Master The Art of Negotiation
Many people believe that negotiations are "all or nothing", and that there has to be one winner and one loser. Nothing could be farther from the truth. While the goal of negotiation is most certainly getting what you want, the fact is that the best deals (the ones that stick) incorporate terms and ideas from both parties.
In this article, we'll provide some tactics and tips that good negotiators use get what they want. These suggestions may be used in virtually any negotiation process.
Before the Negotiation
Prior to entering any formal negotiation, it is important for an individual to think about what he or she wants to achieve from the process. To that end, it makes sense to put on paper specific goals or desirable outcomes. Be optimistic. Ask yourself what would be a "home run" in your deal? This could be as simple as the other party conceding entirely to your wishes. Next, individuals should identify several fall-back positions that they'd be comfortable with that would still get the deal done. The idea is to have thought out as many scenarios as possible.
The next task should be to identify (or try to identify) any potential weaknesses in the opposing party's position. For example, if in a real estate transaction one party knows that the other party has to sell a certain property or face a liquidity crisis, this is valuable information that can be used in negotiation. Identification of weaknesses is important because it may allow the party that has done its homework to capitalize on the other party's weaknesses and turn negotiations in its own favor, or at the very least help both parties to better identify an area of middle ground.
Another pre-negotiation exercise, and it is something that most people don't do but should, is to come up with a list of reasons why their proposal would also be beneficial to the opposing party. The logic is to then bring up the key points of this list in the actual negotiation with the counterparty in the hope that the points will advance the cause and/or help to identify some common ground. Again, using real estate as an example, perhaps one party - in this case a company - could argue that its bid for a particular property is more favorable than others (even though it's lower in terms of dollars) because it is an all-cash offer, as opposed to a riskier financing or a stock swap. By specifically pointing out the advantages to both parties, the negotiator increases the odds of getting the deal done.
Ideally, each party should identify its goals and objectives at the outset. This allows each participant in the negotiation to know where the other stands. It also establishes a basis for a give-and-take conversation. At this point, each party may then offer its fall-back proposals and counter proposals in order to hammer out a deal.
That said, beyond the initial volley of proposals, there are also other things that negotiators can do to enhance their chances of turning the deal in their favor. Let's use body language analysis as an example.
Was your proposal well received? Positive signs include nodding of the head and direct eye contact. Negative signs include folding of the arms (across the chest), aversion of the eyes or a subtle head shake as if to say "no". Pay attention next time you ask someone a question. You'll see that more often than not, a person's body language can yield a lot of information regarding his or her underlying feelings.
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If a negotiation is done by phone, body language can't be determined. This means that the negotiator must do his best to analyze his counterpart's voice. As a general rule, extended pauses usually mean that the opposing party is hesitant or is pondering the offer. However, sudden exclamations or an unusually quick response (in a pleasant voice) may indicate that the opposing party is quite favorable to the proposal and just needs a little nudge to seal the deal.
Negotiations done through the mail (such as residential real estate transactions) are a different animal altogether.
Here are some tips:
Words or phrases that leave ambiguity may signal that a party is open to a given proposal. Look specifically for words such as "can", "possibly", "perhaps", "maybe" or "acceptable". Also, if the party uses a phrase such as "anxiously awaiting your reply" or "looking forward to it", this may be a signal that the party is enthusiastic and/or optimistic that an agreement may soon be reached.
When the opposing party makes an initial offer or a counter proposal, see if you can incorporate some of those ideas with your own and then ink a deal on the spot. If compromise on a particular issue is not possible, propose other alternatives that you think would be favorable to both parties.
Finally, while all agreements should be sealed with a hand shake, a more formal contract memorializing the negotiation is a must. To that end, have an attorney draft a formal contract soon after the negotiation process is completed and make certain that it is signed by all parties in a timely manner.
No Agreement? No Worries
If an agreement cannot be reached in one sitting or one phone call, leave the door open to future negotiations. If possible, schedule further meetings. Don't worry - if worded appropriately, your request won't appear overly anxious. To the contrary, it will come across as though you sincerely believe that a deal can be worked out and that you are willing to work to make that happen.
In between negotiations, try to mentally review what took place during the initial meeting. Did the opposing party reveal any weaknesses? Did he or she imply that other factors may have an impact on the deal? Pondering these questions prior to the next meeting can give the negotiator a leg up on his or her counterpart.
Finally, if an agreement simply can't be reached, agree to part as friends. Never, under any circumstances, burn your bridges.
If you think you have what it takes to prosper in the business world, check out Is A Career In Financial Planning In Your Future? and Career Shift: Get In The Driver's Seat.
Edited by: Lawyer Asad