Successful negotiations start with stellar preparation

One of the many glitches in the human makeup is the difference in our abilities when it comes to performing for others as compared to how we perform for ourselves. It always baffles me to read about the psychiatrist who has helped so many of his patients rebuild their lives but whose own personal life is in turmoil. How about the financial adviser who never picked a stock right for himself but managed to build a tidy pile for his clients?

Not many of us are able to do things for ourselves the same way we do them for others. That translates into whether we’re better at our jobs or better at our personal affairs. Even people who make their livings negotiating can really mess up in the use of their professional skills in their own personal interests. Not every real estate expert who spends her career negotiating commercial retail leases is an expert when it comes to negotiating her own compensation. The insurance company adjuster who knocks heads all day long negotiating settlements with personal injury lawyers still may be a patsy in settling his own salary differences with his employer.

Unfortunately, there’s no way we can escape having to represent our own interests, whether we’re good at it or not. So we might as well try to learn how to be good at it. Whether or not you’ve ever negotiated anything else in your life, when it comes to getting a job, asking for a promotion or a raise, or even hanging onto the job you have, at some time your ability to negotiate on your own is going to be tested.

Whatever you’re negotiating for, including a job, you’ll do best if you forget the flowery speeches and concentrate on knowing the other side’s strengths and weaknesses. In other words, do your homework!

• You need superior information. That’s why car dealers win in negotiations. They know exactly how much they paid for the car they’re trying to sell, and also how much your trade-in is worth. Few ordinary car buyers take the time to learn those two critical numbers. And even when they think they do, the dealer throws in variables like options and financing charges that help disguise the dealership’s true profit margin. The result is that only the most sophisticated customers know how to cut a deal without cutting their own throats. The true pro has customers believing they have stolen the car.
• Don’t make decisions for other people. When you let them decide, you make them decide.
• Stay calm. If you’re tight in the batter’s box, you can’t hit. The high average hitters always keep a quiet bat until it’s time to swing. Pounding the table only works in the movies.
• Anticipate questions. Know the answer to every question you might be asked before you sit down at the table and you won’t have to appear as if you are negotiating.
• Be a spin-doctor. Finesse questions. For example, if you are asked, “What do you need for a salary?” reply with, “Do you have a salary range established for the position?”
• Silence is golden. Do as little negotiating as possible. Make your employer make the first offer … it could be a pleasant surprise. On the other hand, if you make the first offer and suggest a number lower than the employer was about to offer you, you’re giving them a pleasant surprise.
• Evaluate the employer. What do you know about their needs? Is this a tough position to fill? Do they have the reputation for being high payers or low payers? Are they noted for high or low turnover? Do they tend to provide a fast track or a slow track for their employees?
• Evaluate yourself. What bargaining advantage do you hold? Top grades? Great potential? Superior past performance? First-rate credentials and experience? Proven skills? Proven loyalty? Will it matter to the company if they don’t hire you and hire someone else instead? Is your potential to perform of such value to them that they wouldn’t want it to go to the competitor? Can you prove it?

Negotiating 101: 50 years of experience

If you ask me what one skill has made the biggest difference in my career, I would answer you, hands down, negotiating. It applies to selling, purchasing, hiring, firing, expanding, downsizing, and every other phase of business you can name. It’s part of the game that I am particularly fond of, and it’s not just to see how much I can get the other person to give. I like to learn from the varied strategies that other people use.

Here are some of the lessons I have learned over a lifetime:

1. You can’t negotiate anything unless you absolutely know the market. Only then you will be able to recognize a good deal when you see it.
2. If you can’t say yes, it’s no. Don’t sugarcoat it. Don’t talk yourself into yes just to seem like a nice guy. No one ever went broke because he or she said “NO” too often.
3. The single biggest tool in any negotiation is the willingness to get up and walk away from the table without a deal.
4. It’s not how much it’s worth! It’s how much people think it’s worth.
5. Many people listen … very few actually hear. You can’t learn anything if you are doing all the talking.
6. In any negotiation, the given reason is seldom the real reason. Find out the real reason and your probability of success goes up dramatically.
7. No one ever choked to death swallowing his or her own pride.
8. In the long run, instincts are no match for information.
9. There’s no more certain recipe for disaster than a decision based on emotion. Or another way of saying this is: Make decisions with your heart and you’ll end up with heart disease.
10. A dream is always a bargain no matter what you pay for it. If it’s something you’ve always wanted, and this is your big chance to get it, go for it and make it work.
11. The most important term in any contract isn’t “in” the contract. It’s dealing with people who are honest. As the old adage goes: You lie down with dogs … and you get up with fleas.
12. There is no such thing as a “final offer.”
13. Try to let the other person speak first.
14. Never give an ultimatum unless you mean it.
15. You cannot get dealt a straight flush unless you are in the game.
16. Smile and say no, no, no, no, no … until your tongue bleeds.
17. Agreements prevent disagreements. You have to fight your guts out for an agreement and then you won’t have a disagreement.
18. If you can afford to buy your way out of a problem, you don’t have a problem.
19. More deals result from whom you know than what you know. And it’s not just whom you know but how you get to know them.
20. The walls have ears. Don’t discuss any business where others can overhear it. Almost as many deals have gone down in elevators as elevators have gone down.
21. People don’t plan to fail, they fail to plan. Top negotiators debrief themselves. They keep a book on themselves and their opponents. You never know when that information may be gold.
22. Your day usually goes the way the corners of your mouth turn. Your attitude determines your altitude.
23. People go around all their lives saying: What should I buy? What should I sell? Wrong question: When should I buy? When should I sell? Timing is everything.

Everything’s negotiable— and here’s how to do it

During the Civil War, President Abraham Lincoln was urged by a friend to give up Forts Sumter and Pickens and all government property in the Southern states. In reply, Lincoln said, “Do you remember the fable of the lion and the woodsman’s daughter? Aesop writes that a lion was very much in love with a woodsman’s daughter. The fair maid referred him to her father. And the lion went to the father and asked for her hand.

“The father replied: ‘Your teeth are too long.’”

The lion went to a dentist and had them extracted. Returning, he asked again for his bride.

“‘No,” said the woodsman. “‘Your claws are too long.’”

Going to the doctor, he had the claws removed. Then he returned to claim his bride, and the woodsman, seeing that he was unarmed, beat out his brains.

“‘May it not be so with me,’” concluded Lincoln, “‘if I give up all that is asked?’”

I learned a long time ago that you can’t give anything away in negotiations without receiving something in return. I also know that the most important term in any contract isn’t the contract. It’s dealing with people who are honest.

Before you start any negotiation, look beyond the title and make sure that the person you’re dealing with is in a position of authority to sign off on the agreement.

No matter what industry you’re in, or how far you go in your career, the ability to effectively negotiate can make the difference between success and mediocrity. It doesn’t matter whether it’s a multimillion-dollar contract, a job offer, or a house sale. The rules of good negotiating are the same.

• Know what you want. Don’t go to the table without a clear, realistic idea of what you want to achieve. It will help you negotiate with confidence.
• Ask for what you want. Don’t be afraid to make the first offer. You’ll set the tone for the discussion, and studies suggest that the negotiator who goes first usually comes closer to getting what he or she wants. While I often counsel people to let the other person go first, someone has to start the process. I have found that either way, I need to be clear about my expectations or I will be disappointed.
• Understand what your adversary wants. A successful negotiation should satisfy both sides. Instead of trying to crush your competition, find out what he or she hopes to get, and try to work together toward a solution that works for you both.
• Don’t concede unilaterally. Usually one side or the other has to give something up. If you offer something, be sure to get a comparable concession from the other person. Giving away something for nothing will be taken as a weakness to be exploited. The playing field needs to be level. You don’t have to accept being bullied.
• Don’t rush. Time can be your friend if you’re willing to wait for the right deal. If the other side senses a deadline, he or she may be motivated to hold out until the last minute, or try to force you into accepting unreasonable terms. Be patient and let the time pressure work against the other side.
• Be ready to walk away. This can take a certain amount of courage, but it’s necessary to avoid being backed into an agreement you don’t want. If possible, keep an ally in reserve—someone with the power to approve or reject the deal. This can give you an out if you need to turn down a deal, or motivate the other side to make the best offer possible.
• Listen. Sometimes what the other side says is not the same as what they want. They say the price is too high, but their most important demand is quality, which almost always costs a little (or a lot) more. Pay attention for cues that will help you direct your response to a better outcome for all.

Financier J.P. Morgan once wanted to buy a large Minnesota ore mine from John D. Rockefeller. So Rockefeller sent his son, John D. Jr. to talk to Morgan.

Morgan asked, “Well, what’s your price?”

He was unprepared for the response. Junior said, “Mr. Morgan, I think there must be some mistake. I did not come here to sell; I understood you wanted to buy.”