Negotiation seems like a mystical art. Is it something only a special few can master, or can we all become effective negotiators?
For the second of our new series of blogs, we’ve interviewed Yellowday Associate Trainer Steve Hallett about how he helps people become effective negotiators. Steve’s engaging approach and ability to apply theory to real-world applications has been honed over more than 25 years of professional training. Thanks Steve for sharing your insights.
Steve, is negotiation an elusive art, or can you turn anyone into an effective negotiator?
It’s true that some people – very few – are natural negotiators. But the vast majority are frightened of negotiation. They’re made to negotiate by their employers because it’s part of their job, and they’re very uncomfortable about it. When we ask our course delegates to list why they fear negotiating, the possibility of causing offence always comes out on top: the fear of upsetting someone, of damaging a relationship. Fear of failure is also common.
But yes, everyone can negotiate. You just need the tools to help you navigate what for most people is a pretty emotionally loaded process. We break down this “mystical art” into its component skills. Our delegates frequently recognise techniques that have been used against them!
If you’re naturally gifted before the training, you can probably become a better negotiator than someone who is not, but by applying simple principles, anyone can improve hugely.
Tell us about the different types of negotiation.
On our course we talk about hard and soft negotiating. Hard negotiating happens in a business-to-business context. Soft negotiation is person-to-person or person-to-business.
Some of our delegates think they’ve never negotiated, but pretty much everyone has experience of soft negotiation. Most of us have negotiated with our partner or children or friends, or when buying a house or car, or talking to a landlord. The skills involved in soft negotiation are familiar to most of us, and they are the same skills we use in hard negotiation.
So what’s the key to negotiation? What do people need to know, and where do they go wrong?
The basic principle of negotiation is this: what are we negotiating? What is the conversation all about? We need a clear understanding of this before we negotiate.
People often enter negotiations with the assumption that the other side wants the same as they do, or thinks the same way. We teach people to establish the MILs, (Must, Intend, Like). This is an established methodology, not our own. The MILs are:
Must: What we must not go above or below in a negotiation. The bottom line of cost/price/other variables in a deal. (We’ll come back to variables later.)
Intend: The level at which we will be happy and comfortable walking away with this deal. Or, in a business negotiation, that our manager will be happy and comfortable with.
Like: The level we’d like to be at, where we feel we should be pitching.
MILs are crucial. They give us our negotiation range. We all have them, and so will the other party. Some of our delegates recount experiences where they wanted to sell a car to a friend or a house to a family member, and both parties wanted the deal to happen – the goodwill was mutual. And yet it didn’t work out, because the MILs didn’t overlap. If the MILs don’t meet, there is no negotiation, regardless of the goodwill on both sides.
Negotiations can’t absolutely always work out, can they? Can you learn the art of “no”?
Two further tools we can use to help us understand our negotiating position clearly before we begin are our BATNA (Best Alternative to a Negotiated Agreement) and WATNA (Worst Alternative to a Negotiated Agreement). These help you to understand your walk-away position: that is, when you can walk away from the negotiation and do better.
If you have a good Best Alternative to a Negotiated agreement, your power in the negotiation is greater. If you have a weak one, then you don’t really have a walk-away position, so you’re going to be the weaker party in the negotiation. Establish your BATNA – do you have one? What is your opposite party’s?
There is seldom a true WATNA in soft negotiations. Think of when you last bought a car or a house. You might get emotional about it, but unless you’re buying something truly exceptional, something similar will be available soon enough. The worst case scenario is that you might have to wait a bit.
But in business negotiation there is often a WATNA. We truly need this deal to go through if we are to get our parts on time, or we’ll end up with a warehouse full of 10,000 widgets we can’t sell to anyone else.
So, the next thing we need to do in a negotiation is establish our variables: what are they? People often look to negotiate on price first, but there are many variables. When you buy a car, price is one negotiable variable. So is part exchange value. So is the finance package. There are variables everywhere, in every deal you see. And if you can identify and split the variables, it’s to your advantage. If you’re at an impasse, perhaps you can split the variables: a good negotiator can always do this to keep a negotiation alive.
Variables are a useful way to access the “low hanging fruit” of a negotiation: offer what is cheap or easy for you to give but valuable for the other party to receive, and ask for what is valuable for you to receive but cheap or easy for them to give. I recently bought a used car; my first pitch, which I knew I wouldn’t get, was to ask for a discount. I then tried this offer to the dealer: “upgrade me from six to twelve months’ warranty and we have a deal”. To give me cash would be costly for him, but an extended warranty was little sacrifice to secure the sale.
What are the key mistakes amateur negotiators make?
They forget to pitch low or high, depending on which side of the seesaw they’re on. It’s an obvious technique, but it’s really crucial. It’s a common mistake: people get caught out by a desire to be liked. They want to be seen as being very reasonable, so they pitch at the level they’re prepared to settle at, thinking that will sound reasonable to the other party.
But of course, the other party isn’t a mind reader and doesn’t realise their opposite is being reasonable! Instead, they will always interpret your first pitch as your highest pitch, and negotiate from there. By trying to be likeable, all you’ve done is concede bargaining power. You’ve beaten yourself. That’s why amateur negotiators often come away feeling angry, cheated or frustrated. They were being reasonable, but the other party didn’t know it. The gift of telepathy is in short supply, so be nice at your peril!
We also teach delegates not to give variables away because they’re excited a deal is almost in the bag. Do this and you’re effectively playing with your terms as if it’s within your capability to do so. By all means be positive when you’re near a deal, but don’t promise to do anything for free.
I’ve heard you speak of the foolishness of splitting the difference…
Yes! We also talk about this on the course. Here’s a question for people who acquiesce to splitting the difference: whose difference are you splitting?
If someone asks you to split the difference they have probably pitched high. It’s not a great negotiation point and is rather unsophisticated, but it’s one we see on TV a lot so people feel pretty street smart when they’re doing it. In fact, it can be mutually ruinous! I may settle on a price I can’t afford, and it may be below your cost price. Nobody wins.
You’ve suggested many people fear negotiating. What else do you teach to help them win in a pressurised, potentially stressful scenario?
Another tool the skilled negotiator deploys, often when in hard negotiations, is negotiating on the merits. When a negotiation becomes emotionally charged, come out of the emotional stuff and bring it back to the facts. In a real-world scenario, this might look like a business getting an independent valuation from a consulting firm before selling, or reviewing stock at wholesale prices. It’s a way to move on.
At a more interpersonal level, we also spend a lot of time examining behavioural ploys. This is where people might become aggressive or dismissive or sarcastic in their negotiating. It’s meant to make you feel you’re not even close to a deal – to make you panic and backtrack. We show you how to stand firm, with emphasis on the importance of body language and rising above intimidation. Part of this is about closing with style, which means making it clear that your final pitch is just that. Close with style and don’t infill with further communication. Just close, and make it clear you’re closing.
I often tell my delegates that anything is negotiable, provided we bring in the variables – volume, price, when to buy and so on. Offer to negotiate on a Mars Bar and you might be laughed out of a shop. But offer to buy a box of Mars Bars and negotiations will soon start!
What sort of feedback do you get from the course?
The comment I hear most is that the training provides people with a great confidence to take their negotiation much further – and that’s what it’s all about.
The Negotiation Skills course can be delivered cost effectively in-house, on a date to suit you, and tailored to your organisation’s needs. We provide exercises to help bring the theory of negotiation to life and to help hone delegates’ skills.
The course is also available on our open schedule. Learn more about our Negotiation Skills training: https://www.yellowday.co.uk/training-courses/leadership-and-management-development-training/negotiating-skills/
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