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When it came to negotiations, the American oil billionaire Jean Paul Getty followed the advice of his father: “Never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.”
Accordingly, successful negotiations should be less tug of war, more give and take.
A sustainable deal can never be a zero-sum game, and coming to the table with only one desired outcome is ill-advised. Instead, the key to successful negotiations is devising a number of creative solutions that can benefit both parties.
This starts by being clear about what you want to achieve, and then crafting different terms that would be acceptable to both you and the counterparty.
Here’s how to get to the ideal deal:
Establish the terms of engagement
Make sure you understand what the process of negotiation will entail, who all the stakeholders are and who will make the final decision on the deal. Avoid the anti-climax of painstakingly negotiating a deal, only to find out that a different party has the final veto.
Do proper homework
You need to have all the facts and figures about the situation before you start to negotiate. As importantly, you need to understand the motivations of the counterparty. What are their interests and what do they want to achieve?
Considering the situation from the other side’s perspective will be crucial in achieving an agreement. However, don’t over-empathise. There’s a difference between seeing their point and feeling their pain, which may cloud your perspective. This is called the empathy trap – the counterparty may inadvertently (or intentionally) guilt you into a deal you don’t want.
Lose the fear
When the stakes are high, apprehension and anxiety about not achieving your goal can be debilitating, or make you overly aggressive in negotiations. Make sure you are calm, well-prepared and have back-up plans and counter-offers. Also, don’t take any criticism or rejection personally.
Never negotiate via email
Messages can easily be misconstrued.
Present multiple equivalent simultaneous offers
Multiple equivalent simultaneous offers (MESO) is a negotiation strategy that involves coming up with at least three different options that are all at equal cost to yourself. All of these options are then offered to the counterparty as part of the negotiations.
Research from two US academics shows that this strategy yields results: negotiations that involve MESO have a higher deal rate, and the party who presents the different options is seen as flexible and accommodating. The only downside is that this strategy requires much more preparatory work.
Listen carefully
Pick up on every point and make sure you understand all the issues by asking questions. Repeat the statements the counterparty makes back to them, confirming to them that you recognise and appreciate their concerns.
Also, listen to how the counterparty speaks. Match their speed of talking. If they favour a measured approach, don’t overload them with loads of facts and fast talking.
Never use round numbers
Demonstrate that you’ve put in the hard graft by presenting amounts and numbers that are well calculated, not imprecise thumb-sucks.
Avoid the ‘hard no’
If you can’t reach an agreement, don’t push so hard that the other party has to reject the terms. Instead, take a break and come back with different and credible counter-offers that may be more acceptable.
Silence is golden
Often, loose lips sink deals. “Never forget the power of silence, that massively disconcerting pause which goes on and on and may at last induce an opponent to babble and backtrack nervously,” the veteran journalist Lance Morrow once wrote.
The compulsion to fill awkward silences often leads to nervous verbiage, which may cost you the upper hand in negotiations. By talking constantly, you may give away too much of your position. Instead, get comfortable with staying quiet and listening intently to what the other party is saying.
Mind your manners
Be polite and avoid losing your temper in all situations. Be diplomatic and respectful. Don’t issue ultimatums. At all costs, avoid escalation into hostility. Strip out all emotion and focus the conversation on the facts. Recognise that all parties need to save face.
Don’t compromise your values
Make sure that your conduct and the terms of the deal always correspond with what you value in life. This will earn you respect.
Lock in and leave
When you have agreed to an acceptable deal, get out as soon as possible. For many negotiators, this is the danger area. There is nothing to gain from hanging around and chewing the fat. Often, this is when some of the gains negotiated in a deal are sacrificed.
When you have reached an agreement, immediately sum up your understanding of what has been agreed upon and send it back to the parties for official agreement.
Lastly, remember that according to the Indian telecoms mogul, Sunil Mittal, the test of a good round of negotiation is that both parties must smile. “For me, the relationship is very important. I can lose money, but I cannot lose a relationship.”
This article originally appeared in the 16 June 2016 edition of finweek. Buy and download the magazine here.
