Become A Master Negotiator

Summary: Getting an unbiased third party to mediate a negotiation.

When two counterparts do not have a history of working well together, using an intermediary, or “umpire,” to facilitate the negotiation can sometimes prove helpful. In this case, a third party who has had previous positive relationships with both counterparts enters the picture.

Example

Two corporate presidents know it is in the best interests of both their companies to merge. In fact, they know that if they continue on the present course, they will both eventually be leading unprofitable companies. The problem is that they have met twice before to negotiate a merger. Since each of them has an ego the size of King Kong, they have left the table without a deal each time, and their relationship has ended up even more strained. A vendor who sells machinery to both companies, and is well liked by both presidents, enters the picture. This vendor starts to talk with each president separately about merging the companies and eventually brings the two presidents face-to-face to create a win-win outcome.

Counter

Of course, an obvious counter would be for one counterpart to refuse to work with a mediator but, in this example, countering would not be in either president’s best interest. If you agree to work with a mediator in a negotiation, we have two helpful suggestions. First, make sure you verify that the mediator chosen is truly impartial and does not unfairly represent one side. Test the information the mediator presents for accuracy. If necessary, talk to others who have worked with the mediator in the past to ensure his character is strong and his results are credible. Second, verify the fees or costs of the mediator’s services up-front so there are no surprise bills or sudden requests to split his commission.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Appealing to a counterpart’s feelings by acting personally upset by an offer.

Most negotiators want to avoid hurting someone else’s feelings. Tough negotiators don’t mind being ruthless, since they consider their actions just a part of business, but even they don’t feel comfortable when someone tells them they have hurt his feelings or betrayed him in some way.

Example

We were negotiating a subcontract for our services. In the middle of the negotiation, the contractor stopped and stated that it was important that we know how he felt. He went on to tell us that because of our long business relationship, he felt hurt and betrayed that we would not work for him unless we made a higher fee. We backed up and changed our aspirations because we felt terrible that he was taking our actions so personally. We do not mind driving a hard bargain, but we do not want to hurt people’s feelings in the process. Unfortunately, we learned when this happened a second time with the same person that the “hurt feelings” were just a tactic.

Counter

We could have simply apologized and asked the contractor to clarify why he felt hurt. Or it may have been helpful to ask, “If You Were in Our Shoes, could you understand why obtaining the higher fee might be important to us?”

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Making an offer that is contingent on specific conditions.

This tactic, which is similar to The Trial Balloon, is used to check out your counterpart’s acceptance of your proposal. This tactic is based on the idea that most people never give up anything without getting something in return.

Example

You are an office supplies salesperson. A potential buyer asks you, “If I am willing to sign the purchase order today, then would you be willing to lower the price by a dollar per unit?”

Counter

Before accepting an If… Then offer, make sure that what you are agreeing to is in your long-term best interest. You may want to reverse the tactic, asking your counterpart, “If I do lower the price, then will you be willing to make each payment ‘net 10′?” Or you may want to buy more time to research the long-term value of the proposal, using the I’ll Think About It and Get Back to You Later tactic: “Before I agree to lower the price by that much, I need to think it over and do more financial projections. I will get back to you next week.”

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Testing to see how firm a counterpart is on certain issues.

Finding out how firm your counterpart is on the key issues is often helpful in a negotiation. You can get some information by sending up a Trial Balloon and watching your counterpart’s reaction. This tactic may give you a better understanding of what to expect when you get down to doing the final negotiation.

Example

A home seller is asking $450,000 for her house. The buyer might say, “I can give you $430,000 in cash and have the money to you in one week. Would you be willing to sell me your house at that price?”

Counter

In this example, the YIKES! You’ve Got to Be Kidding! tactic could prove effective. A second effective counter could be the response, “That’s Not Good Enough.” A third possible counter could be to support the $450,000 asking price with Facts and Statistics, citing the selling price for comparable homes in the neighborhood.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Sending the message that if the counterpart doesn’t agree to the offer, the negotiation is finished.

An effective tactic used by negotiators is saying, “This is our best and final offer. Take It or Leave It.” This tactic, which is commonly used by labor unions, is designed to discourage additional negotiation. Making a fixed offer sends the message that if the counterpart does not agree, there will be no further discussion. A real test of egos ensues when a counterpart replies, “We’ll leave it. We are walking out of the negotiations.”

Example

The mechanics at a major airline have gone without a contract for several years because the mechanics’ union and management have not been able to agree on salary. Finally the union demands a salary package and says, “That is our best offer. Take It or Leave It.”

Counter

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Summary: Changing the time for reaching a decision on a deal point.

Since many negotiators set a deadline for making a decision, it is important to note that almost every deadline can be moved. Instead of hastily making a bad decision under the gun of a deadline, consider changing it.

Example

A salesperson tells a potential buyer that the sale price on a particular product will be available only until the end of the month. The buyer explains, “That is too bad because I do not get paid until the fifth of next month and all my credit cards are maxed out. Is it possible that on this one item you could get management’s approval to give me a rain check on the sale price until the fifth?”

Counter

The salesperson could counter this tactic by protesting that his company has a formal written policy of not extending the sale price on items, since doing so would mean that everything in the store would be on sale all the time! A second effective counter is the tactic of There Is More Than One Way to Skin a Cat. The salesperson could offer the option of a layaway, writing up the sale today but setting the product aside until the fifth. This would accomplish both counterparts’ goals.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Preparing multiple options for resolving deal points before a negotiation begins.

In a negotiation, the counterpart with the greatest number of viable options usually gets the best outcome. A good tactic is to walk into a negotiation with three to five possibilities for accomplishing your goal. This tactic empowers you because when your counterpart puts a roadblock in one direction, you have other viable alternatives.

Some of the most difficult negotiators to deal with are unilateral thinkers who believe there is only one way to do things. When one counterpart won’t look at options, the negotiation is likely to result in a lose-win outcome.

Example

You would like to hire a star salesperson for your company. Your boss has enforced a salary ceiling of $70,000 for the position. But during an interview, you discover that the salesperson you want to hire has a base salary of $75,000 at her current job and will not leave for less.

You reopen the negotiations with a different proposal. You offer the salesperson a base salary of $70,000 but promise to give a $15,000 bonus if she can reach sales of $500,000. This arrangement is more acceptable to your boss, and the salesperson thinks she will have no problem selling $500,000 worth of your product.

Counter

The salesperson could use the tactic of I’ll Think About It and Get Back To You Later, to have time to evaluate the new proposal. If her goals and your’s are still some distance apart, she could try the tactic of I’ll Meet You in the Middle.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Being the first to put forth an offer in a negotiation.

Some negotiators believe you should never make the first offer. We have watched negotiations stall because neither counterpart was willing to make the initial move. We believe that if you have conducted thorough research, planned well, set high aspirations, and made a commitment to a win-win outcome, you should have no fears about Making the First Offer. The only time we would discourage you from doing so is when you have no interest in what is being negotiated.

Example

Two couples are out for dinner one evening. John and Mary announce that they are planning to sell their home. Mark and Elizabeth state, “We want to buy your home. What is your price?” John and Mary respond, “Based on a competitive market analysis completed by two different real estate brokers, we feel a fair price is $450,000.” John and Mary have done their homework and have high aspirations, so there is no reason for them to hesitate to make the first offer.

Counter

There are several effective counters for this example. One possible counter is the tactic YIKES! You’ve Got to Be Kidding! This would be especially appropriate if Mark and Elizabeth’s banker has told them that the maximum loan they could qualify for is $425,000. A second effective counter would be for Mark and Elizabeth to conduct their own competitive market analysis and counter with a lower price, using the tactic of Facts and Statistics. If they are not clear about how the price was determined, a third counter could be the tactic of Asking an Open-Ended Question: “Just so we understand, what comparable neighborhood and homes did the real estate brokers use in their competitive market analysis?”

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Encouraging any partner interested in buying out another partner’s interest to make a fair and reasonable offer.

Example

Two business partners enter a buy-sell agreement that Establishes a Fair Starting Point in case either partner wants to buy the other partner out in the future. They make the following agreement: If Partner A wants to buy out Partner B, Partner A will make an offer that he considers fair and acceptable. B is then given a choice. She can accept A’s offer, or reverse the offer and buy out A under the same terms. This system of Establishing a Fair Starting Point encourages any partner interested in buying out another partner’s interest to make a fair and reasonable offer.

Counter

This is a difficult tactic to counter because both parties agree to the fair starting point before the tactic is ever utilized. If the situation has changed since the start of the negotiaiton, such as the business has doubled since the Fair Starting Point was established, the best tactic to counter with would be Facts and Statistics.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Appearing indifferent to the outcome of a negotiation.

With this tactic, one counterpart appears to be uninterested in the outcome of the negotiation. She simply encourages the other counterpart to follow through with the terms. Her attitude is clearly, “Whatever…”

Example

Company A warns Company B that if a delinquent bill is not paid, the matter will be turned over to a collection agency. B replies, “We are already being sued by six other companies. We are planning to file for bankruptcy next week. We will provide you with the name of our bankruptcy attorney, and you can send the collection paperwork directly to him. Perhaps that will save you some time.”

A second example is a parent giving a teenager some tough feedback about a bad report card. The parent says, “If you don’t improve your grades, you will be grounded indefinitely.” The teenager replies, “Whatever, I don’t care. I don’t have any friends or anyplace I want to go anyway.”

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