Negotiating Pressure

It's a fact: Identifying the pressures on the other side increases your negotiating power and strength.

The current economic climate and ongoing political unrest around the world is creating pressure on many negotiators. Decisions are being delayed. Buyers are being asked to bring costs down. Salespeople are being asked to increase volumes and margins. Engineering and manufacturing professionals are being asked to increase plant efficiencies. Managers everywhere are being asked to do more with less.

Any given negotiator is probably felling pressure from a variety of sources.

Now, more than ever, you must remember that in any negotiation there are pressures and problems on BOTH sides.

Yet, its only human nature, we almost always focus on our own problems and pressures and forget about the other side.

One of the key concepts discussed in the Effective Negotiating seminar is -- "You've got more power than you think." Just the recognition of the pressures on the other party will increase your power and strengthen your negotiating position.

You know your needs -- your pressures. The other party also has needs, which they feel as their pressure. Remember to ask yourself that key question -- "What's on their sheet?" This will help you identify the other party's pressures.

With this information use your negotiation as a tool to help find opportunities for a Both-Win solution--an agreement that takes the pressure off both you and the other side.

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

The Circle of Discovery

Most students of the negotiation process agree that the best negotiators will perform a thorough process of discovery prior to sitting down with the other party.

The process of discovery itself requires resolving some internal concerns, such as:

1. How much do I really need to know? (In the next article we'll discuss some of the characteristics of the other party it would be helpful to know.)

2. What is going to be the best approach to discovering each of these points of information?

3. When does it become too much to ask?

4. When should discovery start?

5. Who, in our organization should be assigned each of the points to discover?

6. How will we verify the information we do discover?

7. Who in the other party's organization will we use as a source?

8. How can we deal with our people's philosophy toward discovery?

Now, hold a mirror up to the above list and prepare your organization for the other party's discovery process:

1. What is safe and / or appropriate to share with the other party? Some of these issues must be made available to create the best agreement possible for both parties.

2. What is the best way to disclose?

3. Who is the most appropriate person to disclose vital information?

4. How do we train our vulnerable people to not disclose information we do not want disclosed?

I will never advocate lying, but it is imperative your folks have permission to not answer a question! Here are some ideas on how not to answer a question and still maintain our integrity:

· "Wow, great question, but that answer can only come from Penny in Engineering."

· "Why is that important to you?"

· "I am not authorized to answer that question."

· "You know, we used to provide that type of information to trusted folks, like yourselves, but then we realized that our friends changed jobs, and their replacement never seemed to have the same level of confidentiality as the first person. Pretty soon our propriety information became street knowledge. Now, after being burned a few too many times, no one in our organization is authorized to disclose this type of information."

Some relevant quotes for you:

Remember, a loose woodpecker inside of the ship may be a greater danger than all the storms on the outside.

"I have never been hurt by what I didn't disclose, but I have oft regretted what I did say."

"It is better to remain silence and be thought of as a fool, than to open your mouth and remove all doubt."

"Silence creates confidence in your position."

"Wise folks speak when they have something to say and fools talk when they have to say something."

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 Understandings and Agreements

An Understanding is an expression of mutual viewpoint and attitude on an issue. An Agreement is a conclusive commitment to mutually acceptable terms. And a Procedure is a way of doing something.

You're probably wondering what this has to do with negotiating. What difference does it make? After all, isn't a deal a deal?

When you're negotiating it's not enough to simply reach 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 what is, or is not working.

A good Agreement should not only spell out the work and money involved, but should also discuss the understanding behind the Agreement and a Procedure for measuring cost in the event that additions or deletions of work occur. A poor Agreement simply leaves the parties bickering about whether verbal understandings are being met and whether costs are 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 documented in detail right now, while they are fresh in our minds?"

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

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

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