Do Your Negotiation Homework
Common sense should tell you how much detail to go into. Turning up with reams of paperwork to discuss a team member’s request for time off would likely cause amusement, dismay or resentment. Equally, having no hard data to hand at a crisis board meeting would almost certainly cause your reputation serious damage.
- Goals. What are you trying to achieve during the negotiation? And what do you think the other person’s goals will be?
- Trades. What might you be able to ask for, and what would you be prepared to give away?
- Alternatives. If you really can’t achieve your goals, what would be your “best alternative to a negotiated agreement” (BATNA)? Your position will be more secure if you have a number of options, so it’s worth putting plenty of effort into addressing this point.
- Relationships. How have negotiations gone with this person in the past? Just as importantly, what kind of relationship do you want with them in the future?
- Expected outcomes. What precedents have been set? Based on those, and on any other evidence you have, what seems to be the most likely outcome of this negotiation?
- Consequences. Is this a big, one-off deal, or one of many smaller negotiations? What do you and the other party stand to gain or lose?
- Power. Who holds the power here? How might this affect the negotiation process?
- Solutions. Taking all of these points into account, what do you now consider to be a fair outcome – one that you can put forward with confidence?
Negotiation Skill #2: it’s about your people skills
At Hautacam Consulting, we utilize Inscape Publishing’s DiSC© product. DiSC is not designed to assess negotiating skills. Rather, it is designed to describe a person’s behavior when their personality interacts with a selected environment. An example of such is an employee negotiating on behalf of their company.
Using this program, seminar students can identify their natural negotiating style. They can then start to understand how others may view them in order to improve their performance.
With this program, you will begin to see why you may be more comfortable with certain people than others. It is easier to talk to people who have similar negotiating styles. When teaching styles, we focus most of our time on explaining how to persuade people with less compatible styles.
Questioning and listening do not come naturally to dominants. They tend to move toward goals without considering multiple solutions or outcomes. For that reason, others often view dominants as impatient and uncaring. Dominants tend to use a bottom-line approach. They are good at stating why something will not work. As a result, they may be seen as negative. To dominants, results are much more important than how people feel.
The influencer may see the dominant as “negative.” The dominant may view the influencer as “unrealistic” or even “political.” Both want to make decisions and are leaders. Influencers like to make favorable impressions and want a relationship. Influencers can appear to be impulsive and disorganized. To them, attention to detail is not an asset; they prefer to look at the bigger picture. Influencers are social and usually know a lot of people. They want to get results. However, their focus is on motivating people to get results together.
High-dominant and influence styles negotiating with people in the steadiness style have to be cautious. These two styles like immediate responses, whereas the steadiness style likes to think before responding. They are very methodical and reserved. They are opposites of dominants and influencers.
Dominants will likely need to have patience with the conscientious style negotiator. This is because dominants want to make decisions and get on with things. A limitation of the conscientious style lies in their zeal to get all the facts. With this approach, conscientious styles can appear indecisive.
The Classic Profile
Regardless of the intensity of one or two of the attributes, everyone likely possesses some or all of them. The below attributes are identified through the Classic Profile. This profile examines the intensity of each attribute in relation to the others. The negotiator gets a complete picture of how they tend to behave. Negotiators also learn how to effectively communicate with different kinds of people. The Classic Profile includes an evaluation of how your style tends to behave. It considers the following:
When people of different styles interact, it can be negative. In one example, an influencer is negotiating with a conscientious style. The influencer makes a remark with a minor statistic about the quality of a product. The conscientious style questions the remark and finds it cannot be supported.
In another example, a steadiness style is negotiating with a dominant style and wants to ponder answers to questions. While the steadiness style is thinking, the dominant style begins to talk and starts pushing for an answer or decision.
When negotiating with a dominant style, an influencer will likely answer questions with a story or anecdote rather than using a shorter, more direct approach. These seemingly small things can become huge in the hands of a skilled negotiator.
How To Improve Your Negotiating Performance & Results in 3 Easy Steps
Are you at the top of your game and ready to take your negotiation skills to the next level? There has never been a great negotiator who was born great. Great negotiators, like great athletes, leaders or politicians, simply do the basics very well. The question is, what are the basics? I will share with you the three areas you need to focus on if you want to master your negotiation skills and outperform your counterparts:
My view on the subject isn’t theoretical or academic – it is rooted in over fifteen years of professional experience gained in 35 countries. This article will provide you with a simple yet practical and powerful framework that you can put to work immediately. The framework serves one purpose: it is to help you consistently achieve higher value, more rewarding negotiation outcomes.
Business Acumen is about understanding the basic building blocks of a business and using that knowledge to make commercially sound decisions and convincingly communicate your ideas to persuade leaders, decision-makers, and counterparts.
To become a well-rounded negotiator and dealmaker you need to understand the key business drivers and their dynamics, you need to get a good grasp on how organizations make money and profits, and how leaders and decision makers measure value. A lot has been said and written about claiming and creating value in negotiations, and if you don’t get the concept of value, you are limiting your options to achieve more creative, higher profit agreements.
When you dissect any organization, however large or small, you will find the same key drivers that power any business: Cash, Profit, Assets, Growth, and Customers. Successful leaders focus on setting clear objectives and achieving results in these five areas to deliver on the most critical goal for any organization: long-term, sustainable profitability. The truth is your negotiated outcomes always directly influence at least one of the drivers above, and because each driver is dependent on all of the other drivers, your actions, commitments, and agreements always impact the entire spectrum. It is vital that, as negotiators, we contribute to the long-term profitability and growth of our businesses; hence we need to understand and master the art of making commercially viable decisions.
– Increasing your company’s revenues – for example by conducting effective price negotiations, negotiating changes in scope effectively, upselling and cross-selling, establishing and protecting value in environments of aggressive price competition, etc.
– Cutting costs – by negotiating TCO rather than just the acquisition price, negotiating stronger partnerships with key strategic suppliers, improving SLA’s and KPI’s, eliminating overruns on projects through effective negotiating of scope, etc.
Your ability to effectively engage in negotiations may strongly impact a cash position and cash flow of your organization. Every single concession you make, unless reciprocated, equals decreased revenues or/and increased costs. Don’t get to the negotiation without having identified your objectives, tradeables, and a walk away position. Having a solid trading plan where you know exactly how to protect margins and at the same time secure strong working relationships is a MUST in negotiations.
PROFIT – Do your commitments and tradeoffs in negotiations generate more revenue or increase costs? In simple terms: PROFIT = REVENUES – EXPENSES. Profits are increased by some combination of growing sales revenues and/or reducing costs. At the end of the day profitability of all the agreements you negotiate contribute to the overall profitability of your organization. There are many factors we need to keep in mind to ensure both: profitability of your negotiated agreements and the long-term profitability of your business:
– One of the toughest challenges that salespeople and business leaders face today is the battle against lower-priced competitors. How you tackle this challenge has a significant impact on your company’s bottom line, operating profits and its fortunes in general.
– Don’t just set prices – manage and negotiate them effectively – very small improvements in price translate into huge increases in operating profit. On the other hand, nothing will drop profits through the floor faster than letting price slip down a percentage point or two – an average of 1% price discount may decrease your operating profits by 8% to 10%
– If you lower your price, can you increase volume enough to generate more operating profit? A short answer is ‘NO’. The common arithmetic of decreasing price to increase volume to increase profits does not add up. Make sure that you understand how the price/volume/profit tradeoff works for you and you know price elasticities for your products and services.