Avoiding the traps in negotiation
All business people have to negotiate with colleagues and clients, but few master the art. Here organisational behaviourist Gillian Ku, Associate Professor at London Business School, showcases five common mistakes – and how to steer clear of them.
1 Failing to prepare
Negotiating is about understanding the issues you’re discussing and prioritising how important each one is to you. You should think about a stretch goal that’s realistic but not too easy to obtain, along with your alternatives, a clear overall bottom line and sources of power – these are your and the other side’s strengths and weaknesses.
You then need to look at these issues from the other party’s perspective. For instance, if l think of five issues I’m negotiating that are important to me, how does the other party think about these five issues?
Are there other issues that are important to them? Hopefully, some of the things that are important to me aren’t important to them and viceversa. If that’s the case, you have the perfect opportunity to trade off on differing priorities. You also want to figure out the other party’s alternatives, bottom line and sources of power when negotiating.
Experience, research and speaking to people in your industry will help you understand what drives the other party. Put yourself in the other party’s shoes and consider what the world looks like to them. Thinking about their interests and priorities can result in beneficial outcomes during negotiations.
2 Having the wrong mindset
It’s fairly common for people to think of negotiations as a competition: “I need to win this. I need to make my points clear so that the other side sees things from my perspective and acknowledges theirs is wrong.” This approach can result in a fixed- pie bias where you believe the only way to do well for yourself is for them to lose. Negotiations should be much more collaborative than that and involve joint problem solving: asking questions, listening and appreciating differences. If you think about negotiating as creative problem solving, the pie is not fixed and it’s something you can grow together.
When discussing terms, we differentiate between interests and positions. Interests are the fundamental things that motivate you, while a position is a stated desire or want.
You may go into a negotiation and say, “I want more money” – and that’s just a position. The underlying interest could be much more complicated. It could be you need the money to work on a new R&D project or to have sufficient cashflow. If you separate the interests from the positions, you can approach negotiations with a better mindset. You need to be firm on your interests; if your motivation is to fund a R&D project, don’t compromise. But you can be flexible with your positions and potentially find ways for the other party to help you fund your project other than giving you more money.
3 Being afraid to ask for what you want
If you don’t ask, you don’t get. People want something, but some don’t feel comfortable asking. Others fail to prepare properly and don’t think to ask for something that could have a serious impact on their bottom line and happiness.
Negotiations are fundamentally about people sitting down and talking. You need to figure out who is on the other side of the table. If you build a good relationship, that person is more likely to give you the things you want. But you shouldn’t be so afraid of offending them that you don’t ask for things. There is an art to how you craft your message when asking for something. Saying, “I want you to pay me
€1,000″ is different to, ‘I’d like you to pay me €1,000” or “Do you think you could pay me €1,000? ” It is important to match the language with the situation, relationship and context.
4 Getting emotional
The effects of emotions depend on the kind of deal you’re talking about.
Emotions can make things more complicated. Someone may have worked with an organisation before and didn’t win the business then, so they’re determined to get the deal this time – even if it means doing something not particularly sensible such as undercutting themselves.
Similarly, in negotiations you can get very frustrated – “Why aren’t they listening?” The next thing you know, you’re shouting, or repeating yourself and not making headway. Take a deep breath and think about whether what you’re doing is sensible, and try to be able to step back from getting emotional in the moment, which is incredibly difficult. It may be useful to have a partner or colleague with you whose job is to be more neutral and say, “I think things are getting out of control, so let’s take a break.”
5 Making demands rather than being diplomatic
When negotiating a deal, think of it in terms of interests, motivations, rights – “It’s only fair I get this, the law says this, I’m owed this” – or power: “If you don’t do this, I will sue you or go on strike.” You can see how the assertiveness of the language increases from interests, to rights, then to power. A clear recommendation is to use less assertive, more collaborative language when at the interest level. It’s less contentious and gets things done in a ‘grow-the-pie’ way. I would always encourage people to start there, but there may be times where you need to get tougher and talk at the rights and power levels. But you need to be careful when doing that, because, when things escalate, it’s very difficult to go back to the interest level. Start nice and ratchet up if the situation calls for it. If you do that, understand the costs and benefits and do it strategically rather than getting annoyed at the other side and yelling at or threatening them.