As a leader you are involved in all kinds of negotiations daily. These can run very smoothly, or they can be difficult disputes with significant conflicts. The question is what can you do create value at the negotiation table regardless of the situation? Here are ten tips for creating value that you may find valuable in your upcoming negotiations with employees, peers, your boss, customers, clients, vendors, shareholders, or other stakeholders. There lessons can be applied to any negotiation. This is part 1 of a 2 part series. Part 1 presents the first five strategies. Part 2 presents the second five strategies next week.
1. Research the other participants to learn all you can about them
This is one of the most important tips. Go on social media (LinkedIn, Facebook, Google, and others) and use your network to learn all you can about the other party and their team members. Do not simply obtain their resume.
Did deeper.
What kind of person are they, what do they like, and what are their habits. Where do they live or have lived? Where did they go to school? Are they morning or afternoon people? Are they married? Have children? Have grandchildren? Do they have pets? Do they drink coffee or tea? If so any preferences? Do they have any hobbies? Where have they gone on vacations? These are things you may want to explore with them prior to the negotiation if you can. You can call and share that since we will be working together may you learn a little bit about them, and you would be willing to share a little bit about you to help promote trust. Most people are fine with this. What have you got to lose? Remember this is about them, so let them do most of the talking.
2. Consider ways to bond with them
Having learned all you could about them, put this into practice at the beginning and during the negotiation. Plan for it. Think about it ahead of time. If you are with at a team, talk about it. What will and who will bring up what before the session, during breaks, at lunch, or other informal opportunities? How can you find ways to make this human interaction more peaceful rather than adversarial from the beginning. For example, when you physically meet or if you are meeting virtually, you can mention something of a personal nature to help de-escalate the situation and demonstrate a positive sense of humor or empathy.
The point is to find a way to promote being human and that we are all human.
As a mediator with difficult business valuation issues between parties with dollar amounts sometimes in the billions of dollars, I found some simple questions helpful. For example, both sides have a decision maker(s) , attorneys, and experts. Before we start, I ask the experts that are ready to do battle with each other, what is something positive that has happened to each in the last thirty days in about three minutes. There is a pause, but then something comes up about things like children, grandchildren, a pet, other family, a vacation, or something of a connecting nature. This helps to de-escalate the situation and provide a level of humanness so that everyone realizes that even the adversary has human qualities and is not the great evil person they thought before entering the mediation.
3. Consider ways to build trust
David Horsager in his book Trusted Leader provides insights into how to build trust. As a simplified commentary on my part taken from his 8 pillars that drive results, I offer my own take with
three broad categories of consistency, compassion, connections.
Let me explain. Under consistency be clear about what you are saying and be consistent with your commentary. Reflect on what you heard the other party say and take the time each time to demonstrate that you are listening. Compassion is all about being calm, confident, and competent. Stay focused. Regarding connections focus on character, contributions by everyone, and be committed to whatever you are agreeing to. All of these actions will enhance trust during the negotiation process.
4. Know your BATNA
Do your research ahead of time and determine at what point you are willing to walk away from the negotiations if you do not agree up to a certain point. That is if you cannot reach an agreement of at least “X” you will walk away from the deal. This is your Best Alternative To a Negotiated Agreement or your BATNA. This requires serious thought and should not be a quick decision or taken lightly. Consider sunk costs, opportunity costs, how may others react to you walking away. Consider employees, clients or customers, shareholders, competitors, vendors, and any other stakeholders should they become aware of what took place in this negotiation. It may be confidential in nature today, but it may become public tomorrow.
What about future contracts, subsequent year audits by the IRS, or other longer term implications.
Determine your BATNA, but not in a vacuum or as a haphazard number. In other negotiations other than with the IRS where you know if you have not reached an agreement with at least your BATNA on examination you are going to Appeals, this is the point at which you would walk away from the negotiation.
5. Come prepared with alternatives
Do your research ahead of time and come prepared with various alternatives. I recommend for example when negotiating with the IRS during an examination compute six alternatives. These are your position, the IRS position, your BATNA, and three computations in between your position and your BATNA. Why? The IRS can resolve the case factually on examination. That is, they need a way to compute the actual resolution. If you cannot agree on BATNA as your final offer on examination, then you are prepared for the case to be unagreed and you will elect to go to Appeals with the IRS. At Appeals the Appeals Officer can settle the case based on the hazards of litigation. This can be a percentage settlement having explored various court cases. An agreed case on exam takes less time for the IRS agent to close the case and they are evaluated on closures. What about outside of the IRS?
Outside of the IRS you still want to compute various alternatives. Perhaps quality, time frames, future contracts, modifications to existing contracts, price point – quantity differentials, or other variables may play a key role. Think outside of the box Anticipating their interests, what can you potentially offer to make this a better deal for them.
Check out Part 2 with the next five strategies in the blog on November 28, 2022.