Become A Master Negotiator

In our October 2011 issue of the Master Negotiator, we talked about the National Basketball Association’s (NBA) lockout and the inability of the Commissioner of the NBA, the team owners and the players to pull together a win-win outcome after months of on-going negotiation.

The three areas where both sides could not find agreement were: the division of revenues between the owners and the players, the structure of the salary cap system and the length of the players’ contracts.

A harsh reality the owners brought to light and remained steadfast was in the fact that 22 of the 30 NBA franchises were losing money each year and ultimately, the owners needed a Collective Bargaining Agreement that would help them run their teams like a business that consistently makes a profit.

In October’s newsletter, we made a few predictions. First, we said that the players would never gain back the money they were losing during the lockout by not coming to agreement. Second, that it would also be hard for the owners to quickly come to agreement because the league is composed of “haves,” the teams from big profitable markets, and the “have nots,” the less profitable teams from smaller markets. And third, we predicted that the lockout would be resolved in late December or early January.

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What happens when you put the following people into one room: David Stern (The Commissioner of the NBA), Billy Hunter (Union Executive Director), a selected group of NBA team owners, and last, a group of players who happen to be some of the highest paid people in America? You end up with a room full of egos so big that they don’t have the capacity to negotiate to a win-win outcome.

This group of individuals has met many times in hopes of coming to some type of outcome that both sides could agree on. Most recently, negotiations broke down after a 3 day marathon session, complete with a mediator who had successfully helped the NFL and MSL come to win-win outcomes. At this point, there have been no new dates set for both sides to come together and meet again.

What are the sticking points? The sides remain divided over three main issues: the division of revenues, the structure of the salary cap system and the length of the players’ contracts. First, let’s discuss the revenue split. Under the current contract, the players have 57 percent of the split in an environment where NBA owners have lost around $300 million. The owners have insisted a 50-50 split under the new contracts before they even begin discussing the salary cap. Prior to the last negotiations breaking down, the players seemed to be entertaining a 50-53 percent sliding scale, depending on revenues. The owners don’t seem to be budging and are trying to get back about 700 million dollars they have lost. The owners currently claim that 22 out of 30 NBA franchises lose money each year. To help the NBA franchises be more profitable, the owners are trying to negotiate shorter contract lengths while, naturally, the players want longer contract lengths. Ultimately, the owners need to run their teams more like a business that consistently makes a profit.

So why do we say that everyone loses in this situation? It has long been our belief that, in a short period of time, people seldom gain back what they lost during a strike. It will take years for the players and the owners to re-coup the loses they are currently experiencing. One challenge the NBA has is that some teams make a ton of money, some teams lose a ton of money. The teams that lose a ton of money each year may actually be financially ahead by not playing ball. This makes it even harder for the owners to come to a quick agreement on a winnable outcome. So who is losing right now?

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In a negotiation, there are times when you have to tell your counterpart “No.” The challenge is that for some people, the word “no” is the equivalent of a four letter word. Telling your counterpart a resounding “No,” could cause the negotiation to deteriorate to the point that neither counterpart is able to achieve a win-win outcome.

Currently, the major grocery store chains of Ralphs, Albertsons and Vons are in negotiations over a contract defining new wage and benefits. The grocery stores want their employees to take on more responsibility in paying for their health care benefits. Both sides have said a resounding, “No,” to each other’s proposals and at this point, there is a threat of a strike. Because of the damage done to both sides in the strike that occurred two contract negotiations ago, it is our prediction that this mediation will be resolved without progressing to a strike. So, when you need to say, “No,” what are other options that may help resolve the disagreement. The following 8 tips will help to move your negotiation forward:

1. Just say it: Although uncomfortable for some people, the easy way to tell a counterpart, “No,” without any mixed signals is simply to look them in the eye and say, “No, I am not going to agree to that.”

2. Conditional ‘No’: This technique works exceptionally well for the amiable person who does not like looking people square in the eye and telling them an outright, “No.” Instead of telling your counterpart, “No, I can’t/won’t do that for you,” use a ‘conditional no’ and say, “I can’t get the project done for you this week, but I can work on it later this month, if that will work for you.”

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In last’s month’s Master Negotiator, we talked about the importance of having confidence when you negotiate and, specifically, what you can to do build an even higher level of confidence. This month, we are going to explore what happens when you take one of your strengths, confidence, and turn up the volume on it to the point it becomes overconfidence and undermines your success as a negotiator. Unfortunately, there is a very fine line between the success confidence brings to the table and the fall to death that can occur when one negotiator is overconfident.

As a negotiator, when you are overconfident, the following behaviors may undermine your ability to build a relationship with your counterpart and create a win-win outcome.

1. Overconfidence comes across as cocky and arrogant. Overconfident negotiators do not feel a need to value their counterpart’s opinion, needs and goals or take the necessary time to build a relationship where the counterpart is motivated to help create a win-win outcome. Some negotiators will actually chose a more expensive outcome from a competitor rather than have to deal with an overconfident negotiator who comes across with the same impact quill of a porcupine.

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When you negotiate, confidence is a great attribute to help you achieve a win-win outcome. Dictionary.com defines confidence as the belief in oneself and one’s powers or abilities. When you have deep confidence, your counterpart usually recognizes the confidence that you exude, both verbally and nonverbally. The benefits of having high confidence include:

1. Feeling strong about what you are asking for from your counterpart
2. Feeling strong that you are right
3. Having the ability to say “no” to your counterpart if what they are asking for is not reasonable or in your best interests
4. When you have confidence, it positively impacts the outcome of the negotiation because your counterpart tends to ask for less and give in to your requests more often than if you lacked confidence

So the question becomes, how does one increase the belief in self or in one’s powers and abilities? The following 5 tips will help you to become a more confident negotiator.

1. Preparation… Preparation… Preparation
   There are some negotiators who prepare on the way to meeting with their counterpart. When it comes to building confidence, this is not a good strategy. The more you prepare, the more you know the details, the facts, the history or the organization or person you are negotiating with, and your BATNA (Best Alternative to a Negotiated Agreement), the more confident you will be when you meet with your counterpart to negotiate.
2. Develop Options and Alternatives
   If you have multiple options and alternatives to help create a win-win outcome, you will feel more confident in your ability to negotiate. The best negotiations are when both counterparts have multiple options or ways to complete an outcome where both parties consider it to be win-win. One outcome for you may be that if you cannot structure a reasonable deal with this vendor, there are several other vendors that would love to have your business.
3. Have a Clear, Positive Vision of the Outcome
   A vision is a clear mental picture of the outcome. When you negotiate, you always have a vision that is one of three different outcomes. The first vision is a positive vision. You believe you will achieve a positive outcome and have done the preparation to align with your vision. The second vision a negotiator may have is a vision of the status quo. In this vision, you just want to gain or keep what is rightfully yours but you are not looking to win in the negotiation. The last vision a negotiator may hold is a negative vision. In this vision, the negotiator walks into the negotiation believing they are going to lose before the negotiation even starts. A positive vision is the only vision that will help you build confidence.
4. Hold Your Counterpart Accountable
   Make sure every deal point you or your counterpart agrees to is measurable and time bound. When you do this well, you can feel more confident that what was agreed upon will happen. When the deal points are not measurable and time bound, there is a good chance you may still get your reward, but only in heaven.
5. Trust Your Guts
   Becoming a confident negotiator is part knowledge and part guts. There are times when your counterpart says all the right things. In fact, what your counterpart says may even line up with the knowledge you have gained. But still, there is something about this counterpart you do not like or trust. When you do not like or trust someone, your guts are telling you that something stinks. If you believe your guts may be onto something, you will have the confidence to walk or choose an option you developed in point 2 above.

Confidence can be a great asset to your negotiation. But, too much of it will most likely do more harm than good. Next month we will cover the impact of how overconfidence can hinder your negotiations.

You may also like:

• The Ideal Negotiator
• Successfully Using Emotions in Negotiation
• Negotiating with a Bully, Shark, or Jerk

In a negotiation, the counterpart who has the power is better able to positively leverage or improve their outcome. One of the fastest ways to gain power is to introduce competition into the negotiation. People who make their living by selling a product or service typically do not like it when a buyer tells them they have a different or lower bid from a competitor. It forces a sales person to really “sell” the benefits and value of their proposal. The buyer, on the other hand, loves competition to help improve their deal. When you go out to buy a car from a dealership, and you find the exact same car at three different dealerships, you will achieve a much better outcome by sharing information with one dealer about what the other dealers are willing to do to sell the car.

In the last three weeks, two of our clients have been acquired by larger companies or capital firms. In each case, during the finalization of a deal with the buyer, a second potential buyer entered into the negotiation with an offer to buy the company. The first bidder significantly improved their offer to finalize the deal and eliminate the second bidder from the deal.

Competition holds tremendous power for 3 reasons.

First, competition means you have possible options and outcomes. When you have multiple options, you tend to be less committed to only one option. In a negotiation, it is important to know that the side who is least committed to the negotiation holds the most power. This is true in business and it’s true in personal relationships as well. The best negotiations and relationships flourish when there is equal commitment to a win-win outcome.

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Each style’s values are clearly represented in the results of the study

For the past month, we’ve been advertising our Negotiation Styles quiz with the goal of compiling demographic information on negotiation styles. We asked participants to answer 10 questions about themselves and to specify their job positions.

The results revealed more to us than we expected.

Before we delve into the results, here’s a quick refresher of the four different negotiation styles.

Let’s start with the Amiables, also referred to as the Blues. Amiables’ focus tends to be on preserving the relationships that are involved in the negotiations and ensuring that both parties are happy with the outcome. They are interested in showing genuine care and have a strong desire to feel valued in the negotiation.

While Amiables are focused on the relationship with their counterpart, Drivers, also known as Reds, are bottom-line results oriented individuals. In negotiations, Drivers are concerned mostly with winning and are less concerned about their relationship with their counterpart. They tend to be assertive, time oriented and persuasive.

At the other end of the behavioral spectrum are the Analyticals, Greens, who calmly and methodically explore all options and focus on facts and statistics to obtain a fair and economical outcome.

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