How to ALWAYS be happy with the results of your negotiations
September 17, 2014
If you have been in a salary discussion, purchased a used car, or sold your hi-fi equipment to the second-hand dealer, you know what it means to be in a negotiation. As with all situations in life, sometimes you come up on top, other times, not so. But you should ALWAYS be happy with the results.
Not true, you say? Any concession is a step toward unhappiness? Any compromise will lead to a poorer outcome? If these are more in line with your thinking, you might want to stick around and read what follows – because it might well open up new vistas for “negotiation nirvana” (if there’s even such a thing!) and see what all this means to the strategic thinker that you are.
Why we negotiate
Let’s first get something straight – negotiation exists because we want what the other person has to offer; and all we need to do is to settle on the terms. If you had no demand for your counterpart’s offering, you would not need to enter into the negotiation. It also means that both parties are keen to acquire what the other has to offer. With that in mind, let us uncover what is important for any party to a negotiation:
1. Value, not price
The deal will be made if the perceived value of the product/service outweighs the cost to acquire it. One thing we know for sure, we will not willingly purchase something that costs more than the value that it provides; and the walk-away point is where cost equals perceived value. Yet herein lies the greatest opportunity for all parties because value is subjective and different parties have different objectives in the negotiation. As such, it would pay huge dividends to parties to uncover the true intent for entering into the negotiation. Getting the highest/lowest price is seldom the only intent.
Many people usually associate negotiations with money, especially in a purchase deal. Yet there are other aspects that can be thrown into the mix without affecting quantum. These include payment terms, profit sharing, downstream revenue, brand equity, partnership potential, or warranties and support. Each of these elements has its own perceived value and can tip the scales away from a straight dollar-value agreement.
Nobody enters into a negotiation simply for the sake of winning it; they go in to get something in return. If we won at the expense of our counterpart, it would leave a bad after-taste in their mouth, and would make for a difficult situation if we were expected to work together again. It also increases the likelihood for them to renege on it the minute they find an opening to do so. That will also leave you with nothing to show for the effort you take to negotiation. Focus not on winning but in helping your counterpart achieve their goals and objectives. The more you are able to meet in the middle, to help them achieve as you do too, the better your chances of walking away happy.
With that in mind, let us now look at the strategy and tactics needed to get there.
The strategy for negotiation
In a single, composite word: win-win. If both parties in the negotiation approach the situation on a win-win basis, both their objectives will be met. In order for this strategy to work, both parties need to be open with the other and state their intent upfront. In many negotiations, parties keep their cards close to their chest, and they want the other to reveal their position without they having to put any skin on the table. In a win-win situation, that will not work. Both parties need to be open with the other and together, work to meet both objectives. In that scenario, they are both not taking sides but are interested stakeholders in each other’s success. And that takes trust.
The key to getting to win-win is in trust. To do that, you must take the first step: to put some skin on the table before your counterpart does. This will allow you to get a positive counter-response from the other party. I know; by doing that, you will be exposing vulnerabilities that are best kept under wraps; after all, we have to present our strongest front in negotiation, not the weakest one. The key therefore is in balance. So I end with a quote from Prof Emeritus Morell Boone of the University of Michigan, who was involved in strategic negotiations for the Carter administration during the Iranian uprising, “It is important to build trust and rapport, however, this should be done carefully by providing relevant facts not information that relates to desired results at the end of the process.” It is a dance of give and take on the ever-rising platform of trust.
Now who won’t be happy with a negotiation premised on that?
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