What kind of negotiator are you (part II)

In this column Matt Crouch provides some tips on negotiation.

Story by Matt Crouch

In the February edition we looked at the concept of the “BATNA” or “best alternative to a negotiated agreement. This time I thought we could explore some of the top “do’s” and one or two “don’t’s” of negotiation… Here we are talking largely about commercial negotiation – the aim of which is to persuade your counterparty to accept what you want – or something acceptably close to that.

Do know what kind of a negotiator you are and try as best you can to plug your weaknesses. This requires some honest self-analysis. For example, are you too aggressive or are you so non-confrontational that you give the farm away too easily? See the February column for more on this issue.

Do know what outcomes you are looking to achieve from the negotiation (write them down!) and draw a line in the sand were you are not prepared to accept any less, then stick to it. This can only be done with a keen sense of your BATNA. Again – see the February column.

Do your research on your counterparty. This cannot be stressed enough. The more you know about your counterparty and the outcomes that he/she is seeking, the better you will be placed to orchestrate a win-win outcome, where both parties get most of what they want.

There is a great old story about the two parties negotiating over a crop of oranges. After much energy spent going back and forth, they finally agree to split the crop 50/50. Sounds fair, doesn’t it? Well, yes, until it is discovered that one party wants the oranges to use the skins only, while the other only wants the flesh of the fruit. Both parties could effectively have had all of the oranges if only they had known more about the other party’s needs!

If you find yourself in a negotiation where (despite your research) you do not know enough about the other party – the solution is simple: ask! The extra time is well worth what you might learn and in my experience it is rare that you would lose face.

Do try to initiate (or, if possible, set) the agenda. In contractual negotiations this often means that it is far better to take responsibility for (and thus control over) preparing the first draft of the contract. Here there is a common misconception that letting the other party prepare the contract will save money in legal cost. In fact, getting your lawyer to draft the contract will often be less expensive in the long run, since you have taken charge of the agenda.

Do respect your counterparty’s time and arrive punctually. Arriving late is not just a bad look, it can be the start of an emotional response that is very counterproductive to negotiation.

Do recognise (while we are on the subject) that EQ is arguably just as important as IQ in any negotiation. It doesn’t matter how logical or conceptually smart your case may be, if you upset the emotional equilibrium of the negotiation, the deal can be as good as over. I have seen negotiations savagely de-railed because a lack of trust crept in, as a result of one party being just a little careless with the emotional quotient. Managing this issue (your counterparty’s emotional state – and your own!) of course requires sensitivity – but also research and preparation: What are the hot buttons that you might need to be careful about pressing, or avoiding altogether?

Now - a “don’t” – Don’t be too keen to “split the difference”. Let’s say that your price is $100 and your client has offered $50. Returning instantly with a counter-offer of $75 can be a mistake. You have just given away $25 and a skilled counterparty will say “Thanks for the offer of $75, but we’ll need to come down further from there.”

Finally, do look to orchestrate a win-win wherever possible. Winning the negotiation means getting a deal done on the plus side of your BATNA. That means getting to “yes”. Avoid “ambit claim” negotiations where the parties start at opposite ends of the spectrum and tediously work to the middle, because “that’s how the game is played”. In other words, be as straightforward as you can be and ask that of your counterparty. Do not ask for things you don’t want/need, or embark on a ‘point-scoring” exercise. You will engender trust – and that is essential to good negotiations!

For further details contact Matt Crouch on (02) 8281 7800 or email mcrouch@bartier.com.au.