Negotiation is a huge subject, and a heavy word. However, you don’t have to be sitting in a formal suit with a counterpart across the table to be negotiating. In a way, each one of us practices negotiation several times during the course of a day. It could be as simple as “Let’s go to this movie instead of that” or as complex as “We can offer you only $15 Billion not 19!”. Almost every business conversation can be termed a negotiation; a large percentage of personal conversations could fall into this category. Whenever we interact with someone to get something while reciprocating with as little as possible – well, it is a negotiation. It is, then, indeed surprising that negotiation still remains such a confusing skill to everyone.
I have taken a number of negotiation courses, and am still not sure a) what I have learned from them and b) what exactly are these negotiation skills that such courses want me to apply.
The premise of this article actually came from a couple of conversations I had last month. Two people, both well known in their respective fields of Human Resources and Venture Capital, remarked how they had become negotiations specialists and almost always ended on the winning side.
To me, both these fields suffer from such a huge information asymmetry that what is being practiced is not negotiation, but a one sided compromise. Consequently, I am also hugely against all those articles which preach, “12 Tips for negotiating your job offer” or some such. If you want to enhance your negotiation skills (and you should) do not base them on these (or similar) scenarios. Look, an HR person will always have more information than you. They definitely have more power than you at that moment along with answers to such critical questions as do they have other qualified candidates, how much is the budget allocated for this position, who exactly is the decision maker, how urgent it is to fill this slot etc etc. Similarly a VC is in even more powerful position – he has all the answers + you don’t even know if he actually wants to invest or is just ‘staying in the loop’. Again, nothing against these two fields (well, a bit but that is for another article :-)) – what I am saying is that, you should not judge or try to increase your negotiation skills based on such lopsided scenarios that 9 times out of 10 are outside your control.
So, if the above are not good examples of negotiation specialists, what are? To me there are three kinds of people who do demonstrate good success in negotiations:
- People who are in fields & position where they almost always have access to more information that the counter party. The above two (HR & VC) are examples of this category and if you do fall in this category – good job.
- People who are either so highly experienced or (and) so highly respected that what they say is considered to be the ultimate and fair truth. The respect could come from prior track record or even age. If you fall into this category – do understand that you have a responsibility to be fair. Again, you very likely do not need to read this article further.
- This third group is where we are most interested and these are people who do not always come with the above two advantages. Yet, they almost always demonstrate a high success rate. And, more importantly, this success rate is valid across different fields & genres, not just constrained to one or two. Of course, slowly these people also take advantage of their reputation/respect but even without that, they are in control of the situation.
I did have the good fortune of observing a couple of people from the third group. Turns out, that there were only three things that made them what they were.
[dropcap style=’circle’]1[/dropcap] Research, research and research – I do not mean research all those buzzwords like BATNA (Best Alternative To a Negotiated Agreement. Really??). These people were always as aware as possible of the specific situation at hand. By default, this preparation corrected some of the information/power asymmetry in situations such as above. The beauty of their skill lied in the process; they prepared the same way whether it was a huge land deal or a job interview. For example, for a job interview the process could start with looking for answers to questions such as: Who is the decision maker in that line, can I reach out to someone who works there to understand more about the hiring process, why are they recruiting for this position now, can I search in LinkedIn as to who was working at that job title and what were his/her qualifications, can something like Glassdoor.com tell me about the salary range, what is the current market situation for someone with my skillsets etc etc. For something as complex as an out of court settlement, the process would often be similar; who are the stakeholders in the dispute, who stands to gain more, who are external influencers who need to be approached first before doing the actual settlement and so on.
The point here is not to list down every possible question that you need an answer for. The point is that rather than aiming for situation specific skill, aim for process specific ones. What is the way to research any situation? Get into habit of finding the people surrounding the situation and find out who can be the allies and who need to be kept at a distance.
Entering a room to decide on something without having made the efforts to find out all you could about the people & the problem is the best possible way to make a bad settlement. Equally importantly, the aim is to know what you want out from the situation. Do not only hope to get something out and leave it at that; be clear on why you went through all the pain to research and what would make you happy. And also be clear what is the absolute worst that you can live with (ok, ok this might mean thinking about the BATNA).
Finally, the aim is also to have a grasp on what the other party wants. Do not aim for ‘winning’ the negotiation, aim for arriving at a mutually beneficial solution. Unless the other person is a douche-bag, in which case all bets are off!
Which brings us to the second point.
[dropcap style=’circle’]2[/dropcap] Do not negotiate with yourself – To me, this is one of the most common weaknesses that many of us demonstrate. After the first point above, hopefully you have a fair idea of what you want out. Yet, I have seen people even making the first offer at a point lower than what they had just decided in their minds a few moments ago. I am not talking about adapting to the situation as it unfolds (which we will cover in the next point) but having second thoughts on your own research. How often have you been in a position where you left your home thinking, “Ok, I will ask for $100K for this” and as soon as you start talking, your mind starts questioning yourself, “Hmm, maybe $100K is stupid, $90K is more than enough”?
This is bad. Remember that $100K figure came after (again hopefully) you did some research. Remember that it was your best guess estimate. Do not fall into the spiral down of questioning every preparation you had made. You already have external people to negotiate with; if you start negotiating with your earlier self too, it is going to be a tough ride. So, stay strong and confident in the knowledge that you gathered pre-deal.
[dropcap style=’circle’]3[/dropcap] Stay Calm – Yes, easier said than done. However if you did follow the above two points – this is all you need to do to reach close to the best possible outcome (keeping in mind that the counter party might just not be a rational entity in which case anything you do is anyway futile). There is no version where the negotiation will proceed exactly as planned. It could start going much worse than you imagined or much better or somewhere in between. The point is that you want all your faculties to operate at optimum efficiency to react to this change, and that is not possible when you are on an emotional roller-coaster (ego, anger, pride, despair…). Staying calm is critical not only to measure your responses but to accurately analyse what is being said from the other side. There is no room for misinterpretation when you are live!
How to stay calm? A great strategy is to talk as little as possible. In high pressure situations, majority of people have the tendency to shoot themselves in the foot. Do not be that person. There would be a time and place to utilize your networking skills – maybe it was before this meeting, maybe it will be after this meeting. However, it definitely is not during this meeting! The less you talk, the more chance you have to comprehend how the meeting is going and in which direction you might have to adapt. Plus, this helps you in not blurting out all you know or your offer or some knowledge that you didn’t want them to know.
How to stay calm? Another method I have seen employed is to relax the pace of discussion. Ease into the moment of decision making, do not brute force your way into getting an agreement. Of course, there might be some situations where getting the deal done right now is the only thing you want, but in others – leverage the power of time in making things turn towards a mutually beneficial solution.
How to stay calm? And do not forget your normal methods – sleep well the previous night, have a light breakfast/lunch, know what keeps you alert (maybe you function well with Caffeine, maybe you don’t). And by the way, knowing how breathing affects your emotions is not all hocus-pocus. Taking a deep breath when you want to explode in anger has saved many a mess-up.
This article went longer than expected, and I am by no means a negotiation specialist myself. However, looking at people who operate with a high success rate, I believe that you do not need to over-complicate the skills needed. Research as much as humanely possible, know what you want and ‘just’ stay calm.