Wednesday, November 2, 2011

Negotiation 101

Negotiation is a beautiful thing. You know why? Because it makes everyone involved happier. The best type of negotiation works to find the absolute best results for each party. This type of negotiation is called Win-Win, and can be applied in almost every situation. I’ve found that becoming a skilled and practiced negotiator will make me and the people around me, like my friends, family, business partner, and employees, more happy.

Situations for negations happen all around us, occur during all stages of life, and at all levels of importance. Some examples of negotiation include:
  • Child/Parent: Dealing with day to day conflict.
  • Siblings: Learning to share toys, clothes, or Mom’s attention.
  • Friends: Taking turns while playing.
  • Significant Others: Time management, spending an agreeable amount of time together.
  • Boss: Pay and compensation rates for an employee.
  • Business: Aspects of contracts, partnerships, or funding.
Here are some things I've learned about negotiation:

First & Most Importantly: Always try to negotiate, you may be able to get a better deal for both parties. Remember that not negotiating is a conscious choice and has an opportunity cost too.

Set Your Bar: Before you enter the negotiation conversation, commit yourself to your "absolute minimum price." This is the lowest you'll go before selling, or the highest you'll go before buying. Stick to this commitment and press “pause” if you can't get within this range. Tell the other party you'll have to think about it and step away to re-evaluate the deal not in their presence.

TMI: Don't let the other party know your "absolute minimum price." Keep this information to yourself and don't share it.

Communicate: Tell the other party what is important to you. That way, they know where your values lie and will be more apt to giving you those things.

Speak First: Be the first party to offer a price/suggestion/anchor point for the negotiation. If you speak first, you set the standard and more often than not, will hold the advantage. Make your "initial offer" no matter how absurd it is, but always make your offer politely.

If you aren't the first to offer a deal, make sure to respond to theirs promptly and tactfully. For example, if you we're going to propose $150 and they say $5000. Be very polite and say, "I was going to initially offer you more in the $150 range, but lets keep talking." Don't let a huge discrepancy in value cause you to abandon all hope, you never know how flexible a person can be.

Think Outside the Box: Be willing to negotiate on terms other than cash. If price is an issue (which most of the time it is) try to incorporate other things that are important to you into the deal. A few ideas for consideration: timing, quality, what is delivered, and what type of support is attached. If your negotiating with friends, how about homemade cookies, dinner, a backrub, or as my friend Nikill says, "You owe me something small." He’ll hold his fingers up, laugh and say "Just something small."

Tread Lightly: Some deals are more important than others, be more sensitive around larger or emotionally charged deals. It is so much easier for people to walk away faster, or have a strong intuitive reaction telling them to back off when there is a lot is at stake.

Check Yourself: Don't get emotional. Stay calm, pleasant, and overall happy. This will help you stay confident.

Win-Win Negotiation is a powerful tool that can benefit both sides of any deal. Strive to find that "sweet spot" and everyone will walk away happy. As a final note, negotiation is just like anything else - practice makes perfect. Have fun role playing and practice negotiating with friends and family first. You’ll gain confidence and soon be ready to negotiate in other situations where more is at stake.

Here are a few articles I recommend for honing your negotiating skills:
5 Things to Never Say During Negotiation
When To Negotiate
Creating Win-Win Negotiation
12 Tips For People Who Hate Negotiating

Good Luck!