Friday, October 25, 2013

5 Core Principles of Negotiation That Can Save Your Bacon

We often don’t notice the countless mini-negotiations that we engage in on a daily basis.  And when big, obviously high-stakes negotiations do occur, the pressure and anxiety we feel leading up to the process can undermine our ability to get what we need and want.  

Below I've compiled a list of five essential negotiation concepts that can help take you from zero to hero in any negotiation scenario.  To learn more about the invaluable Art of Negotiation, sign up for my in-depth, hands-on workshop at Citizen Space on Saturday, November 2!!!

1) People will only negotiate if they believe you can help them or hurt them

I know, I know -- it sounds obvious, right?  Well, this golden rule of negotiation too often gets overlooked and leads parties to focus on the wrong things.  We tend to be single-minded about what we want when we negotiate.  It’s easy to overlook the reasons why the other party is even willing to negotiate with us in the first place.  

How many times has someone refused to even negotiate with you at all about something?  “That's not up for discussion” or “This is non-negotiable.”  Sound familiar?  Chances are, that person knew that you could neither hurt them nor help them in that scenario.  As result, there was no point in even engaging with you about it.  

People often view negotiation as an inherently competition exercise – two sides in opposition to one another - one winner, one loser.  Sometimes that's just the way it is.  But whether the tone is antagonistic (say, divorce proceedings) or collegial (salary negotiation for your dream job), all negotiations entail two or more parties who are in some way mutually interdependent.  Each party wants or needs something from the other.  Each believes that the either side can in some form either hurt them, by denying something they want, and/or help them, by giving them something they want.  Otherwise, there would be no point in negotiating.  

Keep this principle in mind as you ask questions and gather information to enhance your understanding of what the other side really cares about and, more importantly, why.

2) Focus on interests, not positions

The distinction between interests and positions has long been a fundamental concept in negotiation theory.  It’s one of those frameworks that, once you’ve learned it, seems like a no-brainer.  I first learned about interests and positions over a decade ago when I picked up Fisher and Ury’s classic Getting to Yes.  I continue to be amazed by how often this framework proves useful in reaching agreements and preventing negotiations from spiraling into full-blown conflicts.

The premise is simple.  Here’s how I like to boil it down:

A position is what you want.  It’s a particular viewpoint or set of requirements from which there is often little to no movement...at least on the surface.  

For example, let’s say I’m in the market to buy a new car.  One position might be that I want a car that will get at least 45 miles per gallon (mpg).  

An interest is why you want it. It’s the underlying economic, emotional or logistical need that helps to explain why you take a particular position. 

So, we said that we want a car that will get at least 45mpg.  Great.  But the question that often goes unasked and unanswered is: Why?  The answer can determine whether we’re able to actually get what we want out of the negotiation.  

If I’m the car dealer, and my most efficient model only gets 42mpg, should I just say “Oh well, I guess we can’t help you” and let you walk out the door?  No, of course not!  (When has a car salesman ever done that, right?!)  What I need to do as the seller is determine why it is you say you want 45mpg, what specific interest you have invested in that number, and whether it’s really about efficiency at all.  

So what do I do?  I start to ask questions.  I might discover that what you really want is a car that is significantly more environmentally friendly than your previous car, and 45mpg just sounded right to you based on the market research you've done.  If the concern is actually about ecological footprint rather than range or fuel economy, I could try to address your interest by pointing out that our 42mpg model actually has the lowest emissions of any car in its class, has won a slew of awards from environmental publications and qualifies for a government incentive program, etc.    

The ability to navigate interests and positions is one of the core principles of negotiation, for good reason.  It only becomes possible when we allow ourselves to be genuinely curious and open-minded about the other party.   

3) In boxing, styles make fights; in negotiation, styles should prevent fights

People tend to think that negotiation style is just a reflection of your personality or career path.  While there is a kernel of truth to this assumption, it’s largely based on stereotypes and oversimplification.  For instance, I encounter a lot of negotiation students who assume that a high-powered corporate lawyer will use a competition style, whereas a nonprofit director is more likely to be collaborative, and a social worker will be an accommodating push-over.  As individuals we all have  tendencies that reflect our personalities (and professional environments that tend to value and reinforce certain styles over others).  That said, negotiation styles are actually tools that can be deployed at will in a strategic way. 

In a boxing match, a fighter might be naturally more defensive-minded or aggressive.  But the most skillful practitioners of the "sweet science" know how and when to mix it up to accomplish what they’ve set out to do.  In negotiations with more than one issue at play, skillful negotiators will often use one style for one issue and a different style for another issue.  Rather than triggering a more explosion conflict, as a great clash of styles might do in a prize fight, modulating styles in a negotiation context can help to prevent the process from breaking down into an intractable conflict where no one gets what they want.

For instance, going back to the new car example… As the seller, I might be more competitive or uncompromising on the issue of overall price -- maybe because I have a quota to fill for the month or because I know that particular model is a low-margin unit. However, on the issue of amenities or lease terms or service discounts, I might take on a much more accommodating style, in terms of both content and tone.  

Negotiation style is not simply a reflection of your innate personality.  It’s a tool that you can use to your advantage.   

4) Watch out for anchors – they can drag you down!

Anchoring is an attempt to establish a reference point, or anchor, around which the rest of the negotiation process will revolve.  Anchors often take the form of first offers and prove most dangerous in situations where there exists an imbalance of power, resources or information.  Or when protocol dictates that only one party has the right to make the first offer. 

While often our first instinct is to hold back, keep our cards close to the vest and let the other party make the first move, making the first offer can have a powerful, anchoring effect by distorting the other party’s perceptions of the range within an agreement might actually be possible.

For example, let’s say that you’re a hiring manager at a design firm and I’m the new young associate you want to bring onto the team.  In actuality I'm your first and only viable choice for this position, yet I have no idea what you’re actually willing to pay me...and even if I asked you directly, you’d probably be evasive about it.  All I have is a general sense of the market rate based on some anecdotal online research I’ve done on your firm’s competitors, which suggests a range anywhere from $30,000 up to as much as $70,000.  So I go in expecting to end up somewhere close to $50k. 

Let’s say you tell me that you’re super excited for me to join the team and the salary that you’re offering is $36,500.  I might think to myself: whoa, I’m pretty sure I deserve $50k, but what if you’re even not authorized to go higher than $40k for entry-level associates?  Or what if your second choice candidate would happily take $36k?  Hmm…maybe I shouldn’t push for much more than $40k, because I don’t want to insult you…

Little do I know that you’ve been authorized to offer up to $51,500, after a six-month review and satisfactory performance. 

Yeah.  I’ve just been anchored.  Your first offer has distorted my perception of your actual range, because protocol dictates that it’s disrespectful to make a counteroffer that strays too far from what’s already been put on the table. 

Which leads us to...

5) Preparation, preparation, preparation

In real estate, it’s all about location.  Well, for negotiators, it all comes down to preparation.  One of the only ways to counteract the effects of a well-placed anchor, is to arm yourself with compelling information, to carefully prepare your reaction to resistance that you might encounter and to fully understand your contingency plan or other tactics that you can deploy to increase your odds of getting what you need and want. 

To learn more about these concepts, how to effectively plan and prepare for a negotiation and much more, sign up for my fun, immersive workshop, The Art of Negotiation and Conflict Management on Nov 5, hosted by Citizen Space!!!


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