David Brown: Negotiating

Usually you need your negotiating partners to leave a negotiation with you feeling that they’ve ‘won’. Of course, you want to win too. When both parties feel that they have won, this is called win-win.

So, to help you understand what negotiation is, I have introduced a few key ideas that will be fully developed later in this book:

Give and take. This is the essence of negotiating.

Packages. These are what you deal in.

Partner. This is who you negotiate with.

Win-win. This is how you want to end up, with both parties happy and ready to do business with each other again.

Hopefully, you will recognize that these ideas are not just the stuff of reaching commercial agreement – they also allow communities to thrive and allow us to co-exist as human beings.

This book will show that you negotiate more often than you realize. Once you realize you are doing it, you will be more successful.

Before you start negotiating, be clear that you are prepared to ‘give and take’.

You are trying to reach a commercial agreement, secure an industrial relations agreement, solve a problem or resolve a dispute. Negotiation should take place when you need somebody’s consent to a proposal, and they need yours before you decide to agree. But you should only negotiate if negotiation is the best way to achieve your objectives.

Consider that there are many alternatives to negotiating, and in some situations they may give you a better result.

Persuade. Persuade them that what you are proposing is the best option. This is a buying or selling approach that might be used in connection with a price rise or one of the terms of the contract. It doesn’t cost you money.

Impose. Just tell them what they must do, or what you must do (you could say you have no choice). Shops are effectively doing this when they offer goods on a non-negotiable basis. Sometimes price rises or purchasing conditions are presented as non-negotiable.

Instruct. It’s a less severe form of impose, but you are still dictating the terms if you choose to do this.

Postpone. Put it off till circumstances change. An example of this would be putting off price rises or reductions in a commodity such as oil or metals, because the short-term situation is too volatile. You could choose to allow the market to settle down.

Leave it to chance. Allow the situation to be dictated by outside events, such as linking a price to the dollar or inflation.

Give in. This is an option, but not one you will enjoy. Sometimes governments, companies or individuals have to give in because the odds are 100% against them.

Problem solve. If both parties can work on solving the same problem this may be a good idea. Employers and a trade union might co-operate to decide how best to deal with a financial crisis.

Arbitrate. Allow another person or body to solve this for you. An industrial tribunal could resolve an industrial dispute.

Plead. Rely on an appeal to someone’s good nature. This is only a good idea if you can rely on their good nature, or if it’s not important to you.

Whether one of these alternatives is a better option than negotiating depends on many factors – you, your boss, your negotiating partner’s circumstances, the market in which you operate, the short term, the long term, your confidence levels and risk, to name but a few. We will study these options in more detail in 1.3 and give you ideas on how to decide on the best option.

Before you embark on any negotiation, be sure to recognize that there may be better ways of solving the problem.

There is no point in using brilliant negotiating skills if you shouldn’t be negotiating. In 1.2 we listed the main alternatives to negotiating. Here we will explore the advantages and disadvantages of those approaches.

Persuade. If you can persuade them to your point of view, you’ve no need to negotiate. On the other hand, it can take forever. It won’t succeed if there is a serious clash of interests – if for instance your partner’s position in the market place is badly affected.

Impose. This can save you time and money, but it may ruin long-term relationships. Your partner may decide that you have stopped thinking win-win and are thinking only of yourself.

case studyAs a sales manager, I regularly negotiated a large contract to supply aluminium products to a US-owned company. One year we agreed to use an American source of primary ingot as the basis of our costs. We neglected to consider the possibility that our costs might shoot through the roof because of changes in the dollar-sterling exchange rate. We took a chance on there not being a significant change in the exchange rate. Months later there was a massive change, and our hard-won agreement was put at risk – we had left one major issue to chance. After that, we learnt to put exchange rate limits in all our agreements, and negotiated a mechanism that kicked in outside those limits.

Instruct. It’s quick, but people like to be offered choices, so are put off by being told what’s going to happen.

Postpone. A good idea if the problem might go away, or if you think conditions will change in your favour. A bad idea if conditions change for the worse.

Leave it to chance. A good idea if it seems fair. A bad idea if one party suffers so much that the agreement is sunk.

Give in. A good idea if you have no choice whatsoever – it’s going to happen anyway. A bad idea if it destroys your credibility or if it will cost you in the long term.

Problem solve. A good idea if you can work together on the same problem. A bad idea if each party has a seriously different agenda.

Arbitrate. A good idea if both parties will accept the outcome. A bad idea if one party will be unhappy with the decision of the arbitrator.

Plead. It shows you in a conciliatory light, as someone who is reasonable. But it puts you at the mercy of others, and may make you appear weak.

Once you have considered these options, but have then decided that negotiating is your best bet, we can focus on the techniques that will allow you to negotiate successfully.

Consider the advantages and disadvantages of alternatives to negotiating before embarking on a negotiation.

Whether we seek to impose a decision on someone, or leave things flexible, or negotiate, depends on the other party as much as on us. If you are to succeed, whatever you decide to do must depend to a large extent on who you are dealing with.

These are some of the things that you need to consider about the other party when negotiating:

Expectations. What are their expectations going to be? Why do they have those expectations?

Behaviour. How will they expect you to behave? How will they behave? Are they naturally aggressive, or conciliatory? Will they make

case studyI used to negotiate regularly with an Indian family that had a significant position within the aluminium industry in Europe. Whichever member of the family I negotiated with, I needed to recognize that they would always inflate the volumes that they were going to take in order to get the best price. They talked big and took a lot smaller. I had to develop a strategy that coped with this. One tactic I used was to go right back to square one with a fresh package for the reduced volume. That was not well received. Instead I made sure that my concessions on specification and price were still going to be acceptable to me when the volumes inevitably started to reduce, and I built that into my first package.

extreme demands or will they be more reasonable? Will they react in a logical way or will they expect you to behave in a particular way, because that’s the way you have behaved in the past? If you suddenly behave differently, how will they react – will it increase or reduce your chances of reaching agreement?