What makes a good negotiator? Is it steely confidence, combined with the ability to bluff?
While these attributes may help, successful negotiation really comes down to a practiced approach. The following framework should help you negotiate the sale of property and equipment, resolve employee compensation questions, set promotions with your vendors, and generally get your way.
There are three phases to a successful negotiation: preparation, offer and counter, and settlement. Throughout, think of the parties to the negotiation as partners, not opponents.
Know What You Want. This may seem obvious, but many people don?t articulate what they want before diving in. If you are looking for a new site, don?t just shop around. First decide what you want and what you are willing to pay for it.
Develop Options. If someone offers to buy your business tomorrow (and you are interested), the first thing you should do is discreetly find two other prospective buyers. Their bids will give you information upon which to base a valuation of your business and will give you leverage in the negotiation.
Get All Issues on the Table. You are hiring a general manager and talking strictly about salary. But maybe vacation days are what really matters to the candidate and you can perhaps cut salary by $10,000 in exchange for $1,000 worth of paid time off. Make sure you understand all of your partner?s issues and get yours out there as well. Then everyone will know where tradeoffs exist.
Frame the Discussion. People evaluate information relative to reference points. Salesmen know this when they say, ?I had a guy last week who was willing to pay twice as much.? You want to be the one who does the framing: ?Well, we?ve never paid more than $500 for a cooler.? Even if $500 is a low offer for the cooler at hand, it will guide the negotiation downward.
Offer and counter
Create Negotiating Room. Regardless of whether you make an offer or a counteroffer, you should give yourself as much room to negotiate as you can.
The First Offer. Whether to make the first offer depends on how much you know about your partner?s expectations. If both of you have clear understanding of prevailing value (example: the ?Blue Book? value of a car), it is in your interest to start things off and frame the discussion. If you are uncertain, get information from your negotiating partner in the form of an offer. Just don?t get anchored outside your negotiating zone by someone else?s attempt to frame the discussion. Never offer a range (?I?ll give you $5,000 to 7,000?). Your negotiating partner will always take the most advantageous end of the range.
Counter. Things tend to wind up in the middle. It?s true, and it?s based on human nature. If you have the opportunity to make a counteroffer, keep this in mind.
Be Absolute, Not Relative. A thousand dollars relative to a used cooler seems like a lot; but $1,000 relative to a new building seems trivial. They both have exactly the same impact on your bottom line. Don?t allow yourself to give up big ground in dollars just because it seems small in percentage to the negotiation.
Avoid Irrational Escalation. This happens most in bidding situations. Don?t get so emotionally invested in ?winning? that you end up losing in a big way. Don?t get caught in the trap of thinking, ?Well, if I?ve come this far?? If you have developed options and are clear about your objectives, this is easier to do. You can always walk away.
Seek Inventive Solutions. There is usually an opportunity to bring in new variables and new considerations. Consider this if you are facing an impasse.
Following these general principles should ensure that you get as close to what you want as possible while negotiating mutually amicable agreements. Over time, it will even give you steely confidence.
Woody Smith is vice president with The Intelligence Agency, a marketing and strategy consultancy in Traverse City, Mich. Write to [email protected]
Natural Foods Merchandiser volume XXV/number 4/p. 18, 22