Delivering a workshop recently on Negotiation for Small Business, one of the attendees said “I love my work, but when it comes to negotiation and resolving any issues. I absolutely hate it and wish I did not have to get involved in that part of it.” Negotiation brings up different emotions for people, some abject fear, and excitement and for others caution.
In the Ivey Business Journal, Jeswald W. Salacuse wrote about a major oil company lost a major contract in India because local authorities felt that it was pushing negotiations too fast. In fact, the loss of the contract underlined the important role that cultural differences can play in international negotiation.
In some cultures, (Japanese for example), the goal of a negotiation is not a signed contract as such but rather the creation of a relationship between the two sides as more time and effort is given to negotiation preliminaries. North Americans often want to rush through this first phase of deal making.
Preparation and understanding the other side’s point illustrates the purpose of this article, which is that before you go into a negotiation it is important to be prepared. This is just as relevant to a small business owner negotiating a new contract, when discussing a salary review or re-negotiating your contract with an existing client.
Here are a number of points that can help you have a successful negotiation:
Be clear on what you want to achieve: Many people tend to go in unprepared without any clear objective; negotiate from a place of weakness and then agree to terms which can have painful consequences to the bottom line. Often you end up in a situation where every stage of delivering your services is a salient reminder of a deal you agreed to that does not serve your business.
Believe in yourself: Roger Fisher and William Ury who wrote Getting to Yes, said “…the greatest obstacle to successful agreements and satisfying relationships is not the other side, the biggest obstacle is actually ourselves – our natural tendency to react in ways that do not serve our true interests. But this obstacle can become our biggest opportunity.” What we believe about ourselves and our mental approach can have a tremendous affect on the outcome.
Be prepared before any negotiation: If you are negotiating a review of your services with a client, a raise with your boss or having to defend a rate change with your main client, make an analysis before the meeting – Have you assessed the opportunity, situation or project thoroughly? What are my interests? What are their interests? Do this before making that call, sending that email or meeting in person.
Walk a mile in their shoes: Taking a moment to see things from the other side can transform how you approach the discussion and probably bring a solution where you both feel good. Is your approach confrontational, collaborative – win: win, lose-win, or let’s see if we can work something out together.
Be clear on your best alternative: BATNA is a term coined in Getting to Yes, which means the best alternative to a negotiated agreement. Put differently, it is the best you can do if the other person refuses to negotiate with you – in other words if they tell you “there is no way we are going to reduce our fees or simply “Get lost!”
BATNA’s are critical to negotiations because you cannot make a good decision unless you know what your alternatives are. Recently, I wanted to switch to a Sim only contract for my mobile phone and was offered a deal for £15.99 per month. I heard of a recent promotion for £12.99. £12.99 is my BATNA – my walk away point. However, when I mentioned the cheaper deal and that I have been a loyal customer for more than 15 years they were not prepared to negotiate. They simply said ok.
My BATNA was not necessarily my ideal outcome, (as there are the relational costs of looking for another provider and switching) but the best I could do without them was to switch providers and go for the cheaper deal. What is the best you can do if your negotiating party decides not to budge? Write this down or discuss with your team before meeting.
Negotiation is a part of life and your success is dependent on your attitude, self-confidence and approach. Even if you love to negotiate it is a learned skill and requires preparation, clarity on what you want and having a strategy in mind.
If you can focus your efforts on building a relationship and fostering trust between yourself and the other party, you will probably come to a solution where everyone is happy. However, you also need to be able to draw a line in the sand and be prepared to walk away.