For less experienced negotiators, it may be tempting to try to outsmart the party across the table with clever tactics or to focus on claiming rather than creating value in a negotiation. But aggressive, heavy-handed maneuvers rarely generate the outcome people hope they will. Successful veteran negotiators know that the key is mastering the basics of negotiating first, preparing effectively ahead of time in order to gain a deep understanding of their counterpart and focusing on developing a rapport.
Here are the must-haves for a good negotiation, followed by some tips for more complex tactics.
Prepare Ahead of Time and Know Exactly What You Want
Every sound negotiation guide emphasizes the importance of preparation. However, anyone who has ever tried to prepare for one knows it’s more tricky than it seems because it’s nearly impossible to imagine every potentiality that may come up in a quickly changing situation.
To best prepare without getting overwhelmed, follow this to-do list:
- Define your jackpot, not the likely outcome. Rather than focusing on the terms you think the other party will accept, identify what success looks like for you so you don’t set the bar too low.
- Define your walk-away point. Some trade-offs will simply be unacceptable to you or your organization and those should be crystal clear ahead of time.
- Define your interests. Know your priorities and what and how much you can trade off to achieve them.
- Define the issues or terms you can use during the negotiation and think about new factors you can introduce.
Ideally, you should know the weighted value of each term you are negotiating. Would you trade, say, 1% of a growth rebate for $340,000 worth of co-marketing allowance? It’s best to identify specific metrics for success. Of course, if you were to consider every negotiable term in a complex negotiation, you might end up dealing with millions of possible combinations. But you should at least look at the top items on your list, figure out your time value of money, and create sales and other estimates to inform your process. This will help minimize psychological effects and help rationalize the decisions for both sides, increasing the likelihood of acceptance.
Once you’ve made your own list, define each item in the list above for the other party as best you can. If you spend more time thinking about the needs and wants of the other side of the table than you do your own, you’ll be far better prepared going into the negotiation.
Focus on Expanding the Pie
Negotiating, as opposed to bargaining or haggling, can create new value rather than just distributing it. New value is created by trades—asking for something you want and giving something in return. Having several negotiation issues to trade helps ensure that you can enlarge the pie rather than cutting ever-thinner slices of it during the process.
Establish Trust and Openness
At the beginning of every negotiation, reveal your priorities and ask the other side to be open about theirs. This sounds counterintuitive; many people don’t want to share that information because they’re afraid that the other party will abuse it. There is some research that suggests total transparency can lead to manipulative tactics. However, revealing your interest can signal cooperation and elicit reciprocity. If the other party offers information, too, you should feel empowered to share more. Your counterpart’s priorities will give you important information that you might not have gained during preparation and can lead to the discovery of potential trade-offs and concessions.
This is often overlooked in negotiations because both sides tend to think they want to get a better price and focus only on that. To generate the optimal outcome, don’t talk about price at the beginning of a negotiation. Leave the toughest item(s) for last.
A good negotiation starts with building rapport with the other party. “Trust is absolutely key,” says Jeanne Brett, Professor Emeritus of Management & Organizations at the Kellogg School of Management at Northwestern University. In her research, Professor Brett divided international negotiations by the level of trust and openness associated with them. Trust is a very human trait and great negotiators work to establish ground rules regarding openness and trying to find mutual gains. If a negotiation starts to go awry, you can always refer to the objectives stated at the beginning of the process as a way to decrease tension.
Know How to Diffuse Attempts at Bullying
At some point in your career, you’ll likely encounter a negotiator who tries to claim value in a hostile way. The person may try to bully you and may even use threats. When that happens, fear typically kicks in and the prehistoric part of the brain called the amygdala takes over, shutting down the creative parts of the mind and preparing you for fight or flight. You’ll need to buy yourself time to get out of this state.
By using simple, go-to tools such as questions, you can start guiding the conversation and regain your ability to think clearly. For example, if the other side says, “This delivery schedule is unrealistic!” it can be helpful to take the last few words of the statement and turn it into a question. “The schedule is unrealistic?” Even if you’re scared stiff in the moment, your counterpart will now have to explain. That gives you time to recuperate.
Labeling is another effective method you can use in these kinds of fraught moments. “I sense some heightened emotions,” you might say about an attack or when someone raises their voice. That can help deescalate the situation by prompting the counterparty to end their tirade and start explaining.
Advanced Negotiation Tactics
If you get the basic negotiation approaches above right, you’ll be more effective than 80% of negotiators. Once you’ve mastered these basics, including knowing how to build trust and rapport, you can focus on some advanced tactics, like the three below. Although these can be effective ways to gain an advantage, you should use them with caution.
Even though anchoring, or establishing a reference point for the negotiation, seems like a simple tactic, it should be used carefully. It can work on even on the most seasoned negotiators, but it can also backfire. If you’re wondering whether you should make the first offer or let the other side go first, a good rule of thumb is that the party who has more market information should go first. If that’s you, should your ask be realistic or should you ask for a lot more than you expect and meet in the middle? An unrealistic anchor can cause the relationship you’ve been carefully building to deteriorate, generate hostility or force your counterpart to walk away. But I’ve participated in many negotiations where the other party asked for much less than they could have had, which is also a costly mistake.
Also, you need to be able to dislodge an unrealistic anchor and you should definitely avoid making an immediate counteroffer, as you would have to anchor unrealistically as well in the moment. That can destroy the good rapport and alignment you’ve established. If you’re presented with an unrealistic anchor, it’s best to communicate that it is a nonstarter and ensure both sides realign on strategy before making another offer.
Naming the Game
Calling out a tactic is another highly effective way to put a stop to it. I once negotiated company options for an advisory role. The negotiations didn’t progress very well because my counterpart across the table kept repeating, “How can I do that?” This tactic was described by Chris Voss in his book Never Split the Difference. I gently mentioned that both parties in the negotiation had read the first 10 pages of the same book, and by doing so, immediately ended the stalemate.
If you have prepared well by listing all of the items you can use in your negotiation along with their value to you, you can then plan what are known as multiple equivalent simultaneous offers (MESOs). For example, in a salary negotiation, you might offer an executive job candidate two options, one with a lower salary but more stock options or vice versa. If both choices are of equal value to you and the job candidate chooses the one she values more, you’ve created new value in the negotiation. This also gives you information about the candidate’s priorities that you can use as you negotiate subsequent items in the person’s employment contract, such as vacation, travel expectations and retirement benefits. Using MESOs in complex negotiations can be tricky, but they can be a helpful tool for pros and an effective way to signal cooperative intentions.
The basis of a good negotiation is having a genuine interest in the other party and their priorities and coming up with new issues to negotiate over to expand the pie. Rather than being tempted to try to outsmart or intimidate the other side with threats, prioritize preparation and use the time-tested principles discussed above to generate better negotiation outcomes.