Article originally published in the American City Business Journals on June 4, 2019
During my career, I have negotiated many types of deals and have observed
negotiating styles and skills of other senior leaders. In August 2017, I wrote an article
in which I shared advice on how to be an effective negotiator. This is an update of that
article:
Know what you are trying to accomplish
What would success look like? If you don’t know where you want to go, you will never
get there.
What are the minimum outcomes you must achieve? If you cannot achieve them, are you
prepared to walk away from the table? If not, perhaps you have not yet properly defined
your minimum outcomes.
Develop a game plan before negotiations start
Do you need this deal more than the other party, or do they need it more than you? Are
you dealing from strength, or are you in a weaker position? Are the concessions you need
to make not in your short or long-term best interests?
Every negotiation requires compromise and trade-offs. You are not going to win on every
issue. Therefore, it is important to determine the issues that are deal breakers for you. Try
to determine which issues are deal breakers for the other side, and can you live with
agreeing to them?
Study and understand your counterpart
Understand the negotiating style of the lead negotiator on the other side of the table.
What is their reputation and track record in past negotiations with you and with others?
Can they be trusted to meet their negotiating table commitments?
Listen to the other party and ask questions to further understand what they want to
accomplish. Communicate to them what you want to accomplish. Identify where your
goals overlap and where they don’t so you can work to close the gaps.
Work toward a win-win
If you have an ongoing relationship, it’s important for a win-win result. If one party feels
they were treated unfairly in a negotiation, the relationship between the parties could be
damaged and may affect future negotiations. Maintaining a good relationship in the long
run is more important than a win-lose result.
If this is a one-off negotiation, you need to decide how hard you want to take advantage
of your perceived strengths and drive toward a “win-lose.” You could run into the other
party again in a different situation where you may not have as strong a position. People
have long memories.
One of the objectives of a negotiation, through the process of give-and-take, is to find
more overall value for both sides, perhaps not apparent before negotiations start.
Avoid bravado and strong-arming the other party if they won’t agree to your terms
If strong-armed by you, so as not to lose face, other party will be forced to raise the
stakes and retaliate against you rather than capitulate, which forces you to respond in
kind. This is a dangerous game. Where does it stop?
You and the other party are playing to your respective constituencies, and no one wants
to appear to have caved in to the other side. Avoid being backed into a corner where one
or both of you will lose face.
In sports, you never want to enrage the opponent by making statements that inflame
them, which makes them play harder. This principle also applies to negotiations.
Avoid negotiating with yourself
Once you make an offer, wait until the other side responds with a counteroffer. If you put
another offer on the table before a counteroffer is made, the other side will view this as a
weakness and try to exploit it to their advantage.
To avoid not receiving a counteroffer, ensure that your offer is credible. If it isn’t, the
other side may just ignore it and not make a counteroffer, prematurely ending
negotiations.
React strongly to an untrustworthy party at the negotiating table
I once was the lead negotiator for my company in a negotiation to sell our ownership in a
joint venture to our partner. After the second time the attorney for our partner
misrepresented what we had negotiated in the agreement he was drafting, my team and I
abruptly stood up and announced we were leaving the table and would not return until my
counterpart replaced that attorney.
Two days later, my counterpart apologized and informed me he was appointing a new
attorney to record our decisions, and negotiations resumed.
Don’t misrepresent what was previously negotiated. It damages your credibility.
Remember that it takes two parties to negotiate or renegotiate a deal
If either party feels it is not in their best interest to do a deal, they won’t. Even if you
perceive you are in a position of strength and you feel you can force the other side to
acquiesce to your terms, they always have other alternatives, which if pursued, might hurt
you in the long run.
Before entering a negotiation, be well prepared. Know when you are willing to walk
away. Understand your situation and that of the other party, including strengths,
weaknesses and alternatives. If at all possible, avoid a win-loose result. People have long
memories.
Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.
Concise and helpful article. All good points to remember. Thank you for your wisdom.