Fail to negotiate well, and you can set your business back. Succeed at negotiating, and you put your business on the road to sustainable success. And it doesn’t have to be an emotionally-charged battle. For long-term business success, negotiation should not be seen as any kind of battle. Whether you love negotiating, or like most of us, you feel anxious about negotiating, you can get better at it. And for the success of our businesses we need to be better at reaching well-constructed agreements. Well-constructed agreements with your employees, your customers, your landlords and even the tax office can determine the profitability, the capital value and the cash flow of your business.
You negotiate better agreements when you stop seeing negotiation as an “I win, you lose” conflict. The key to success is seeing every negotiation as a path to mutual agreement.
Camels clearly show there’s always a way to win. A memorable story from the Middle East tells of a dying father leaving his 17 camels to his 3 sons. To his first son he left half the camels, the second son he left a thirdand the youngest son he left a ninth of the camels.The sons argued hard but could reach no agreement. 17 does not divide by 2, nor does it divide by 3 or 9. Eventually the sons consulted a wise old woman who thought for a long time about the camels. She wasn’t sure she could help but let them have her 1 camel so they had 18. The first son took 9 camels, half of 18. The second son took 6, his third. The young son took 2, a ninth of 18. 9 + 6 + 2 = 17. So they gave back the remaining camel to the wise old woman. Every negotiation has a solution.
Your business will have key moments where your skill at negotiating will have a big impact on the results of your business. You might be negotiating a salary package with an important new recruit or an important existing employee. You might be agreeing a vital property purchase or rental agreement. You might be negotiating a contract with an important new client or long-standing existing client. “I win, you lose” is likely to be a stressful battle…
Such a combative approach might work on a street stall in a market when negotiating over a Persian rug. But not with a long- standing client, valuable team member or strategic supplier. Successful negotiating preserves important relationships AND gets the result you want. Which is why in this report, rather than refer to your ‘negotiation opponent’, you’ll see us refer to them as your ‘negotiation partner’. You’re in it together, seeking a mutual “win, win”.
The sons did the right thing getting the wise old woman to help with the 17 camels. The old woman was not tied up with the personal issues, just the problem. In Fisher and Ury’s landmark book on negotiating – Getting To Yes – they urge us to separate the problem from the people too. This worked when the ‘Good Friday’ agreement brought two warring Northern- Irish factions into Government together. Both parties succeeded partly by separating the problem from the personalities.In your negotiations, a third party like the wise old woman can also help, but it’s your analysis and your preparation that will help you most.
The world’s best negotiators point to the need for top-quality preparation. “When the pressure is on, you don’t rise to the occasion, you fall to your highest level of preparation” – Chris Voss from ‘Never Split The Difference’. Fisher and Ury suggest three stages to successful negotiation:
The discussion part is what most people see as negotiation, but it’s just the tip of the negotiation iceberg. The analysis and planning is most of the negotiation iceberg, and like the Voss quote suggests, preparation decides your negotiation success when the pressure is on. Anticipating your negotiating partner’s wishes, interests, reasons and concerns will help you prepare well. It also pays to prepare your best outcome, your minimum walk-away result and your BATNA – Best Alternative To A Negotiated Agreement. To help with this you’ll find a preparation checklist in the download tools that come with this report.
1. Seek understanding by preparing and asking great questions…
So what do you ask? What do you want to know? How do you ask? Great communication starts with preparing great questions. Because when negotiating, a badly-constructed question can set a negotiation back or ruin it completely. Respectful and deferential questions show you are seeking a collaboration towards an agreement. “Why are you insisting on 3 months payment terms?” – could easily be seen as an aggressive question. “What brought you to conclude that 3 months for payment is needed?” – sounds more like a humble question seeking genuine understanding. Check out the downloadable tools and resources accompanying this edition of Business Bitesize for a whole armoury of respectful questions.
2. Show that you understand both facts and feelings
When demonstrating you understand facts, Chris Voss suggests we should repeat the last three words of any statement by your negotiation partner. Follow this with a silence and you prompt greater sharing at a deeper level. It’s a great way to demonstrate you’re listening to the facts. Fisher and Ury rightly point out that people make decisions based on how they feel, more than they decide using logical reasoning. Like the car buyer who likes the way the acceleration makes her feel, then justifies her decision with the safety record and fuel economy of the car. Ignore emotions in a negotiation and your negotiation will be less of a success than it could have been. What’s important is that people feel genuinely understood when they know you appreciate how they feel. So start by spotting the way your partner is feeling. Use words to describe these feelings and share these words carefully, respectfully. A phrase like “It seems like this is frustrating you” or “it looks like you’re really upset about…” can help. Allow a silence after such a statement and you may hear the magic words “that’s right”. “That’s right” is a sign you have demonstrated genuine understanding not just about the facts of their situation but the way they feel about it too.
3. Seek multiple options around which you can seek agreement
Seeking the single best option makes finding a mutual win/win deal much harder. Use your well-prepared questions to hunt for multiple options that might work. Not options around a negotiating position but around the interests and reasons. Like the 12 year old twins arguing over the last orange in the house – both want the orange. When dad gets fed up with the arguing he grabs a sharp knife and each gets half. But, like the twins, dad has simply listened to the position of the twins not the interests or reasons behind why they wanted the orange. Digging deeper into not just what people want but why they want it in a humble, respectful way can result in everyone getting what they want. Both girls could have had a whole orange to themselves because:
- One twin wanted the rind to bake an orange cake
- The other wanted the flesh to quench her thirst!
Go hunting for interests, reasons and options and you’ll be better at achieving a successful negotiation.
“What if the other side is focused on win/lose and doesn’t care about win/win?”. If there’s no long term relationship to be preserved then do what you can to get the best result you can. The ideas and skills in this report will still help. If there is a long term relationship in need of protection then you can share your goal of win/win with the other party. You should use the ideas and skills here to help you look beyond their stated position and still seek out options. If they use tactics you don’t like, raise this in your discussion and make it clear you’re not willing to respond to threats and tactics. This may be enough to stimulate a more constructive discussion.
According to the experts, getting a ‘no’ is really good for your negotiation. Asking questions and seeking options that gets you a ‘no’ can be good because every ‘no’ eliminates what they don’t want. A ‘no’ also makes your negotiation partner feel safe, secure and feel a sense of control about the discussion too. Seek a yes too soon and you’re likely to be trading positions and haggling rather than discovering interests and seeking options. So celebrate every ‘no’ and seek to understand the reasons behind a ‘no’.
Despite negotiating being a daily happening, few of us are armed with the effective negotiating skills focused on mutual problem solving. Both the Fisher and Ury book “Getting To Yes” and the Chris Voss book “Never Split The Difference” cut through the jargon of negotiating. Both deliver insights, knowledge and skills that will make you a stronger negotiator. Both are surprisingly small books and worth diving into. You’ll also find more insights, exercises and resources by checking out the downloadable tools that come with this edition of Business Bitesize.
Seeing every negotiation as a problem to solve together rather than a battle to win sets you up for stronger results. Because negotiation is a stressful and emotionally charged affair it pays big time to be prepared. And so these four helping hands focus on your question preparation more than anything else. It pays to restate the quote by Chris Voss: “When the pressure is on, you don’t rise to the occasion, you fall to your highest level of preparation”
So prepare well:
1. Analyse, prepare and plan your negotiation discussion
2. Prepare and ask great questions
3. Show that you understand both facts and feelings
4. Seek options that might work based on the interests and reasons
“How do I know that this approach to negotiating will deliver better results for my business?”
Good preparation will always pay off. No preparation or weak preparation hands the control to the other party. By separating the problem from the personalities and seeking multiple options to discover preferences, you’ll ultimately reach agreement in which both parties succeed. OR would you prefer to simply haggle like a market-trader with the most important people in your business – your team; your customers; your suppliers?
STOP focusing and haggling over negotiating positions
START seeking to understand what your partner wants and why and create multiple options.
Your business success depends on your ability to reach agreement with the key people in your business – team, customers, suppliers, landlords. The bigger the deal, the bigger the risks and the better you need to be at negotiating. Start by seeking a deeper understanding behind people’s negotiation positions. You don’t want to have to halve an orange when you could both have a whole orange! So ask questions about people’s positions and reasons. And identify more options from which you can both choose. And don’t underestimate the power of listening to the answers and seeing the way people feel. Show them you understand. You’ll then set yourself up for greater negotiation success.
Negotiating is personal. As a business leader you’ll be negotiating every day or every week in some way with the people that are important to your business and your life.
- Parent vs Teenager - Customer vs Seller
- Manager vs Worker - Wife vs Husband
These important relationships are so far removed from the street haggling you see at a market. And so it pays to seek out a mutually beneficial solution to your negotiation rather than see negotiating as a battle.
1. Analyse, prepare and plan your negotiation discussion. Being clear on your best outcome, your ‘walk-away’ outcome and your BATNA (Best Alternative to a Negotiated Agreement) will help you prepare your questions. Working out how your negotiation partner sees their best and worst outcomes and their BATNA can also influence the questions you ask.
2. Prepare and ask great questions. Negotiation is a problem-solving discussion. And healthy discussions start with great questions.
3. Show that you understand both facts and feelings. Great questions have you both sharing valuable information, facts and feelings. Capturing these and sharing these so your negotiation partner knows they have been heard means you’re on the road to a win/win agreement.
4. Seek options that might work based on the interests and reasons you both have. Rather than focusing on one outcome, seek options based on the interests and reasons behind your negotiation partner’s position. By working on creating multiple options together you’ll both head towards a win/win negotiation.