The Negotiation Book
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The Negotiation Book

Your Definitive Guide to Successful Negotiating

Steve Gates

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eBook - ePub

The Negotiation Book

Your Definitive Guide to Successful Negotiating

Steve Gates

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About This Book

Winner! - CMI Management Book of the Year 2017 – Practical Manager category

Master the art of negotiation and gain the competitive advantage

Now revised and updated, the second edition of The Negotiation Book will teach you about one of the most important skills in business. We all have to negotiate at some point; whether in the office or at home and good negotiation skills can have a profound effect on our lives – both financially and personally. No other skill will give you a better chance of optimizing your success and your organization's success. Every time you negotiate, you are looking for an increased advantage. This book delivers it, whilst ensuring the other party also comes away feeling good about the deal. Nothing will put you in a stronger position to build capacity, build negotiation strategies and facilitate negotiations through to successful conclusions. The Negotiation Book:

  • Explains the importance of planning, dynamics and strategies
  • Will help you understand the psychology, tactics and behaviours of negotiation
  • Teaches you how to conduct successful win-win negotiations
  • Gives you the competitive advantage

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Information

Publisher
Wiley
Year
2015
ISBN
9781119155522
Edition
2

CHAPTER 1
So You Think You Can Negotiate?

“It is what we know already that often prevents us from learning.”
Claude Bernard

SO WHAT IS NEGOTIATION?

Negotiation is a necessity, a process, and an art. It evokes complex feelings that many seek to avoid and yet it is fundamental to how business gets done and takes place millions of times a day around the world. If you can take control of yourself, your values and prejudices, your need for fairness, and your ego, you may start to realize the best possible outcomes in your negotiations. The biggest challenge here is not in educating you in how to be a better negotiator, but motivating you to change the way you think about negotiations and yourself. Of the many thousands of negotiation workshops I have provided at The Gap Partnership, the greatest change I see clients make is that of self-awareness. Learning about negotiation is an exercise in self-awareness because understanding yourself and what effect a negotiation can have on you, enables you to accommodate the pressures, dilemmas, and stresses that go with it. Self-awareness helps us to recognize why we do the things we do and the effect this has on our results. It also helps us adapt our approach and our behavior to suit each negotiation rather than trying to make one approach fit every situation, simply because it suits our personal style.

Why bother negotiating?

Just because everything is negotiable doesn’t mean that everything has to be negotiated. The value of your time versus the potential benefit that can be achieved by negotiating is always a consideration. Why spend ten minutes negotiating over the price of a $10 notebook when you normally make $100 an hour? So you may save $2 – that’s 20 cents a minute! However, if it is your next car and a 5% saving could equate to $1500, the time is probably worth investing.
There will be situations involving more important decisions where you are mutually dependent and yet hold different views. When an agreement needs working through, effective negotiation can help provide not only a solution but potentially a solution that both of you are motivated to carry through.
There is no other skill set that can have such an immediate and measurable level of impact on your bottom line than negotiation. A small adjustment to the payment terms, the specification, the volume threshold, or even the delivery date will all impact on the value or profitability of the agreement. Understanding the effects of these moves, and the values they represent to you from the outset, is why planning is fundamental to effective negotiation. The skill in building enhanced agreements through trading off against different interests, values, and priorities is negotiation. In the business context it is known as the skill of profit maximization.
volume threshold
This term is used to determine a level at which benefits such as pricing, discounts, delivery, or other services become applicable.
So, effective negotiation provides the opportunity to build or dissolve value – but what does value really mean? It can be too easy and is too often a focus on price. The question of “how much?” is one, transparent, measurable issue and, because of this, is also the most contentious issue in the majority of negotiations.
Yet price is but one variable you can negotiate over. It is possible to get a great price and feel as though you have won and yet get a very poor deal at the same time. For example, because the item did not arrive on time, or it fell apart after being used twice, or it had no flexibility about it, and so on. (Ever heard the saying “you get what you pay for”?)
variable
This can be a price or any term of condition that needs to be agreed.
In negotiation, your ego and your competitiveness might fuel the need to “win,” especially where you allow a sense of competition to become involved. However, negotiating agreements is not about competing or winning; it is about securing the best value. This means understanding:
  • what the other person or party wants, needs or believes;
  • what they do; and
  • how that affects the possibilities.
As a Complete Skilled Negotiator your focus needs to be on what is important to the other party: their interests, priorities, options, if any, their deadlines, and their pressure points. Try to see the deal as they see it. If you set out to understand them and their motivations, you may be able to use these insights to your advantage and, ultimately, increase the value of the deal for yourself. Being driven to beat the other party will distract you from your main objective, which is usually to maximize value from the agreement.
pressure points
Pressure points are things, times or circumstances which influence the other party’s position of power.

Proactivity and control

Your first task is to be proactive – to take control of the way you negotiate. To map out the issues, formulate an agenda which helps you to negotiate agreement in a way that will serve your objectives. Try to be honest with yourself when deciding or agreeing on what these are. Remember, price is only one element of the deal and winning on price may not result in your attracting the best deal. You may need cooperation to the point where the other party not only agrees to go ahead but is also prepared to honor their commitment. There is absolutely no place for your ego in your negotiations. The single thing that matters is the total value over the life time of the agreement.

Becoming comfortable with being uncomfortable

The person on the other side of the negotiating table may well take up a tough position, which could make you feel challenged or even competitive. Becoming more comfortable with being uncomfortable in situations like this, where you are also likely to experience pressure and tension is one of the most important prerequisites of a skilled negotiator. Without this, our ability to think and perform can become compromised. So you need to recognize that, by negotiating, you are involved in a process and the people you negotiate with need time to adjust as part of engaging in this process. Typically this is when:
  • any new risks, obligations, conditions, or consequences are presented; and
  • any new proposals that you make, which materially change the value of the agreement.

EMPOWERED, INEXPERIENCED NEGOTIATORS REPRESENT A REAL RISK

The adoption of cloud-based technology solutions into organizations has created a fast-changing, complex environment where it’s important not only to have technology specialists on your side, but a negotiator who can make sense of the variables featured in contracts.
PIC, a Paris-based consultancy business, were keen to invest in a new HR management system to help manage the challenges around managing their ever growing team. During their research they identified a solution which also offered an integrated Learning Management Systems (LMS). This is a platform for managing staff development and also houses content for training purposes that staff can access.
People Technologies, the potential supplier, made a compelling pitch to PIC on the basis that their LMS system might also be used as a platform for servicing PIC’s own clients. This meant that PIC would acquire not only a system that serviced its own business but a solution which could extend their service offering to their own clients.
The newly appointed technology manager sold the idea to the board of PIC who were impressed with his creative thinking. The annual license fee was twice the budget allocation but the client-facing provision was sold as a real opportunity to “provide a monetized technology solution to its clients,” won the board over.
The board bought the idea and signed a 3-year contract. However, it soon became apparent that the venture was a first for People Technologies. Although a large business, it had never provided its service to a client as a resale facility. There were issues that had not been thought through, such as chargeable licensing and the fact that PIC would be liable for every one of its client users. Issues around integration and maintenance had not been fully understood or negotiated by the technology manager. The board had assumed his understanding of the interdependencies. Within weeks, the CFO having faced questions from the operations team investigated the implications of the contract and realized that the opportunity lacked coherence. It subsequently cost the company half the cost of the 3-year contract to exit and the technology manager his job.
So, even though the board had committed to a solution for twice t...

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