When you enter into your next negotiation, what is it that you really want? I’m willing to say that your answer is “a deal” – after all, isn’t that what we all want? If that is what you want, just exactly how do you plan on going about making this happen? If you want to get the deal that you are looking for, you are going to have to come to your next negotiation prepared. This means that you’ve got homework to do before the negotiation starts. The big question that you have to answer is do you know how to go about preparing for your next negotiation?
It’s All About Getting Ready
When your next important negotiation is looming, “winging it” is never the right answer. The best negotiators take the time to engage in thorough negotiation preparation. This is what you should be doing. This means taking plenty of time to analyze what you want, the negotiation styles and negotiating techniques that you will use, your bargaining position, and the other side’s likely wants and alternatives. Negotiators should engage in a careful self-assessment prior to negotiating. In particular, we should be asking ourselves two main questions as part of our negotiation preparation: what do I want and what is my alternative to reaching an agreement?
The Power Of What Do I Want?
The first of the two questions that we should be asking ourselves requires us to set an ambitious but realistic target. When you are setting a target, there are three traps to watch out for. First, avoid appearing to be an under-aspiring negotiator who sets a target that’s too low. If you do this, you may end up feeling like the victim of the “winner’s curse,” which describes the disappointment we feel when the other party immediately accepts our first offer in a negotiation. The fact that the other party was eager to accept your first offer suggests that you aimed too low and failed to engage in adequate negotiation preparation.
On the other hand, you don’t want make the mistake of being an over-aspiring negotiator, either. If you aim too high and refuse to make significant concessions, you will be left without a deal. Finally, a third problem arises when you engage in so little negotiation preparation that you don’t know what you want. In this case, a negotiator often views the other party’s good-faith proposals with suspicion or disappointment.
Always Know What Is My Alternative to Reaching Agreement
To improve your odds of being able to meet a realistic but ambitious target, you will need to determine your best alternative to a negotiated agreement, or BATNA. The reason that you want to determine your BATNA is because it will help you know when it’s time to walk away and pursue your best alternative. Your BATNA assessment involves the following three steps:
- Identify all of the plausible alternatives you could pursue if you can’t reach a deal with the current party.
- Estimate the value associated with each of your alternative.
- Select the best alternative, which is called your BATNA.
An example of doing this would be a job seeker who is engaged in negotiation preparation for a particular hiring negotiation, the first step would involve identifying other possible job opportunities as well as other alternatives, such as staying at their current job or applying to graduate school. The second step would involve assessing both the monetary and non-monetary value of each alternative, including likely salary, benefits, responsibilities, engagement with one’s work, quality of life, and so on. This type of analysis should lead the job seeker to identify the alternative that they would most prefer.
Take Time To Calculate Your Reservation Value
Once your negotiation preparation has helped you identify your BATNA, you are now in a position to calculate your reservation value, or reservation price, which is your walk-away point in the upcoming negotiation. If you are engaged in a price negotiation, this might be a particular number. In an integrative negotiation where multiple issues are at stake, your reservation value might be expressed as a complete package, such as the lowest salary, benefits, and responsibilities you’d accept to take a certain job.
What you need to realize is that your knowledge of your reservation value will help you avoid two mistakes: (1) accepting a deal that’s worse than your BATNA or (2) rejecting a deal that’s better than your BATNA.
Be Sure To Assess Your Counterpart’s BATNA
When engaging in negotiation preparation, it’s not sufficient for you to only look at your own needs and wants. To improve the odds of a mutually beneficial deal, you will also need to figure out how much the other party may be willing to give. This means that you need to analyze their BATNA.
You should ask yourself, “What will they do if our negotiation ends in impasse?” This will lead you to think about the other side’s reservation value. An example of this would be a job seeker who might conclude that the hiring organization is likely to have other qualified candidates waiting to take the job for a relatively low salary. If so, the job seeker might recognize that they won’t be able to push the hiring manager very far in a salary negotiation. Conversely, a job seeker might be aware that they are one of the only appealing candidates for the open position – in which case, she may be able to drive a tough bargain.
We need to realize that negotiation preparation needs to be conducted with a clear-eyed view of the playing field. The more rational and methodical your negotiation preparation process is, the better your negotiation results should be.
What All Of This Means For You
The result of your next principled negotiation may rest on how well you prepare for the negotiation. Knowing that we need to prepare for a negotiation is not the same as actually taking the time to prepare. What makes things even more difficult is that we also have to know the correct way to prepare for a negotiation. If we go about doing this the wrong way, then we’ll never be able to get the deal that we want.
If we are going to be successful in our next negotiation, then we are going to have to make sure that we can answer two questions: what do I want and what is my alternative to reaching an agreement? If we know what we want, then we’ll be able to avoid asking for either too little or too much. In every negotiation that we participate in, we need to make sure that we go in knowing what our BATNA is. Likewise, we also have to know what our reservation price is so that we know when we should get up and walk away. Knowing your BATNA is only half of what you have to do. You also have to take the time to determine what the other side’s BATNA will be.
It’s not easy getting ready for a negotiation. It takes time and a considerable amount of effort. However, it turns out that the final outcome of a negotiation often is based on just how well prepared we were when we went into the negotiations. If we can understand the proper way to prepare for a negotiation, then we will improve our chances of being able to get the deal that we are looking for. Prepare carefully and discover the true power of going into a negotiation with the knowledge that you need to be successful.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: How much time do you think that it takes to prepare for a negotiation?
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What We’ll Be Talking About Next Time
When we enter into a sales negotiation, we often rely on what has worked for us in the past. We don’t spend a lot of time thinking about what new negotiation styles or negotiating techniques we could bring to this negotiation because we assume that one sales negotiation is going to be like all of the others. However, that is where we would be wrong. It turns out that if we are willing to learn some new sales negotiation techniques, we just might be able to get to the deal that we want quicker with a better result for both sides.