These tips still do it. From AFR Boss late 2002.
Negotiating tips
Know the rules
“The number-one mistake is that most people go into negotiations with a
different mindset to a trade-off mindset,” says Melbourne Business
School’s Mara Olekalns. “You get faulty process when somebody doesn’t
understand the rules.” She says compromise is not necessarily the game.
“Staying is always a bit harder.”
Know your power, even if you are coming from a position of weakness.
“The fact that somebody is negotiating with you means you have
something that people want,” says Olekalns. “Ask yourself why they are
negotiating with you. Analyse what they want from you that will help
them. Always know what your alternatives are. Are there other people
who can supply you with the same service?”
Know your bottom price
“Be really creative. If negotiating a job or a contract renewal, look
at what the options are if you don’t reach a mutually satisfactory
solution,” says Olekalns. “A radical alternative in a job contract
renewal may be a complete change of career.”
Be creative
More than cash can be put on the table, says Simon White, partner in
media buyer Ikon Communications. “When negotiating with people in other
businesses there is a lot of sweat equity with knowledge and contacts.”
This can be as simple as the introduction to new contacts from a
company’s client base.
Be informal
“A lot of people still negotiate the formal way,” says Rogen
International’s Tony Castricum. “The informality of (our times) means
you should leave that stuff at the door and get on with it.”
Be yourself. Traditionally in negotiations people were told to make eye
contact. “But too much eye contact and too much sincerity smells
fishy,” says Castricum.
Know your moves in advance
Play the game like chess, says White. “What does the person do if I say
X? What if I say Y?” Inside knowledge is key. One of White’s cheeky
techniques is to find out when media sales executives have their weekly
meetings and phone two hours before to negotiate when they are near a
deadline and want to impress their boss with results. “We’re trying to
be hard but fair. That’s okay.”
Be personal.
Your personality plays a big role, says Minter Ellison’s Costas
Condoleon. “Some deals are very compelling and get done. At the end of
the day it’s individuals.”
Dress for the occasion. You don’t want to be wearing a bespoke suit
when your opposite number has a nose ring. While the code of dress has
relaxed over the past 20 years, some people are still underestimated
for their dress sense. Richard Branson, complete with beard and jumper,
is legendary for cutting tough deals despite the fact that his
opponent’s cloth was cut on Savile Row.
Let’s Deal
The art of negotiation is no longer about relative advantage. Building relationships with mutual respect will get you a quicker settlement – and a better result
It has been a bad year for business ethics. Even before the backlash to corporate scandals erupted, trust had emerged as a crucial issue in negotiating sessions. Specialists in the field now see a greater emphasis being put on forensic and aggressive questioning. And negotiating parties are wary about how much to take on trust.
Recent research from the Melbourne Business School found that people do want to trust each other in negotiations but that first impressions are critical.
“The Dynamics of Trust in Negotiation”, a paper by Mara Olekalns, Feyona Lau and Philip L. Smith, published in August, examines two experiments testing the relationship between first impressions and trust in simulated negotiations.
Olekalns, associate professor at MBS, says: “First impressions are very important. Firstly people make fairly quick assessments as to whether they trust you – independent of what you do in the negotiations. If I decide early on that I’m not going to trust you, my response is going to be very different than if I decide I’m going to trust you.
“As a topic in management, trust is becoming a very important issue. Building relationships is a very important way of doing business.”
Olekalns believes business is moving towards a style of psychology-driven management where the focus is on emotions and trust.
Global negotiating specialist Tony Castricum, from communication consultancy Rogen International, says the new emphasis on trust means people seek more evidence to back claims made in negotiations. “We want to see detailed substantiation,” he says.
While people should be honest in negotiations, they need to appear honest as well. Castricum says this is a matter of body language and not appearing over-rehearsed. People should look natural.
In the spirit of truth, people are demanding openness and honesty from negotiating partners and testing it with aggressive questioning.
Castricum says it is not just a matter of skilful questioning but having the ability to pursue a line of interrogation so that the other person comes under huge pressure. Not so much the techniques of the career diplomat, more the questioning skills of a top QC.
Mutual respect
Minter Ellison corporate partner Costas Condoleon, an M&A specialist who worked on the Singtel takeover of Optus, says mutual respect makes negotiating a transaction easier. In any transaction there are two perspectives and both parties deflect as much risk as possible. It’s about having people who think outside the square, looking for solutions rather than problems, Condoleon says. “The best way to get negotiations done is to have parties who are creative.”
He says it’s rare for two parties to agree without first having reached a breaking point – the point where negotiations are stretched to the limit. There are, he says, many ways to get there. “Some people are trigger happy and very keen to say, ‘If we don’t have that, the deal is off.’ Others know what issues are important. How many deals fall over? A lot.
There is a spectrum of what is a reasonable outcome to another party.”
He says that plenty of times trust has been strained to breaking point and behaviour has been inappropriate or unethical. According to Condoleon, the offences include deliberate withholding of information, supply of misleading information, and the application of inappropriate pressure.
Castricum says business and political leaders should set standards for the rest of society. And now with the backlash against Enron and the like, trust and openness may be further reinforced. For instance, in the US there is, ironically, a backlash to President George W. Bush’s enthusiasm for war on Iraq. The tough-guy stance often works but does not necessarily achieve the best result, says Castricum.
The old days of table-thumping negotiations between staff and management are largely dead. “Nowadays there is far more consideration,” he says. “The ambit claims in the main are not there. And the management who said ‘get stuffed’ and acted like pigs realise they can’t behave like that any more.”
ACTU assistant secretary Richard Marles says enterprise bargaining brought about a sea change in negotiations in 1993-94. He says there has been a big leap forward since. “It’s a lot more adult,” he says. “I think relationships are very much stronger. People know each other a lot better and know how to work with each other. It’s more mature and sophisticated but I wouldn’t say it’s friendlier.”
There is a greater awareness of the competitive environment and management’s perspective. Knowing what a company can bear is useful before negotiations start. “Knowledge is power,” Marles says.
A lawyer by training, Marles learnt to read profit-and-loss statements and balance sheets to help negotiations when he was working for the Transport Workers Union in 1998. He interviewed transport company CEOs and dissected the financials to find out what claims were feasible.
Olekalns says negotiation standards and styles were raised by the publication of Getting to Yes by Roger Fisher and William Ury in 1981, based on the work of the Harvard Negotiation Project at the Harvard Law School. The project aims to improve the theory, teaching and practice of negotiations. Researchers on the project have been involved in high-level talks, for example, between Peru and Ecuador, and on concepts for Middle East negotiations.
Olekalns says the project “really changed things in negotiation” by moving people away from positional negotiation to collaborative talks. “The goal is to try and get something that works for both people,” she says, adding that negotiation is still affected by the distribution of power between the parties.
In Getting to Yes, Fisher and Ury say that old-style bargaining can create incentives to stall settlement. “In positional bargaining you try to improve the chance that any settlement reached is favourable to you by starting with an extreme position, by stubbornly holding to it, by deceiving the other party as to your true views, and by making small concessions only as necessary,” they say. “The same is true for the other side. Each of those factors interferes with reaching a settlement promptly.”
For their next edition, perhaps the current jam in Middle East negotiations will present another case study for the breakdown of positional bargaining.