Today, we dig a little deeper into negotiations. In case you missed it, make sure you check out last week’s article “Negotiating Like a Trained Expert the Easy and Effective Way.”
Life is (almost) never a zero sum game
A zero sum game is one where one side must lose for the other one to win, like a football game. But, life is much more complex than games, and in most negotiations, the other party doesn’t have to lose, in order for you to win. It’s all about looking for ways to grow the pie and ways we can both win.
Finding the interests you share with the other party is one way to find win/win solutions. Taking the time to listen and get to know the person you are negotiating with and trying to understand where they’re coming from will help you uncover what their interests really are. As you identify their interests, you can work with them to find ways they intersect with your interests.
If you’re dealing with somebody who only seems to want to play hardball, one useful strategy is to come up with multiple options that are worth the same to you. That way, you can give them multiple options, and they will feel like they had a choice, while you still get what you need. Another thing you can do is to look for things that are low cost to you but high value to them. This is especially useful when negotiating in your personal life. If your kids want to go to the state fair on Saturday, but you’re trying to trim your entertainment budget, try offering to play ball in the park instead, maybe all they really want is to spend time with you, and this option provides them that without costing you anything out of pocket. It’s a silly example, but it illustrates the point.
The beauty of a “yesable” proposition
Ultimately, your goal is to get the other party to say “yes”, so you want to make it as appealing as you can for them to do so. You want to make their decision easy. A “yesable” proposition is one where it’s easy to say yes and most importantly, where the agreement can be finalized without any further details having to be worked out and without any further negotiation needed in the future. If at all possible, at the very end of the negotiation, once you’re almost sure you have a win/win option that both parties will be happy with, phrase it in such a way that it is realistic and sufficient for the other party to simply say “yes”. This is exactly what employers do when making an offer of employment. They don’t offer you the pieces of the offer piecemeal. They offer you a full package of salary, benefits, and vacation time so you just say “yes.”
If you simply can’t agree on substance, agree to agree based on objective criteria
So after hours, or even days, of negotiation, you simply haven’t been able to come down to a proper agreement. The other party is about to walk away and things feel all but lost. There is still something you can try. Let’s go through an example:
Larry is a claims adjuster trying to keep a claim from going to litigation. Jim, the claimant has asked for $100k, but Larry cannot justify more than $50k based on the facts, pictures, and research he has. He has tried to come up with creative solutions and find interests in common with Jim, but he’s just not getting anywhere. Neither party has moved an inch the last two times they’ve met.
Larry: “Jim, as we have discussed, you feel you need at least $100,000 for your losses, and after extensive research, I am valuing this claim at $50,000. You have said that if we can’t come to an agreement today, you’re going to be securing a lawyer, and I understand why you’re thinking of doing that. In my experience, if you get a lawyer the claim will take twice as long, and even though we might end up settling for a little more, the lawyer will take 30% of the settlement, and you might not end up with enough over our current offer to make it worth your time. How about we settle it in arbitration instead? We both agree ahead of time to be bound with what the arbitrator decides. That will be much faster than getting a lawyer involved, and we will both end up with a fair settlement. How does that sound?”
By agreeing to use binding arbitration instead of pursuing expensive and slow litigation, both parties can feel that they got a fair settlement while avoiding many of the expenses. The key is to find a neutral and fair way to create a meeting of the minds. Often, going this route does a lot to deal with the emotional side, both parties want to feel that they were treated fairly and a neutral third party can be a life saver in helping them feel that. If you can’t agree on the amount, at least agree on the procedure to get there.
Being ready to walk away – Developing your BATNA
BATNA stands for “Best Alternative to Negotiated Agreement” and is a key concept in the theory of negotiation. Regardless of how hard and creatively you worked, there is a possibility the other party is just in a much better position, and in the heat of the moment, they say something like “Ok, the very best we can do is $25,000. Take it or leave it.” If you’ve tired and invested in getting to an agreement of some sort, you might get tempted to just accept it, especially if you have figured out that the other party is outgunning you, and a good agreement is simply beyond reach. So you accept it and then you get to the car, and as you start driving away, you realize you literally lost money on the deal. The deal that you just agreed to simply doesn’t meet your needs at all. The way to avoid ever finding yourself in this situation is to develop your BATNA ahead of time and always be ready to walk away if you can’t get what you need.
Figuring out your BATNA is a three step process:
- Coming up with a list of options to pursue if the negotiations can’t come to an acceptable agreement.
- Improving some of them and converting them into practical options
- Selecting the best one
Once you go through this exercise and have your BATNA, you’re in a better position to avoid getting bamboozled into accepting an offer that doesn’t meet your needs. Also, and maybe most importantly, knowing what your best alternative is will give you the security to negotiate from a position of strength. If you come to the table unwilling to walk away, the other side will probably detect that weakness and exploit it.
A slightly more refined modification of the BATNA called the Trip Wire can also be useful. The Trip Wire is not quite as hard and fast walkaway point as the BATNA is, but rather it’s a point below (or above if you’re buying) which a deal might make sense, but only after careful consideration. For example you can agree with your boss ahead of time: I’ll make the deal if I can get at least $20 per unit, I’ll walk away if I can’t get them above $15 per unit, but if I can get them to $17 I will call you and we will discuss. That $17 figure is the Trip Wire.
One final, but very important note about BATNAS: Always spend some time before the negotiation doing your best to consider what the other side’s BATNA might be. Obviously you can’t fully know what their BATNA is, but having spent some time thinking about it will make it easier to put yourself in their shoes and creatively come up with win/win options.
What if the other side won’t play ball? Time to switch from baseball to jujitsu!
Meaning, Negotiation Jujitsu, please, no physical grappling on the negotiation table. There are times where regardless of your efforts to negotiate in terms of interests, to creatively find win/win options and to grow the pie, the other side seems only interested in playing hardball. In those cases, you’ll have to reach for more advanced techniques.
Negotiation Jujitsu is the art of countering “the basic positional moves of bargaining in ways that direct their attentions to the merits.”
First of all, do not criticize or reject their position, that will only make them defensive. When they attack yours, do not push back. Instead of pushing back, deflect their attack against the problem. “As in the Oriental martial arts of judo and jujitsu, avoid pitting your strength against theirs directly; instead, use your skill to step aside and turn their strength to your ends. Rather than resisting their force, channel it into exploring interests, investing options for mutual gain.”
When they make an offer, don’t reject or accept it. Treat it as one of the many possible options and look for the interests behind it. What are they trying to accomplish? How can you improve it? Ask them how their offer addresses the problem.
It might seem like you should, but don’t defend your ideas, instead invite critique and advice. Ask them what is wrong with your idea. Rephrase every attack on your position as an attack on the problem instead.
The two key tools of Negotiation Jujitsu are: use questions instead of statements, and use silence. Statements cause resistance, while questions bring answers and cooperation. Questions help the other side open up, so you can better understand them.
Use silence when they make an unreasonable offer. Literally just sit there and wait. Don’t utter a word. Let them feel uncomfortable with the silence, and there’s a good chance they’ll make a better offer, especially if their previous offer was just a bluff. Silence makes them feel like you’re at a stalemate, and unless they’re ready to walk away, they’re likely to give in to save the deal.
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To dig much more in depth into the theory of Principled Negotiation, we highly recommend the book Getting to Yes by Roger Fisher and William Ury.
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