Tuesday, 06 April 2010 04:54

Art Of Negotiation

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Negotiation is a fact of life. We negotiate all the time, professionally and personally. Think of all the negotiation you do on a daily basis with your spouse and children. Negotiation is fun too, if you keep your ego out of it.

I hope to teach you some negotiation tactics in this article. Knowing tactics can make negotiation more productive and enjoyable. If nothing else, you should learn how to defend against negotiation tactics.

A word to the wise: Don't get carried away with negotiation tactics. Deals are built on mutual respect and trust. Usually you achieve your best results by being fair and treating people fairly. It also helps to negotiate for win-win outcomes, because stable relationships are only built on mutual benefit. Also, in many situations and relationships, you create a bad impression by making a show of negotiation. In sum, be careful about the thoughtless use of tactics, and don't act too smart. Use your better judgment.

Fundamentals.

Be Indifferent. In the art of negotiation, this principle ranks above all others: Be ready to say "no" and walk away. Never want any particular deal too much. Even better, try to line up some alternatives (or at least appear to have them lined up) so that you can walk away to another deal. Of course, the downside to walking away is not getting called back, but never fear, another deal usually comes along pretty soon.

Be Petty. Negotiation is a petty business. Don't be noble by laying your cards on the table too early and telling the other side your bottom line. This tactic might work when you are dealing with like-minded, noble people. Against a veteran negotiator, however, you'll just be a noble sucker. Instead, play the game in front of you, negotiating as appropriate to that game.

Be Knowledgeable. Know yourself and your opponent. Learn about your opponent - what it needs and wants. It even helps to care for the other side and show empathy for them. Ask your opponent open ended questions - you'll be surprised what people reveal if you only ask them. On the other hand, don't reveal too early what you need or want out of the deal. Lastly, know your walk-away point, and keep it secret.

Basic Tactics.

Avoid giving the first offer; start high / low. If the other side's initial offer is absurd, ask them for a more reasonable offer before moving forward. If you need to publish a price, start very high or low, that is, a good bit higher / lower than your walk-away point.

Squeeze them. If you succeed in having them make the first offer, delay the moment when you give a concrete number - say to the other side that their offer "is just not good enough." See what the other side comes back with. Do not overuse this tactic, though, because it can come across as a little high-handed.

String 'em out. Find something to negotiate about, even if you plan to lose on that point. This prevents the other side from believing that it offered too much, then withdrawing its offer or nibbling at you. You want the other side to believe that it is winning a good deal. Likewise, save items for negotiation and sweetening the deal, even if you don't care about them.

Concessions; no nibbling please. Never give without getting something of equal value in return. Decelerate your concessions, i.e. from large to progressively smaller to nothing. This prevents the other side from nibbling at you, that is, constantly coming back for more concessions. Remember, negotiating is a petty business.

Fun Tactics.

With the fundamentals in hand, we can move on to fun tactics. If you are married, these negotiation tactics might seem familiar to you. Spouses naturally use tactics, especially with the kids.

Appeal to a Higher Authority. An interesting tactic is to keep the decision maker away from the table. A distant decision maker seems only to receive concessions, not give them. Examples of distant decision makers include another officer of the company, an attorney or a spouse. If this tactic is used against you, ask to speak with the higher authority not the middle man who lacks authority to negotiate. Car salespeople love this tactic.

Good Cop / Bad Cop. Prior to negotiation, designate the good cop and the bad cop, and remember your roles (and remember to have fun with your roles). Use the good guy for all concessions and the bad guy for hard posturing. Although this might appear like a cheesy detective show tactic, it can work once, the first time, on an unsuspecting victim. This tactic is like a summer rerun - the rerun is new to you if you've never seen it before.

Silence. Silences can be unnerving. You can use silence to make the other side uneasy, and thereby draw out more information and concessions. Listen without interruption, then pause. Wait them out - they might even start up talking again. But avoid stare-downs (save tense silences for your marriage). Instead fill gaps with questions or get busy with your notes, etc.

Stalemate -- Set Aside. When faced with a stalemate, put the issue aside for later.

Split the Difference. Never take or offer this ploy. If you take the ploy, you likely settled for a bad number. If you offer this ploy and the other side refuses, then you probably lowered your position to the split number. The other side, on the other hand, keeps its pre-split position.

Fait Accompli. Document your proposal thoroughly so that it is easy for the other party to accept (with all needed documents completed and ready to sign).

Offer Withdrawn. Use as a last resort, especially if you are being nibbled upon. Here you just walk away. If the other side pursues you, great. If they let you go away, that's fine. If the other side withdraws its offer on you, understand that it is close to its walk-away point. Counter-offer slightly above the withdrawn offer. Be wary of the other side now, however, because "offer-withdrawn" is a heavy-handed tactic.

And Finally...Remember the moral: Don't get carried away with negotiation tactics. Deals are built on mutual respect and trust. Usually you achieve your best results by being fair and treating people fairly. It helps to negotiate for win-win outcomes, because stable relationships are only built on mutual benefit. Also, in many situations and relationships, you create a bad impression by making a show of negotiation. Use your better judgment.
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