David Brown: Negotiating

Culture. What culture do they come from? We will return to this in 1.6, and elsewhere – because understanding their background is a vital part of understanding what will appeal to them and what will turn them off. This will be the difference between success and failure.

Preferences. Will they want to negotiate one-on-one or will they turn up as a team? Is the other party likely to see the world through positive or negative eyes? Is their glass half full or half empty? Do they look at the big picture or the detail?

Pressures. Even if they turn up on their own, has their boss exerted pressure on them to get a particular result? If there are such pressures on the other party, I would call this ‘having a monkey on their back’ and you need to be aware of it.

Options. How important are you to them? How important is it for them to reach agreement? What’s their best alternative to reaching agreement?

Understand who you are dealing with and be sensitive about them and their situation.

Whether you are a buyer, a seller, or involved in industrial relations, you will usually negotiate with the same people on a regular basis. You will want to develop a relationship with them so that they want to do business with you again. You will both want to feel that you have made a good agreement – we call this feeling ‘win-win’.

We are going to consider outcomes – the end results of negotations. It is crucially important to know your own objectives – where you want to finish up – before you set off. There are four possible outcomes to any negotiation:

1 Failure to agree.When it is appropriate for the negotiators to go their separate ways, because there is simply nothing on which they can possibly agree.

“Begin with the end in mind”

Stephen Covey, author of The Seven Habits of Highly Effective People

2 Lose-lose.When both parties refuse to move, when it was in both their interests to do so. Neither side achieves its objectives nor do the two parties generate solutions to their problems. This leads to total disillusion and frustration with the negotiation process and a danger of souring long-term relationships through a loss of respect and trust. When they come to reflect on this after the event, both parties are likely to regard it as an opportunity missed and will not be proud of themselves.

3 Win-lose.When movement is predominately one-sided. The side that did not move ‘wins’ whilst the side that did all the moving ‘loses’. In a win-lose situation, individuals are usually more concerned with victory rather than relationships. Too much effort is put into achieving short-term goals rather than long-term objectives. A ‘them and us’ attitude is created and the long-term relationship between the parties is jeopardized.

4 Win-win.The experienced negotiator will work towards creating two-way movement that is felt to be reasonably split between the two sides. Movement is aimed at bridging any gaps between them. During the negotiation, channels are developed and kept open for two-way communication. With an emphasis on flexibility, solutions are proposed that enable both sides to achieve their objectives. Satisfactory decisions are arrived at and long-term relationships are enhanced. There is a perception that both parties have demonstrated reasonable movement, the lifeblood of negotiations. Once the meeting is finished, there is a spirit of partnership as the two parties set about making the agreement work.

If you want to do business with someone in future, aim for a win-win result from every negotiation.

I would define culture as ‘the way we do things around here’. What is meant by ‘around here’? It means wherever in the world you are doing business. To succeed as a negotiator you need to understand where the other party is coming from.

It is very dangerous to generalize on the subject of culture – you could say there are as many cultures as people you deal with. The important thing is to be prepared for others to think and behave differently from you. The usual advice for dealing with the Japanese is to be very, very patient. Yet no culture is entirely predictable, so don’t be surprised when you encounter some Japanese who expect you to hurry up!

case studyThe Japanese have a very special approach to negotiating. In my experience they are very difficult to read (like good poker players) and frequently need the approval of their colleagues on key issues. I have negotiated with Japanese agents over substantial supplies of aluminium sheet for making freight containers. As negotiators, they are not aggressive, but patient and firm. The specific Japanese approach that I would like to share with you is their tendency to go over the same ground again and again. Once at 6:00pm, I felt we were minutes from agreement. We had been hard at it for three hours. I should have known when they said “can we just check on the specification” that it would take another four hours!

“If you negotiate with Japanese clients, ask questions. When you think you understand, ask more questions”

John L Graham, professor of business, University of California

Nor can you make generalizations about gender differences. When men are negotiating with women, some feel a gentle approach is called for, but many women will object to being patronized in this way. Some women want to prove themselves better than men, and will therefore prove as combative as any man.

Some businesses have reputations for being aggressive in everything they do – in employing people, in buying, and in selling. If you deal with them, your tactics need to be adjusted to suit theirs – with an aggressive first offer for instance. Other companies that you will deal with have an approach that is very much concerned with respecting the rights of their employees or their suppliers. You simply have to know who you are dealing with!

Your negotiating partner’s behaviour may be very different to your own, so be prepared to allow for this.

The old maxim‘proper preparation prevents poor performance’ is as crucial in negotiating as it is in presentations, sales visits and other areas of business. This chapter provides you with a preparation framework that allows you to define your objectives, anticipate the other party’s approach, and develop your own strategy and tactics. Thus prepared, you have a much better chance of reaching an agreement satisfactory to both sides.

A clear understanding of your objectives is essential when negotiating. You should be ready to propose a package that is challenging but credible. Your preparation should end with you deciding on your ‘Desirable’ list and using it to form the basis of your first proposal. Use these steps to prepare.

1 List the things on which you can give and take. These are called your negotiating variables. If it is possible to give and take on something, list it as a variable.

2 For each variable, list the ‘Desirable’ (best you can hope for), ‘Probable’ (most likely) and ‘Worst’ (worst that you would want to finish up with) outcome from your point of view.

3 Put a value on the difference between ‘Desirable’ and ‘Worst’. Now you have identified what the most valuable items are from your point of view. Price and volume are obvious values, but sometimes it is more difficult to put a value on a variable.

4 List all those things on which you are not prepared to give and take. You are effectively saying they are non-negotiable.