Advanced Negotiation Tactics, Skills and Techniques

Advanced Negotiation

Very few of us are critically dependent on negotiation skills every day of our life, but usually when critical moments arise, such as buying a big ticket item, selling a complex contract or a large project, getting a new job, or fighting for a raise... negotiation skills become critical.

Similarly, when you are unexpectedly approached by someone else who demands something from you, or when a conflict arise (e.g. someone is unhappy about something and threatens you with legal action), this give rise to situations where negotiation skills are very useful.

In life we don't always get what we deserve, we get what we can negotiate.

The Limited "Mainstream" approaches to Negotiation

Many gurus and books mistakenly view negotiation as a co-operative activity where you have to build trust and establish rapport. (With the purpose of reducing the mood from adversarial to co-operative)

They recommend trying to understand the other person's point of view, their interrests and concerns.

Their top technique is to turn a negotiation into a win-win discussion.

Of course knowing what the core interests of the other party are, and identifying areas of win-win is great when possible.

However this is nowhere near sufficient for most situations, where no matter how hard you try, the main aspect of the negotiation, such as price, is an inherent conflict. They want it lower and you want it higher, or vice-versa.

No amount of dressing it up can change that. Yes you can swap price for other concessions, which is a very helpful technique, but that does not change the fact that inherently you are negotiating AGAINST the other person's objective.

They win if they get the outcome closer to one side, and you win if you get the outcome to the other side (your preferred side).

While win-win situations, when possible are fantastic, many will employ serious manipulations disguised as win-win. Win-win is just one of many "frames" that a negotiator can use.

Other "Rules"

Never be the first one to speak/name a price

Usually the person to first mention a price, creates the initial anchor point for all subsequent negotiations. Because you have no idea what the other person WOULD have said, by being the first to state an opening position, you lose the opportunity to discover the other person's initial position which could have provided you with some information.

Being the first to open with a position far outside reasonable ball parks, could also lead to being "ridiculed" (a power ploy).

So generally, being the first to state a price weakens your position.

However in many negotiations, if both play this game of "not being first", it could lead to some interesting verbal to-ing and fro-ing, and one party WILL have to make the first move. So obviously in such a situation, simply escalate to the next rule. 

Low Balling & High Balling

With price negotiations one party wants it lower, while the other wants it higher.

If you have to be the one to speak first, and have the stumach to low-ball/high-ball - in other words - throw out an initial offer far higher or lower than where you intend to settle, then do it.

This gives you an opportunity to judge the other person's response without anchoring yourself to an unfavourable price.

Even if you are the last one to speak, simply by putting an intial price far away from the other person's opening price, will almost always result in a better final outcome for you.

This should make it obvious that anyone that OPENS with a FAIR initial offer price, will still get a little bit sqeezed, so whether you like it or not, its usually not in your best interest to open with a fair offer, and almost never a disadvantage to open with a carefully crafter low/high ball offer. 

There is of course another situation in which it is acceptable to start close to a FAIR price, and this is when it is a Multi-Factor negotiation.

Multi-factor negotation is when the negotation is not just about price, or even if it starts out as a pure price negotiation, this approach can move the negotiations away from price as the main item where the battle lines are drawn.

Price & Value, Price & minimum contract duration, Price & additional benefits and terms - these are the details that could be negotiated at the same time, or relative to price, or as concessions in return for a higher or lower price.

If one looks at pure price negotiation it is tempting to analyse it as a pure mathematical problem using game theory. By assigning "economic values" to the terms/value aspects of a multi-factor negotiation would appear to reduce all negotiation problems to a mathematical game between TWO players, namely

P1 

and

P2

where each makes moves by stating a price/total economic value proposition alternately:

P1(v1), P2 (v2), P1 (v3), P2 (v4)..... until the value being negotiated converges at some "midpoint" between v1 and v2 where agreement is then realised, terminating the "game".

This would suggest that one should always try to "pad" one's initial offer so far away relative to what could be imagined as extreme opening positions of the other party, so as to result in the desired final "midpoint" outcome.

However, this is really nothing more than simple negotiation 101.

The next level of negotiation is not so much about PRICE, as it is about NARRATIVE. This is the next level where the boys will be seperated from the men.

Negotiation in the context of a Narrative

In between the price offers and price responses bounced between the two parties, little bits of narrative are injected. Justifications, reasons, bluffs, distractions, "relevant facts" that influence valuation etc.

Sometimes its also important for the other party to respond to these items independently of price in order to neatralise their impact on price, or to prevent the "frame" (context) of the negotations being changed.

Unfortunately this is a rather advanced topic, and this lesson is already getting too long. For those who want to see a full treatment on this topic, with some real world examples, can check out "Negotiating with your Right Brain" by Venkat at: http://www.ribbonfarm.com/2008/03/16/bargaining-with-your-right-brain/

Group Negotiations

When two groups / companies negotiate, it is critical to define ONE AND ONLY ONE person who will solely respond to all communication from the other side.

A deliberate tactic sometimes used, is to direct specific points at another person in an opposing team, someone who they know will accidently commit the side to a weaker position.

THEREFORE BE WARNED. If it is a legal negotation, respond to all direct communication with a standard response: Thank you, I will consider your point and have my attorney send out my response on my behalf.

In situations where it is inconvenient to involve the attorney due to for example time constraints or other matters of practicality, start off by saying:

The following response was drawn up without consultation with my legal advisor, and therefore this is entirely without prejudice to my rights...

In other negotations between firms, be sure to brief ALL members of your team beforehand on WHO (one person) will authorise and transmit all responses on behalf of the team.

A few words on preparation

Mental preparation for all points that could be raised during the negotation contributes to success. Run through some imaginary situations in your mind with your intended responses.

Imagine how you would respond to curve balls, unexpected points, and ridiculous offers or demands.

Know in advance what would be your ideal outcome and your minimum acceptable outcome.

Finally, no deal is almost always better than a bad deal. There will always be another deal tomorrow.

High stakes negotiating can be extremely stressful, and it is therefor of great benefit to have a confidant that can give you some perspective and allow you to blow off some steam, or to strategise with.