Succeeding in Negotiation – a guide for business executives

 

Succeeding in Negotiation – a practical guide” is written by Dr Edward Lestrade, President of the Online International Arbitration Court. It is in the top-ten downloads of its class at the Social Science Research Network having been downloaded more than 450 times. The article is regarded to be a must-read resource for experienced lawyers and business executives and has been quoted widely in similar articles and books worldwide. The article is reproduced here in full for our readers.

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Introduction

Negotiation is a part of our daily routine. Most of us enter into at least 2 significant negotiation situations daily where positive outcomes are very important for us. Our negotiation partners include colleagues, friends, bosses, business associates, customers and vendors. In all these settings we use a variety of persuasion techniques to get our own way. The majority of the techniques we use tend to be based on intuition, emotion, and reliance on past positive experience and for the minority of us, as a result of training/ education in negotiation skills.

With reference to the above, this article aims to give busy legal practitioners and business executives a comprehensive and focused competency base in technical negotiation skills. It will target ‘business’, or commercial’ activities because other kinds of negotiations can be about emotional or ‘political’ outcomes predominantly which are outside the scope of this presentation due.

Negotiation, Persuasion and Motivation

In commercial settings, negotiation can be generally defined as the process of encouraging and realising the desire by parties to come to terms on a particular matter. Both selling and negotiating are about getting others to agree to your ideas, or point of view. The key word is persuasion. Therefore in order to master skills in both selling and negotiating, you need to have background knowledge of dominant psychological theories of human motivation.

Motivation is the impulse to do or not do something. Generally, people do things to return to a state of equilibrium (balance/ comfort). Balance can be represented by happiness or delight or enhancements of both. For example, we are motivated to eat to become less hungry and also for enjoyment/ pleasure. We are also motivated to impress our bosses so that we don’t get dismissed, or lose promotion prospects. But, there are negative and positive factors in all things that motivate us. We are often motivated by a combination of them – desire to reduce fear, satisfy the dark pleasures of greed, revenge, etc. Generally, better and more reliable results are achieved from positive motivational influences, rather than negative, and they tend to last longer. Negative motivational influences on their own are generally not as lasting and as robust (i.e., if you force someone to do something, he/she is unlikely to do it as well, as if he or she really wanted to do it on their own).

Abraham Maslow & Motivation Theory

Abraham Maslow presents a rough guide for our motivational influences in his seminal book Motivation and Personality (New York: Harper & Row, 1970). There are other theories on human motivation postulated by other authors. However, in my view, these other theories all significantly support and complement Maslow’s original theory of a sequentially developed standard hierarchy of human needs. According to Maslow, we have a hierarchy of needs which are developed sequentially the top one being: ‘self-actualisation” – to fulfill oneself, to grow and use our skills optimally and creatively. The others leading up to that are: a) basic human needs (physiological safety – food, water, etc.); b) safety and security (security, protection and stability in day to day events); c) social (need of love, affection, sense of belongingness in one’s relationship with others); d) esteem (need for respect, prestige, recognition, personal sense of competence and mastery).

Motivational Theory and Persuasion Techniques

Therefore, from a theoretical perspective, in order to persuade/ motivate therefore, we need to find people’s hot’ buttons, i.e., where they are in a motivational hierarchical structure. In that respect, it may be useful to use Maslow’s guide for assistance. For example, we might try conceding on price in a negotiation, but if the other party’s desired outcome concerns something else, then we will not persuade the other side to come to our way of thinking.

Hot Buttons & Motivation

Using Maslow’s guide, we can work out a ‘hot button’ approach to persuasion:-

Security/ stability needs -try to be like your opposite number -people tend to be influenced by people who are like them and have similar priorities;

Social needs -demonstrate respect for the other side and earn it from them people tend to want to do business with people they like/ respect, or/ and who like/respect them;

Esteem needs -help the other side to do a good job -people like to do a good job for their bosses. Also be considerate and thoughtful – do your research on the other side for personal likes/ dislikes -people generally want to do deals with people whom they can trust and who are professional.

Basic human needs -good to do business with pleasure over a coffee/ lunch or dinner or at a golf course. Try to introduce pleasure into the negotiation process. Make it fun, or interesting -people like to be entertained (try not be boring!);

Self-actualisation – let the other side believe that he/she is in control and that you are helping him/ her to achieve their objectives. Women tend to have natural qualities in this area from my personal perspective, although this has not been scientifically proven.

Non-verbal communication and neuro-linguistic programming skills

Neurolinguistic programming (nlp) has been described as hypnosis awake. It is a way of using total communication skills (verbal, non-verbal) to gain control over a person in his awake state. The technique uses matching of voice tone, body posture, etc., to a high degree of surreptitious similarity. After a while, the user is then able to influence the other side relatively easily. Do not however overestimate its use. Most professional negotiators will have read (or have been trained) in NLP or non-verbal communication skills. However, it works. Try using it and you may be surprised by the good results.

Commercial Negotiator’s General Skills Package

If you are taking on an experienced negotiator, be careful. Find a colleague mentor you can rely on when the going gets rough. Generally, if you feel out of your depth, don’t start. Get someone better, if you can, to do it for you. In that regard, you must not enter into a negotiation unless you are sure that you have a good chance to win. Be prepared, do your research on the other side. Do know your strengths and weaknesses and decide on what you want before you enter into the negotiation – know your top, middle and bottom position and do not deviate from them. Always trade concessions – I give you that, you give me something back. Never give something for nothing – you will regret you ever did as this sets the principle that your negotiation stance is based on a paper foundation! Do not negotiate until you have sold the basic deal. The sales process should always be antecedent to the negotiating process. Selling is the process of getting the other side to agree to your proposal in general terms -to get their commitment to do the deal on terms to be agreed. Without first selling the deal you have nothing to negotiate. You cannot finalise something that is yet undesired.

Negotiation and Culture

It is useful to bear cultural issues and national traits in mind. However, don’t get too carried away. Most international negotiators are aware of and tolerant of idiosyncratic national traits. It is useful to remember them, but do not rely on them. However, it is good to remember some rules of politeness and respect for the other side – those can always gain you some good points. For example, a lunch meeting for business would not be favoured by the French; the Dutch like to negotiate after the contract is signed; in some Middle Eastern countries a handshake, or a person’s word, take precedence over a signed agreement. However, basically, if you follow the general rules for good negotiation they will survive cross-borders.

Negotiation and Logic

You should always use logic to sell your ideas. Logic is seductive – people really don’t want to appear irrational and/or unfair. When the negotiator appears illogical and unfair, know that you are not negotiating with the right person – someone else is pulling his/her strings. Again, do try not to negotiate situations that are inherently bad. Best thing to do is to walk away while you can. Bad situations could be – a) the other side has a history of unfulfilled commercial promises; b) there is the potential for personal conflict of interest (eg., other side may be your potential employer, etc.); c) pyrrhic victory may be achieved. Do remember that negotiation and selling is about a perceived win-win.

Try to avoid win-lose as people always try to get back one way or the other and that could be unpleasant.The deal struck must be satisfactory to both sides. Again, negotiations scenarios must be planned in terms of members, venue and basic preparations. For example, negotiations with ‘helpers’, ‘decision-makers’, final decision-makers’ have to be structured differently in terms of the setting and relevant preparations.

Stimulating Desire with Competition

It is always helpful when negotiating with people who don’t want to negotiate to try to make them aware that the competition is interested, or that you are just about to sign up another deal, but the door is still open for a possible deal. But, you have to be convincing, or the strategy may be perceived as a cheap pressure tactic.

When negotiating with professional buyers be prepared for price sensitivity. Avoid being pinned down on price at the tender stage, always quote low prices, or give a wide price band. If you quote a low price you can always re-negotiate it, once the other side has ‘bought’ the deal! Sell on service and long-term relationship and complementary services.

Negotiation to Win

When negotiating contract terms, know your law (and do take ‘expert’ opinion) and client’s rights and relative liabilities. Always know the entry and exit policy and plan for it. If you are negotiating choice of law terms seek advice from relevantly qualified lawyers with good insurance and choose a jurisdiction that will best protect your client’s rights in any litigation. Beware of arbitral clauses – they can be nothing more than an agreement to use a ‘freelance’ judge in terms of the choice of law clauses within the contract. They need to be carefully drafted, particularly with regard to the mandate of the arbitrator and the conduct of the arbitration. For ‘impasse’ in the negotiation process, re-close (resell) the deal from your perspective – if necessary, start the whole process over again with the strategies above in mind. You should go back to basics to make the other side aware what is at stake in the negotiations and resell the benefits and features of the deal. Where you encounter an objection, it is very important to specify it – find out what you have to do to get the other side’s total satisfaction. You might offer a compromise to ‘close’ (‘..so if I can get you X, will this be OK?). You may want to offer a collateral benefit and appear to give more than you are getting.

Use the ‘lost sale close’ as standard (‘…sorry it came to this, how could we have avoided this?’) – once the objection is identified, then re-sell the deal for re-commitment to negotiate terms.

The Negotiator’s Essential Competencies

You should be prepared.Specify and know all topics to be negotiated and agree on what is not to be included. Agree on mutual objectives in terms of needs, wants and desires and be consistent. Work towards achieving all your needs and most of the things that are ancillary and in that regard, know the options available (especially the minimum position from both your side and the other). It is very important to be able to see the argument from the other side and to be creative and consistent with the truth (the other side certainly will be!). Try to identify where you can be flexible and know the other side’s sensitive position well.

For example, how much do they want the deal? How little does it matter to them? What information do you have about their operation, or competitive pressures that they should know about and which, when they do, will motivate them to go your way? Negotiation is about people – know the person/ people you are dealing with. The more you know them, the more likely you will be able to negotiate well with them.

Use time scaling effectively and be aware when it is being used against you as a negotiation ploy (i.e., ‘..let me think about that…’; ‘ ..I’ll get back to you..’. Use the letters/ email/ fax to re-close (re-sell) the deal for these time scaling techniques. Also, give concessions for good behaviour. For example: ‘..if you give us a commercial reference, then we will give you a 1% discount on repeat orders…etc..’. Also, a useful ploy is to test the water’ -do a ‘test/ assume’ sale and see how far the other party rejects, or commits to it and then close/ finalise the deal. Use matching techniques by equaling the other side in numbers at the negotiation table. More than their numbers could be oppressive less could put you in a weak psychological position.

A good negotiation technique is to appear stupid. That normally gets the other side to relax and give you more information as you are perceived to be less of a threat. However, do ensure that you have really understood the issue involved and appear honest (be consistent!). Furthermore, it is important to use body language where possible – use neurolinguistic programming techniques (if you have been trained in them) and be aware that some signs may be ‘sent’ to mislead you from the other side, so evaluate them carefully.

Another good strategy is to use the team (your boss, or your senior colleagues) to relay any negatives to the other side and to enhance your own position as a helpful mediator) – avoid giving bad news! You are the one pledged to get the other side what they want, not to tell them what they can’t have. A caveat – beware of the switch/ deliberate mistakes from the other side -back out while you can, or go for big concessions. Beware of confusion in any of the negotiation process. If you really don’t understand completely the deal on the table and which you have just agreed to, then you are likely to have been

severely disadvantaged. Another handy tip is to keep notes of the entire negotiation process. You never know when they may come in useful.

Your own Practical Model of Negotiation

Please use the notes above and think of and make notes about a recent negotiation situation you have been in where the negotiator was good in your opinion. Now describe the setting and list the reasons for your opinion. Do these reasons match up with the points above? After you have done that, make notes about a recent negotiation situation you were in where the negotiator was bad in your opinion. Now describe the setting and list the reasons for your opinions. Do your reasons match up with the points above? You will now have probably created a generalisable model of a good negotiator similar to the profile which follows.

Profile of a Successful Negotiator

As such, successful negotiators are likely to have all of the following attributes:

are perceived to be in a position of authority

achieve good rapport with their negotiating partner

have already sold the subject matter of negotiation

are not confrontational

are perceived to want to help the negotiating partner achieve his/her goals

always sell win-win scenarios

are perceived to be truthful

are prepared

address cultural issues

are perceived to have integrity

know what he/she wanted

know the other side very well.

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Disclaimer: the content of this article does not constitute legal advice and should not be relied on in that way.

 

 

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