Tag archive: dr-chester-l-karrass
Telephone Negotiations
Should you negotiate on the telephone?
How and when should you negotiate on the phone?
Let’s start with the when.
According to Dr. Chester Karrass, “a phone negotiation is the ultimate quick-deal maker.”
Here are some situations when the phone works best:
• You are dealing with a hard-to-reach person
• You want to say no easily
• You don’t want to seem concerned
• You want to sound tough or resolute
• You want to keep the discussion short
• You want to equalize your status
• You want to limit the amount of information
• You want to talk more, listen less
• You are prone to interrupting frequently
• And last but not least , you want to keep costs low (no flying a team across the country)
Let’s discuss how to negotiate effectively over the telephone.
The first rule is the rule for all negotiations: be thoroughly prepared, and be better prepared than the other party.
A few dos:
• Make a checklist to avoid omissions
• Take notes during the conversation
• Confirm agreements by repeating them back in your own words
• Have a ready excuse to break off the conversation
• Talk less to get the other party to talk more
A few don’ts:
• Don’t start a phone negotiation when you know you won’t have time or you are in the middle of other things.
• Don’t multi-task during the phone call. Remain fully engaged in what is being discussed during the call.
• Don’t start a conversation unless you know your issues and you have a position on them
• Don’t be afraid to call back if there are errors in your calculations or you decide you want to revisit an important issue.
Risks:
• When on the phone you can’t look the other person in the eye to determine their emotional reactions to what you are saying. The message you think you are sending might not be the message they are receiving.
• You may end your call thinking you have agreement when you really have no agreement from the other side.
• If you use your cell phone you may not have the opportunity to write down the results of your call until later. When you do document what happened on the call, what you write down may be different from what was actually agreed to.
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Strategic or Tactical Negotiation?
When you enter a business negotiation, chances are you have thought about what you want to achieve. Perhaps you have even planned for the negotiation. But are you being strategic or tactical?
Many people trip up on the difference between strategy and tactic, and the easiest way to explain it is that tactics are what allow you to achieve your strategy.
Dr. Chester Karrass talks about three types of planning:
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- Administrative planning: Focused on providing information to teams/individuals to ensure the outcome of both strategies and tactics.
- Strategic planning: Focused on achieving your long-range goals
- Tactical planning: Focused on getting the best results from a specific negotiation
Negotiation = Entrepreneurship?
Do you have to be a negotiator to be an entrepreneur or do you have to be an entrepreneur to be a negotiator?
There is synergy between these two roles. Merriam-Webster defines an entrepreneur as “one who organizes, manages, and assumes the risks of a business or enterprise.” According to Dr. Chester Karrass, good negotiators have a high need for achievement.
To achieve, it could be argued, you have to be ready to take risks. The overlap between an entrepreneur and a negotiator comes down to assuming risk. So, people who do best in negotiations are hungry for success, and are willing to take a risk to reach that success. Ditto for entrepreneurs.
It is not really surprising that good negotiators are entrepreneurial, because what they are doing is putting themselves out there in a bid to succeed. So, you don’t have to an entrepreneur to be a negotiator, but you must be entrepreneurial.
According to Lyve Alexis Pleshette, writing in the PowerHomeBizcom website, there are five skills every entrepreneur needs:
1. Sales and marketing skills
2. Financial knowledge
3. Ability to self-motivate
4. Time management skills
5. Administration skills
To those very necessary skills, we would add negotiation skills. Entrepreneurs will not succeed in getting their businesses off the ground if they don’t negotiate for what they want.
Conversely, perhaps learning the skills of negotiation also increases your entrepreneurial spirit. As you become a more confident negotiator, you will also become more able to identify what you want and how to get it.
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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:
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- 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 consessions, 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 deadlines?
- 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?
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.
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Lying during a business negotiation?
Business negotiations are similar to poker games in that you don’t reveal all your cards to the other party (player). But, there is a vast difference between not revealing information and willfully providing the wrong information.
One move—bluffing—is ethical and the other move—lying—can be unethical. Dr. Chester Karrass says the following: “Discretion in making claims and statements should not be confused with misrepresentation.”
You should not allow your side or the other party’s side to engage in lying. Dr. Karrass recommends the following policies:
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- Never condone lawbreaking, lying or gross misrepresentation.
- Make your team sensitive to the important of avoiding the above.
- Only hire ethical people for your team.
you will sometimes encounter negotiators who feel comfortable lying to you. To reduce the likelihood that you’ll face deceptive tactics, try prefacing important negotiations with a discussion of ethics. Tell your counterpart that you intend to behave as fairly and truthfully as possible, and ask him to do the same. When you do catch someone in a relatively minor lie, consider discussing the matter directly to see whether you feel comfortable moving forward. If the lie is significant and trust seems beyond repair, walking away may be the best choice.How do you deal with lying during a business negotiation?
Something for nothing
Any experienced business negotiator, or indeed any experienced person, knows that there is something is wrong when you are getting “something for nothing.” We are all familiar with the adage “if it sounds too good to be true, it probably is.”
In business negotiations, it is OK to throw in extra value (we’ll give you free shipping or 45 days credit, for example) but when an offer sounds too attractive, you may be dealing with the “shyster tactic.” A shyster is someone who obscures his/her purposes by using verbal/legal smokescreens. A shyster tactic is unethical and it involves luring the other party with a deal that is very attractive into a never-ending negotiation.
Dr. Chester Karrass tells us that the shyster will make and break verbal agreements—using a variety of tactics such as claiming a misunderstanding or using the missing-person technique. A shyster will be cordial until the agreement is signed, and then the trouble will begin. Costs will not be what you thought or there will be endless delays in delivery.
Dr. Karrass says: “Shyster tactics work because people like a bargain and don’t want to work very hard. They get lured into the ‘something-for-nothing’ trap.”
How do you deal with the shyster tactic? First of all, remind yourself that “if it sounds too good to be true, it probably is.” Second, if you detect any signs of bad faith or a whiff of unethical behavior, turn and walk away.
Have you been taken in by a shyster? Tell us your experience.
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Take it or leave it?
Many times during a business negotiation we are tempted to say to the other party “take it or leave it.” Generally, this happens when we are frustrated or have been going around the same issue for a long time. The truth is that “take it or leave it” is a good tactic in several situations. Sometimes you do need to issue an ultimatum.
According to Dr. Chester Karrass there are at least five situations where it makes sense to use the take it or leave it tactic:
1. When you don’t want to encourage further tinkering with a deal
2. When if you drop the price in this negotiation it will affect your pricing overall
3. When the other party can’t afford to leave it.
4. When all customers are accustomed to paying the price
5. When you can’t afford a loss.
The problem with using the “take it or leave it” tactic is that it can create hostility, as the other party feels backed up against a wall. To minimize the potential for bad feelings, make sure to not use the actual phrase “take it or leave it,” which is pretty charged. Find a way to say this without using those words. Also, watch your timing. It is best to use this tactic later in the negotiation than earlier.
How often do you issue this ultimatum to the other party? Do you find it works?
Karrass wishes our readers in the United States a very pleasant and relaxing Labor Day weekend. We will be back here on Wednesday, September 7th with more insights and tips on business negotiations.
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