Better Negotiating

BASIC NEGOTIATION TACTICS Proceeding tactically: How-to We all quickly learn that being tactical gives us an advantage when we negotiate. In this chapter, we will discuss some fundamental rules of thumb and familiarize you with essential negotiation tactics. We will also take a closer look at the special case of coalition-building. The importance of getting off to a good start As mentioned in the previous chapter, two items necessary for getting a negotiation started in a professional manner are the opening statement and the opening position. Both of these elements serve all three levels of a negotiation. We want to work with competent dialogue partners (substantive level), we want to know the goal of the negotiations, the opposing party’s demands, and the planned procedure of the negotiations (methodological level), and we want to understand with whom we are negotiating (psychological level). Opening the negotiation – your “overture” The start of a negotiation can be compared to an opera’s overture. This instrumental introductory piece, often played before the curtain even rises, typically sets forth the main musical themes of the work. In the same way, the “overture” of a negotiation sets the tone for the rest of the discussions that will occur between the parties. The overture plays a harmonizing role, as the two parties find out more about each other. In this opening phase, one often hears statements about the parties themselves, their products and services, joint successes in the past, future opportunities – and naturally the items on the day’s agenda. There is sometimes a covert power struggle going on behind these statements. Some of the key questions at this stage are: • Who will take the lead in the negotiations? Formally or informally? • Who is in control? Do the parties have equal bargaining power? • How can I put my strategy into action? • Can I already pick up on the other party’s strategy? Your opening position The first clear, unambiguous statement of what you want is contained in your opening position. Exchange opening positions with your counterpart only after the “overture”. If necessary, pause the discussion to revise the proposal that you have prepared. Do not make any concessions until after you find out the other party’s opening position. Your opening position must be substantively credible and must be communicated authentically. You want to give the impression that it is close to what the final agreement should look like. Ideally, you would like the other party to state their opening position first. However, convention dictates that, when buying and selling, it is usually the seller who states their price first. TIP: Sometimes the other party’s opening position may bring up new information regarding what they are seeking, and you may find yourself needing to quickly revise your own opening position. If necessary, ask for a brief pause to think things through! Taking breaks in a professional manner Fleur and Nellie are in Portland to visit a previously unknown supplier who had contacted them with an interesting offer. However, an unexpected piece of information emerges over the course of the contract negotiation – contrary to what the supplier had claimed, they have no experience working with the aerospace industry. Fleur pauses the discussion to ask for a short break. She demonstrates a professional response to the situation – and makes sure that she does not risk agreeing to anything without fully thinking over the matter. Simply explain why you need to take a break, so that the other side understands. You can skillfully frame it as something that will benefit both parties (e.g., “It’ll give both of us a bit more time to think about whether…”) Announce that you wish to use the time to consult with the members of your team, then take them into another room and do so. Or else simply think over any newfound information on your own. If necessary, withdraw to a corridor or coffee shop; there may even be a small office or spare conference room that you can use. Inform the other party of how much time you will need and when you will be ready to resume the discussion. Matters are even easier when you are not negotiating in person – simply schedule another videoconference or inform your counterpart when he can expect to hear back from you by phone or email. How to make concessions like a seasoned pro Neil is the youngest of three children. As a child, he quickly discovered that he could get whatever he wanted if he behaved himself nicely. Without even realizing it, he increasingly conformed to his parents’ expectations, always getting along well with everyone at home and at school. Now, in his early 30s, he has an interesting job in the aerospace industry. He soon notices that, while negotiating with clients, he repeatedly makes concessions that go beyond the terms that his manager had clearly discussed with him – he gets the sense that he feels pressured to please his clients when they express their dissatisfaction with his proposals. Now he is in a predicament. His clients love his acquiescent nature – but his boss does not, frequently pointing out that “everyone else manages to negotiate tougher.” Neil understands that it all goes back to his childhood: he is quick to make concessions because he wants to please others – and this compliance gets him approval and recognition, just like it always has. He knows, however, that he has to learn how to make concessions like a professional, so that he can hold his own even in difficult negotiations. The art of making concessions in a professional manner is essential to any successful negotiation. Negotiating is all about two parties gradually moving towards each other – and both rigid inflexibility and excessive compliancy impair this process. Thus, the following recommendations: • Always leave yourself room to make concessions. • Plan out your concessions beforehand. • Let the other party make the first concession. • Actively request concessions from the other party. • Don’t be the first to make a major concession – and object when the other side demands one from you. • Attach a condition to each concession that you make. • When you receive a concession from the other party, know that you do not automatically have to make one simultaneously. • Give smaller and smaller concessions as the negotiations go on. • Take advantage of the notion of limited authority. (“That’s not a decision that I’m authorized to make here today” or, “Our company policy would require us to have an internal discussion about that first.”) • When negotiating a package deal, remember that absolutely nothing is final until the last point of the package has been agreed upon. How to tell when the time is right to close the deal In every negotiation, there comes a time when it seems like you are reaching the end of the line. You often hear lines like, “This is really our final offer” or “I simply can’t go any lower.” You’ve gone back and forth with the other party regarding your positions, you’ve developed solutions, and now all that remains is getting to the final handshake. But how do you know it’s really the right moment? And how do you seal the deal? This also raises the question of whether you should make a “final offer”. Be careful! Doing so can be dangerous. Never make a “final offer” unless you can be sure of what you will do if the other party refuses to accept it. Here are some guidelines to follow when making such an offer: • Express yourself credibly – with regard to both your wording and your body language. • State your final offer slowly and deliberately. • Maintain firm eye contact. • Demonstrate that your entire team is in accordance. • Demonstrate the finality of the offer (by your tone of voice, by folding your arms, by keeping silent and waiting for a response, etc.)