Negotiating

David Brown

• Publisher: HarperCollins Business
• Year: 2010
• eBook ISBN: 9780007358915
• Topic: Business
• Subtopic: Business General
• Index: Business

The negotiating secrets that experts and top professionals use.

Bargain your way to success

After exchanging packages you have to bridge the gap between their package and yours. You will do this through movement as you bargain with each other. This chapter looks at how to manage concessions, the need to track them, and the importance of constantly bearing in mind your objectives before making concessions. Above all, I will emphasize how important the tiny word “if” is in the negotiating process, and how to use it to your advantage.

5.1
Movement allows agreement

Negotiation is about compromise – give and take – so it follows that negotiation is about movement. We will look at the tactics of movement in this chapter, but first let’s look at the big picture so that you can be sure of its importance.

Negotiations are about the movement of two parties from two opposing positions to a single position of mutual agreement. So, it follows that movement is the lifeblood of negotiations. You should be constantly re-assessing your approach to these three questions throughout every negotiation:

• How far apart are we? That is, how far apart are we on each of the variables that are the basis of our negotiating framework?
• Where do we have to move? Where do we have to get to in order to reach agreement? It is the point at which we will agree! It is Stephen Covey’s “end” as in “start with the end in mind”.
• What do I have to do? You know how far apart you are; you now know where you will meet; finally you need to ask yourself, “What do I have to do to get there, what do I have to do to bridge the gap?”

Make constant use of your negotiating framework. On each of your variables ask yourself, “How far apart are we, where do we have to move to, and how do we bridge the gap?”

You and your partner need to send signals that you are both prepared to move, otherwise you will drift towards deadlock and failure to agree. Signals usually come in the form of a change of emphasis in a previously rigid statement. So, for instance, “never” becomes “maybe,” “impossible” becomes “that could be difficult,” and “no” becomes “not as things stand.” Early on in the negotiation, these would be floppies (see 4.9), but when both parties are looking for movement, they are a signal that movement is possible. They are grounds for hope. Here is another example of an aspect of negotiating that is not clear cut, not black or white, but requiring you to have a feel for the situation and use your good sense.

When you feel that some movement is required, look for a signal. If you don’t receive one, send a signal that will prompt movement from the other party. Questions are important in this situation, questions such as “Why are you so determined to stick on that point?” or “What’s needed to bring us together?”

Signals are an essential part of negotiations because they indicate the possibility of movement without committing the negotiator to anything specific like a revised package. The revised package follows, and you are one step nearer agreement.

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In order to reach agreement, entice movement from the other party, and be prepared to move yourself.

5.2
“If” is the biggest word in negotiating

We have already touched on the significance of the word “if ” in Secret 4.1. Successful negotiators start proposals with “If you…”. Remember this, put it into practise and you could save yourself a fortune.

It is essential to say, “If you do this, this and this, I will do that…” because you are attaching a condition to a proposal. You are making the point that this is a package and that the other party should either accept the package or reject the package and offer an alternative. What you are not doing is giving the other party the chance to accept bits of your

case study One of my consultant friends, Neil, was negotiating a spell as an interim industrial relations manager for a company going through a period of change. He was asked to reduce his daily rate by £20 per day to clinch agreement on a package that the MD of the company had spelled out. This covered all the variables they had been discussing, including a mileage allowance of 55 pence per mile. “OK,” said Neil, “If you increase the mileage allowance to 62 pence per mile, providing we are agreed that it is six months’ work; that I will work five days per week with me working remotely from my office on one of those days; that I will be paid weekly in arrears, and that all out of pocket expenses (hotels and meals) will be reimbursed at cost, I will reduce my daily rate by £10. Neil conceded £10 per day and worked out that the extra 7 pence per mile halved the cost of the concession to him. After more small adjustments they shook hands on the deal.

package, and reject other bits. If you allow the other party to accept the best bits of your package, and agree them in isolation, then you are being ‘salami-ed’ (see 4.5). You are getting into a situation where you could agree on several negotiating variables one after the other, only to be left with one variable on which you don’t agree. You have been ‘salami-ed’, you have nowhere to go, and that could be expensive!

When you negotiate use a calculator. If you don’t then you are either brilliant at mental arithmetic, or you are not negotiating in a structured way. Your package contains several negotiating variables, each of which has a different value to you. For each item you may move from ‘Desirable’ to ‘Probable’, even to ‘Worst’, as you make concessions. How do you know how valuable each concession is? Consider the case study in 4.2. The other party might ask you to reduce the price by one quarter of one percent. How do you know how valuable this is? How do you know how valuable it is in relation to the other items in the package? You need a calculator!

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Use “if” as the first word in every proposal you make.

5.3
If you concede, attach a condition

This principle is so important that I am devoting this section to a selection of practical examples that show how this can work for you. You can then come up with proposals that will suit your particular situation.

You may be any of the negotiating types that we considered in the introduction – buyer, seller, government officer, family member, industrial relations officer, or others. I am going to give examples for each, but please appreciate that these are only examples.

Some of them start “If you…”, as discussed in 5.2, but some start with “If I do this…will you…? For me, the latter is too likely to result in someone saying “No”. However, this approach is sometimes used, particularly in the closing stages of a negotiation when you are asking someone point blank, “Will you accept this?” The challenge for you is to come up with the right words to persuade the other party in the situation in which you are negotiating. Here are a few examples of what people might say when they are put in a difficult situation.

• In the family 1. A wife wants her husband to take the children to school, but he is aware that he might have to do the shopping as well. So he concedes, “I’ll take them to school, if you sort out the shopping.”
• In the family 2. Your son wants to behave just as he likes, wants an ice cream, and wants to play football with his friend. You concede, “If you help me today, we get ice creams and I will pick up Paul so that you can play football tomorrow?” Children (like some adults) are very persistent, and expect you to give in, so be aware of this when deciding how to respond to their demands.
• The buyer 1. A buyer is under pressure to buy large batches of 1,500 units, at a price they don’t like. They concede, “If you let me buy a minimum batch of 1,000, if you will supply them on a two-day lead time, and if you accept payment in 60 days, then we will accept your price of £5.23 each.”
• The buyer 2. A buyer is being asked to accept a package that is less favourable than they want to settle for. They concede, “If you give us first refusal on all your obsolete stock, I will accept the package that you have just offered.”
• The seller. A seller is being asked to reduce the price by 1%. They concede, “If you will commit to featuring our goods in the front of your catalogue, we will reduce the price by 0.75% and pay £1,000 towards your printing costs.”
• The employer. The employees know that they face a cut to a four-day week, and wish to maintain their existing hourly rates. So the employer concedes, “If you are prepared to accept a four-day week and a 2% reduction in the rate per hour, we will commit to no redundancies for at least six months.”

I could go on, but the requirement is for you to be imaginative and structured in your own negotiations. Often, the concessions you will have to make will be wrapped up in a package that is more complex than the examples above, as in the case study in 5.2.

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Imaginative conditions can make any concession desirable.

5.4
Make your first concession small

Making your first concession a small one – ideally on a relatively minor issue – sets the tone for the negotiation. This involves risk and uncertainty, so requires real courage. It is what Steve Gates means by “being comfortable with being uncomfortable”.

In Secret 5.5 we will look at several ideas that will allow you to manage concessions effectively. Before we go there, I want to focus on the importance of starting small. Negotiating expert Chester Karrass has conducted extensive trials that have shown:

1 People who start with small concessions get better results than people who start big. Those who make small concessions followed by even smaller concessions get the best results of all. The message is start small and get smaller.

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2 People who make their first concession on a major issue secure the worst results.

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3 People who make the biggest single concession in the course of a negotiation fare worst of all.

“The key to negotiating is learning to be comfortable with risks that make negotiators feel uncomfortable”

Steve Gates, Chief Executive, Gap Partnership

One of the reasons that these factors are important is that people who make big concessions raise the expectations of the other party. People who give a little at a time get the best results. So you need to view concessions through the eyes ...

Table of contents

• Cover Page
• Title Page
• Table of Contents
• Skilful negotiating will improve your life
• Know when to negotiate
• Prepare clear objectives
• Discuss your respective positions
• Deal only in packages
• Bargain your way to success
• Find common ground
• Put it all together
• Jargon buster
• Further reading
• About The Author
• Copyright
• About the Publisher