Negotiating The Hard Way

Sometimes the other side wants to play hardball with you
Sometimes the other side wants to play hardball with you
Image Credit: Kelly Sims

Every negotiation that we engage in is different. The other side of the table has their own set of goals that they want to accomplish and how they plan on going about achieving them can be different during each negotiation. Sometimes the other side may decide that they want to play hardball with us – they plan on using extreme demands and few concessions. When this happens, we need to be ready and know how to deal with the situation.

Making extreme demands which are then followed up by small, slow concessions

This is a classic technique in which the other side is trying to take over the negotiations. What they will try to do with their extreme demands is to anchor the discussions (price, conditions, etc.) and then have you make changes from that point. Don’t let them do this. Instead, at the start of the negotiations you need to be very clear about what your demands on the other side are, what alternatives you are open to, and what your bottom line is. Don’t let the other side throw you off of your game.

Commitment tactics

The other side may tell you that what he or she can do is limited by others. They may tell you that their “hands are tied” and their superiors have only given them limited ability to make deals with you. That is easy to say but you need to keep in mind that they are still the ones that their company has sent to negotiate with you. Take the time to check out what they are saying – make sure that the commitment tactics that they are using are real before you take action based on them.

Take-it-or-leave-it offers.

At some point during the negotiations the other side may stand up and tell you that you can either “take it or leave it”. Although this is a powerful thing to say, you need to keep in mind that during a negotiation offers are never nonnegotiable. A good tactic for you is to ignore their “take it or leave it” demand and instead choose to focus on the content of the offer that is currently on the table.

Inviting unreciprocated offers

Sometimes the other side chooses to not respond to your offers. When you make them an offer, you need to then sit back and wait for them to respond. You are going to want to wait for them to make a counteroffer. Make sure that they do this before you even consider reducing what you are asking them for. The one thing that you don’t want to allow to happen is for you to start bidding against yourself.

Trying to make you flinch

All too often when you are engaged in a negotiation in which the other side wants to play hardball with you, they will keep making demands. Demands on top of demands. What they are trying to do is to get you to reach your breaking point. When they find that, they can then back off just a bit and they know how much you can take. Don’t fall for this. Push back early on and don’t let them find out how much you can take.

Personal insults and feather ruffling

As much as I would like to tell you that negotiating is a professional activity, there are times when the other side may decide to make it all personal. They may start to attack you using personal insults and look for other ways to ruffle your feathers (saying bad things about your company, your negotiating style, etc.) What they are trying to accomplish by doing this is to feed on your insecurities with the hope that by doing so they can make you vulnerable. Don’t allow this to happen. Instead, insist on a break if you find that you are becoming flustered. Also feel free to call the other side out and let them know that you know what they are up to.

Bluffing, puffing, and lying

At times the other side may say things that they think will make their negotiating position stronger. However, what they say may not be 100% true. By making things up, what they are trying to do is to find a way to throw you off of your guard. You need to be on the lookout for this kind of behavior. When they make a statement of fact, you need to be polite but remain skeptical about the correctness of what they are saying.

Threats and warnings

There may be times where the other side goes all in and start to threaten you. They may be telling you about the dire things that they will do if you don’t agree to their demands. You need to know how to deal with threats when they are made. The first thing that you need to do is to recognize them for what they are – threats. Knowing what tactics the other side has decided to adopt can help you to stand up to them.

Belittling your alternatives

As a negotiator you always have alternatives. No, you don’t need to reach an agreement with the other side although you might want to. What this means is that if the other side starts to talk badly about what will happen if you don’t reach an agreement with them, you need to ignore them. Make sure that you have a firm grasp of what your best alternative to a negotiated agreement (BATNA) is and then don’t let your opponent shake your resolve.

Good cop, bad cop

If ever there was a classic negotiating technique, then this is it. This tactic happens when the other side has two or more people on it and one plays the role of the reasonable one while the other plays the role of the tough and unreasonable guy. The goal is to get you to go along with the reasonable guy because the unreasonable guy is so unreasonable. Don’t let them manipulate you. Instead, reach out and bring in your own bad cop if you have to.

What All Of This Means For You

Every principled negotiation is a new adventure. When we sit down to negotiate with the other side we need to realize that they will bringing their own set of negotiation styles and negotiating techniques to the table. There is always the possibility that they may decide that they want to play hardball with you. If that is the case, then you need to recognize it and take appropriate actions.

Hardball negotiating techniques can take on a number of different forms. It can be as simple as having the other side make a lot of demands with slow concessions in order to get you to start to negotiate from where they want to be. Or they could attempt to present you with take-it-or-leave-it offers. You need to recognize the technique when it is being used on you and then take the appropriate action to ensure that they are not going to be successful.

When the other side decides that they want to play hardball with you, they think that they can force you to give in to their demands. Your role as a negotiator has to be to detect it when they are trying to do this and then push back. If they want to play hardball, you need to show up ready to play – and to win!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You:

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Just exactly how important is honesty when it comes to negotiating? Sure we’d like to always be able to tell the truth, but sometimes it sure seems like it would make life just a little bit easier if we either didn’t say something or if we bent the truth just a bit. Likewise, can we really trust what the other side of the table is telling us? During a negotiation, in order to be successful no matter what negotiation styles or negotiating techniques are being usedyou want to avoid deception and find ways to build trust with the other side.

What Can Negotiators Learn From Police Hostage Negotiators?

There is no more high stakes negotiating than that which is done by police hostage negotiators
There is no more high stakes negotiating than that which is done by police hostage negotiators
Image Credit: Gonzalo Alonso

As negotiators, we often view a negotiation that we are involved in as being a high-stakes operation. The future of the company, somebody’s career, or a quarter’s profits may all be on the line. However, nothing that we do stacks up to the challenges that are faced by police hostage negotiators. Each one of their negotiations can quite literally be a matter of life and death. Since these types of negotiators deal with such high-stakes situations, you’d think that we could learn a thing or two from them…

Rule #1: Talk To Me

Being a negotiator is hard work. Being a police hostage negotiator is even harder work. In New York City, the police negotiation team is kept very busy: they handle up to 400 negotiations per month! Each of these negotiations is different and last year they were involved in one that lasted for over 50 hours and ended up involving a team of 17 crisis negotiators. The NYPD’s hostage negotiator team has a motto: “talk to me”.

Communication is an essential police negotiation technique for their crisis negotiators no matter what negotiation styles or negotiating techniques are being used. There is a very good reason for this. The ultimate goal of any hostage negotiation is for the negotiator to build a sense of rapport with the person that they are talking with. In order to make this happen, they need to show that they are ready to listen to what the person is saying. This means that they have to open channels of communication to the person that they will be talking with. The negotiator wants to build trust and display empathy. The goal is to find a way to work with the person in crisis towards a peaceful solution that previously seemed impossible.

Rule #2: Patience

As you can well imagine, the one thing that a police hostage negotiator wants to accomplish is to wrap the negotiations up as quickly as possible. There may be lives at stake and the number of people who are involved in the situation can be quite large. The sooner that the event is over, the quicker everyone can get back to their real jobs. That’s why it can be so hard to remember that a key to a successful negotiation is patience. The police have to realize that they need to allow the other side time to air their concerns.

What the police negotiators don’t want to do is to jump to conclusions or rush too quickly to try to reach a resolution to the situation. The goal of the police negotiator has to be to build a sense of rapport with the other side in order to be able to influence their actions. If this is something that the police ignore, then they’ll find out that they have hindered their ability to influence the other side and it’s going to take a lot longer to find a peaceful resolution to the current situation.

Rule #3: Active Listening

One of the big challenges that a police hostage negotiator faces is that the other side can become fed up with the negotiations. This can especially happen if the negotiations drag on for a while. In order to build a sense of trust with the other side, the police negotiators need to take the time and engage in active listening. This is viewed as being both an effective and affective skill for the negotiator to have.

In order to resolve any hostage negotiation, the police have to collect as much information about what is going on as they can. Taking the time to really listen to what the other side is saying is a key part of doing this. If you gather information about the other side, the negotiator is going to have a better chance of being able to maintain an open dialog with the other side. In the end, this is the key to finding a resolution to the situation.

What All Of This Means For You

The negotiations that we find ourselves engaged in are important to us. However, we need to realize that there are other principled negotiations and negotiators who are often engaged in real-life life-and-death negotiations: police hostage negotiators. How they go about accomplishing their difficult tasks can teach all of us some lessons about negotiating.

In order to resolve an issue that a police negotiator has been called to it’s critical that both sides are talking with each other. Police negotiators have to have open channels of communication with the other side. These types of negotiations require patience on the side of the negotiator. They don’t want to jump to conclusions or attempt to rush to a resolution. In order to build a sense of rapport with the other side, the police negotiator needs to engage in some active listening to show that they care what the other side is saying.

No, the negotiations that we engage ourselves in are not nearly as important as the ones that police negotiators find themselves in on a daily basis. However, they can teach us important lessons on how to deal with the other side in order to be able to reach an agreement. If we follow what the police negotiations can teach us, then we can hopefully be as successful as they are.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How long do you think that a police hostage negotiator should let a negotiation drag on?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Every negotiation that we engage in is different. The other side of the table has their own set of goals that they want to accomplish and how they plan on going about achieving them can be different during each negotiation. Sometimes the other side may decide that they want to play hardball with us – they plan on using extreme demands and few concessions. When this happens, we need to be ready and know how to deal with the situation.

Defensive Negotiation Strategies That Negotiators Need To Know

A negotiator needs to know how to deal with skilled persuaders
A negotiator needs to know how to deal with skilled persuaders
Image Credit: Graham C99

When you sit down to a negotiation, who is sitting across the table from you? In most cases you are going to be looking at a talented negotiator who is also a skilled persuader. Just like you have a collection of negotiation styles and negotiating techniques that you use during a negotiation, so do they. When they start to apply their tactics against you, how are you expected to react? Looks like you are going to need some defensive negotiation strategies.

You’ve Got To Prepare

I hope that it goes without saying that before starting any negotiation, you really do need to take the time to prepare for the negotiation. However, where I see a lot of negotiators fumbling is when it comes to trying to answer the question about how to prepare for a negotiation. Your preparation has to be both systematic and rigorous. You’re not going to want to leave any rock unturned. One of the most important areas that you’re going to have to spend time studying will be your BATNA: best alternative to a negotiated settlement. If things don’t go right during the negotiations, then what will you do?

Your preparation also needs to include trying to uncover the zones of possible agreement between you and the other side. Your investigations will need to cover each of the issues that are going to be brought up at the negotiating table. The better prepared you are for a negotiation, the less the possibility that you are going to end up accepting an offer that is no good just because the other side was able to present it in a way that made it look attractive.

Information and Influence Are Two Separate Things

A fairly common trick in the world of negotiating is to use someone that we will respect as our counterpart in a negotiation. The reason that the other side will do this is because then whenever the other side says something, we are going to tend to believe them no matter what they are saying. Your job as a negotiator is to realize this. You then have to separate everything that the other side says into two parts. One part is information and that is a good thing, the other part is influence, and that is not such a good thing. This separation needs to occur before you react to what they are telling you.

In order to be able to successfully separate what you are being told, when the other side makes a proposal you are going to have to ask yourself some questions. The first question is if someone else was making the proposal to you, would you be willing to agree to it? Next you are going to have to ask yourself if the proposal had been made in the past, an hour or a day earlier, would you have agreed to it then? Finally, you need to ask yourself if you agree to what is being proposed then will you be able to justify your agreement to your boss and coworkers?

Always Rephrase An Offer

When the other side makes a proposal to you, they will always phrase it in a certain way. Your responsibility as a negotiator will be to take what they have told you and rephrase it. The reason that you are going to want to do this is because the words that they’ve used to wrap up their proposal may be hiding something that you are going to want to uncover before you agree to it.

Examples of phrases that need to be rephrased include “I believe that you should agree to my offer because it is the best offer that you are going to get.” Drop the “… because it is the best offer that you are going to get” part and see if you agree with what is being said. Another approach that the other side might use would be to break payments up into many smaller payments. Take the time to think about how you would respond if they were offering to allow you to make just one single larger payment. Would this still be a good deal?

What All Of This Means For You

Negotiating is not something that we do alone. Instead, there is always somebody sitting on the other side of the table. What we need to realize is that that person has their own unique set of skills and talents. This means that we need to come to the principled negotiation with our own set of defensive negotiation strategies.

In order to be successful in your negotiation, you are going to have to make sure that you have prepared for the negotiation. This means that you’ll need to have a good understanding of your BATNA in order to make sure that you don’t end up accepting a bad proposal. When you are negotiating with someone you need to be able to separate the information that they are presenting you with from the influence that they bring to the negotiating table. The way that you do is to focus on what they are proposing and drop the other words. When the other side makes a proposal to you it will be necessary for you to rephrase it in order to determine if this is an offer that you should accept.

Every negotiation is a battle between two sides. Your goal as a negotiator is to get the best deal that you can reach. Since the other side will be trying to do the same thing, you need to come to the negotiation equipped to defend your position. Your good defense is the first step in making sure that you can get what you want to get out of your next negotiation.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: If you rephrase a proposal and decide that you don’t want to accept it, should you rephrase what has been offered to you back to the other side to see if they would agree to your proposal?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

As negotiators, we often view a negotiation that we are involved in as being a high-stakes operation. The future of the company, somebody’s career, or a quarter’s profits may all be on the line. However, nothing that we do stacks up to the challenges that are faced by police hostage negotiators. Each one of their negotiations can quite literally be a matter of life and death. Since these types of negotiators deal with such high-stakes situations, you’d think that we could learn a thing or two from them…

What Tips Does A Negotiator Need To Know In Order To Close A Deal?

Getting to close can be the trickiest part of doing a deal
Getting to close can be the trickiest part of doing a deal
Image Credit: eltpics

I can think of nothing more frustrating than being involved in a negotiation where you just don’t seem to be able to move the discussions to a close no matter what negotiation styles or negotiating techniques you use. You are putting the time, energy, and effort into the negotiations and yet the end point just seems to keep moving farther and farther away from you. When you find yourself in a situation like this, it’s time to take a step back and see if there is some sort of action that you are going to be able to take that will allow you to finally get to the end in this negotiation.

Make Use Of The Clock

Negotiations can seem to go on and one. The reason for this is because neither side has all that much of an incentive to wrap things up. We all understand that any given negotiation will generally expand to fill the time that is available. What we need to realize is that in other negotiations, such as legal cases and potential strikes, always seem to wrap up at the very last minute. What’s going on here?

Until there is a reason to wrap a negotiation up, to the other side the ongoing costs of a negotiation that doesn’t seem to be ending won’t appear to be all that great. In order to get your negotiation to move along quicker, it’s always a good idea to impose a deadline on the talks at the start. Alternatively, you can also attach a fuse to any proposals that you make – they will only be valid for a specific period of time before expiring. However, you’ll need to be careful here because you don’t want the other side to feel that you are placing them under artificial pressure.

Be Sure To Count Your Change

In order for a negotiation to close, you are going to have to be happy with the deal that you’ve been able to put together. However, there will be times that the other side starts to play tricks as the negotiations appear to start to be winding down. A classic technique is to reach an agreement with the other side only to have them come back to you and reject it and demand more from you. When this happens, you need to push back.

You need to be ready for this kind of thing to happen simply because it happens so often. When you are wrapping a deal up, check with the other side to ensure that all of the key provisions have been taken care of. You don’t want to be surprised later on. If the other side comes back with more requests, you should be very cautious about making any unreciprocated concessions. You don’t want to encourage additional requests, so make sure that you get something in return for anything that you provide at this stage in the game.

Write Your Own Deal

If you want to wrap up a negotiation, it’s all going to come down to you being able to sign a deal with the other side. In order for that to happen, no matter what was discussed at the bargaining table, it’s what’s in the final agreement document that is really going to matter. If something that you’ve agreed to does not make it into the final documents or if it is poorly documented, then you are not going to be able to sign the deal and the negotiations will just keep going on.

No, the paperwork that is associated with a negotiation is not very glamorous. However, this is the thing that you have been working towards. No matter how tired you are as the negotiations start to draw to a close, you need to resist the urge to just turn everything over to the other side to wrap it up. Instead, you are going to want to volunteer your team to write up the final agreement. When you do this, you’ll be able to structure the document to account for the risks that you are willing to take and to protect your interests where they are important to you.

What All Of This Means For You

There is perhaps nothing more frustrating than participating in a principled negotiation that just doesn’t seem to wrapping up. Time can pass and you don’t seem to be any close to reaching a deal with the other side than when you got started. What you need are some suggestions as to how you can get this negotiation to move along faster.

The first thing that you want to do whenever you are starting a negotiation is to establish a deadline for the talks at the start. You may also want to attach a fuse to any proposals that you make in order to motivate the other side to move more quickly. Be careful as you start to approach what appears to be the end of the negotiations. The other side may reject your final offer and come back with more demands. Don’t just make concessions, ask for something in return. The actual text of the final deal is very important to you. Offer to write it yourself and then you won’t have to spend the time reviewing a document that was created by the other side.

The good news about all negotiations is that they seem to eventually come to an end. However, how long that is going to take is another story. As a negotiator you need to know what steps you can take in order to get things to move along more quickly. Do the things that you have to do and you’ll find yourself with a signed deal sooner rather than later.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You:

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

When you sit down to a negotiation, who is sitting across the table from you? In most cases you are going to be looking at a talented negotiator who is also a skilled persuader. Just like you have a collection of negotiation styles and negotiating techniques that you use during a negotiation, so do they. When they start to apply their tactics against you, how are you expected to react? Looks like you are going to need some defensive negotiation strategies.

Three Sources Of Power In Every Negotiation

Power is what it takes to get what we want in a negotiation
Power is what it takes to get what we want in a negotiation
Image Credit: Bronson ABbott

So what do you really want to get out of your next negotiation? If you are like most of us, the answer is “the best deal possible”. This all sounds fine and good, but just exactly how does one go about getting the best deal possible during a negotiation? The answer is that if you come to a negotiation with more power than the other side has, your chances of using your negotiation styles and negotiating techniques to get what you want out of the negotiation increases. If it’s more power that we want to get, then we had better spend some time studying where power comes from in a negotiation.

BATNA Power

When you sit down at the negotiating table, you are there for a reason. The other side has something that you either want or need. Because they have what you want, this gives them some power in the negotiations. Your goal as a negotiator is to realize that they have this power and then take steps to take the power away from them and transfer it over to you.

One way to make this happen is to find ways to not be so dependent on the other side. A great way to make this happen is to make sure that you have a BATNA: Best Alternative To A Negotiated Agreement. When you have a good BATNA, one that you could live with if you had to, then you will be less dependent on your need to reach a deal with the other side. If the negotiations don’t result in a deal, then you already know what you are going to have to do.

Role Power

So you’ve been asked to participate in this negotiation and so has the other side of the table. What makes you so special that you got picked for this task? For that matter, what makes the other side of the table so special that they got picked to participate? It turns out that just simply by who we are we can bring power with us to the negotiating table.

Everyone sitting at the negotiating table has a job and that job carries with it a title of some sort. Couple this with the role that we are currently filling and all of a sudden each person at the table has a certain amount of control over how things work. Each of us has the ability to exert some control over a wide range of things that can affect the outcome of the negotiation. More often than not, this type of role power has been granted to us via the organizational hierarchy that we are a part of.

Psychological Power

When you sit down to negotiate, you already have a prediction about how you think that the negotiations will turn out. You might be in a happy and upbeat mood and think that things will be going your way today. Or you might be depressed and figure that there is no way that you are going to be successful in this negotiation. The way that you view the negotiation is the source of your psychological power.

The final source of power that we can all bring to a negotiation is psychological power. The great thing about psychological power is that it can provide you with a sense of power even when you are lacking power from other sources. You are in charge of how much psychological power you have. When you are feeling down, you can create a temporary sense of power that will help you to be successful in your negotiation.

What All Of This Means For You

In order to get what we want to achieve in our next principled negotiation, we need to be able to convince the other side to accept our ideas and proposals. In order to cause this to happen, we need to bring power to the negotiations. Where that power comes from and how much of it we have are both critical questions that we need to find the answer to in order to be able to get the deal that we are looking for.

Power can come from many different sources. One such source is our BATNA: Best Alternative To A Negotiated Agreement. If we realize that although a deal would be nice to achieve, if it doesn’t happen we can still move forward then we will have power. Having a strong BATNA makes us less dependent on the other side of the table. Everyone sitting at the negotiating table plays a role in their company. Each role has its own set of responsibilities. We can get power from the role that has been assigned to us based on what impact we can have on the outcome of the negotiation. Finally, our view of how the negotiations will go can have a big impact on our ability to get the deal that we want. We are in charge of how much psychological power we bring to the negotiating table.

The reason that we are willing to spend the time, energy, and effort that a negotiation takes is because we believe that we can get a good deal. In order to make that happen, we need to show up with the power that it’s going to take to get that deal. As long as we know where our power is going to be coming from, we’ll then be able to tap into it and use it during the negotiation.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: What do you think that you could do to provide yourself with more psychological power during a negotiation?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

I can think of nothing more frustrating than being involved in a negotiation where you just don’t seem to be able to move the discussions to a close no matter what negotiation styles or negotiating techniques you use. You are putting the time, energy, and effort into the negotiations and yet the end point just seems to keep moving farther and farther away from you. When you find yourself in a situation like this, it’s time to take a step back and see if there is some sort of action that you are going to be able to take that will allow you to finally get to the end in this negotiation.

Negotiators Need To Learn How To Deal With The First Offer Dilemma

In a negotiation, should you be the one who makes the first offer?
In a negotiation, should you be the one who makes the first offer?
Image Credit: Niels Sienaert

Just imagine the next negotiation that you are going to be involved in. You sit down at the table, you have your notes easily available to you, you’ve done your homework and you know who’s going to be negotiating with you today, you know what negotiation styles and negotiating techniques you want to use, and then the negotiations start. Generally these things start by having everyone agree as to why they are there and what the goals for the negotiations are. The big question is what then? Is this the time that you should make the first offer to see if you can wrap things up immediately?

The Danger Of A First Offer

As we all know, in any negotiation there is always the question of who has the most power. We’d always like to be the ones with the power, but power is a fluid thing and it can flow from one side to the other quite easily. When it comes to making a first offer, the party that makes the offer is demonstrating power – for a period of time they are controlling how the negotiations go. However, it’s not quite clear if you should be making a first offer.

This is a topic that the people who study negotiations have been debating for years. Guess what – there is not a single agreed upon answer to this question. Right now the majority of people who have spent time looking at what it means to make a first offer have come to an agreement. What they are saying is that you don’t want to be the person who makes a first offer. The thinking is that if you make a first offer, then you will be risking “showing your cards” to the other side. If this happens, then your power in the negotiations will decrease.

There is a flip side to this argument. Other researchers think that if there is a price that you want the other side to accept it might be worthwhile for you to make the first offer. If you do, then you will have the ability to “anchor” the price – establish a starting point for the final price. This approach seems to work best if you have a good feel for the range that the price of what is being negotiated should be in. Likewise, it can work well if the other side of the table does not have a good feel for a range that the item being negotiated should be at.

How To Handle Making A First Offer

So all of this discussion about how to go about making a first offer leads to the big question: just exactly how do we handle this? It turns out that some studies have been made regarding making first offers in a negotiation. In a study that was done, MBA students were asked to participate in the negotiation of a single-issue price deal. The researchers recorded who made the first offer, how much was offered, and the final outcome of the negotiations.

After the negotiations were over, the researchers asked the participants questions about their emotional state during the negotiations. They were asked if they felt anxious during the negotiations and how they felt about the outcome of the negotiations. What’s interesting is that the negotiators who made a first offer during the negotiations were the ones who felt the most anxious. The result of this is that these were the negotiators who were less satisfied with the results of the negotiation. However, it turns out that the negotiators who made the first offer ending up getting the best deal.

So what does all of this mean? In a nutshell if you are negotiating to get the best price, then go ahead and make the first offer. This will allow you to anchor the price in the negotiation. However, if what you want to get out of the negotiation is a feeling of satisfaction, then you are not going to want to make a first offer. This will remove all of the stress and anxiety of making a first offer from you.

What All Of This Means For You

When a principled negotiation is starting, you are going to be faced with making a very important decision right off the bat. Should you be the one to make the first offer in the negotiation? This might allow you to wrap the negotiations up very quickly – or would doing this be a big mistake?

Every negotiation is about power. When we make a first offer we are showing the other side that we have power. This is an issue that has been studied for a long time. Some researchers believe that you should not make a first offer because by doing so you’ll be revealing too much to the other side. Other researchers think that you should make an initial offer because by doing so you will anchor the price for the negotiation. A study has been done on making the first offer in a negotiation. What the researchers found was that making the first offer makes the negotiator more anxious and less satisfied with the outcome even though they get a better deal.

Making the first offer in a negotiation really is a big deal. This can end up setting the tone for the rest of the negotiation. You are going to have to decide if you want to drive the price to be a value that you want it to be or if you want to feel good about the negotiation when it’s all over. The power is in your hands – you get to decide if you want to make the first offer!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: Do you think that there is anything that you could do before a negotiation starts to feel less anxious about making a first offer?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

So what do you really want to get out of your next negotiation? If you are like most of us, the answer is “the best deal possible”. This all sounds fine and good, but just exactly how does one go about getting the best deal possible during a negotiation? The answer is that if you come to a negotiation with more power than the other side has, your chances of using your negotiation styles and negotiating techniques to get what you want out of the negotiation increases. If it’s more power that we want to get, then we had better spend some time studying where power comes from in a negotiation.

Tips For Closing A Negotiation Faster

 A negotiation isn't over until you've been able to close it
A negotiation isn’t over until you’ve been able to close it

Image Credit:
Anne

As negotiators we are always under pressure by our management to “close the deal”. I think that we are open to wrapping up our current negotiation as quickly as possible. However, we face a number of issues in trying to accomplish this no matter what negotiation styles or negotiating techniques we use. For a number of different reasons, a negotiation can drag on for weeks, months, or even years. Another reason is that one of the parties involved in the negotiation may be unwilling to make a best offer that would wrap up the negotiation. Finally, the presence of tough competition can cause the other side to not want to close with you. Given all of this, what can we do as negotiators to make a closing happen faster?

Create A Process For The Negotiation

It turns out that how we start a negotiation is a critical first step in the process of being able to close a negotiation faster. One of the reasons that our negotiations can drag on for so long is because we have failed negotiate a explicit process for how we wanted the negotiation to proceed at the beginning of the negotiation. We need to talk about the process before we talk about the specific issues that will be negotiated or the parameters that will guide the negotiation.

What we need to do is to find out what ground rules will be needed for this negotiation. A person to facilitate this negotiation needs to be identified before the negotiation starts. Both sides have to agree on what issues will we be discussing and when will we be discussing them? If we are able to map out the process that we want to follow for this negotiation this can help us to avoid making any false assumptions during the negotiation. The result of this should be that the negotiation becomes more streamlined and efficient.

Establish Benchmarks And Deadlines

The way the we can get to the point in a negotiation where the discussions can be closed is by making process from the start to the end. In order to determine if we are making that process, we need to have benchmarks. We need to create short-term benchmarks and at the same time identify an ambitious final deadline.

Part of the process has to be making decisions about what will be done if we are unable to meet a benchmark or a deadline that we’ve set. If this happens, a discussion has to be had about if we need to come up with a new schedule and what we can do to improve it going forward. As we reach the end of a negotiation, we are often afraid that we may end up making too many concessions. The good news is that the other side is under the same pressure. We need to realize that deadlines can help to spur concessions and more quickly close a negotiation.

Use Shut-Down Moves

One of the most important things for us to realize as a negotiator is that any negotiation that we are participating in does not occur in a vacuum. What this means for you is that even during your negotiation, the other side may be receiving information on a more attractive offer from a competitor. This could quickly become an obstacle to your ability to close this negotiation.

If you sense that this may be happening, this is the time for you to try s shut-down move. Propose to the other side that the both of you engage in a limited, exclusive negotiating period lasting perhaps one week. During this time period the other side agrees to not entertain offers from your competition.

What All Of This Means For You

The goal of every principled negotiation that we participate in is to reach a deal with the other side. In order to make this happen, we have to eventually reach a point in the negotiation where we are able to get the other side to agree to close the negotiations. This can be difficult because of issues with the negotiation or because of outside factors. What we need to do is to learn how to move a negotiation closer to being closed.

If we want to have any chance of successfully wrapping up a negotiation, we need to start the negotiation off correctly. This means that we need to have a discussion with the other side about the process that we want to follow for the negotiation. This will lay down the ground rules for both sides to follow. Next we need to establish some milestones and deadlines. These will be used to track our progress through the negotiation and to make sure that both sides know when to start to wrap things up. Finally, if we feel that the other side is delaying because they may be getting offers from our competition, we can try a shut-down move that will lock out the competition for awhile.

Our success as a negotiator will be judged based on our ability to close negotiations. Getting the other side to agree to do a deal with us can at times be a real challenge. We need to know how we can motivate them to agree to wrap things up with us. Use these three tips to move your next negotiation to close quicker!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: When you are creating benchmarks with the other side, should you be the one suggesting the dates for when goals should be reached?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Just imagine the next negotiation that you are going to be involved in. You sit down at the table, you have your notes easily available to you, you’ve done your homework and you know who’s going to be negotiating with you today, you know what negotiation styles and negotiating techniques you want to use, and then the negotiations start. Generally these things start by having everyone agree as to why they are there and what the goals for the negotiations are. The big question is what then? Is this the time that you should make the first offer to see if you can wrap things up immediately?

How To Become A Better Negotiator

Caption: Five ways that you can improve your negotiating skills
Caption: Five ways that you can improve your negotiating skills
Image Credit:
mer chau

Let’s face it, being a negotiator is a tough job. When we realize that we need to find a way to get better at the negotiation styles and negotiating techniques that we use, the realization that we need to improve can appear to be such a big task that we will have no idea how best to start. It turns out that the right way to become a better negotiator is to take the big task of improving your skills and break it down into a set of smaller, more manageable tasks. /strong>Master these strategies and you’ll become a better negotiator!

Get Good At Preparing For A Negotiation

The people who do research on what can make us perform poorly in a negotiation have discovered that the #1 thing that can screw us up is simply not preparing adequately for a negotiation. All sorts of bad things can happen if we don’t take the time to prepare for a negotiation: we may end up making concessions that we didn’t mean to make, we may miss sources of value, and we may not be able to identify when we have a beneficial agreement before us.

In order to get ready for our next negotiation we need to take the time to prepare. We know that there is both homework and research that we’ll have to do and so we need to make sure that we reserve the time that will be needed to perform this work. There are additional things such as creating a checklist of things that we need to remember to do during the negotiation. Also, if time permits, we need to role play how we think the negotiation is going to go. One critical part of every preparation is for us to determine what our Best Alternative To A Negotiated Settlement (BATNA) is before the negotiation starts. Likewise, you are going to want to try to determine what the other side’s BATNA is also.

Get The Training That You Need

We all know that getting training is one of the best ways to become a better negotiator. However, just exactly what we need to do with this training is an open question. It turns out that the one thing that we really don’t want to do is to sit in a class and just take notes. A much better idea is to take the time to think about how the ideas that the instructor is sharing with you can be related to your next negotiation. When you don’t understand something that is being presented, put your hand up and ask a question about it. This is why it is so important when an idea is presented more than one time.

Understand That Mistakes Are Part Of Learning

One of the biggest challenges that we run into when we are working to become a better negotiator is that during our training, we are going to make mistakes. Nobody likes to be wrong, but all too often during training we start to become defensive when we realize that we are making bad decisions perhaps because we are over confident or because we are using faulty thinking.

We need to understand that mistakes do not reflect shortcomings on our part. It turns out that feeling uncomfortable about mistakes that we make while negotiating is an important step along the route of improving our negotiating skills. We all need to understand that we may have judgement biases that can cloud the way that we make decisions in a negotiation. One we realize this, we will then be able to improve our way of thinking during a negotiation.

Always Practice More

One of the techniques for becoming a better negotiator that we all understand is that we need to do more practice. It is only by taking the time to practice that we will be able to develop the skills needed to turn new ideas into negotiating strategies. Getting negotiation training is a good first step; however, it’s going to be how you choose to use the information that you learn that will have an impact on how you negotiate.

One you have learned new negotiating concepts in training, you need to think about what you’ve learned. You need to try out the new negotiating strategies and skills that you’ve acquired with people who will tolerate you making mistakes as you use these new tools. By using what you’ve learned, the new techniques will become part of your nature and they will replace the old habits that were not working for you.

Find A Coach That Works For You

The good news about working for an organization of any size is that there is probably someone in your organization that you can turn to in order to get help in improving your negotiating skills. With a little luck, instead of just telling you what to do in a particular situation that may arise during a negotiation, these knowledgeable individuals can help you improve your negotiating skills.

If you can find the right person who can provide you with coaching, then they can show you how to predict what will and what will not work during a negotiation. They can also be a big help in helping you to understand what happened during a negotiation after the fact. You are going to want to work with someone who can help you set goals and determine what techniques to try out.

What All Of This Means For You

As good of a negotiator as you are, we all know that we can become better. In order to get better at this thing that we call principled negotiation what we need to do is to find ways to go about improving our negotiating skills. It turns out that there is not just one thing for us to do, but rather several that we should all be doing at the same time.

In order to become better negotiators, we need to be willing to take the time to prepare for a negotiation. If we take the time prepare, we can avoid making too many concessions and we’ll go into a negotiation knowing what our BATNA is. Becoming better at negotiating starts with getting more training. When we get training we need to make sure that we spend time thinking about how we’ll go about using what we’ve learned. When we are learning new ways to negotiate, we need to be ready to make mistakes. This can be uncomfortable, but it’s the way that we improve the way that we think about negotiating. The only way that we can improve is by practicing what we do. In order to learn how to become better, we need to find a coach who can help us become more effective.

As negotiators, we need to realize that we can all become better at what we do. All we need to do is realize that there is room to improve and then take steps to boost our skills. Taking the time to become better negotiators is how we’ll be able to close better deals and close deals faster.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How often do you think that you should meet with a negotiation coach if you want to become a better negotiator?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

As negotiators we are always under pressure by our management to “close the deal”. I think that we are open to wrapping up our current negotiation as quickly as possible. However, we face a number of issues in trying to accomplish this no matter what negotiation styles or negotiating techniques we use. For a number of different reasons, a negotiation can drag on for weeks, months, or even years. Another reason is that one of the parties involved in the negotiation may be unwilling to make a best offer that would wrap up the negotiation. Finally, the presence of tough competition can cause the other side to not want to close with you. Given all of this, what can we do as negotiators to make a closing happen faster?

The Reverse Auction Tactic

You need to be careful when you get involved in a reverse auction
You need to be careful when you get involved in a reverse auction
Image Credit: PROM C Morgan Follow

When we are negotiating with another party to sell them something, we need to be very careful how they are treating both us and the other vendors that they are talking with. The person who is buying the product is highly motivated to find a way to get the best possible price and to learn as much about what they’ll be buying as possible. One way that they may choose to go about doing this is to run what is called a “reverse auction”.

What Is A Reverse Auction?

Place yourself for just a moment in the shoes of a buyer. They know that they have a need for something. The thing that they need may be complicated, have a lot of parts, or require a long time to implement. There is no way that they can know everything about what they need especially if they have never bought it before. What this means for them is that they are going to have to avoid our negotiation styles and negotiating techniques and create a specification for what they want based on their best available information. It’s not going to be perfect.

The next step is to get multiple vendors to respond to the specification. Once the responses have all been collected, the buyer then asks all of the responders to come and have a meeting with them. The buyer picks the time and the place. They pick this so that each of the responders will see the other people / firms that have responded to the specification. The purpose for doing this is to increase the pressure on each person who responded – let them know who the competition is.

After having had a chance to talk to each responder, and perhaps having them lower their prices once they’ve seen who they are up against, the buyer is now in a better position. They have a much better understanding of what they want and what it will take to deliver it to them. They turn around and issue a revised specification that has been updated with everything that they learned during their discussion with the responders. This time around they’ll get revised offers each with an even lower price. Exactly what they wanted.

How Can You Defend Against A Reverse Auction?

If you selling a product or a service, the last thing in the world that you want to have happen is for you to get involved in a reverse auction situation. Potentially you are going to find yourself going to the effort of responding to the same specification twice before it get awarded and your price is going to be driven down by competition. One simple way to deal with this kind of situation is to simply not participate. When you detect that the buyer is running a reverse auction, decide that the business is not worth it to you and simply don’t respond.

Another approach to dealing with a reverse auction is to go ahead and participate in the auction, but control when you meet with the buyer. When they try to schedule a time to meet with you, take steps to make sure that you are the last seller that the buyer will be meeting with. There are several reasons for setting this up. The first is that when you meet with the buyer, they may reveal to you what they have learned by talking with the other sellers. Additionally, the buyer may be tired of the whole reverse auction process and just want to wrap things up and this may put you in a better position than all of the other sellers. Finally, we all tend to remember the person that we met with last.

When you are dealing with a reverse auction situation, you want to prevent what all too often happens at an auction from happening to you. What can happen at an auction is that bidders get caught up in the moment and just start bidding in order to win the deal. In a reverse auction situation, you might start lowering your price to win the deal and you could end up with a deal that you don’t want to have. In order to make sure that this does not happen to you, make sure that you have a bottom line before you talk with the buyer. Know how much you’ll be willing to lower your price and make sure that you stick to that. You don’t want to find yourself giving away the farm.

What All Of This Means For You

When we have something to sell, we’d like to make a proposal to a buyer, have them evaluate it, decide that we’re the ones they want to do business with, and then select us. However, since we live in the real world, things don’t always turn out this way. All too often, what happens is that the buyer decides that they want to run a reverse auction and we can end up getting sucked into something that won’t turn out well for us.

When a buyer runs a reverse auction, they create a specification, invite multiple vendors to bid on it, and then invite everyone who bid on it to meet with them. They set this meeting up so that everyone sees who else bid on the specification. They use these meetings to collect more information on their specification and to get the vendors to lower their prices. They then re-release the specification and get the vendors to bid again. Ultimately, they get lower prices the second time around. If you don’t want to get caught up in a reverse auction you can choose to not participate. You can also make sure that you are the last vendor that they meet with and you can make sure that you know what your bottom line is.

As sellers, we can understand the buyer’s need to try to create as detailed a specification as possible. However, we need to try to not get pulled into a reverse auction situation because we will generally not get the deal that we want. Keep your eyes open during your next principled negotiation and if it appears as though the buyer is starting a reverse auction, take the necessary steps to protect yourself.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: What do you think would be the best way to make sure that you are the last vendor that the buyer talks with when they are evaluating proposals?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Let’s face it, being a negotiator is a tough job. When we realize that we need to find a way to get better at the negotiation styles and negotiating techniques that we use, the realization that we need to improve can appear to be such a big task that we will have no idea how best to start. It turns out that the right way to become a better negotiator is to take the big task of improving your skills and break it down into a set of smaller, more manageable tasks. /strong>Master these strategies and you’ll become a better negotiator!

How Can You Negotiate With Multiple Parties At The Same Time?

Most negotiations end up involving multiple parties
Most negotiations end up involving multiple parties
Image Credit: peteandcharlotte

When you are planning your next negotiation, what is running through your mind? You can probably see yourself sitting at a table negotiating with the other side. This tends to be how we view most negotiations. However, it turns out that reality often looks much different than this. Negotiators often have to deal with more than one party to reach their goals. This requires us to tailor our negotiation styles and negotiating techniques towards this end. These negotiation scenarios pose unique challenges for us. However, most negotiation advice focuses on talks between two parties.

The Challenge Of Multi-Party Negotiations

Understanding how a negotiation can unfold when there are multiple parties involved is a complex subject. The good news for you and I is that studies have been done of these very types of negotiations. Some very smart scientists have studied real-world mergers-and-acquisitions (M&A) deals, which tend to involve experienced lawyers, bankers, and businesspeople. The deals that are being negotiated are often prices at many millions, even billions, of dollars. As I believe that we are all very aware of, some of these deals prove successful; others are well-known disasters.

One of the biggest challenges that we can run into as negotiators is that when there are multiple parties involved in a deal that we are trying to negotiate, things can change very quickly and they can change at any point in the negotiations. The worst time for these changes to start to show up is after we’ve been able to sign a deal and before we’ve been able to actually close the deal. Many things can happen during this time that can have an adverse impact on the deal that we are working so hard to put together.

In the world of M&A, the negotiators realize that there are a number of things that can go on during this time period between the signing and the closing. What they are looking for is a way to minimize the number of things that could cause a deal to become undone. What they have discovered is that if they can come up with a way to bind the different parties together between the signing and the closing, then they’ll have a much better chance of actually making their deal work out in the end.

How To Make A Multi-Party Negotiation Work Out

So all of this talk leads to the inevitable question: when there are multiple parties involved in a negotiation, how can you hold things together in order to be able reach a successful deal? One lesson you may be able to adapt to the complex negotiations that crop up in your business and personal life is deal protection. Deal protection is a heavily negotiated issue in M&A transactions; however, deal protection is rarely negotiated outside the M&A context even when it could create value.

In a typical negotiation, sellers can use deal protection. As an example, take a typical residential real-estate bargaining session. In the time between the purchase-and-sale agreement and the closing, the person selling the house is bound irrevocably to the transaction. This clause protects the buyer, but it means that the seller can’t accept a higher offer—a condition that can be inefficient for both the seller and the buyer. Imagine you’re selling your home. A prospective buyer falls in love with your house and (unbeknown to you) one other house. After much debate, he makes a successful bid on your house. Soon after you’re under contract, you receive a blockbuster offer from another party. It’s too late to back out, right? Not if you had negotiated deal protection.

For example, you might have proposed a clause that would allow you to withdraw between signing and closing by paying the buyer a breakup fee of perhaps $25,000. For a buyer who is virtually indifferent between your house and another house, this should be an attractive alternative. It turns out that Buyers can make similar moves. Suppose parties are at an impasse, with the seller asking $500,000 and the buyer offering $450,000. The buyer might offer a “loose” $450,000 deal that allows the seller to accept a better offer between signing and closing by paying a modest breakup fee, such as the buyer’s out-of-pocket costs.

What All Of This Means For You

Although when we try to imagine our next principled negotiation, we often picture ourselves negotiating with only one other party, all too often this is a mistaken belief. In the real world we find ourselves in a complicated multiparty negotiation. In order to make a deal happen in this situation, we’re going to have to understand how to deal with all of the different viewpoints.

One of the biggest challenges that we may end up facing in a multiparty negotiation is the simple fact that between the purchase-and-sale agreement and the closing a lot of different things can happen that will cause your deal to become undone. The good news is that you can take steps to prevent this from happening. If you work with the other side to implement a form of deal protection, then both parties will have a way to react to changes in a way that will allow them to both get the best deal possible.

As negotiators we need to learn to adjust to the way that the world really works. Although we’d like to be able to live in a world where we don’t have to worry about the complexities associated with negotiating with multiple people at the same time, it turns out that we have to. Using deal protection you can ensure that once you’ve reached an agreement with the other side, you can be assured that you’ll be able to finalize a deal with them.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How significant do you thing that your deal protection will need to be in order to ensure that the other sides will be willing to do a deal with you?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time