- 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: value-of-satisfaction
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 »
A negotiator should approach their negotiation much like an investor approaches the stock market. With today's wild swings in the stock market, this can be quite a challenge! But, here's what I'm talking about. Prudent investors look to increase the value of their money. They look at growth potential, expected dividends, and the risks associated with an investment. Investors attempt to calculate the present value of the potential investment given the expected growth rate and dividend payouts. In this way, their investment decision is balanced against the associated risks; compared to other potential investments; and a decision is made to buy or not. Is this potential investment fairly priced, over-valued or under-valued? A good negotiator does the same thing -- but on a very subjective level. Negotiators need to focus on the present value of satisfaction; determine the value of future satisfactions (and dissatisfaction); and compare this to making a deal, making no deal, or working to create a better deal. This brings up a fundamental but subtle point about any negotiation. The flow of positive and negative satisfiers in any deal is in the mind of each participant. Some participants are optimistic about the future. Others are pessimistic. Some want immediate satisfaction, while others are prepared to wait. Much of your strength as a negotiator comes from your ability to provide satisfaction to the other party. You can help increase the present value of the deal by getting the other party to place a higher value on future satisfaction. You can do the same thing by showing the other party that future dissatisfactions are unlikely. consessions can play a big role in creating a flow of satisfaction. But this flow between people is not a simple as it looks. Before you start making concessions to increase the other party's satisfaction, think about how you want to do it. Take into account who will benefit, in what way, when, and from what source. A concession can provide satisfaction to the receiver now or later. Maybe the receiver wants to take it all at once or a little at a time. A concession can direct its benefits to the organization, specific parts of the organization, third parties, to the other negotiator on a personal level, or to all of them at once. Make sure your well meaning concession does indeed provide satisfaction -- and not doubt, or dissatisfaction. Concessions can move people closer together (raise satisfaction) or move people further apart (decrease satisfaction). Be careful! Every negotiator has the same role to perform: to raise the present value of future satisfactions for the other person and help the other party reach a decision that will provide satisfaction to both parties.Read more »
Basics of Collaborative Both-Win® Negotiation-Why it Works
There is always a better deal possible for both parties in every negotiation. This may seem a bold statement but is it backed by considerable economic theory and research. About 150 years ago, Egardo Pareto, an Italian economist, theorized that any contract agreement between two individuals could be improved if the parties continued to work together to raise its value or utility. He proved, through contract utility analysis, that a gain in mutual satisfaction could be achieved at little or no loss to either party in a transaction. Subsequent economic theorists substantiated Pareto’s theory and built on his findings. Indeed, I am convinced that anything can be done better if people collaborate in doing so. When two negotiators work together to find a better way they will succeed if not limited or impeded by organizational, structural, legal or psychological constraints. Collaborative Both-Win® negotiation is the path to better agreements. It is within the grasp of anyone to learn. Negotiators do not have to be geniuses to be creative and find a better way. Two factors come into play to create mutual gain; first, each side comes to the table with their own unique aggregate of assets, ideas, needs, problems, experience and relationships; second, through collaboration both sides integrate their previously unconnected mix of attributes in ways that create enlarged joint satisfaction values not previously tapped or attainable by either party individually. For example, under the category “Needs,” such needs as power, money, growth, excitement, survival and others can be included. Each party has some inadequately fulfilled or unfulfilled needs within these needs attributes. This is also true for the other attribute categories. It is the integration and tradeoff of these attributes that paves the way for an innovative arrangement or agreement that enlarges satisfaction possibilities for both parties much as Pareto theorized.Read more »
Moving Together to a More Creative Higher Value Agreement
We know from experience that compromise is usually the most direct route to settlement when differences or disagreements occur. But we also know that compromise is often not enough to bring us together. When we speak of making a “better deal for both” it is important to recognize that the words mean something quite different in collaborative Both-Win® negotiating than it does in conventional competitive bargaining. In competitive negotiating we have limited goals; specifically, the pursuit by each side of its own interests and the satisfactory sharing of whatever is at issue or to be distributed or settled. For example, let us imagine for a moment that we were bargaining for the sharing of a ten-piece pie. If one got six and the other found four satisfactory that would be sufficient for a conventional competitive agreement. The same would be true if the pieces shared were seven and three or eight and two as long as both sides found this satisfactory and acceptable. Collaboration in a workplace negotiation can create profound economic and psychological benefits. It can reduce cost, make your work easier or relieve internal bickering by resolving problems or finding better ways to do things. On a higher level, collaboration has the potential to create new opportunities for growth and longer-lasting relationships. Collaborative negotiating is centered on enlarging value for mutual benefit. This leads to the successful resolution of differences and a better agreement for both parties. To summarize, the magic of the collaborative process we propose is that it allows both parties to a workplace difference or dispute to work together to enlarge our hypothetical 10” pie to one that is now larger and at the same time tastier. These benefits make it easier to share and increase mutual satisfaction with the final distribution. The essence of collaborative Both-Win® negotiation is that there is always a better deal available if both parties invest the time to search for it together.Read more »
Give in Slowly and Grudgingly
Negotiations are lost when people cave in before they need to. As you negotiate, it is wise to make sure the other side is not certain as to whether you will back down further from your position. If you retreat too soon or too easily the other may be encouraged to try for more. Negotiators who concede quickly or make large concessions usually do so to move the agreement toward closure, but often drive the parties further apart by raising the other side’s expectations to unrealistic levels. Everything you do in a negotiating situation affects the expectation level in the other person’s mind. Your initial demands set the stage. Your persistence in holding to a position leads the other party to wonder if their goals can be reached. The rate and timing of your concessions determine whether the other side’s expectations will rise or fall. Your way of offering concessions will affect the overall satisfaction with the settlement. If concessions are small and grudgingly given, the other side is likely to be pleased because they will feel that little was left on the table. As for making concessions grudgingly and slowly, the record is clear for workplace negotiators. People who are stingy with concessions come out better if they are consistent in making only small concessions and explaining them well. By giving slowly, negotiators add value to their movement and signal that they is little more to give. Concessions, carefully controlled, lead the other side toward closure and provide them with a higher level of satisfaction with the final outcome. These goals are also consistent with the objectives of relationship-based compromise in that they provide both parties with negotiating space and time to explore a better deal for everyone. Giving in slowly also leads to an increased flow of information and a better understanding of why the final settlement makes good sense.Read more »
Increasing Positive Impact
Another approach to increasing the positive impact of what you say is repetition: standing firmly behind your argument or offer for a reasonable period of time. Few things wither a negotiator’s position in the eyes of the other side as much as being seen as a person who quickly jumps from one view to another in the face of pressure. There is little question that the combination of repetition and perseverance serve to add a measure of conviction and resolve to a negotiator’s words and actions. Zhou Enlai, the famous diplomat and negotiator under Chairman Mao Zedong, Communist Premier of China, was not one to take another person’s offer or “No” for an answer. For almost three long years during the Vietnam War, Zhou Enlai repeated his offers day after day. His steadfastness led the less patient Americans to believe that his position was truly firm, and that concessions, if any, would be few and slow in coming. When he did make some concessions, albeit small ones, it was welcomed and celebrated as a major victory. In a similar vein, Michael Eisner, for many years CEO of the ever-innovative Disney organization, used persistence and repetition as a filter to assess new ideas presented by his creative staff. He would deliberately reject the idea or ask that it be resubmitted later after considerable improvement. Creative artists and producers who had the passion and conviction to resubmit their proposals after multiple rejections were felt by Mr. Eisner to be worthy of another serious look. Repetition and persistence work like that if backed by good argument. A final suggestion is that you learn to ask for something in return when making an offer or concession because it adds utility to any movement you make. It allows you to retreat from your concession if the other refuses to grant what was asked for. It permits you to do so without loss of face or power. Later, if you choose to drop the string attached to the concession, it will add extra value and satisfaction to what you then decide to concede.Read more »
Learn to Say at Least Once More
Learn to say “No” at least once more, even when you like and are willing to accept the other’s offer. Then say “Yes.” This is suggested not so much because you sometimes get a better offer but because it provides greater satisfaction to the other party than saying “Yes” immediately to what is an acceptable proposal. I will explain why I feel this way with a story told me by a then-prominent movie star. Dinah Shore told me this as I waited to be introduced as a guest on her television show. Knowing that I was going to talk about negotiation, she said off camera, “I’m the world’s worst negotiator.” Some years ago, when $500,000 was a very large sum of money, a Beverly Hills home was for sale at $500,000. The actress liked the house and offered $425,000. The buyer’s broker immediately said, “We’ll take it.” Years later, despite the fact that the value of the house was already more than $1,000,000, she was still angry about the $425,000 agreement made earlier. Dinah Shore was convinced that her $425,000 offer was a foolish mistake because it had been immediately accepted. That’s why she said, “I’m the world’s worst negotiator.” But was she really the world’s worst negotiator, or was it the broker or seller? If we wish to see how bad a mistake the broker made, we have only to imagine another scenario. What if the broker had said, upon hearing the offer, “I don’t think my client will accept your offer, but I’ll be glad to submit it.” He could have returned in five minutes and explained that the client, because she was in a divorce action, was willing to take $440,000, still a real bargain. Suppose they then settled at $435,000. Would Dinah Shore have felt that she was a good negotiator or a bad one? Because of the delay in saying “Yes,” she would have been more satisfied paying $435,000 than the $425,000 she actually paid! It’s ironic, isn’t it? For Dinah Shore, paying $425,000 represented pain and dissatisfaction. Paying $435,000 would have meant the opposite. There is an underlying principle here: the other side will always appreciate the agreement price more if they believe they have worked for it and gotten closer to the bottom line. If not, their self-esteem will be bruised. They will be angry at you and angry at themselves for a long time. One final note on why you should learn to say “No” a few times even when you are willing to settle. As many of you remember, Dinah Shore was a caring and giving person. If she had not been so nice, her anger about the deal might have caused her to make trouble for the seller in a number of ways. If she were upset enough, she might have made an excuse to cancel the agreement before escrow or ask that expensive repairs or improvements be made. She might have demanded that the Persian rugs and fireplace accessories be included in the price. People do these things when they get a “Yes” answer too quickly. Like most people, rich or not, they hate to feel they were “taken” or that they foolishly left too much on the table.Read more »
The Considered Response
Negotiation involves work. People rarely bargain for the fun of it or because they have nothing better to do. They negotiate to gain satisfaction. What we will now consider are ways to increase the value of our responses to whatever the other party offers or concedes. Whether we say “Yes” or “No” to their offer it is important we do it right; that is, we must enhance their satisfaction and maintain a good relationship. Concessions are normally made by both sides to bring parties together. The person making the concession hopes to narrow or bridge the gap that separates them. How one handles the other side’s offer can either set the stage for further improvement or serve to harden the disagreement. A time-tested approach to adding value and credibility to your responses and counteroffers will be suggested. I call it “The Considered Response.” One of the best negotiators I ever encountered employed the “considered response” whenever he negotiated. It worked this way. Whenever the other side made a demand or concession his first reaction was to listen carefully and take notes. Then, when they were through, he would say nothing but make calculations on a sheet of paper. After what appeared to everyone to be a longer period of time than it was he would say, “I can’t afford to accept your offer. It’s simply not enough.” His way of responding indicated to the other that he had seriously weighed their arguments and position, even though he had not agreed. Frankly, I can’t be sure that he really figured anything out on that sheet of paper. For all I know he might have been doodling. But I do know that his “considered response” gave his answer credibility and respect. It became, when negative, a stronger “No.” And when he said “yes” as he often did, the other person perceived it as a more satisfying “Yes.” The “considered response” is a powerful tool. By disciplining yourself not to shoot snap answers “from the hip,” your strength as a negotiator will increase. The rule is this: The next time the other side makes a demand or offer, be it acceptable or not, don’t respond to it with a “Yes” or “No” right away. Keep quiet and think about it for a while. Better yet, write down on a paper a few “pros and cons” and some calculations. Then answer “Yes” or “No” or whatever is appropriate. Your considered response will give greater weight to your answer and greater satisfaction to the other person as well. Few negotiating behaviors provide much time-to-think, negotiating space, response credibility and appreciation for the other’s offer or concession as a considered response. Make it part of your response pattern.Read more »