There is a story told about Bill Clinton, that when he sailed to the UK in the 1960’s after earning his Rhodes Scholarship to study Philosophy, Politics and Economics at Oxford, he shook everybody’s hand on the ship. When asked why he had done this, he explained that one day he wanted to be the President of the United States of America and that he was going to need a lot of friends.
In a HBR article early in 2015, Carolyn O’Hara a New York based writer and editor sets out how in a negotiation process you can drive a hard bargain while keeping a relationship intact. She explains that generally people think they have to be nice in order to spare hard feelings, or overly tough in order to win. Both of these she explains are incorrect.
Building negotiation skills is a critical aspect to any executives tool box. There is a risk of damage to a key customer or supplier relationship from such sensitive discussions being handled badly. The first step in avoiding this is to make sure that you are negotiating with the right person, the decision maker, and not someone stuck in the middle feeling 360 degree stress in the process.
O’Hara suggests that negotiations can often go south quickly, if the parties are not properly vested in each other. She sets out a framework of principles which include walking in the other person’s shoes to gain a true understanding of the pressures and context that the other party faces.
O’Hara explains that it is important to spend a little time from the outset using small talk to get to know the other person and to build connections that you can leverage later in the process. She agrees with many other authors on the subject that ego should be put aside. The target of the process should be a solution or joined set of results and that both parties should use “we” statements and not “I” statements to reinforce the mutuality of the process. Wharton University Professor of Management, Adam Grant, in his best-selling book Give and Take sets out a number of tactics for any executive undertaking a complex negotiation.
Firstly, don’t be guarded with your information, share openly from the outset. Trying to keep your cards close to your chest simply prevents trust being built between the parties. Grant suggests that people tend to approach professional interactions with one of three mindsets, Taker, Matcher, Giver. It is only when we are in Matcher mode that we look to trade evenly.
Secondly, know your walk away point and base it on firm data. Researching effectively beforehand will bring more confidence to how you handle the process.
Thirdly, make the first offer. This flies in the face of how most of us were trained or learned how to negotiate. However Grant explains that people who make first offers more often get final terms at their target position.
The reason for this they explain is that the first price acts as an anchor and the only alternative the other party has, is to work around that price or seek to re-anchor. Re-anchoring by the other party often reveals the mid point to be their actual target outcome.