effort, or whatever else you can think of. - Don’t expect to resolve everything in one go.
Assuming goodwill on both sides to do a deal, really difficult issues may still not always be capable of being dealt with in one go. Sometimes it is really helpful to put some matters into abeyance for another time. So don’t be in a rush to settle everything at once. Quick deals often produce really bad results!
But what do THEY want?
Very often, the energy and emotion to protect our own viewpoints in a negotiation can escalate a perfectly reasonable difference of views into a full-blown argument. Either nobody wins (‘Lose-Lose’), or the strongest or more able side wins at the expense of the other (‘Win-Lose’), leaving the losing side to work night and day to ‘get their own back’. (For an example, the vast majority of marital break-ups?)
The way to avoid this does require the goodwill of both parties - you can’t ‘make’ the other side be reasonable! But you can encourage them by seeking common ground.
- Focus at least as much on what they want – and why – as on what you want.
Many deals fail because at least one side – and often both – didn’t understand what really concerned the other party. Hence one of the Golden Rules: before you start to negotiate, establish their full agenda.
All tough negotiators are going to make their best hopes sound like the least they can possibly accept, will aim high and expect you to move first. And you can do the same too. But in truth, it is far more productive to focus on a ‘Win-Win’ deal – assuming there is any desire for one – and that means establishing very clearly what they want and why, even if they may not get all they might hope for. - Look for other ways of doing a deal.
This is where the power of ‘variables’ comes into play. For example, you may want to resist a supplier’s price rise, but the offer of quicker payment, more business, advance scheduling, a less-demanding specification or even shared publicity, might be just as valuable to them, and at less cost to you. - Keep all the issues linked.
The concern of many in seeking a collaborative deal is that our goodwill will not be reciprocated. But you can readily avoid this by keeping issues linked.
For example: “We can’t accept X as things stand, but can we come back to this after we have discussed our needs for Y”
Important Lessons
We all have to negotiate, both at work and home. Yet most of the skills required are not intuitively obvious and, often, we don’t even know why we did well (or badly!), without other’s insights.
But, the more we practice, the better we can certainly become.
This is the first article of a series that I am writing for Vistage UK, if you would like to read more of my tips of negotiation click here to read some free excerpts from my book "How to Negotiate Better Deals" today.
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