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Planning for a negotiation is much like going on a diet. We all know that it
is good for us but for some reason or another, we can't follow through on our
good intentions. For most of us, the business day is so packed with routine
tasks that we find it difficult to set time aside to do the planning that we
know is necessary.
The first step in planning properly for a negotiation is to make a
deliberate effort to set aside some of our work or delegate it to others, so
we can fully prepare. Failure to prepare for negotiation will dramatically
reduce our chances of success. If the other person has prepared carefully,
our chances may be reduced to zero. You must find time to plan. Once
time is set aside, the next question is how to prepare.
One effective method of preparation is to provide answers to questions.
Questions and answers provide information and in a negotiation, information
is power. Here are some questions that will help you establish a sound
foundation for any negotiation. Other specific questions would need to be
derived and answered based upon your particular situation.
1. What exactly do I want to achieve in this
negotiation?
This is the most important question of all and needs to be
answered in the most specific terms possible. A general statement such as
"the best deal possible" is no objective at all. If you don't know
exactly where you want to go, how will you know how to get there? Knowing
your specific objectives will keep you focused and help you avoid going off
track or becoming bogged down on peripheral issues.
2. What is my Point of Indifference?
Unless you have a POI you cannot negotiate from a position
of psychological strength. Knowing that there is a point beyond which you
will not go means that you will not be plagued by distracting thoughts during
the negotiation that perhaps you are giving away too much.
3. What should my first offer or demand be?
How you answer this question often determines the outcome
of the negotiation. Every study of real or simulated negotiations gives the
same results: The higher the initial offer or demand, the higher the final
result and, conversely, the lower the initial demand or offer, the lower the
final result. Too often negotiators failed to give themselves enough room to
bargain by making their initial offer or demand to close to their objective.
The rationale is, "I didn't want to insult the other person." If
you have never negotiated with someone who has acted insulted, your openers
have not been high or low enough.
4. What are my priorities in this negotiation?
Every negotiation involves trading. Much of the art of
negotiation consists of trading items of lesser value to you for items of
greater value. Unless you have a pre-established priority list, how will you
know the relative value of the items that are being traded?
5. What does the other side want from me?
Every negotiation involves two or more parties, each of
whom wants something from the other. When you answered the first question
above, you defined exactly what you wanted from the other side. Now you need
to look at the situation from the other person's perspective. You may not
know before the negotiation begins exactly what the other party wants from
you but you should be able to make some educated assumptions. Those
assumptions need to be tested and refined as a negotiation proceeds so that
somewhere during the negotiation you should develop a reasonably accurate
assessment of what the other party wants from you.
6. What is the priority list for the other side?
If you can determine the other side's first priority and
can find a way to satisfy that need, that may be all of substance you will be
required to give. In your initial planning, you may not know what the other
side's first priority is. However, you should be able to make certain
assumptions based on your understanding of the other side and the situation.
Again, these assumptions will need to be tested and refined as the
negotiation proceeds.
7. What is my strategy and what will my tactics
be?
Is a Win-Win approach best-suited to a particular
situation or should you employ a more confrontational style? The answer, of
course, depends upon the particulars and the individuals involved. Once the
overall strategy has been determined, then the tactics that best implement
the strategy can be devised. Remember, however, that you are not locked into
any one style and can adapt your approach to the people and the situations
that you face.
8. What strategy and tactics is the other side
likely to employ?
If you have negotiated previously with the other side,
then you should have a fairly accurate view of how they will conduct the
negotiation; most people have a specific style that varies little from one
negotiation to another. If this is your first opportunity to negotiate with
the other side, it is important for you to talk with others who know your
opponents, and learn about their personalities and styles. Information is
power in a negotiation and the data you collect about the individuals
whom you will be facing will give you great strength.
9. What is my contingency plan in the event a
deal is not made?
It is important that you answer this question so that you
will not be apprehensive if your Point of Indifference is reached and you
must walk away. Sometimes the best deal is no deal, and your POI tells
you when you reach that point. However, walking away is not enough. You must
also know in advance what you will do if the negotiation is terminated. If
you do not have a contingency plan, you will be tempted to go beyond your
Point of Indifference and may end up with a deal you will later regret.
Before the negotiation begins you should identify an alternative, or
alternatives, in the event the negotiation fails. The knowledge that you have
a fallback position will give you psychological strength that will enable you
to negotiate effectively and calmly.
10. What perceptions do I need to change?
Every negotiation is an exercise in perceived power.
If you want something, the person who can provide it has power over you.
Conversely, when someone wants something from you, then you have power over
that person. Power comes in two forms – the power to help and the power to
hurt. In most business negotiations, hurt usually means denying the other
side the help they are seeking. If the other side perceives that you do not
have the power to provide significant help, then your ability to extract
concessions from the other side will be severely limited. Similarly, if the
other side perceives that you do not have the power, or the will, to inflict
hurt, then again you may not be able to extract significant concessions. Perception
is reality; people's behavior is determined by their perceptions, and it
is necessary for you to ascertain what perception the other side has of you.
Do they perceive that you have the power to help them and, if it is required,
both the power and the will to inflict hurt? If you determine that the other
side does not perceive you in this light, then you must develop an action
plan that will change their perception and allow you to negotiate from a
position of strength rather than weakness.
11. What motivates the decision-maker?
Each of us in our business life has two distinct
motivations – to do well for our company and to do well for ourselves. In
many cases, those two motivations closely coincide. Sometimes, however, there
is a separation between our personal and professional motivations. For
instance, two divorce lawyers negotiating the terms of a financial settlement
may not exert their most strenuous efforts for their clients because they may
be negotiating together in the future and want to maintain a reasonable
working relationship. Team negotiations are often difficult because people
are reluctant to offer reasonable concessions for fear of appearing weak in
the eyes of their teammates. Before beginning a negotiation, you should place
yourself in the shoes of the other person. Try to get a sense of how that
person is approaching the negotiation and what it is that might be motivating
him or her other than professional considerations.
Some motivating factors to
consider no matter with whom you are negotiating include:
- Security – If
you have negotiated with bureaucrats at the city, county, state, or
federal level, you know that this is a prime motivator for many
individuals. Of course, corporate managers and others may be insecure as
well, and reluctant to make a decision. No one whose primary concern is
his or her personal security will agree to a deal that in any way
threatens that security. You must package it to achieve your objectives
and to provide for the other person's security needs.
- Social approval
– Peer pressure is a powerful motivator for almost all of us. Few of us
are willing to make an agreement that would subject us to criticism or
scorn from our colleagues or business acquaintances. Do you know before
the negotiation begins what peer pressure the other side is facing? If
not, you need to do some investigation to answer this question.
- Status –
Mercedes-Benz and Gucci have not achieved their high volume of sales at
elevated prices simply on the basis that their products are well made.
The increased price is the payment for the value that buyers place upon
the status supposedly achieved by owning these items. If you are dealing
with someone who is status-conscious, that person is not going to agree
to a deal that lowers his or her perceived prestige.
- Recognition –
We all want to be recognized for our accomplishments and for the
satisfaction that accompanies such recognition. An experienced
negotiator will often allow the other side to claim credit for whatever
favorable deal was struck. Of course, in order to receive the credit the
other side will have had to concede something.
- Revenge – Does
the other side bear a grievance against some outside party? If so, can
you structure the deal so that in some way that outside party is injured
by the agreement? If that can be done, you are then in a position to
extract concessions that might not otherwise come to you.
- Pleasure and
entertainment – The industries supplying weapons systems to the
Pentagon go to great lengths to provide Pentagon officials with
opportunities to learn about their products or see demonstrations of
their weapons at such hardship posts as Hawaii, Bermuda, and Key West.
If the person you are dealing with is amenable to such persuasion, a
golf outing, expensive dinner, or hunting trip may make the difference
between a deadlock and a deal that gets done.
- Fear
- The fear that you want to have present in the other person's mind is
the dreadful consequence of not making a deal with you. If that fear
does not exist, what can you do to implant it? If that fear is strong
enough, the other person may well go beyond his or her point of
indifference and agree to a deal that is weighted in your favor.
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