11 Golden rules for negotiation

We keep making deals in our personal and professional life. On the professional front, there are a wide variety. With employees — ‘perform well, and you will get a good incentive’. With suppliers- ‘if you give me good quality, I’ll buy more from you’. Deals can be both implicit (mutually understood but not articulated objectively) or explicit. Negotiating deals can be frequently painful. Whether it’s closing the deal for a large order of your product, or buying another company. This article looks at some golden rules while negotiating which make the process enjoyable.

The word ‘negotiate’ derives from the Latin ‘negotiatus’ means to ‘carry on business’. Treat negotiation just like that. Something which is a necessary part of business. Not something which is distasteful. When you enter with dread, you tend to want to hurry things up. And rushing things can cost you dearly. Instead, savour it, like a nice cup of coffee (or glass of your favourite tipple!). 

As with everything, be prepared before starting negotiations. That includes knowing what constitutes ‘victory’ for you and which elements are critical for you. Also, research your counterparty and where they see value. Often, we enter a negotiation without knowing which elements are critical for us. When we do that, we are effectively entering with a piece of paper with our ‘ask’ from a negotiation. And pray that the counterparty agrees with our views. That’s unlikely to happen. Without homework, there’s a chance that an inconsequential point becomes a deal-breaker. And you’ll only know its inconsequential after the negotiation. Also be prepared with your BATNA (Best Alternative to Negotiated Agreement). This is your plan B, the actions you need to take in case the negotiation falls through.Do you have an alternate supplier? Can you find a viable replacement to your employee? 

Very often intangibles are not that valuable to you. But matter significantly to the other party. For eg in an employer-employee negotiation, flexibility in working hours and symbolic titles might be very valuable to an employee. Intangibles are often difficult to find. But when you do, they can be key enablers of a successful negotiation. The best way to find out is to go ahead and ask the other party what’s important to them. 

Negotiations work best when they’re win-win for both parties. Don’t focus on only what you want from the negotiation. All through the negotiation, look for ways to make the deal sweeter for the other party. Not only will the negotiation go smoother, but it will set the stage for a long-term relationship. Remember, the close of negotiation is the start of a relationship. It’s important to start on a positive note. Don’t treat negotiations as a winner-takes-all type of discussion (See Rule #8).

Nobody likes negotiating with a person who goes back and forth. Be clear on what you want. And try to stay consistent. That doesn’t mean you can’t change your mind. Only that you shouldn’t change your mind about everything. And when you do change your mind, be fair to the other party and explain your reasons for doing so. Equally, don’t negotiate with a person who keeps changing their mind. You might successfully close the negotiation but enter a relationship where the lack of consistency of word and action continues. It’s not worth the hassle!

Opportunities come and go. So, don’t bend over backwards to accommodate every request of the other party. That makes for a poor start to a relationship. If you didn’t have anything of value, they wouldn’t be negotiating with you. While its good not to let your ego get in the way of a negotiation, don’t underestimate the value you are bringing to the table. It’s common for smaller companies to enterinto lopsided deals with larger companies. Yet, those deals should only be done where there’s a larger strategic objective. For all other cases, stand your ground on your critical ‘asks’ from the negotiation. It’s better to wait and hammer out a mutually beneficial deal, rather than to make concessions you regret later.

Be respectful in your interactions. And don’t accept disrespect from the other party. Both parties benefit from a deal. So, nobody’s doing anybody a favour by getting into a deal. However, don’t go overboard on demanding respect! (See Rule #8)

It’s easy for a negotiation to get stuck on trivial issues. With both parties not willing to concede since it will hurt their egos. When negotiations start becoming personal, other distractions also come in. For eg one is more likely to get angry if the deal becomes a personal goal. And anger is a sure-fire way of scuttling a win-win deal. Negotiation is not a competition, so don’t let your ego make it one.Stay calm and objective during a negotiation and there is a better chance you’ll get what you want. 

Something you’re not happy about? Tell the other party about it. Don’t stew over it and expect the other person to understand. What’s important to you isn’t necessarily important to the other party. Speak your mind. But do it respectfully and with deference to the other persons opinion.

It’s good to start with a few wins. That means agreeing on the elements which are easier to get mutual agreement on. And then moving to the more contentious issues. All negotiations have some common ground for both parties. Make the best use of it. Here again, it helps to go well-prepared into a negotiation. You can choreograph the order in which you discuss the elements in a negotiation. Agree on the easier elements. Build some consensus and move on to the more difficult bits.

Negotiate face-to-face. And then write down the common understanding after each phase of oral negotiation. Often, what’s agreed orally looks very different from what’s put down on paper. For large contracts, don’t ever complete an entire negotiation orally and at the end put it down on paper. That will lead to a reopening of the entire negotiation. Discuss important elements, get everyone’s agreement put them down in writing, and move to the next item.

Negotiations can take time. Disney’s acquisition of Lucas Films, home of the Star Wars brand was announced in October 2012. Negotiations started in May 2011! It took more than a year for George Lucas and Bob Iger, the CEO of Disney to reach an agreement. Keep these 11 golden rules of negotiation in mind and you’ll probably reach an agreement much faster! And start a sustainable long-term business relationship.