Whether you’re shaping a complex M&A deal, lobbying for resources, or asking for a pay rise, you need to start with an inward look – it takes self-awareness
Negotiating can be a slippery business. Especially when your palms begin to sweat under the realisation that you’re anything but prepared. Have you ever walked into a negotiation situation and felt the rising, uneasy panic that you simply don’t know – not really – who you’re going to meet, what they’re going to say, or who tried to strike a deal before you? It’s a more common fear than you think. Almost a quarter of executives surveyed for a London Business School negotiations poll admitted their biggest barrier was down to a lack of preparation, second only to a lack of mutual understanding (34%).
To be truly ready, you should anticipate questions that you don’t want to answer. Prepare to be blindsided. What’s the worst thing you could be asked? Research prior to bargaining can take many forms. But while people tend to concentrate on data and possible countermoves, they miss out on the most basic form of preparation: rehearsing answers to hard questions. Imagine being asked “There’s another deal on the table, why I should choose you?”, “The market’s weak, what’s your minimum?”, or “Are you really experienced enough for this contract?”
So, what should you do? Start by scripting questions that would make you worry. Then, practice your answer by flipping and stretching the question. For example, answer “What other offers have you received?” with “What offers would you expect me to have?” Once you start to rehearse these out loud, you begin to understand which phrases you’re most comfortable using. Then, adapt each of your scripted responses – as you would do in a competency-based job interview with pre-arranged examples – so that your answers fit regardless of the style in which they’re asked. Your counterpart is more likely to accept a confident, prepared answer.
“I worry that I won’t get what I want. I’m concerned I’ll strike a deal that’s below par. What if I damage a relationship with the other party?” Beneath these common fears, there lies a hidden question: are you anxious at all? Anticipation and excitement are too often mixed up with anxiety. Physiological arousal is hard to suppress. So the first step is to work out if it’s worth suppressing at all.
To emotionally prepare for negotiations, examine the way you internalise the situation. One tactic is to reconsider the language you use in advance of meetings. If you spend time worrying about the outcome of the deal, reframe it as an opportunity. Think: without the negotiation, change will not happen, or progress made. And your team has put faith in you as the right person for the job.
Contrary to popular belief, neuroticism – the long-term tendency to be in a negative emotional state – does not stimulate bad negotiating outcomes. Those who think they are poor negotiators and estimate low performance generally don’t fare any worse. But anxiety does temporarily lower confidence in your abilities. To overcome this barrier, build your confidence with practice.
There is also a distinct difference between liking a negotiation and doing well. We sometimes confuse the two. People underestimate the enjoyment of it. Remember, it’s not all about the deal. Unless you’re buying a car or it’s another one-off negotiation, it’s always about growing a relationship with the person you’re dealing with. Your opponent doesn’t have to love you; they just can’t hate you.
What if you had something that could sweeten the deal? Without prior knowledge, you could hold the key to your opponent’s ideal outcome, and it could be something you’d happily give away. What’s guaranteed is that you won’t know unless you try and understand your counterpart. Don’t take the easy one-sided approach.
In order to grow the pie for everyone, think of the deal being more about trade-offs. The outcome doesn’t have to be just good for you and it doesn’t have to be at all costs. You need to understand what drives you as well as what drives the other person to create a value-adding deal: otherwise known as integrative bargaining.
With a good understanding of your opponent’s interests, it’s more likely that you’ll achieve a better result by creating a win-win solution. Everyone gets a piece of the pie, but perhaps one party gets the crust and the other eats the filling. In integrative bargaining, each party works at understanding what the other really needs out of the negotiation – creating more value for everyone.
Creativity is an important ingredient of integrative negotiations. Once you know what you want, and what your opponent needs, it comes down to how it plays out. Take buying a property. A price is never just a price. You will negotiate the completion date, whether it comes with furniture and what the terms of the contract are. There are always items to be put on the table. The more flexible and creative you are, the more the price will drop and the more the seller will be committed to your offer over other similar offers.
Just because you’re a good or promising leader, don’t expect to sail through negotiations. High-achievers, who typically soar in leadership positions and those with dominant voices, tend to be less successful at striking an effective deal. Why? Because dominant people like talking – and at a critical bargaining crossroads, if you start talking, then you generally start giving too much away.
So extroverts, in their desire to dominate the conversation, often suffer from bad outcomes.
If you want to share the pie by creating value, you need to be good at problem solving, which is affected by enhanced understanding, creativity and care. This method is more advanced than bargaining where only one party stands to gain and one gives everything up – known as distributive bargaining.
If the interests of your opponent are irrelevant to you, there’s no way to expand the pie and neither party is likely to invest in the relationship. Unsophisticated negotiators tend to assume that all negotiation is distributive, which is governed by gamesmanship and aggressiveness. To change your approach, look at social cues that would allow both parties to agree a deal with more.
The smarter negotiator is able to understand their counterparts’ true interests and provide them with better deals at little cost to themselves, which is the basis of integrative bargaining.
If you’re an extrovert, beware of anchoring – when people form initial assumptions and use information to make later judgments. Early on, instead of dominating conversations, try listening. Research finds that extroverts can be a liability in early negotiations, when anchoring occurs. The initial conversations are critical to establishing rapport. You can discover a huge amount in that time – what kind of person you’re dealing with, their personality and their likely negotiation style – an effective early chat can set you up for success.
One of the biggest obstacles can come from your own side of the negotiation table. How can you manage team dynamics when dealing as a group? Simply, rehearse together.
Before that, make sure you understand yourself and your intrinsic/extrinsic motivations. Then, get to know your group. Imagine being unaware that your team consists of under-prepared, anxious, one-sided and domineering negotiators until being sat across from the other party. No one wants to sabotage their own efforts, but unfortunately, that does often happen.
Although on the same side, teams have different priorities; people are motivated by their own subjective purpose, because they don’t want to let their personal stakeholders down. If different people are visualising different ideal outcomes, there is no clear way forward and no united purpose. This weakens the offering.
To negotiate with a team successfully, you must first prioritise internal negotiations. This allows members to align their interests before negotiating as one. To avoid an embarrassing blunder at the bargaining table, try role playing as a team and uncover potential trade-offs and non-negotiables early on. Once conflicting interests are uncovered, you’ll be able to develop a strategic approach to the negotiation.
Everyone has a different style, and when tensions reach a peak, people can become emotional and irrational. Consider assigning roles to make the most of your team’s strengths and interests. If you’re a loud negotiator you might lead and talk, if you’re more self-aware, your team might benefit from your ability to listen – you could become the team’s strategist. Simulate where you will sit and how you will communicate with each other. Who will reply with an offer? When should you contribute? Who has the right to make concessions?
High-quality negotiating teams often have better outcomes than solo negotiators. A team allows you to take care in your response to offers and a pooled resource can provide real clarity in what the best deal exactly is. You might even enjoy it.
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