Negotiating with 8 golden steps, the agreement table
Preparation is one in the most important aspects of negotiation. Neglecting this crucial component can result in a bad deal or a failed agreement.
People never plan to fail, but they often fail to plan. This is a sensible and shrewd maxim that has dogged many business owners through the ages. It’s the prime reason why so many intrepid enterprises fail so miserably, despite the determined efforts of their proud owners. A grand idea had illuminated their hopes, and they thought or assumed they couldn’t fail. They crashed into stark reality when their ledgers bled the color red, and consequently, the life of their business itself. They failed because they didn’t plan.
‘Be Prepared.’ is a brilliant Boy Scout motto that should be akin to the first commandment to any endeavor upon which we embark. Successful businesses follow prescribed models that are not all that dissimilar to mathematical formulas. Success is not a mystical alchemy but rather the science of tried and tested methodology.
Successful negotiations are no different. We must prepare ourselves through intelligent, reasoned planning. To do otherwise is not much different, from trying to grope and fumble your way through a dark and unfamiliar room.
To illuminate your way to the negotiating table, here are the 8 golden steps, which will guide your way in planning your approach.
Step 1 – Understanding
We first gain understanding of the purpose of the negotiation through prioritizing and ranking our needs or objectives. Second, we must follow the same process for the other side. Our understanding is based on all the intelligence we can gather about them. It may either be an estimation of their objectives, or a fairly reasoned guess. We must also rank and prioritize what we perceive as their needs and objectives.
Performing this procedure enables us to consider possibilities about a potential and beneficial outcome, not only for ourselves, but also for the other side. This overview offers us a perspective about the issues we are going to face.
Step 2 – Invent Solution Scenarios
Once we understand our prioritized objectives, and what we perceive as those of the other side, in terms of the desired outcome, we can determine what areas would be potential areas of mutual agreement. Here, we might find the basis for finding a region of compromise. Alternatively, we can consider prospects to trade off as concessions. Likewise, we can determine those concessions the other negotiator might have to offer that are of interest to ourselves. We need not re-invent the light bulb, just a better one.
Step 3 – Establish the Alternatives
The prepared negotiator knows that there is a bottoming out point. Here, a negotiation might collapse like a house of cards. Both sides will have a reservation price or bottom line that they will not transgress or cross. If our paths do not intersect, then there is no zone of agreement and the talks will likely fall to pieces. Keeping this possibility in mind, the intelligent negotiator realizes that they must chew over their best possible alternatives or BATNA, which is the fallback position, should talks fail.
We must realize that the other negotiator is of a similar mind. So, we need to discover their best alternatives to fully appreciate the relative strengths of both parties in comparison.
Step 4 – Give Your BATNA Some Spinach
The stronger we can make our BATNA, the stronger are our alternatives. This is not just a preparatory phase of the process; it must be seen as an ongoing process. Anything you can do to strengthen your alternatives empowers your position at the table. A feeble BATNA weakens your ability to be as effective as possible. It may possibly make you prone to being placed in the position of accepting a less favorable deal.
Step 5 – Who’s the Big Cheese?
Be fully cognizant of what decision-making authority you bring to the table. More importantly, before you even sit down to begin negotiating, it is crucial that you clarify the decision-making authority limits of the other side.
One of the most common gambits used to gain advantage over us, as we are about to reach that critical stage of agreement, occurs when the other side shrugs their shoulders and calmly advises that they have to clear it with the ‘Powers That Be.‘ Our looming agreement becomes deflated like the air leaking out of a balloon, and we find we are caught in the power shuffle squeeze. They could be holding out for “just a few more concessions.”
By ensuring that the authority levels of the people who represent the other side are understood, we will have the proper knowledge to adjust our strategy accordingly. The other side do not need to have equal authority, but we need to make sure we clarify that we haven’t committed to anything before they get the authorization to complete the agreement.
Step 6 – What Do You Know About Them?
Information is power. Put the other side under the corporate microscope and research their background as thoroughly as possible, to find out what you can about them. Similarly, we need to know as much as possible about the operations of the company or organization they are representing. We can achieve a better understanding of their needs and interests through research. Knowledge is power, but ignorance is a miserable and unacceptable excuse.
Step 7 – Don’t Let the Bough Break
A rigid tree often breaks in the face of a raging wind, while a flexible one bends to survive and weather the storm. A rigid posture or position is often counterproductive. Be prepared to open your mind to new opportunities, by adapting to changing circumstances and adjusting your strategy and tactics accordingly. Don’t weigh yourself down to a specific position. A rigid stance will give you no room to navigate a different course, or alter your options.
The negotiation process is not a straight line from A to B. It is about as predictable as the weather, and we all know how fast that can change. Have the right mindset before you enter the talks. Keep your mind open to face any potential changes that might spring out at you when you least expect it.
Step 8 – Know Your Fairness Yardstick
A durable business relationship with a partner will not survive the test of time if one of the partners feels they have been pressured into making a disadvantageous deal. If we are going to be making proposals, it is essential we determine realistic standards or criteria to form the basis of the proposal.
How else can you sell it to the other side; and how else can either side know whether the deal is subsequently fair? Similarly, how can you accept a proposal from them if there are no standards or criteria to give their proposal any weight or validity? We can use industry standards, internal or outside experts, or past experience to provide some guidelines. There are very few agreements that don’t have some kind of history or precedent. These can be used to act as a fairness gauge.
As we prepare our own fairness gauge, we must be proactive and not just reactive. We must always remember to consider developing a gauge, one that can be applied to both sides’ proposals.
Preparation is one of the most overlooked aspects of negotiation. Neglecting this crucial component can easily result in a bad deal or a failed agreement that shouldn’t have happened. Very few of us like to do homework, but we know if we aren’t prepared, we might fail the test. It sounds like an overly simplistic thing to say, but the consequences can be disastrous. Which position would you prefer before entering a negotiation—to be on shaky ground or confident in your preparation? It’s your call.