How to become a better negotiator!
Morten Moller Pedersen
VP - Integration, Operational Excellence @ Noble Corporation | Adaptive Leadership, Global Operations, Portfolio Management, Strategy
How to become a better negotiator!
Every negotiation starts somewhere. For the unprepared they start when you encounter the other party at the “negotiation table”.?
If you want to step up your negotiation game and become the one that makes both sides better off, you need to read this article and learn about the 11 steps that will prepare you for your next negotiation.
I found the inspiration of this article in a recent example of a good friend...!
Negotiations
At work, in your marriage, with your kids, when purchasing a new car???, etc.
Negotiations seem to be everywhere, or are they?
Let’s start by making a definition!
Negotiations is predominantly a formal process. It’s a situation where you need to give in and bargain with the counterpart.
It’s less about argumentation of who is right and who is wrong!
You trade until you achieve a result and both parties agree on the direction, coming from a place where you disagree about the terms!
Think about it like this: “Both parties need to be willing to give and take”, else it’s not a negotiation!
So arguing with your kids about why mom or dad is right is not a negotiation!
Why prepare for negotiation?
Spending a little time getting ready for a negotiation enables you to consider what you want, what they want, and how the deal might work.?
By thinking through potential challenges you won’t be thrown off guard when a new piece of the deal reveals itself.?
By knowing what you need out of a deal, you can avoid the pressure you may otherwise feel, to either agree without considering the consequences, or asking for a break in negotiation that may ruin the momentum you had going towards closing the deal.
Negotiation can be stressful, but when you prepare for your next negotiation, you can change that!
Proper preparation can remove the fear out of negotiating even the biggest and most important deals.
11 simple steps to success
If you prepare for your next negotiation you can substantially increase your readiness to participate in your next negotiation.
Step1: Defining Issues in Negotiation
Never skip this step. Typically parties come to a negotiation with an outcome in mind but forget to put in the effort of defining the issues.?
You should start by brainstorming the issues that are connected to your negotiation. But the pitfall is that defining your issues too narrowly can mean less room for negotiating!
When planning you may find that you are faced with a single issue negotiation, should this be the case, remain open to discover new issues as the process unfolds.?
Projecting the other party’s interests in the negotiation become especially important in these cases.
Step 2: Define Underlying Interests
Knowing what the issues are, and knowing what the interests are, are two different things.?
Issue refers to the core of what is being discussed, i.e., the what of the negotiation.?
Interests deal with the why of the negotiation!
We may go into a negotiation looking for more money. Money then is the issue. Asking why you want the money seems silly. Or is it? Money is an instrument to do other things.
Money could simply mean security in some cases:
Money could also mean respect:
Typically the most powerful of interests come down to basic human behavior:
Understanding the underlying interests is important. The basic problem in a negotiation lies not in conflicting positions, but in the conflict between each side’s needs, desires, concerns, and fears. Knowing your interests allows you to be open to good deals and closed to bad deals.
Horse trading????or the art of putting on the table what you want from the negotiation, and listening to what matters to the counterparts.
In other words how do interpret what is important to the counterpart, and what is less so… Thereby enabling to trade in what is less important to you and give concession’s to what is important to whom you are negotiating with!
Think about it this way: “You need to benefit someone in order to be benefited yourself”!
So where can we find inspiration to negotiations? Something as unlikely as good advice can come from politicians! Their job is inherently to negotiate with counterparts which have differing opinions, but end of the day they need to deliver a result!?
As an example 78 times democrats and republicans have come together and agreed????on a new ceiling of the US debt! Despite coming to the table with vastly different views!
One of the most important skills is to figure out what really matters to the counterpart in order to leverage it to create value for the items you want to achieve from the negotiation!
At Harvard this is referred to as the “interest based negotiation”.
In the perfect world both parties come to the table with 100% value and you end the negotiations having created 120% value…
This can be compared to “position negotiation”! A popular term for this would be an argument, i.e., “I will not accept anything less than…”
In certain situations, this can be an approach, but it’s then important to remember that it’s then no longer a negotiation, as you’ve taken a pre-defined position!
Examples:
Many people are proud when you ask them and they’ve achieved results through this approach!
What they more often than not forget is what they potentially could have gotten if they had approached the situation with an interest based negotiation!
So let’s take the typical salary negotiation, what if the playing field had been left open?
Would that have spawned conversations around increased flexibility, better terms around working from home, other benefits, share options, etc.?
Step 3: Analyze the other party
At this step, turn your attention to the other party and your interaction with them.?
Start by gathering the information you have based on your past interaction. Current??relationship, past deals, etc.?
Do you anticipate an interest based negotiation or something more power based??
What do you know about strategic levers they have used in the past?
If you have no history with them or if you are not familiar with the other party, it may be a good idea to do some research on them. Publicly traded companies file all sorts of information, individuals post large portions of their life on the internet, and company news is announced on their website. Go hunting!
Step 4: Project the other party’s issues
It’s great that you’ve been through your own issues and interests and spent some time thinking about the other party or parties. Now you need to turn your mind to what the other people in the deal may want out of the deal. What do you think they are going to bring to the table? Are there any issues they might have missed which you can use as leverage?
Step 5: Define other party’s interests
Once you identify the other party’s issues you should use the information gathered in step three in an attempt to determine their interests. Remember that the interests are what drives the issue it is the counterparties why. having a guess at their interests allows you to plan your strategy.
Step 6: Consider how interests impact each other and the parties
Having a handle on your interests and their interests allows you to go to 30.000 feet and look at the whole picture! Determining how the interesting issues may fit together to get the best deal. The key of this step is to take a wide view of what the potential consequences would be, i.e., deal or no deal.
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Step 7: Consult with others
Simple negotiations occasionally involve only two parties. Typically at least one of the negotiators is working on behalf of another person or entity.?
Managing internal and external stakeholders is an essential role of a negotiator.?
When negotiations involve a wide-ranging stakeholder map, talking to each of them about their interests early in the process is essential to building a sustainable deal as it can reveal new interests that must be included.
Consulting with others should be thought of as an ongoing activity throughout negotiations.?
If the negotiations cross the “red lines” of defined interests, it is likely outside of what some stakeholders would consider acceptable. If not managed closely, they might attempt to build support for defeat of a deal.
Step 8: Set goals for the process
Once you are clear on your interests and the interest of your counterpart you should start to set goals for the negotiation process.?
The goal in every negotiation starts with working with the other party to get a result superior to what you could have achieved by yourself.?
Time out for negotiation lingo: Best Alternative To Negotiated Agreement = BATNA
If your BATNA is better than your outcome through participation in the agreement, you should not do the deal.?
Goals for the process of negotiation may also include getting a deal done in a certain timeline.?
Step 9: Identify resistance points
A resistance point denotes a point after which you are going to resist the deal.?
It is the boundary point where the deal would make you take and live with the deal, but not being happy with it.?
A resistance point should be set by considering how the deal reflects your underlying interests. It is dynamic and can change as value enters and leaves the table by the counterpart.
Step 10: Develop supporting evidence
This is not about developing a supporting argument but developing supporting evidence.?
That means you’re finding facts that helps support your counterpart agreeing to your interests.?
In the case of a salary negotiation the facts that a competitor pays substantially more and a certain role it’s hard to recruit for is evidence that pay needs to be increased.?
You have already made the ask, developing and using an argument often devolves into haggling. By being clear on the facts which are empirical and not debatable you can support your asked in a way that causes your counterpart to consider it.?
This step requires you to consider information from all the previous steps to figure out what facts are relevant and how you can structure them to be persuasive towards people involved in the deal.
Step 11: Develop a plan
By now you have considered the issues and interest of all the parties to a negotiation; you have consulted with others to build understanding and support; you’ve identified potential points of resistance after evaluating your BATNA; and you have developed evidence to support your position.?
Now you need to make a plan to pull it all together. Schedule tempo, attendance, participation and information flow are all decided based on the information gathered in the previous ten steps.
How all this information comes together to develop a plan is where the science of negotiation becomes an art.
The A-Team could not have said it better: “I love it when a plan comes together”!
Pitfalls?
Nothing like the perfect plan without pitfalls:
One of the major pitfalls is to take things personal during a negotiation, as soon as that happens you have taken the first steps towards a conflict!
If you find yourself in a situation where you’re taking it personal what is being said! Or you think the counterpart doesn’t want me anything good! You’re on the pathway to??destruction!
What goes beyond step 1-11?
It would be natural to be afraid of walking into a negotiation a bit na?ve or a bit to kind hearted!?
For that reason many believe they need to be slightly on the hostile side, having very sharp opinions prepared and being ready for being hard and tough! A natural preference to prepare for not being stomped down during the negotiations!
The common misconception is that a negotiation is a gunslinger revolver duel between 2 parties at sunrise.
But a negotiation is an open dialogue in which both parties by their own free will reach a common understanding and agreement! The revolver duel is the opposite!
In other words it has to be a collaboration, hence being kind hearted and generous of giving in on items less important to you will generate more value in the end!
Kind hearted, dignity and well dressed?
Kind hearted, how do you make the counterpart feel comfortable about the negotiations and get a feeling of that you don’t have a fixed mindset before you initiate the negotiations?
Dignity, don’t be a sloppy type, being someone you’re not! If you try being more friendly than you are, it can backfire and you’ll be perceived as someone that can’t be trusted!
Being well dressed creates a more formal atmosphere, and also show that you take the negotiation seriously! This is not just about you but also the surroundings, i.e., it’s a suitable venue for the meeting, there is a prepared agenda, there is coffee???, etc. - If people feel they are being squeezed in between 2 other meetings, how does it make them feel? This also helps if you need to negotiate with someone you know really well and potentially even see privately!
What are the typical mistakes:
Let’s exemplify is through something most people can relate to, a salary negotiation. Let’s assume you’ve requested a 10% raise, which would put you high in the salary range compared to your colleagues.
Your Manager might ask: “Why do you believe you should get that much higher salary than your colleagues?”
Intuitively we will attempt answering the question with logical arguments about a, b & c.
The Manager now have a wide open playing field to divert the conversation and counter one or more of the logical arguments! Ultimately undermining your request.
The situation can also be reversed, i.e., let’s imagine you’re about to hire a new employee, if you start out by asking the question: “How would your dream scenario look if we were to hire you for this position”??
9 out of 10 would immediately come forward with their demand on salary, pension, flexibility, tasks that motivate them, things they dislike doing, etc., hence revealing a treasure chest of information you can use in the negotiation of their terms.
But at the same time you’ve managed to set a positive atmosphere for the negotiation!
In order to stay in the positive atmosphere one could move forward by telling the candidate what your dream scenario would be, in which you can balance it against that of the candidate…
That way you’ve now set the playing field for the negotiation, but in an atmosphere where the candidate is ready to create value for both parties, which can be a lot more things than just the $ figure on the contract!
So reiterating that a good negotiation creates value for both parties and that value can be a lot more things can a simple $ amount!
3 key aspects to remember
Summarizing
So prior to any negotiation, what is your strategy should you find yourself becoming irritated? And what is it if the same applies to your counterpart?
You need to have a strategy for both yourself and your counterpart!
What’s the best alternative solution??
?So let’s take the salary negotiation, you’ve asked for $500 more per month. Would you be willing to quit your job or accept a counter proposal? What is your BATNA?
?What’s the impact on the counterpart? Rate it from a scale of 1-10… That provides you a better overview of what really matters!
?The blessing of summarizing
?If you take initiative to summarize the conversation, you also get the power to reframe the agreements! E.g. “so if I am to summarize, I believe we are in agreement that x, y, z….”
?What do you do if you only have 1 hour to prepare:
Helping StartUps & ScaleUps in the Energy Industry
1 年Morten Moller Pedersen intersting article ! Thanks for sharing - one of the key aspects of negotiating is do your SWOT, look for the win-win, try to understand the drivers for the other side of the table (‘get on their piece of paper’) and always always always ‘run the numbers’ Negotiating for success is a regularly overlooked training ….I was trained by the great Bill Garcia - and loved every minute !
Head of Purchasing Management | IPMA | Senior Procurement Professional | Supply Chain Management | EPC | Petrochemicals | Green hydrogen | Oil & Gas | Fertilizers
1 年Great article Mr. Morten, quite practical and well articulated.
Head of Marketing & Contracts - Asia Pacific
1 年Good compilation! I have heard from many that Negotiation is a skill,science,art….probably yes, likely no,or maybe mix of all! Probably the most important reminder to all negotiators: regardless of the context or which issues are on the table, negotiation is always, fundamentally, about human interaction. No matter how high the stakes or how drawn out the dispute, the object of negotiation is to engage with other human beings in a way that leads to better understandings and agreements. It works like a charm!
Director Strategic Sourcing EMEA @ MSA - The Safety Company
1 年Great article Morten! and even better discussion about it yesterday. I can also see a lot of mistakes where negotiators: 1) let their emotions take over and 2) are not being aware of own body language.
C-suite Excellence Coach | Speaker |Author | Motivator | Company Culture Turnaround |
1 年Great article ?? For anyone interested in learning the techniques of negotiating I will recommend reading "Never split the difference" by Chris Voss.