Article originally published in the American City Business Journals on Aug 29, 2017
I’ve spent years negotiating many types of deals and living with the results as well as observing the negotiating styles and skills of other senior leaders. With that perspective, I thought I would share what I have learned about being an effective negotiator.
1. Know what are you 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.
2. 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?
3. 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 what you want to accomplish. Identify where your goals overlap and where they don’t so you can work to close the gaps.
4. Work towards 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 towards 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.
5. 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.
6. 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.
7. 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.
So, 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 you are in a long-term relationship with the other party, drive for a win-win. Exercise caution driving for a win-lose. People have long memories, and you might encounter them again, perhaps when they are in a position of relative strength.
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.