Everything is open for negotiation—even prices, schedules and product offerings that seem carved in stone. Wharton School of Business professor Steven Blum said no one has to just accept what’s offered, but first you must hone your negotiating skills.
A CSD Staff Report
Life is a series of negotiations. While we may realize this in theory, we probably don’t realize how often it applies in practice. The notion that you just have to fall in line and accept the options you’re given is an extremely limiting one.
“This is a whole different way of looking at the world,” said Steven Blum, author of Negotiating Your Investments: Use Proven Negotiation Methods to Enrich Your Financial Life and a professor at the Wharton School of Business. “We all know we can negotiate real estate prices, but the idea that everything is negotiable is foreign to most of us.”
Before you can negotiate anything, you have to know how to start the dialogue and how to ask right the questions. Blum offers the following tips:
Know what you want and what’s even better. One of the most important things a negotiator can do is figure out what he is trying to gain or achieve. When you know exactly what you want, you can be purposeful in keeping the process moving toward your goals and avoiding measures that might throw you off course.
“Don’t make agreements based on the idea of ‘winning’ if they don’t get you what you really want,” Blum said. “Don’t worry about whether the other side is getting too much—that does not matter as long as you reach all your goals. And once a good deal comes into view, see if you can improve it before you close the deal.”
Harness the power of alternatives. In negotiation, power comes from alternatives. You must identify your Best Alternative to a Negotiated Agreement (BATNA). Doing so lays the foundation for increasing negotiating strength, which presents the potential for greater control, influence, and authority. You will never accept a deal unless it is better than your BATNA. It forms a minimum acceptable level for you.
Aim for higher than just win-win. As you begin to hone your negotiating skills, you might be tempted to seek out “win-win” solutions.
Doing so might seem like a great way to keep your relationship with your negotiating partner positive, but the approach can actually backfire, causing you both to settle for the first plausible solution that improves everyone’s position.
See that your interests come first. Good negotiators pay a great deal of attention to underlying interests. They seek a deal that meets their own interests very well, satisfies the interests of other parties sufficiently, and adequately addresses those of all important players who are not part of the actual negotiation.
“If the agreement does not meet the needs of the other negotiation parties, they will not agree to enter into the deal,” Blum said. “If they are somehow tricked into signing a contract that does not really work for them, they will seek ways to sabotage, escape, or otherwise not comply. That’s not good for anyone.”
Keep in mind that what you view as being a good outcome might not be that good if it leaves the other negotiating party feeling worse off or victimized
“Chances are you’ll need to negotiate with certain people on more than one occasion, and you don’t want to burn those bridges by leaving them feeling you’ll take advantage of them the first chance you get,” Blum said.
Don’t get distracted from your real goal. Many people pride themselves on a competitive tenacity that leaves nothing on the table. If possible, they take the table as well. But research has shown that many of these winners end up regretting their victories.
“Competition is a natural and necessary motivator, yet it does not always bring a happy ending,” Blum said. “The desire to win represents a dangerous shift in focus: Besting the competition becomes the primary goal, and the outcome itself becomes secondary. Paradoxically, the strategies and behaviors that follow are usually self-damaging. Avoid hurting your own efforts by keeping your eyes firmly fixed on where you really are trying to go.”
Insist on both a fair process and a fair outcome. Good negotiators refuse to be part of a process, or outcome, that is anything less than fair. Leading negotiation professors urge us to look to authoritative standards and norms, such as market value, precedent, and equal treatment, to help delineate fairness. Just as a skilled negotiator will never agree to a deal that does not do a good job of meeting her interests or that is not better than her best alternative, so, too, she should decline one that’s unfair.
Pay attention to power dynamics. Don’t accept a power imbalance that leaves you at a disadvantage.
“Where the power dynamic in place is neither a necessary consequence of larger roles and relationships, such as deferring to a government official, nor a good one for advancing a negotiator’s interests, work to change it to your own advantage,” Blum said. “Don’t be rude or inappropriate, of course, but also don’t be afraid to question anything that seems unfair or detrimental. Always own your power and politely decline any part of the negotiation process that makes you feel uncomfortable, disadvantaged, or manipulated.”
Don’t trust imprudently. The mere fact that you have insisted on forthrightness, and unwaveringly offered it, does not mean you should entirely trust the other parties. “The best advice is to always act in a trustworthy manner but do not assume that others will do the same,” Blum said. “Be extremely cautious about placing too much trust in others. Better to allow your confidence to build slowly as it is earned.”
Ask a lot of questions. An important study found that skilled negotiators spend almost 40% of their time acquiring information and clarifying information (restating and reframing what they’ve heard to verify that they’ve understood correctly). Average negotiators spend about 18% of their time on the same behaviors. In other words, average negotiators ask half as many questions as skilled negotiators.
“Strong listening skills, along with good preparation habits and the ability to express thoughts clearly, are among the top traits of the most effective negotiators,” Blum said.
Create scarcity. Negotiators respond to what is referred to as a closing window of opportunity. When a proposal or offer is structured to end at a certain time, the scarcity effect adds pressure.
Another factor that causes scarcity is competition. When everyone else wants something, there is a tendency for us to want it more, too. Making it clear that everyone desires the item for sale can make even those with little use for that item determined to buy it. Nobody wants to be left out.
“People seem to be hardwired to greatly fear loss, and that’s why creating scarcity can be an effective negotiating technique,” Blum said. “A take-it-or-leave-it tactic or an ultimatum in a negotiation can raise the scarcity effect to sky-high levels.”
Prepare and practice. Blum said if he could offer only one suggestion to improve your negotiating, it would be this: If you prepare fully for each negotiation, you will do better. It is that simple. As a general rule, the more prepared you are, the better your outcomes will be.
“Practice makes perfect,” he advised. “Use every opportunity to test out your skills and think through situations as if they were important negotiations. As you practice, you’ll become a more agile negotiator, able to work around tough situations and create much better outcomes for yourself.”
Be patient. One of the best things you can do in the closing and commitment stage of a negotiation is to be patient.
“Negotiation isn’t just about getting a better price for a product or service,” Blum said. “It’s about dramatically improving the quality of your life, creating better outcomes for everyone, and even building more harmonious relationships. Improving your negotiating skills is an effort worth making.”