The Numbers Game

How good are you at math? Bob Sullivan, author of Stop Getting Ripped Off (http://stopgettingrippedoff.net/), argues that many Americans are terrible at math, and that is one of the reasons they get raw deals. Sullivan examines the data, and writes in his book that “more than half of U.S. consumers were categorized as having basic or below basic quantitative skills.” Sullivan calls this lack of mathematical skills innumeracy (like illiteracy).

Sullivan finds that even people with college degree have problems with certain mathematical skills. He writes: “most college graduates (and in fact, most adults who held advanced degrees, too), were unable to answer a question asking test-takers to calculate interest payments on a home equity loan. Only 1 in 5 test-takers of any stripe could handle the question, which simulated the most basic task a home-buyer faces when trying to select a mortgage.”

Math skills are crucial in any business negotiation. We aren’t talking about advanced calculus, we are talking about good arithmetic and algebra skills that can help you to understand the numbers you are being asked to negotiate on.

Negotiators who are dealing with price/cost and value issues need to be extremely careful with the numbers. What if the packaging changed on a product, and it is being offered at a better price. Are you able to figure out if you are still getting the same deal as before?

Although most negotiators are not accountants, it is important to be able to make the numbers add up correctly. It is easy to mess up under pressure or because you weren’t paying enough attention. Dr. Chester Karrass advises us to go slow and double-check all numbers to avoid making dumb (and costly) mistakes. If possible, have someone else check the numbers too. The person you are negotiating with is not necessarily going to point out a mistake.

Have you ever made a math mistake during a negotiation that cost you? Please share your numbers gone wrong stories.

Negotiating with Santa...or what to do when asked for more hand you can handle.

Santa gets lots of requests: bikes, toys, cars, computers, you name it. Sometimes Santa gives you exactly what you ask for and sometimes, he doesn’t. The negotiation with Santa takes place before he brings your gifts: have you been naughty or nice? Santa goes all out for nice people, even throwing some extras, but if you’ve been naughty, well, there goes half your list.

As far as negotiations go, negotiating with Santa is straightforward. You only negotiate with Santa once a year. You come up with a written agenda listing your requests (or demands). Santa checks out your requests and then he checks out your background. If you are deemed to be “nice” he concedes on the items on your agenda. In return, Santa asks that you provide cookies and milk upon delivery.

If only all business negotiations were that simple!

If you are seller, unlike Santa, you are dealing with prices. You are not giving things away. And often, your customer asks you for a better price. Since you aren’t Santa, you can’t refuse to negotiate just because the customer hasn’t been that nice. But, sellers who are being asked to concede on price do have options.

There is a great article from the Tool Kit column in the New York Times: “Dealing with a Customer who Wants a Better Price” by Paul B. Brown. Brown gives advice to those who are being asked to lower their prices. He provides several pointers on how to best deal with this scenario:
1) Negotiate on the whole package, not just one piece at a time
2) Don’t lower you price, instead offer additional value (extra services, etc.)
3) Don’t give a concession without asking for one in return
4) Don’t let the other side’s problems become your own
5) Maintain and flex your sense of humor

Since you aren’t Santa, you aren’t likely to get cookies and milk after your negotiation, but you may still be able to please the buyer while maintaining your bottom line.

Karrass wishes our readers successful negotiations and happy holidays and a very Merry Christmas!

Is this a real issue?

There are two types of issues in any business negotiation: real issues and straw issues. You want to negotiate on the real issues. Straw issues are just like packing paper, just there as stuffing or filler, making it hard get to the real issues. Straw issues are distractions, bluffs, decoys... They are there to add an extra layer to get through.

However, negotiators sometimes use straw issues to achieve the results they want. By putting out straw issues, negotiators are giving themselves room to maneuver; they are creating ways to extract concessions. Negotiators who know how to use straw issues know that once these issues are removed from the table, the real issues seem more manageable, easier to deal with.

In labor negotiations, many demands often lead to more concessions. By having many demands on the table, labor negotiators are satisfying different parts of their membership. And with many demands in hand, these negotiators can give away the “straws,” thus giving themselves more room to exchange issues.

Sometimes it is hard to recognize which is a real issue and which is a straw issue. You don’t want to spin your wheels dealing with a straw issue. To get down to the real issues you will have to discover which issues are truly important. This will take a bit of patience and some investigation. Perhaps you hold some off-record discussions with the other party. You can ignore some issue and concentrate on what you want to concentrate on. If the issue is a straw issue, it will go away.

Straw issues may be annoying to the other party but they give you more space to negotiate. Chester L. Karrass has found that the more space you have to negotiate, the better you do in the negotiation.

How do you use straw issues? How do you identify straw issues when you are confronted with them?

How to deal with agressive behavior

When you start a business negotiation, you don’t know what you will be faced with. As the negotiation goes forth, roles, personalities and behaviors unfold.

In some cases, the other party is aggressive. Unfortunately, aggressive behavior is often present in most negotiations. Some negotiators believe aggression helps to “fire up” a team and actively cultivate aggressiveness.

What is the best way to deal with aggressive behavior?

To contain aggressive behavior, you need an understanding of the situation, and a strategy to deal with it.

Perhaps your first reaction is to be conciliatory. However, if you always act as the conciliator, you may end up giving the other party the upper hand.

If, on the other hand, you respond with equal aggression, you may escalate the conflict and end up in a deadlock.

The best strategy is to mix it up: sometimes be cooperative, and sometimes be aggressive to gain the element of unpredictability. When you are not predictable, the other party will have to search for ways to react to you and work with you, thus helping to ease the negotiation.

The bottom line to dealing with aggressive behavior is to be prepared for it. Do not let yourself be bullied by aggressiveness. Finally, use both aggressive and conciliatory behavior to control the situation.

How do you deal with aggressive behavior? Share your tips in the comments.

Can a negotiation go too long?

Business negotiations can be short when agreement is reached quickly. Other negotiations can be drawn out, with both sides making small concessions but not reaching agreement. How long can a negotiation last before it is too long?

It is obvious that the more complex the issues being negotiated are, the longer the negotiation is going to last. The same holds true when issues are highly contentious or polarizing since more ground will have to be covered to bring both sides closer to agreement.

Some negotiators use time to control the negotiation. They test patience to see if they can reach an agreement that is favorable to them. Some negotiators use the “stretchout” maneuver, which involves extending the negotiations over a long period to be able to reveal some uncertainties (e.g. government decisions or new pricing structures) that could affect the negotiation outcome.

Deadlines may be an effective tool to limit the length of a negotiation. By imposing a deadline for decision, an agreement may be reached successfully. However, as with any tactic, deadlines do not always work and they are not always respected.

In labor negotiations, unions may have rules to control the length of the discussions. For instance, the Oregon School Boards Association (OSBA) has made the following rule about length:

“After the first bargaining session, parties have 150 days to exchange proposals. If both parties agree, this period may be shortened or extended. Either party may ask for a state-appointed mediator at the end of this period. The parties are required to spend 15 days in mediation. Either party can then declare impasse. “
From the OSBA site here: http://www.osba.org/Resources/Article/Employee_Management/Labor_Negotiations_FAQ.aspx

There are some dangers in having negotiations go too long:

* Negotiators may grow fatigued and disinterested
* More issues may be introduced than were originally on the table
* Patience may be tested causing decisions that may not otherwise have been reached

On the other hand, some issues are too complex and really do require lengthy discussions. Currently we see the climate negotiations going on in Copenhagen. With many parties involved, and many issues at hand, we can expect those negotiations to be ongoing.

When do you think a negotiation has gone too long?

To concede or not to concede, is that the question?

Perhaps the better question about concession is: what to concede?

Concessions are a fact of life in any business negotiation. Sometimes you must make a concession to get what you want. However, this does not mean your side should make all the concessions, or that you just concede willy-nilly. You should have a strategy behind your concessions.

Here are some key findings about concessions, from Dr. Chester L. Karrass in his book Give and Take:

Losing parties make the first concession on major issues
Sellers who are willing to take less get less
Buyers who start with low offers do better
Negotiators who concede a little bit at a time do better
Negotiators who make the largest since concession do poorly

Taking those points into account, here are some concession tips:

Concede later rather than earlier
Keep track of your concessions
Tit-for-tat concessions are not necessary
Make the other party work for your concession
Don’t give in too much or too fast

Remember, conceding does not always mean giving something away. Here are some “free” concessions:

Listen attentively
Give good explanations
Be nice
Promise something for a future transaction
Share knowledge

How do you deal with concessions? Please share in the comments.

How important is it to "save face?"

To save face means simply to maintain one’s dignity. Conversely, to lose face would mean to be humiliated, or lose one’s reputation.

It turns out that face-saving is a big issue in every business negotiation. However, face-saving is a “hidden” issue.

During a negotiation, each negotiator is involved on both a professional/business level and a personal level. Some people are more prone to letting the personal intrude on the professional, and thus use a negotiation and its outcome to validate their self-worth and build their self-esteem. Clearly, for these types of people, face-saving during a negotiation because a larger issue.


Angry or hostile behavior can result when a negotiator’s self-worth feels threatened. Some negotiators shut down or refuse to proceed because their ego is at stake. When hostility arises, all parties should work to defuse the situation.

Here are some phrases that can help reduce tension:


"Obviously, this can be interpreted in several ways..."
"Perhaps there are other reasons that I am not aware of..."
"Here is some information that you probably did not have access to..."
"I understand your conclusion, but have you considered this..."

Your goal when confronted with a hostile negotiator is to minimize the hostility. Do what everyone else does: blame the lawyers! Seriously, if you can blame a third party such as someone who left the company, the accountant or someone else, it will take the ego issue off the table.

Obviously, when a negotiation breaks down because someone feels he or she is losing face it is bad news for everybody involved. At Karrass, we believe that personal attacks should be avoided. Our negotiation skills teach that you should always leave a face-saving way out for the other party.

Have you ever lost face in a negotiation? Did it affect the outcome against you?

Focus on what is important

Have you ever had a business negotiation that went south because of a bad personal interaction? Most likely, the answer is yes.

Whenever you negotiate, you are always dealing with people. People always seem to bring personal issues to the table. These issues can often make a negotiation difficult. On this blog, we’ve discussed personal issues that can derail negotiations like hidden motivations and bad tempers.

The solution is simple: focus on the negotiating issue at hand.

We came across “Deal or No Deal: The Art of Effective Negotiation,” a blog post by Keri Damen on the MaRS blog
(http://blog.marsdd.com/2009/11/16/deal-or-no-deal-the-art-of-effective-negotiation/) Damen provides some great business negotiation tips. Among them was this excellent piece of advice:

“Separate the people from the problem in your negotiations: Be soft on the people, but hard on the problem.”

It’s easy to make things personal, but we have to resist the urge to critique the person and not the idea. In a negotiation, it is important to measure the ideas being presented separately from whatever the personal issues may be.

In his book Give and Take, Chester L. Karrass quotes Benjamin Franklin, saying “there’s no such thing as a small enemy.” In that spirit, Karrass encourages negotiators to avoid personal attacks because people who feel attacked then feel they must get even. This cycle is counterproductive.

The next time you are negotiating with someone that is taunting you or that you simply don’t like, focus on your negotiation goals, be patient, and ignore the personal stuff. It will lead to a more productive negotiation.

What techniques do you use when confronted by a personal attack?

Using a 'Considered Response'

When you are negotiating, learn to discipline yourself not to provide quick responses. When the other side makes a demand, or makes you an offer, be it acceptable or not, don't respond to it with a quick 'yes' or 'no.'

Silence and Time

Use silence and time to your advantage. Once an offer or demand has been made by the other side, keep quiet and think about it for a while. Better yet, take a piece of paper and write down a few notes, or do a few calculations that only you can see -- or ask for some time to do a little research. Then, when you do provide a response, be it a yes, or a no, or anything else, your 'considered response' gives greater weight to your answer. What ever it is.

Credibility and Respect

A 'considered response' gives your response more credibility and respect.

Your 'no' becomes a stronger 'no.' You took the time to evaluate the offer, and, regretfully must say no.

Your 'yes' becomes a more thoughtful 'yes.'

A quick 'yes' leaves the other side second-guessing their offer. "We should have asked for more." They can feel some remorse. But when you take the time to thoroughly evaluate the offer, and then say yes, it tends to enhance the satisfaction of the other side.

Responding with a quick 'yes' or 'no,' often forfeits the opportunity to create a better, more satisfying deal for both sides.

Language Skills

If you are native English speaker you’ve probably never given it much thought. You’ve been able to conduct your business negotiations without the additional burden of trying to figure out idioms and usage. For those who speak English as a second language, it’s probably much more difficult.

More and more, English is the universal language of business. For instance, deals between Japan and the United States are conducted in English. But does that put the Japanese at a disadvantage?

Language is more than just knowing the words. To be fully conversant in another language, you have to understand idioms, expressions, nuance, and alternative uses for words. For instance, in English we often say sarcastically, “yeah, right!” If you just listen to the words and don’t understand the sarcasm, this could mean that everything is OK.

In business negotiations, everything that is said at the negotiating table matters. Everyone must understand what is going on and what is being said. It is essential to master the language that is being spoken. That does not mean that you cannot participate if English is not your primary language, but perhaps it will depend more on your skill level.

For people who are learning English as a second language, specifically for business, there are many resources out there. We found this website that gives an overview of useful business expressions: http://www.eslgold.com/business/useful_expressions.html

Native English speakers also have to be aware of their language during a negotiation. In this case, it is not simply about understanding the words, but understanding the other side. For instance, are you dealing with people whose culture is more polite? Then you would do well to be more polite in your language. Are you using too much jargon? Are you being grammatically correct? In short, are you making yourself understood? Here’s a helpful guide on “How to Use Appropriate Business Language.” http://www.ehow.com/how_17589_appropriate-business-language.html

Have you encountered a negotiation where language was a barrier? How did you manage to overcome the situation?

Do you make negotiating mistakes?

“The only real mistake is the one from which we learn nothing.” ~John Powell

Who doesn’t make mistakes? Nobody is perfect, and many of us may make some mistakes when we are negotiating. It’s only human, but learning to spot these mistakes may prevent them.

In his comprehensive negotiating book, Give and Take, Chester L. Karrass lists and categorizes several negotiating mistakes. Following are some to watch out for:

Power Mistakes
Underestimating your power
Assuming the other party knows your weaknesses
Being intimidated by status, statistics, precedents, principles
Revealing your power too early
Forgetting your opponent has something to gain from the negotiation

Concession Mistakes
Setting your initial demand near your final objective
Assuming you know what the other party wants
Accepting the first offer
Conceding without obtaining a concession in return
Losing track of concessions you’ve made

Closure Mistakes
Agreeing to a final agreement because of a time deadline
Being intimidated by the other parties “final” offer
Being afraid to break an impasse
Trying too hard to be liked in the final phase of negotiation

General Mistakes
Talking more than listening
Entering a negotiation with a chip on your shoulder
Discussing an issue that you have not prepared for
Not having a first-rate negotiating team on your side

How many of these mistakes have you made? Have you successfully avoided making them again?

What is your motivation?

“Every business transaction involves an exchange of motives.”(Chester L. Karrass in The Negotiating Game)

Perhaps when you enter any business negotiation your primary motivation is to achieve the best deal possible. The people your negotiating with will probably share the same motivation. However, both you and the other party probably have many secondary motivations, which are not as obvious.

Why is understanding motivation important? Motivation is what makes people tick and it shows what they really want. In Both-Win negotiations you will want to satisfy both parties’ goals, and understanding the many personal and business motivations from both sides will make it easier to achieve these goals.

Here is a list of possible motivations:
1) Wanting to feel good
2) Wanting to avoid risk
3) Wanting recognition
4) Wanting job promotion
5) Wanting to work easier
6) Wanting to do what matters
7) Wanting to be listened to
8) Wanting to be liked
9) Wanting material goods
10) Wanting to be seen in a certain way (for example, as being of good judgment, honest, responsible, smart, etc.)

Many of these motivations are psychological in nature. A good business negotiator will seek to understand these motivations, and fulfill them when possible. In this way, the other party will feel good, and will be more likely to be cooperative.

Have you analyzed your motivations when you negotiate? Do you think your opposing party understands those motivations?

Negotiating Tactics: Maneuvers

There are two types of negotiating tactics: maneuvers and techniques. In business negotiations, a maneuver helps to influence the situation in order for you to reach your goals and defend your position. Techniques are mechanisms that work to reach your goal.

There are ethical and unethical maneuvers, and you may deal with both in any given business negotiation. If your opponent lacks integrity, you may be subject to unethical maneuvers. To defend against unethical maneuvers, you must be able to recognize when these are being used.

Dr. Chester L. Karrass classifies maneuvers into six categories:

1) Timing: These set the tempo of the negotiation and include deadlines, speed and patience.

2) Inspection: To verify information you may use maneuvers such as third party access to records, open inspection of documents and full disclosure.

3) Association: Define who are friends and who are enemies. Your associations can strengthen your bargaining power. Association maneuvers include creating alliances and disassociations.

4) Authority: Authority maneuvers deal with decision-makers, and include restricting the right to make final decisions (limited authority) and using third-party authority (arbitration or mediation).

5) Amount: Maneuvers that deal with prices, quantities or degrees include making fair and reasonable offers, using bulwarism (take it or leave it) and non-negotiable demands.

6) Detours: These maneuvers are designed to reduce the amount of information the other side can gather on you. Some are decidedly unethical such as using decoys or denial. Other detour maneuvers include playing good and bad guys, the scrambled eggs maneuver and low-balling.

Do you have a go-to negotiation maneuver? Why and how do you use it? Please share your experiences in the comments.

Making Concessions

In most negotiations, both sides move from their original positions. It is wise to leave yourself 'negotiating space' when you make your initial offer.

Each side to a negotiation usually compromises by making some concessions to reach agreement. Careful concessions help guide you through this process towards a mutually satisfying agreement. Below we list some tips on things to keep in mind when making concessions.

Don't Give Free Concessions
Never give a concession without obtaining one in return. Don't give concessions away free or without serious discussion. A concession granted too easily does not contribute to the other party's satisfaction nearly as much as one that they struggle to obtain.

Craft Your Concession Wisely
Concessions that are poorly made can serve to further separate the parties rather than bring them together. A concession may serve to raise the aspiration level of the other party if it is interpreted as a signal of your weakness. Don't be too quick to give a concession, and don't 'shoot from the hip' -- think through the potential impact of any concession you give. How a concession is made is as important as the value of the concession.

Keep Count
Never lose track of how many concessions you have made, regardless of their value. The overall number is important and can provide bargaining leverage. Keep a written record of your concessions.

Stay Flexible
Flexibility is like money in a checking account. Do not use up your "bank account of flexibility." Every concession should bring you closer to some goal. If you use up all of your potential concessions your bank account is down to zero and deadlock is harder to avoid. Always look for a concession that the other side will value more than what it really costs you.

Build In a Way to Retreat
Don't feel constrained to stick with a concession on a specific issue. The whole agreement is more important than individual issues. Indicate to the other side that all concessions you give are tentative and based on a satisfactory overall agreement (i.e. "tie a string"). Some people tend to stick to interim concessions when they should not. They fear that their integrity may be questioned if they retreat from concessions they have made. Such rigidity can be costly.

Building your negotiating team

Many business negotiations take place with groups of people representing each side. It is clearly a major priority to turn a group of negotiators into a winning team.

Dr. Chester L. Karrass provides several tips on how to form a winning negotiating team.

Designate a team leader. The negotiation team leader controls the length and direction of discussions. In order to succeed, team leaders should be flexible, tactful and have good time management skills.

Team members should be specialists/experts in a given area.

Each member should be given a specific job.

Team members should like and want to negotiate. If a specialist is not “into” negotiating, don’t recruit him or her to the team, no matter how much of an expert this person is.

Engage in team planning. Planning and preparation should take place several days or weeks before the negotiation.

Closely match the other team's numbers. It is not good to be outnumbered.

Have an official note-taker on your team.

Discourage open conflict. You must present a unified front to your opposition.

There is no doubt that a well-prepared team of experts with a good leader will create a positive dynamic when entering a group negotiation.

Do you have any tips to build a winning negotiation team?

Need more information?

Buyers need information in any business negotiation. The more information a buyer has, the better his or her position. But what happens if the seller is unwilling to give up the information? Can a buyer force a seller to part ways with crucial numbers? The short answer is no, a buyer cannot force a seller to give up information.

Here is the conundrum, as set forth by Dr. Chester L. Karrass in his book Give and Take:

“Sellers should start on the basis that cost and pricing methods are nobody’s business but their own. A buyer is well advised to insist that part of the price paid is access to full cost and production visibility. He or she has the right to know what he or she is buying and why the price is right.”

Of course, how much information is exchanged depends on the parties involved. Some sellers will be more than willing to give information, especially if it puts them in a better light than their rivals. However, some sellers deal with confidential processes. The formula for Coca Cola comes to mind. Everyone knows that Coke is made from a secret formula that is considered a trade secret. Perhaps one of the ingredients is what affects the price of Coke, but in no way would negotiators for Coke ever reveal their formula. They are entitled to privacy because this information gives them an edge in the market.

In the end, no entity can force a seller to give up private information. A buyer will have to use other means to figure out whether he or she has a good deal. In fact, a buyer should probably engage in a fair amount of fact-finding before the negotiation. Buyers can study the seller’s business history, previous negotiations, financial data and other publicly accessible information.
What do you do when you need more information and your opponent won’t give it up?

Breaking the Ice

You have new members on your negotiating team. You are negotiating with people you have never dealt with before. You are at a team building exercise. In all of these situations you need to break the ice. You need to get people talking to each other.

There are many ice breaking exercises out there. They are very easy to implement and successful at getting people to talk to one another.

Before you choose an ice breaking exercise, you will have to consider:

How many people will be involved
How much time you have
Whether you will have access to materials
What your purpose is

For more tips on how to choose an ice breaking exercise, check out this article in MFTROU (Management for the Rest of Us): http://www.mftrou.com/meeting-ice-breakers.html

There are several types of ice breaking exercises, suited for different purposes:

Ask participants to share a little known fact about themselves
Ask questions such as: What would you do if you won the lottery? Have the participants share their answers.
Divide the group into pairs and have them “interview” each other. Each person will introduce their partner to the group
Play the birthday game: have all participants get in line by order of their birthday (January through December)

Read more about ice-breakers here:
http://www.mindtools.com/pages/article/newLDR_76.htm
http://nonprofitmanagement.suite101.com/article.cfm/free_meeting_ice_breaker_ideas
http://www.training-games.com/pdf/40FreeIceBreakers.pdf

Do you have a favorite ice-breaker? Please share in the comments.

Are you at an impasse?

You have reached a point in your business negotiations where neither side is willing to give an inch. You are at an impasse. How do you move beyond it? Can you move beyond it? Chances are good that you can break the impasse and reach an agreement if you understand what is causing the impasse and provide some options to move things along.

Impasses happen for many reasons, and not all of them are major. Indeed, some have to do with issues like personality differences, organizational troubles and fear of failure. In short, there is a huge human dynamics component to any impasse situation that needs to be taken in to account.

To break an impasse you have to develop a situation that allows new alternatives to emerge. To create this situation, we suggest considering these moves:

Change the team make-up (members or leader)
Emphasize the cooperative problem-solving approach
Change payment terms but not the actual dollar number
Change specifications or terms
Use humor to release stress and dissipate bad feelings
Add “sweeteners” to the deal

It may be that once the talks get moving again, and new options are put forth, that the old options may look better. An impasse may work as a way to get where you want to be, if you handle it right.

How have you broken an impasse? Tell us in the comments.

Are you a Skeptic?

Webster’s defines skepticism as “an attitude of doubt or a disposition toward incredulity in general or toward a particular object.” Skeptics like to consider, to question and not to accept things at face value.

Good negotiators should be skeptics. Why? Because negotiators need to fully evaluate what they are being told by their opposing party in order to make good decisions.

Dr. Chester L. Karrass instructs negotiators to approach evaluating the other party’s statements with these four principles:

Never take anything for granted.
Check everything.
Put everything in its proper context.
Distinguish between facts and the interpretation of facts.

The other party will present the information that bolsters their position and will leave out anything that is not favorable. As a negotiator, you must be aware of this. Figure out what information you need that may not be presented, and then ask for it. Facts, numbers, statistics can also be challenged.

In other words, question everything, including your perceptions and interpretations. A French proverb puts it rather succinctly: “Skeptics are never deceived.”

Stalled Negotiation?

Are you stalled?

Just as when your car stalls out, when a negotiation stalls you are delayed or can’t reach your final destination. In effect, stalling is sometimes used as a way to avoid reaching a deal. It is the opposite of a productive business negotiation. Some parties enter a negotiation with the intent of not reaching an agreement. Why?


Parties engage in deliberate stalling for various reasons or to achieve certain objectives that the other party is not privy to. According to Dr. Chester L. Karrass, there are several reasons that may be behind a stalled negotiation. These include:

To divert attention (similar to the smokescreen)
To tie up production or inventory
To search for information
To delay decision-making
To search for outside alternatives
To obtain more time
To cover up ulterior motives

Sometime negotiations stall for other reasons, including deadlock. We’ve discussed before how to avoid deadlock or work around it. However, when the other party enters a negotiation with the express intent of not reaching an agreement, there is no amount of negotiation skill or tactic that will jumpstart the discussions.

Have you ever been in a stalled negotiation? How did you handle it?

Rules for Negotiations

Are there rules for effective negotiations?

According to Anthony Tjan, founder of Cue Ball, a venture equity bill, there are four main rules for effective negotiations. He writes about them at the Harvard Business School blog. These are his four rules:

1) Do your homework
2) Don’t negotiate against yourself
3) Get around stalemates
4) Let the other party walk away

These are all very good tips and we have discussed some of them here as well. According to Tjan, the golden rule is the last one, willingness to allow the opposing party to walk away. Essentially, Tjan is saying one should stick to one’s guns. One should be straightforward with what one is willing to do and not to do.

Read Tjan’s article here: http://blogs.harvardbusiness.org/tjan/2009/07/four-rules-for-effective-negot.html

Dr. Chester Karrass discussed 14 rules for winning in negotiation in his book: In Business as in Life—You Don’t Get What You Deserve, You Get What You Negotiate.

Here they are:

1) Pick the best place and time to negotiate
2) Have a “plan b” if the negotiation breaks down
3) Be stingy with concessions and leave room to negotiate
4) Buyers shouldn’t give seller quick counteroffers to their asking price
5) Don’t say yes too quickly
6) Buyers should always try to get cost breakdowns and sellers should not give them
7) Don’t make the first major concession
8) Watch concessions as deadline approaches
9) Shut up
10) Be skeptical
11) Stop hoping for the best
12) Watch out for funny money
13) Know how to compromise
14) You can always find a better deal for both parties


Are there rules you always abide by when you negotiate?

Negotiator or Poker Player?

Negotiations are like a game of poker.

In an interview with USA Today, poker pro Annie Duke compares poker and business. She draws some interesting business lessons from the game. Duke won $2 million in World Series of Poker Tournament of Champions in 2004 and was recently a contestant on the TV show Celebrity Apprentice.

Here’s an excerpt, where Duke discusses negotiations:

Q: What poker tools do apply to business?


A: In poker, you look for patterns from your opponents, how they behave in certain situations. How do they behave when they're comfortable or uncomfortable? How do they play when they're drawing for a hand? How do they play when they have a made hand? Gather data on your opponents so you can predict what they actually have. Understand how they perceive you. It's an extremely important tool in business negotiations. Poker is really just a negotiation. If I know people are perceiving me to be too conservative, then I'm going to play in an unconservative manner until they readjust their perception of me.

Read the entire interview for some fascinating business insight.
http://www.usatoday.com/money/companies/management/advice/2009-07-19-annie-duke-advice-from-the-top_N.htm

Follow up on Boston Globe negotiations

After many months of labor and contract negotiations, the Boston Newspaper Guild, the Boston Globe’s largest union, has agreed to $10 million in concessions on pay and benefits. They hope this will make the newspaper more appealing to potential buyers. Read an article from WBUR here:
http://www.wbur.org/2009/07/21/globe-outcome

Fatique Impacts Negotiation Ability

We all know how it feels to operate on minimum sleep: not good. Our reactions are slower and our thinking is impaired. So it stands to reason that negotiating when you are tired is not a good idea.

Negotiating requires both physical and mental stamina. Fatigued people just don’t have the same alertness and responsiveness as if they were rested. If you are tired and your opponent is not, that increases his or her negotiating power. When you are tired you tend to make mistakes, deal with stress poorly and most importantly, exhibit faulty judgment (and as you know good judgment is one of the keys to a successful negotiation).

Sometimes fatigue results from too many late night sessions preparing for a negotiation. Sometimes, you had to take a red-eye flight to arrive at your destination. And sometimes the negotiation itself goes on too long and all parties become tired (and perhaps irritable).

Dealing with fatigue is one of the many helpful strategies Dr. Chester L. Karrass provides in his book Give and Take: The Complete Guide to Negotiating Strategies and Tactics. Dr. Karrass advises team leaders to conduct business at regular hours, and see to it that the team eats at normal times and gets enough rest.

Knowing that fatigue takes a toll, any negotiator should rest up before participating in any type of business transaction. Long weekends provide a great way to rest, recharge and re-energize.

The Sticking Point

What happens when you can’t get the other party to budge? You have reached the dreaded sticking point. In effect, sticking points are "no." Negotiators don’t like reaching "no" because it stops movement, and can derail the negotiation. Sticking points can suck the energy out of a negotiation and prolong the discussions because neither party is willing to concede on that issue.

Sticking points revolve around many issues: compensation, contract length, benefits, organizational structure, and so on. For instance, during the recent Boston Globe negotiations, a sticking point for the unions was retaining lifetime job guarantees.

Another current example involves Chrysler. Sergio Marchionne, CEO of Fiat, will now run Chrysler. He wants to combine Fiat, Chrysler and GM’s European operations. According to this Detroit News article:

(http://www.detnews.com/article/20090507/AUTO01/905070438/1409/Marchionne-to-head-Chrysler)

"Sources familiar with the negotiations, say Marchionne also wants to include GM's Latin American operations in the mix.

That is a sticking point in the negotiations -- along with the size of the stake that GM would get in the new company grouping Fiat's auto business, its prospective interest in Chrysler and the GM assets. Marchionne is proposing that GM should have around 10 percent, while GM is bound to want more, the source said."

How do you move past a sticking point?

Dr. Karrass calls these points of no agreement "sticky issues." He recommends that when you reach a sticky issue you should shift to another issue. Shifting allows the momentum to continue in the negotiation. With the momentum going, and having agreement on other issues, you will have more reasons to settle a negotiation.

How have you resolved a particular sticking point? Share your "war" stories in the comments.

Build Your Credibility

Negotiation tactics: Build your credibility

One of the most important items you bring to the table during a negotiation is your credibility. After all, if the other party doesn’t believe or trust you because you aren’t credible, then it is likely the negotiation won’t go very well at all. We always prefer dealing with people we believe or whom we trust. Your credibility backs you up.

In a negotiation, credibility is key. In the bestselling book, In Business As In Life – You Don’t Get What You Deserve, You Get What You Negotiate, Dr. Chester L. Karrass writes that "It makes good sense to bring to the attention of one’s opponent the past experience, accomplishments and special qualifications of team members." Why? Because expertise in your field automatically adds credibility to your position. Other qualifiers such as your title and educational achievement boost your perceived credibility.

Thus, to increase your credibility, you should strive to be as knowledgeable as possible about your products or services, and any issues that may affect them.

Truthfulness is also a factor in a negotiation. Your arguments could require substantiation. In order to build credibility, it is a good policy to provide facts and figures that can be checked. If something is not provable, or the numbers don’t add up, you open up a gap in your credibility.

You control your perceived credibility: By appearing professional and by providing reliable information, you can make sure others see you as credible. The more credible you are, the stronger your negotiating position will be.

Doesn't "Be Careful" mean Be Careful?

Communication is a key element in Negotiation.

If you aren't understood, there's no way to negotiate your needs and find an agreement that meets them.

You know what you mean. Making sure the other party knows what you mean is a whole different thing. Sometimes what you say can be taken to mean something else. Sometimes it can be taken to mean exactly the OPPOSITE of what you intend.

Take a look at this confusion:

http://www.huffingtonpost.com/2009/01/30/american-idol-judges-mist_n_162473.html

In a business negotiation you would certainly never want your friendly gesture to be taken as a threat. So, avoid regional colloquialisms, unless you think the other party understands or is happy to give you the opportunity to translate.

I was tempted to end this post with a made-up "saying" just for a grin, but I got nervous that, because this is not a face-to-face communication, it might not be understood or taken the wrong way. Which brings up another point: the danger of irony or sarcasm in electronically transmitted communication. Remember, when you are being facetious, you're jokingly writing exactly the opposite of what you intend. If they don't get it, it can create massive confusion and sometimes bruised feelings.

So, until next time, think about it…In a business negotiation you would certainly never want your friendly gesture to be taken as a threat.

Time Outs in Negotiations

In the USA we just held our annual “Super-Bowl” football game.

If time-outs are so critical to a football coach, they ought to be even more important during a negotiation. The stakes are far higher!

When and how a time-out, or caucus, is called can affect the final outcome. Diplomatic negotiations are usually 10 percent conference and 90 percent time-out. Most business deals reverse this time relationship. I am in favor of lots of time-outs. They make more sense than long talks and short breaks.

I have found time-outs useful for a wide variety of purposes:

* To review what was heard or learned – new information may impact your strategy, targets, or tactics.
* To think of questions
* To develop new arguments and defenses
* To explore possible alternatives before you present them
* To develop better proof statements
* To discuss possible concessions and what will be asked for in return
* To determine the best way to react to new demands
* To determine if you should make additional demands
* To consult with experts
* To check on rules or regulations
* To analyze changes in price, specifications, costs, time or terms
* To just buy you some time

A time-out gives you time to think, to make a point more effectively, to check your facts, or to show your resolve. It provides you an opportunity to get others to help you work on an issue.

Research indicates when negotiating pressures increase, tension can be reduced before a crisis develops by having short sessions and long time-outs.

Remember, never negotiate an issue unless you are prepared for it. Something unforeseen always seems to come up in most negotiations. When it does—a time-out is called for. It might just be a caucus with yourself (i.e. Please excuse me I need to use the restroom), or a meeting among your own people to discuss the new issue. Don’t “shoot-from-the-hip” and plunge into negotiating an issue you are not prepared to negotiate.

Integrity in Negotiations

A negotiation is more than a discussion of issues or a signed agreement. It is an unwritten judgment on the quality and character of the participants. In reaching that judgment, integrity is the key element.

Integrity makes the deal work. There is no substitute for it.

The absence in integrity cannot be offset by intelligence, competence, or tight legal documents. Without integrity, no deal, however carefully written, is worth much. Built into the transaction must be a high sense of values, the generosity to resolve subsequent difficulties equitably, and a commitment to meet the intent of the agreement. Integrity is always a big part of the price. Wherever it is lacking, you will find yourself shortchanged.

What is a Bogey?

The term 'Bogey' is used in the game of golf, and in the military. It is also used in the Karrass Effective Negotiating Seminar. What exactly is a Bogey?

There are several definitions of the term bogey (also spelled bogie). In the context of negotiating this term refers to a target, a false target, or a decoy. In technology the term may be used to refer to a false blip on a radar display. The term is used to describe radar echoes that occur for unknown reasons, especially in the military, where such a signal might indicate hostile aircraft.

There are two types of bogey: those that occur because of some real but unidentified or irrelevant object, fact, or statement (real bogey), and those that occur as a result of no concrete external object or fact (imaginary bogey).

In technology, a "real bogey" can be caused by an aircraft, a missile, and a flock of birds, a tall ground-based metal structure, a balloon with a large payload or a radar-reflective coating. In the military, a real bogey is sometimes produced by dropping myriad scraps of metal foil from high-flying aircraft, producing diffuse echoes that blind enemy radar over large regions.

An "imaginary bogey" can occur because of an external signal having a frequency and pulse rate near, or identical to, that of the radar's internal transmitter. When the radar receiver picks up the offending signal, it cannot differentiate between that signal and a true echo, so a blip appears on the display. This is how radar jamming works. The blip might exhibit fantastic velocity or acceleration as viewed on the radar display.

In computers, bogey signals might conceivably arise from a specialized virus or Trojan horse, or from the activities of a brilliant but malicious hacker.

In negotiations, the bogey is a target which may be real or imaginary. A bogey asks for help. "I'd love to pay you the hundred thousand that you want, but the only problem is I've only got eighty thousand dollars. Help me."

Asking for help is a powerful tactic in negotiation. "I would love to do what you're talking about; I want to make an agreement, but you got to help me."

Asking for help strokes the ego of the other person. The other person has knowledge that you don't have. They may know of possibilities of helping you that you never thought of. Sellers almost always know more about alternatives for using and making and changing their products than any buyer ever dreamed. The reason is that sellers do it all the time. They do it for one customer and another and another and another. Ask for a seller's help, it raises their ego, and they come up with alternate solutions. Those alternate solutions become the beginnings of a both win possibility.

Using a bogey, "This is all I've got." May not always lead to a lower price, but in most situations it will generate more information regarding the transaction and a greater ranges of choices.

I hope this helps in your understanding where the term Bogey came from. Now learn how to use it in your next negotiation!

“Aim higher to do better” Revisited

It always amazes me when something we have been teaching as a simple truth for a long time becomes someone else's revelation.

From Business Week, September 10, 2007: "A new study conducted by professors at leading MBA programs suggests that most negotiators don't realize how much they are leaving on the bargaining table." (Because they didn't aim high enough)

The professors divided nearly 300 students into buyers and sellers of motorcycle parts. After three separate negotiations of 45 minutes each, the professors compared the outcome with what each party had predetermined to be their limit. "The professors discovered that each side underestimated how much the other party was willing to bend, with the result that each party reckoned it got the better end of the negotiation."

"The buyers, for instance, thought they had hit the seller's bottom figure, when in fact they still overpaid by a wide margin."

The professors logically concluded that you should lead with an aggressive bid, and then give in slowly. "…the costs more than outweighed by the possible benefit."

This is always good advice as long as we remember that aiming higher takes into consideration the current market place, the nature of the relationship and does not mean to aim stupid to do better.

Jim Sauerwein

Summarize

Appropriate use of the summary:

In the face of a deadlock, where both parties seem to be becoming intransigent in their position, try summarizing, "Let's see what we have achieved so far……."

The purpose of summarizing is to show the other party that, even in the face of a conflict, we ARE moving toward an agreement.

When you are ready to close the negotiation and the other party seems to be dragging their heels, try summarizing all that has been accomplished, then suggest that it looks like a good agreement for both parties, ask for their agreement and close.

If the other party does not accept your closing gesture, immediately ask what it is specifically that is keeping them from saying "Yes". Isolate that objection, deal with that issue, summarize and close again.

Jim Sauerwein

Building a Dossier to Negotiate Better Next Time

When learning to negotiate with another party, it is important to discover their personal negotiating characteristics. At the same time the knowledgeable negotiator on the other side of the table is learning how to deal with us.

Even though we try to do business only with cooperative business partners, the old military admonition, "Know thy enemy." Certainly applies.

Here are a few characteristics that will be useful to understand your other party's approach to negotiation:

• What range to negotiate do they leave themselves? In other words, historically, is there a consistent pattern from where they open to where they close?


• Concession valuation: It was interesting to learn that not everyone values concessions the same way. Some count concessions, while others look at the total value of the concession.


• People who count concessions are bargainers who are very comfortable with the tit-for-tat approach. Dr. Karrass reminds us that if we must give a concession in return, make sure it is less costly than the one gained.


• How does the other party respond to deadline?


• Can we believe their deadline?


• How good is their planning?


• How is their team synergy?


• Do they use ploys like Good Guy-Bad Guy?


• Does the boss come in at the eleventh hour as the bad-guy?


• How much emotional content do they use in the negotiation process?


• Do they have non-verbals that signal a willingness to close?


• Is there someone on their team who talks too much?


• How well do they honor agreements once they have been made?

These are a few ideas on reviewing and recording at the end of this negotiation to learn how to negotiate with the same party next time.

Quote: "People tend to replicate behavior which has proved to be successful in the past." Chester Karrass

Skepticism Pays

A good negotiator must be skeptical.

Not because the other party may be trying to be deliberately unethical or dishonest (although that may happen on rare occasions) but because when you take a skeptical approach it gives you the opportunity to avoid misunderstandings. You often discover items or issues left out of the negotiation which may come back later and cause major problems between you and the other party.

Being skeptical will also help you avoid making wrong assumptions and give you more opportunity to find out what the other party really needs. This allows you to reach better, longer-lasting agreements. The approach to evaluating what you are told by the other party can be summed up in four principles:

Never take anything for granted.

Check everything – and don’t forget to validate all your assumptions.

Put everything into its proper context – size, time, importance, today, past, future, etc.

Draw a sharp line of demarcation between facts and the interpretation of facts – validate your interpretations.

As you conduct your negotiation use these principles. You will be better prepared to create a better agreement.

Negotiating: Breaking An Impasse

You did everything right, yet you find yourself at an impasse with the other party.

What do you do now??

Too many negotiations break down for the wrong reasons. Impasses are not always caused by world-shattering issues or great matters of economics. Many breakdowns are the result of simple things like personality differences, fear of loss-of-face, troubles within the organizations, a poor working relationship with the boss, or the sheer inability to make a decision.

Any consideration of how to break an impasse must take into account the human factor. It may not be what you do, but how you do it that becomes the critical factor. Here's several moves that may be useful in averting or breaking an impasse:

1. If the impasse involves money – offer to change the shape of the money. A larger deposit, a shorter pay period, or a different payment stream works wonders – even when the total amount of money involved is the same.

2. Change a team member or the team leader.

3. Eliminate some of the uncertainty. This can be done by postponing some difficult parts of the agreement for renegotiation at a later time when you have more information.

4. Change the scope of risk sharing. A willingness to share unknown losses or gains may restore a lagging discussion.

5. Change the time scale of performance. Maybe it’s OK to complete 60% over 4 months rather than 3 months. It might be easier to start slower and still complete the job within the desired timeframe.

6. Assure satisfaction by recommending grievance procedures or guarantees.

7. Move from a competitive mode to a cooperative problem-solving mode. Get engineers involved with engineers, operations people with operations people, and bosses with bosses.

8. Change the type of contract: fixed price, indexed or scaled price, time and materials, percentage of savings, percentage of increased sales, and percentage of profit created.

9. Change the base for calculating percentages: a smaller percentage of a larger base or a larger percentage of a smaller but more predictable base may get things back on track.

10. Create a list of options or alternatives that need to be discussed. Or change the order of discussion.

11. Suggest changes in the specifications or terms.

Impasse breakers work because they re-engage the other party in discussions with his or her organization and team members. These icebreakers help create a climate in which new alternatives can be developed. Surprisingly, sometimes the introduction of new alternatives has the effect of making old propositions look better than ever.

Try to pre-plan a face-saving way to reopen discussions should an impasse occurs. If you set the stage before the impasse sets in, you are in a better position to handle the problem.

Negotiating: Agreements - Understandings - Procedures

A procedure is a way of doing something.

An understanding is an expression of mutual viewpoint and attitude on an issue.

An agreement is a conclusive commitment to mutually acceptable terms.

You're probably wondering what difference all this makes. After all, isn't a deal a deal?

When you're negotiating it is not enough merely to reach an agreement. Even when two parties have the best intentions, agreements break down for a variety of reasons. Breakdowns occur because those responsible for implementing the agreement often do not understand the common viewpoints, attitudes, and backgrounds that brought about the agreement. Sometimes the breakdown occurs because neither party knows how to make the agreement work or how to prove that it is or is not working.

A good agreement should not only spell out the work and dollars involved, but also the understand behind the written words and a procedure for measuring cost in the event that additions or deletions of work occur. A poor contract would leave us bickering about whether the quality level achieved met our verbal understanding and whether costs were being accumulated fairly.

The next time you are in a negotiation, better say to yourself, "It is not enough just to reach agreement on terms. Are there any understandings and procedures that ought to be laid out in detail right now, while they are fresh in our minds?"

Negotiation Assumptions You Make

When in a negotiation, never trust your assumptions. They are likely to be as wrong as right.

If you are negotiating to sell something, be careful with your assumptions. Don't make assumptions like:

"She'll never pay that much"

"There's a lot of competition"

"He doesn't have enough money"

"They don't want to do business with us after the last mess-up"

"I'm sure we're not the low bidder."

Such assumptions can defeat you before you start negotiating; these assumptions lower your expectations; influence the outcome of the negotiation; and may, in fact, be dead wrong.

If you are buying something, your assumptions can:

* Cause you to make high offers when low ones are called for.

* Influence you to make low demands and quick concessions when opposite actions are warranted.

* Seduce you into believing deadlines when patience is by far the better course.

* Create potential hurdles that can move you in the wrong direction.

Don't fall in love with your assumptions. You need to check them out in the interchange of information that comes out of the process of negotiating. Your assumptions are neither right nor wrong until proven so.

"The Behavior of Successful Negotiators"

In "The Behavior of Successful Negotiators" by Neil Rackham we learn specific characteristics of successful negotiators.

Forty-eight successful negotiators were studied over 102 separate negotiating sessions. Their approach and behavior was recorded and compared to a similar sample size of negotiators considered average.

Here are some of the characteristics the Huthwaite Research Group, Ltd. found in successful negotiators:

• In planning, successful negotiators gave over three times as much attention to common ground areas rather than conflict areas.

• The skilled negotiator showed twice as many comments on long term concerns rather than short term.

• Skilled negotiators were more likely to set upper and lower limits while average negotiators were more likely to plan around a fixed point.

• ".....skilled negotiators made immediate counter - proposals much less frequently than average negotiators."

• "The researchers found that skilled negotiators tended to give an advanced indication of the class of behavior they were about to use, instead of just asking, "How many units are there?" They would say, "Can I ask you a question? -- How many units are there?" giving a warning that a question was coming."

So there are a few ideas, and perhaps a good checklist for you to evaluate your negotiating behavior.

Jim Sauerwein

Mark Twain on Negotiating

Back to the subject of helping the other party earn their outcome:

In The Adventures of Tom Sawyer, Mark Twain tells us of Tom getting his reluctant friends to paint Aunt Polly's fence.

You all know the story, so I'll just remind you of the lesson it teaches. In Twain's words, "He had discovered a great law of human action, .....namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to attain."

Quick and easy negotiations often sow discontent in the mind of the other party. Satisfaction is what we are seeking!

Jim Sauerwein

Outnumbered?

I suspect every experienced negotiator has been caught by surprise when the other party turned out to outnumber them significantly. An attempt to intimidate is the usual reason we suspect for the imbalance in numbers.

Let's look at some of the reasons for being outnumbered that actually work to our advantage:

• This negotiation is extremely important to the other party.

• The other party is unprepared.

• The outcome affects multiple departments in the other party's organization.

• They are all present to protect individual parochial interests.

• It takes eight of them to make a decision.

• You have them scared.

• You will become a mentor during the negotiation; they are here to learn from you.

• You buy a good lunch.

Each of those reasons provides you the opportunity to say, "Oh boy! Look at all of them; how great for me!"

Jim Sauerwein

Why Bother?

Often we are asked, "Why bother with all this negotiating stuff? Just lay your offer on the table; they will either accept it or they won't." If the world were perfect and everyone thought the same way, this would be a very efficient approach.

In negotiations involved in long-term relationships, we hope to achieve satisfaction, not only from the outcome, but from the process of negotiation.

Richard Shell, in his wonderful book, Bargaining for Advantage, cites a study where three variables strategies were tested:

1. Start high, then refuse to move.

2. Start moderately, then refuse to move.

3. Start high, then gradually concede to the moderate point.

"The last strategy was the most successful by far. More agreements were concluded using this strategy. The parties employing the third strategy made more money per transaction than did those using the first two. And, the people who faced negotiators using the third strategy reported much higher levels of satisfaction with their agreements than did people who faced those who refused to move."

Shell concludes, "Concessions are the language of cooperation."

Jim Sauerwein

The Best Negotiators?

Years ago I asked a seminar group to identify the best negotiator they had ever met. There was no response, so I suggested they think of a short person. Finally someone ventured, "You mean a kid?"

That was the answer I was seeking. Think of a brand new baby. How long does it take that child to discover their negotiating power?

Think of some of the characteristics of a good negotiator:

• Identify sources of power. Every infant learns to trade quiet and serenity for food, holding, walking, changing and adult babble.
• Aspire a little higher to do a little better. Children are never reluctant to ask for more than they believe they will get. A parent sits there and wonders, "Why did she ask for that: she knows I will say "NO"? The child, however, is thinking, "Ya never know!"
• Precondition the other party. Have you ever had a child open a negotiation with you by using this preconditioning: "I know you're going to say NO, but....."? Or, "All of my friend's parents are letting them go to that party next Saturday" Have you ever been preconditioned for a bad grade in math by learning about the wicked witch of algebra just before the report cards are issued?
• Get something in return for a concession. Does this sound familiar: "If you let me do....., I'll do.....for you."?
• Control the first concession. Every child understands that if the parent makes a large first concession it is usually a sign of weakness, guilt, or a need to get this negotiation over quickly. This encourages the child to ask for more.
• Be willing to take on higher authority. The higher authority in any two-parent family immediately becomes the one who has not said "NO" yet.

These are but a few of the intuitive negotiating characteristics a child brings into the world with them. Consider this: You were that child once; what happened?

Jim Sauerwein

Note from the Author . . .

We are very pleased with the readership of this site, but we would like to ask a favor.

If you don't have a comment on a particular article, how about a question regarding negotiation?

Perhaps you would share with the readership a difficult negotiating problem you have or are encountering.

We would like to hear from you. Is there a topic you would like us to discuss?

Jim Sauerwein

As you know . . . .

In a website called Paul's Tips the author states that the easiest people to fool are often the smartest because they either don't think they can be conned or they can't admit, "I don't know..."

The author states, "As soon as you start hitting people with technical terms, fancy graphs, famous names and the like, you'll immediately increase your credibility. It they are smart, they're even more likely to find themselves nodding in agreement. Many intelligent people would rather cut off a finger than admit they don't know what you're talking about."

One of the thinking traps we worry about is the "As you know..." trap. Negotiators must be very cautious when the other party begins their persuasive presentation by stating, "As you know..." then continues to make their point. Ask yourself:

• Do I know that to be true?
• If I know the statement to be true, does it create proof?
• Is the point relevant to our discussion, or is it meant to impress?
• If the other party's point does not meet these criteria, be willing to stop their presentation and gracefully ask for proof.

Jim Sauerwein

POWER -- An Analogy

Analogies are such a good way to understand concepts. Here is an analogy I like:

Consider the bullfight. There are basically two participants, the bull and the matador. The bull has nearly all the physical power. Who usually wins? The matador. Why?

The matador is the player who brings planning and strategy into the process. So it is in the negotiation process!

Ready, AIM, fire

Jim Sauerwein

Favorite Negotiating Books

Every week or so, I am asked what my favorite negotiation books are. Of course Karrass' classic, The Negotiating Game will always be my favorite. Here is a list of some of my other favorites:

• Bargaining for Advantage by Richard Shell, Viking

• Smart Bargaining by Graham and Sano, Harper House. This one is out of print, but Amazon always seems to have a few used ones.

• What They Don't Teach You at the Harvard Business School by Mark McCormack

• Bargaining for Results by John Winkler, Pan

• Friendly Persuasion by Bob Woolf, Putnam (Good for sports fans)

• Getting Past NO by W. Ury, Bantam

• The New Negotiating Edge by Gavin Kennedy, Nicholas Brealey (pub)

• Getting to YES by Fisher, Ury and Patton, Penguin

• Beyond Negotiating by Carlisle and Parker, Wiley

• On Negotiating Mark McCormack, Dove

• Think Before You Speak Lewicki, Hiam, Olander, Wiley

• Getting Ready to Negotiate by Fisher and Ertel, Penguin

Of course, Harvard Business School always publishes good compilations. Some that I have read recently are: Negotiation, On Mergers and Acquisitions, and On Negotiation & Conflict Resolution.

Jim Sauerwein

Take It or Leave It.

You believe you are reaching a satisfactory agreement, if you could just get a couple more concessions…… All at once your other party pounds the table and tells you empathetically, "Look, I'm not giving you anymore, so take it or leave it!"

How do you respond? If we are not careful, our auto-response might be to tell the other party what he can do with his offer. That would lead to entrenchment and nobody wins. Here are three more constructive responses to TIOLI:

• Summarize and discover: "Gosh, Joe, I thought we were doing quite well today; why has it come down to "take-it-or-leave-it now?" If you can get an explanation as to why your other party thought TIOLI was appropriate, you can rebuild momentum by working through their reasoning.
• Isolate the objection: "Jill, does it have to be take-it-or-leave-it on all three of our remaining issues, or is there one specific item you absolutely must protect?" Perhaps you can give on the mandatory issue in exchange for the issues which may be less critical to the other party.
• Buy some time: "Does it have to be take-it-or-leave-it right now or can we have a couple of days to think this through?" Anytime you can affect the time of the other party's pressure play, you will reduce its effect. Also, time will allow you to re-plan, influence their influencers and allow any emotional content to dissipate.

Many professional negotiators believe that "Take it or Leave it" is a poor choice, but that doesn't mean we won’t encounter it. It is better to be prepared to handle this infamous approach.

Jim Sauerwein

What Is Profit?

The next time someone tells you that they have to make a reasonable profit, begin the discovery process to learn their definition of the word Profit.

Do not assume that their definition of profit is the same as yours.

• In a volume dependent manufacturing business profit might mean keeping the production lines running at full capacity 20 or 24 hours a day. A higher volume passed over the same fixed costs will make all of the business more profitable. Your volume may make your partner’s business more profitable overall.
• Profit might be in helping a commissioned salesperson achieve his/her quota for this reporting period. There were times in my marketing career when I would reduce the price a little for the sole purpose of helping a salesperson achieve quota. That was a profit in morale.
• Profit might be defined as boxing the competition out of a big order. I know company presidents who will "steal" an order from the competition just to win a contest. Is there such a thing as profit in ego?
• Those selling organizations which consider market share a primary target will take a lower profit to enhance their market penetration.
• Reducing a price to entice a first-time customer to try a new product or service is no more corrupt than your grocery store offering "loss-leaders" to get you into the store.
• Lowering the price on a unit of capital equipment in order to create an after-market for spare parts, service parts and consumable items is no different than Gillette offering us a low- price razor handle to insure a high volume on their most profitable item --- the blades. Think about the price of Hewlett-Packard printers in relation to the price of the replacement cartridges.

What is profit? Before your next big negotiation, discover how your other party defines profit, then help them succeed by doing business with you.

Jim Sauerwein

First Concession In Negotiation

When negotiating expert Chester Karrass did his original doctoral research on negotiations, he found that people who made the first significant concession tended to lose the negotiation. That result, of course, yields a very good rule for making early concessions, but it doesn't help us understand why that rule is a truth.

Enter the philosopher, Aristotle who wrote a treatise called Rhetoric wherein he established the steps to becoming persuasive. Aristotle states that the first step to becoming persuasive is to establish in the other person’s mind the completeness within which you believe in your argument.

Aristotle called this credibility ETHOS. He defined ETHOS as establishing the credential of the idea. In other words, if I want to change your mind to my way of thinking, I must first convince you that I fully believe in it.

In combining Karrass with Aristotle we understand the 'what' and 'why'. We make our first concessions small and reluctant to convince the other party that we are serious about our proposal. A large concession ruins the credential of the opening.

If I offered my pen to you for $1.00, then, under your pressure I dropped my price to $0.75, wouldn’t you conclude that I wasn't serious about my initial offer? Aren't you now thinking, "I'll hold out for $0.60; if he came down that much in one concession, there has to be more."

Our ideal first concession should be large enough to invite the other party into the process of negotiation, yet small enough to maintain the integrity of the first offer.

JSauerwein

Patience

I was recently conducting a negotiating seminar and was asked to talk about "tricks to learning patience". Sadly I was out of 'tricks', but here are some ideas that can improve every negotiator's ability to be a little more patient.

Recognition: We are not a patient culture and that characteristic certainly shows up in how we negotiate. When other cultures write about how to negotiate with Americans, one consistent point is to use our impatience against us. A sentence in a Japanese book on how to negotiate with Americans offers this advice: "It is a given that the American negotiators will make their flight."

There is an old cartoon showing a woman kneeling in prayer. This is her prayer, "Lord, please grant me patience and I want it NOW!"

Our culture is replete with sayings like: "Cut to the chase.", "Time is money!" and "Quit beating around the bush!" Here are some sayings to replace those:

• "The longer I take, the more I make." (old sales training saw)
• "Patience brings to the fore what nothing else will." ( Emerson)


• "Patience is bitter but its fruit is sweet." (Rousseau)
• "Slow down, you're going too fast; you gotta make this (negotiation) moment last." (Song from long ago)

Awareness:

We have such a strong tendency to focus on our own deadlines that we forget that the other party has deadlines also. The more we recognize the existence of the other party's deadlines, the more we will negotiate with equity on that point, the easier patience is to employ.

Permission: What we see as patience our boss may see as procrastination. We all must be able to negotiate up the organization to gain permission to be patient. Be prepared to explain to your boss his or her benefit to be gained by your patience.

If your next negotiation is going to establish the foundation for a long-term relationship, take the time to:

Discover the real needs of the other party.

• Allow the other party to disclose how they measure success and satisfaction and how they are measured by their organization.
• Avoid the "Quickie" deal which might ruin the satisfaction which should be derived from the process of negotiation.

Remember: How can we form an agreement that stands the test of time when our process doesn't stand the time test?

JSauerwein

Acceptance Time In Negotiation

OK, so what's with all this pressure to make a quick decision on this new CRM software package?

Maybe it will be better than what we have now, maybe it won't -- but in this case, I'm not going to make a quick decision.

Many negotiators overlook the importance of acceptance time. Like most people, I need a little bit of time to accept anything new or different -- unless of course I thought of it and it's my idea that I'm promoting.

In any negotiation both parties walk into the negotiation with what may be somewhat unrealistic goals. Each party might have misconceptions and bad assumptions. During the process of negotiation -- and that's what all of us so often forget (negotiation is a process) -- we discover that some of our expectations may not be met. Some of our wishes go away and some things may be impossible at this point in time.

The low price hoped for begins to look impossible. The quick, easy sale suddenly does not look so promising.

Can we as negotiators expect the other party to adjust and accept new and undesired realities immediately? Of course not. Resistance to change is universal. It takes time to get used to ideas that are foreign or unpleasant. We can even get used to the idea of death given a long enough period to do so. Acceptance time is as important in negotiation as it is in life.

A buyer needs time to accept the thought that they will have to pay a higher price than planned. A professional seller is not ready to retreat from their price in the first few minutes of negotiation. Both the buyer and seller, and their respective organizations, need adequate acceptance time. This is why the perceptive seller tells a buyer of a possible price increase long before it happens. It gives the buyer and their organization time to reconcile themselves to the idea.

When you ask people to change new ideas for old, you are asking that they discard old friends. Right or wrong, they have grown accustomed and committed to them. Put yourself in their position. Is it not logical that they will be more receptive to your viewpoint or proposal if they are given the time to adjust?