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Successful
negotiation in business takes skill but it is also about tactics.
SARAH CUMBERLAND tracks a communications consultant through this minefield
and maps a course to a win-win situation.
Whether
you're a lone contractor or manage a medium-sized business, you're
bound to encounter the complex world of negotiating in your business
transactions. It takes skill and know-how to ensure a positive outcome.
Negotiating
is all about reaching consensus between two parties, and it assumes
that both sides have power and can move towards agreement, says communications
and management consultant and coach, Jenny Strachan.
One
of the most important requirements for an equal negotiation process
is a strong mental attitude. "If you've been invited to negotiate,
then you have a right to be involved, to be heard, to state your opinion
clearly," Strachan says. "Don't go into victim mentality. It's better
not to enter the negotiation process at all if you think you just
have to accept whatever the other party wants. You end up trading
off too much. Too many concessions can devalue who you are and erode
the value of your own name (or that of your organisation) in the marketplace."
For
example, you sell your services at a certain price. You desperately
want a particular contract so you drop your price. Immediately you
are devaluing yourself in the market and it will be very hard to bring
your price back up again.
Meeting Place
The
location for the negotiation process is important. Arrange to meet
in neutral territory such as a hotel foyer or coffee shop. If you
are called in to the other party's office space, this becomes a power-base
for them, and gives them the opportunity to employ a range of tactics
to assert their power. These may include:
- keeping
you waiting so as to force a decision
- deliberate
interruptions at critical points
- stacking
the boardroom with a team of people
"Instead
of allowing them to make you feel unimportant, make it clear that you
have a strong sense of who you are, that you are an equal party in these
negotiations," she says. "Hold your ground and turn the situation around
to an equal power-base. That is, if you have been kept waiting unnecessarily,
state that you don't appreciate being kept waiting and request the meeting
be rescheduled in a new location (neutral ground)."
If you
find yourself facing a sea of suits when you expected a one-on-one
meeting, assert yourself, saying something like: "This is obviously
a briefing. I'm happy to take part. I'll take the information from
today away with me and this might help with my negotiations later
on."
That
is, reschedule on your own terms. You should walk away from a meeting
if you feel you are being compromised. Remember, you have rights.
Don't just allow the other side to have all the power.
A lot
of people will manipulate time, Strachan warns. "Try not to enter
negotiations under a sense of urgency. If you have a deadline, you
may make more concessions than you should to bring about an outcome."
One
stalling tactic is to defer to authority. The other party might say:
"I don't have the level of authority to sign off on that amount of
money. I'll have to consult my boss/the board." They may use this
strategy to force you to drop your price to their 'level of authority'.
"It's important to be steadfast under fire," says Strachan. "You have
to be able to sit back and listen. Be quietly confident. Don't appear
too keen to put all your cards on the table."
This
allows the other party to 'show their hand', stalling the negotiation
so that you can be clear about what they want.
Be Prepared
Before
going to any meeting, you should be thoroughly prepared. What is of
true value to you? What are your non-negotiables? These could include
the rate at which you are willing to work, the hours you will work,
and access to technology. If you need access to their computers, and
you can't afford to purchase your own equivalent system, then there
is no point taking the discussion further if the other side can't
provide this.
What
is your power-base? Do you represent a company that is strong in the
market? Or, is the other side's reputation and influence something
you can benefit from? Negotiating is about building relationships.
If you care about having a long-term relationship with the other business,
you may be prepared to concede more.
Alternative Plan
Always
have a BATNA (Best Alternative To Negotiated Agreement), Strachan
says. "This is your position of strength, your dealing card. It means
you aren't locked into an untenable position but can walk away from
the process if you have other options to explore." An example might
be if you've tendered for lots of different contracts and there's
a possibility one of these might be accepted. You can use these other
contracts as your BATNA. Although you might not definitely have these
contracts yet, you can appear confident with your negotiators, saying
that you won't drop your rate when there are others in the marketplace
who will pay the specified amount.
Strachan
tells her clients to compare any negotiation process with that of
purchasing a house. You never just accept the price the agent tells
you. You are prepared to negotiate. And your BATNA in that situation
is that there's another house down the road that also meets your needs
so you don't have to buy the first one.
Think
the negotiation process through from the other party's point of view.
Consider what they want and think about how you can meet those needs
without giving up what you want. What is their position in the marketplace?
What do they want from you? What are you willing to trade and why?
What sort of value can you add? For example, providing telephone follow-up
after your service is of no great cost to you, but might be something
you can trade on because it is of value to the other side.
The Other Side
Know
your competitors and their prices. The other side's BATNA might be
that they say they can get someone else to perform the job at a lower
rate. If you know that isn't so, then you can call their bluff knowing
that they'll probably back down.
State
quite clearly: "I'm not taking myself out of the market when you're
not paying me market value." Demonstrate to them that this is the
market rate by stating that if you are unable to fulfil other contracts
so as to do their work, then you'll have to employ someone at that
same rate. You are just keeping your business afloat.
Negotiating
takes a lot of interpersonal skill to be truly effective. Listen well
and ask lots of questions. If you don't feel comfortable with your
level of skill as a negotiator, Strachan recommends taking some training.
*
Jenny Strachan is a communication and management consultant
and personal coach. She is co-author of the award-winning publication
The Business of Communicating, and is currently in the process of
conducting the orientation for staff involved in the Sydney 2000 Olympic
Games. She is a facilitator in negotiation at the University of Western
Sydney and instructor for a series of leadership skills and conflict
resolution courses for women run by IIR Development. She can be contacted
on 0419 014 173 or by email jennys@acay.com.au
Guidelines for Negotiation
- keep
the people and the problem separate
- don't
negotiate about your positions of power
- focus
on the interests, not the positions
- create
options for mutual gain
- remain
objective
Prepare For Negotiation
- establish
goals
- research
the facts
- clarify
the issues
- identify
the real needs
- predict
needs of other parties
- establish
the common ground
- prepare
your case
- prepare
and anticipate the case of the other parties
- identify
the needs and interests of the other parties
Closing
the Negotiation
- check
the viability of possible agreement
- confirm
areas of agreement
- make
a record
- decide
on following action
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