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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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