- Do not underestimate your negotiating power. Most people tend to have more power than they think. Make a systematic analysis of your power -- understand your strengths. Your negotiating power rests on a foundation of more than just competition or financial matters. Your commitment, knowledge, risk taking, hard work, and your negotiating skill are also real sources of power. Don't assume the other party knows your weaknesses. On the contrary, assume they do not, and test that assumption. You probably have more power than you think.
- Don't be intimidated by status. We all become so accustomed to showing deference to titles and positions that we carry these attitudes into the negotiation. Remember that some experts are superficial; some people with PHD's quit learning years ago; some people in authority are incompetent; a specialist may be excellent in their field but without skill in other areas; learned people, despite high positions of power and authority, sometimes lack the courage to pursue their convictions, or sometimes don't even have a strong conviction on the issue being negotiated.
- Remember not to be intimidated by statistics, precedents, principles or regulations. Some of today's decisions are being made on the basis of premises or principles long dead or irrelevant. Be skeptical. Many premises or principles may not apply today -- or do not apply for your specific situation. When necessary, challenge them!
- Do not forget that the other party is negotiating with you because they believe there is something they can gain by being there. You may discover that this negotiation, no matter how small, is part of a larger framework in the other party's objectives. This fact alone may provide you greater negotiating power that is apparent from the situation. Be positive in your approach. Assume the other party wants an agreement as much as you do. If it appears they do not -- find out why.
- Don't focus on your own problems or your possible losses if a deadlock occurs. In all likelihood, there are consequences for the other party as severe as your own. Concentrate on their problems and issues. These will reveal opportunities for possible ways to agree.
- Most negotiations require some concession making. Don't set your initial demands too close to your final objective. There is sufficient evidence to conclude that it pays to start high. Don't be shy about asking for everything you might want and more. Many times your demands are too modest, or too easy to achieve. The other party may not know what they want, or may have a set of values quite different from your own. Remember never to give a concession without obtaining on in return. Don't give concessions away free -- or at least without a thought provoking discussion with the other party about what they are getting. A concession granted too easily does not contribute to the other party's satisfaction as much as one that they struggle to obtain.
- It is a mistake to assume you know what the other party wants. It is far more prudent to assume you do not know, and then proceed to discover the realities of the situation by patient testing and discussion. If you proceed to negotiate a deal on the basis of your own untested estimates, you are making a serious mistake.
- Never accept the first offer (even if you like it). Many people do. There are two good reasons not to: First, the other party is probably willing to make some concessions. Second, if you do accept the first offer, there is a distinct chance the other party will feel that their offer was foolish and they should have asked for more. Immediately their satisfaction with the agreement will be reduced, and they may find ways to spoil the agreement later. In either case, the negotiator who takes the first offer too fast makes a mistake.
Tag archive: bargaining-power
Negotiating During Economic Turbulence
During times of economic turbulence (LIKE NOW!) most negotiations get tougher. Don't reduce your bargaining power by making mistakes. Now is not the time! Here are eight common negotiating missteps people make. Despite their good intentions "not to do that again," mistakes like these happen over and over. Don't fall into these negotiating traps!Read more »
I recently celebrated another birthday and one of the comic cards I received illustrates a great negotiation lesson. Picture a small goldfish swimming in the fish tank. Strapped to the goldfish is a shark's fin, which protrudes out of the tank several inches. Now, how much power does this little goldfish have? If the other occupants of the tank accept that fin as real, has the goldfish grown real power or perceptual power? How much value is there in perceptual power? It is easy to dismiss perceptual power as bluff or fake, but you might be interested in some other's thoughts:Read more »
- Re Jesse Helms: "…he plugs into no important levers, controls no important network, has relatively scant rewards to offer and penalties to impose on his own." "…such power as he has is strictly a function of their own willingness to let him push them around." Meg Greenfield, Newsweek, August 1, 1997
- The idea of power lies in the mind of those involved in the bargaining. J. Winkler
- (Power) It is relative to the assumed power of the other party. J. Winkler
- Their power exists if you accept their power. Karrass
- In an Article titled, "Cheney: Not What He Used to be" in THE WEEK magazine, November 11, 2005, re Cheney losing power in W.DC, "…in a city where power is the appearance of power."
Forestalling a Breakdown in Talks
Let us consider some ways to forestall breakdowns before they harden into long-term bickering or wars. The suggestions that follow will help get stalled talks back on track. They allow a negotiator to rebuild negotiating space for talk without the loss of face or bargaining power for either side.Read more »
- Change the time shape of performance. Not everything needs to be done now, next month or next year.
- Get the help of someone both sides can trust and respect to mediate the difference. That’s what the Chinese and Japanese do so effectively.
- Alter the risk factors that make it harder for one side or both to say “Yes.”
- Change the scope of work. There is always some room for give and take in the work to be done or the way it is done. Getting into the details serves to enlarge negotiating space and point the way to economies of effort.
- In most negotiations, as the end approaches, the sum of settled issues generally outstrips those that are not. Nobody at the table relishes the idea of walking out after so much has been accomplished. It pays to recapitulate all matters already settled and those still open. The balance usually favors moving on to closure.
- Determine if the gap that separates you can be bridged gradually: a little now, more later and completely next year.
- The best way, by far, to break an impasse is to collaborate with the other person to search for and discover a better arrangement for both sides. Change the mode of negotiating from the conventional competitive mode to one that is collaborative and Both-Win®; that is, coming from an essentially self-centered mode to one that fosters mutual gain.
Creative Way to Split the Difference
There are many ways to split the difference when the gap between negotiators is not too large. The most simple splits consist of dividing the difference in some way that cries out, “If not here, where?” A split in half where there are two parties involved, or in quarters when there are four, makes for an uncontested arrangement most times. Splitting the bonus pool by revenue produced can help lead a bonus committee to consensus and closure. I have been in negotiations where flipping a coin determined final distribution and outcome. Simple solutions facilitate agreement. Splitting the difference even in a simple way does have a danger built in. The next time someone on the other side says, “Let’s split the difference,” watch out. Before you are tempted to say “Yes,” calculate how much of the difference you will give away by signifying agreement. It may be, as Shakespeare once said, “by much too much.” Sometimes, on the other hand, complexity is called for. As we said earlier, satisfaction is what we negotiate about, not dollars, goods or services. What is interesting about satisfaction is that is has a time dimension. Some prefer their satisfaction early or in advance while others prefer it to occur far in the future. Changing the time shape of satisfaction has the power to bridge bargaining gaps. When indecision or impasse looms, one way to avert it is to customize the shape of satisfaction and dissatisfaction to fit the specific time needs of each side. The calculus of satisfaction differs from person to person and from one time period to another. Negotiated benefits, rewards and work contributions can be provided all at once immediately, later or at the end of performance depending on a person’s preference, age and lifestyle. Some now, more later and the balance at the end may suit some negotiators more than others. Benefits may also be offered over a period of time, then triggered to increase or decrease by some event, index or performance milestone later. If these creative approaches fail and a gap remains, it can prove to be useful to establish a joint committee to study the matter and make a recommendation. Committee decisions often serve as the catalyst that bring the disputed sharing formula to rest.Read more »
More Collaborative Both-Win Tradeoff Ideas
The following tradeoff areas that follow offer opportunities for mutual reward when used in collaborative Both-Win® negotiating.Read more »
- Partnering for Both-Win® synergy. Partnering of suppliers with their customers has proved enormously successful. When suppliers integrate their resources, needs, information and relationships with those of the buyers, they created efficiencies that lower costs and benefit both in many ways. Partnering is as applicable inside the organization as it is between buyers and suppliers. Two parties, united together as partners, work collaboratively to create new approaches to doing their jobs. They will succeed because they can then combine their assets, ideas and talents to better fit and meet their mutual and individual needs and problems.
- Systems, procedure or process flow tradeoffs. Every system, process or way of doing something is to some extent obsolete or not serving the original purpose it was designed to do. Savings in unnecessary work or material can always be found if we study the process or procedure carefully and modify it to serve current conditions and needs.
- Worldwide outsourcing tradeoffs. Outsourcing, even on a global scale, is now feasible for a wide variety of needs and services at little risk. When faced with what appears to be an intractable difference in cost or delivery, both sides would be wise to consider outsourcing part of the work they do for others.
- Transport and shipping tradeoffs. Moving and handling costs constitute a surprisingly large part of total cost even in day-to-day workplace interactions. Technology is changing how we interact to get work done. Opportunities for mutual gain reside in looking closely at how things and people in the office move about. On a worldwide stage, transportation and shipping costs are an enormous part of total production cost. Fierce competition between shipping between transportation companies is exacerbated by volatility of oil prices and carrier supply; these costs demand considerations. The high cost of transportation and shipping make this a prime target for creative Both-Win® success.
- Cash management tradeoffs. Most individuals and companies handle their cash flow needs poorly. Cash management tradeoffs balancing revenue and outgo deserve a higher place in the budgeting process than small organizations give it.
- Insurance tradeoffs. Corporations pay in advance for possible untoward events that often have a small or modest probability of happening. The ratio of what we pay for security and how much risk we should be willing to take is amenable to constant analysis.
How to Move a Competitive Negotiation into a Collaborative Mode
Two people get together to iron out differences they wish to reconcile. Before long they inadvertently say or do something that adds distance to the gap separating them. Compromise generally serves to bring them closer to agreement but often fails if the gap is large or one of the two has not been tactful in expressing him- or herself. Settling differences in an oncoming impasse like this can best be accomplished if the parties change their mode of dealing with one another. Each by now is exhausted; they have said all they can about the remaining difference and moved as much as deemed responsible or wise. Further jousting for concessions seems futile. A change in strategy is called for. Collaborative Both-Win® negotiating is the way. The magic of this approach is that it transforms their bargaining attitude from competitiveness to cooperation, from self-centeredness to mutual gain. The following segues that follow work well in moving a competitive negotiation to one in which joint effort between parties takes center stage. The “Let’s find a better way for both of us” approach. This approach is simple and direct. Just to suggest to the other party that a better way for both is available if we look for it together. The “Ask for something in return” segue. The hidden power of asking for something in return when you make a concession is that it provides negotiating space for further talk and opens previously unexplored avenues for agreement. The “Ask the other side for help” segue. When in doubt about what to do next or how to bridge the gap or difference, ask the other party to suggest ideas. You’ll be pleasantly surprised at how please they will be to help in most cases. The existing difference may be as unpleasant to them as it is to you. They may know about avenues for potential mutual gain that you are not aware of. The “Ask higher authority on their side for help.” Experiments confirm that people in authority like to help others when requested to do so in a courteous manner. Often they know more about solving a problem than those at lower levels because they have had experience with such matters already. Their advice may well become a point for further modification and collaboration with the other side because someone at a higher level in the organization had a role in suggesting it. The “Krunch” segue is appropriate when you make an offer or concession to the other that they reject with the remark, “You’ll have to do better than that.” This objection, which I call the “Krunch,” is hard to handle, both because it is so general and because it always appears so firm. The best way to respond is to move the discussion from the general to the specific. “What do I have to do better than?” is a “help me” question that sometimes elicits information useful to further collaboration, especially when the relationship between parties is good. In my next post, I will give more examples of Both-Win® segues to help move the negotiation toward a collaborative mode.Read more »
How Expectations Rise and Fall in a Negotiator’s Head
Almost everybody going into negotiation has some target or goal in mind. It may be based on reality or merely a hope for the best. It may be based on what the other party can live with or be far beyond their capacity to say “Yes.” The validity of the estimated target will, in the end, be determined by the give and take of the process, the balance of power and each side’s perception of it, as well as the bargaining skill of those involved. Targets in a negotiator’s head are not set in concrete. They rise or fall with the tides of success or failure based upon what is said and done at the bargaining table. Goals are set. Feedback follows. Every demand, concession, threat, delay, fact, explanation, deadline, or remark has an effect on the picture in a negotiator’s head. The target moves up and down with each work and each new development. How expectations change is important to those who negotiate and is summarized below:Read more »
- Every concession can serve to raise the other side’s expectations. Every “No” has the opposite effect. Small concessions, reluctantly and slowly given, are not likely to raise expectations very high. Large concessions do.
- It takes a number of small failures to move expectations down. Saying “No” just once is not enough. It may take many “No’s” to convince the other that you mean it. That’s why persistence and repeating your viewpoint helps move the other to your position.
- Research shows that those who ask for more in negotiation generally achieve more but they also suffer greater risk of deadlock and possible relationship risk. Good backup for your position and an open discussion of reason reduces those risks.
The Firm “No” Response
There are people who respond to any new idea presented to them or any opening offer in negotiation with a firm “No.” They usually do so with a view to reducing the other person’s expectations or by ending the talks as quickly as possible. Of course, both are legitimate negotiating objectives, even if they are not conducive to fostering better relations between the parties. This firm “No” approach is sometimes used by buyers in commercial negotiations when they have considerable power and wish to leverage that strength to achieve a goal they have already decided on. The seller is told, “This is my final offer. Take-it-or-leave it.” If you are going to respond to someone’s idea or position with a firm opening “No,” minimize the hostility they will surely feel. Never use the phrase, “Take-it-or-leave-it.” It is unnecessarily incendiary and invites retribution. When a firm “No” is backed by facts, good precedents or history, it is less onerous. So also when the “No” is defended by existing organization policies, procedures or published constraints. Yet, however politely a firm “No” is rendered, it will be resented. Time is also a factor in determining how the “No” will be accepted. If the other person is provided adequate time to present and defend their position or idea they will not resent the “No” as much. Whether a firm “No” is expressed early or late in the talks makes a difference. A “No” expressed late in the bargaining process is apt to be received with less bad feeling. What can you do when the other opens the talks with a firm “No” to your “great” idea or “reasonable” offer? My advice is: test the rejection hard. It may not be as rigid as it appears. Several options are available. The best, I believe, is to broaden the nature of the deal under discussion. Expand the problem or differences to be resolved to include other matters of interest to both sides such as service, work product or quality considerations not covered by the “No” response. In addition to broadening the matter or issue, you may test the “No” by using one of these ideas:Read more »
- Saying the words, “But it doesn’t apply in this case,” usually opens the door to further interest on the part of the other side. They will wonder why so you will have to spend time preparing for the “Why” and come up with some reasonably good reasons. The negotiating dialogue that follows will allow you to also discuss other aspects of your basic position.
- Another approach that works surprisingly well is to continue speaking as though you never heard the “No.”
- Find a face-saving way for the person who said “No” to retreat from their position. In a strange way, the person who says “No” in a rigid way has trapped themselves into an awkward, inflexible position. They need a good way out or they won’t retreat.