There are times when it is appropriate to negotiate and times when it is not appropriate to negotiate with another party. This article explores this issue and provides you with some questions to think about before entering into a negotiation.
A question to ask is whether it is worth fighting the battle at this time. You may win the battle and lose the war, or you may even lose the battle. Compare that to not entering the fight. Sometimes simply accepting an offer can be the best decision today. It may allow you to move on. It may offer closure and closure may be very important. It may make room for better negotiations in the future. There are many things to consider.
What questions should I ask?
Here are three broad categories to consider.
- Is now the best time? Where are you and the other person emotionally? Would there be a better time at a later date? Will your alternatives be better or worse in the future? How about for the other side? May either you or the other side may be better off if you wait?
- What are the chances of winning or losing the deal? Looking at the magnitude of the issue and probability of success it is a good idea to consider each as part of your decision making.
- How much time, energy and other resources should I commit to this negotiation? Some negotiations do not require much at all. Other times these three elements can be very significant. Consider the risk. Is it worth it?
Depending on the answers to these three question areas you can explore your own interests and decide whether this negotiation makes sense at this time. The time may or may not be right.
Economics
From an economic standpoint when the costs are greater than the benefits it is time to stop negotiating. Actually, when the marginal costs begin to outweigh the marginal benefits, that is the optimal time to stop, but often it is not clear what the marginal costs and benefits are.
When considering costs think beyond the economics involved and consider the social impacts too.
Social impacts
Consider the social impacts. Think about the emotional toil on you and the other party. Is this a relationship you want to continue? Depending on how this relationship continues, are their ramifications on others besides you and the other party?
How may your approach be perceived by other clients, your employees, vendors, family and other stakeholders?
How does this stack up with your values?
If you make an offer that is so low that the other side is insulted that may kill the deal. Consider how low of an offer to make without insulting the other side. If you insult the other side with too low of an offer, the negotiation may be terminated. Keep that in mind.
Consider the pain
What are the pain points? That is what could you lose? Think of this economically (financially), emotionally, and relationally. When you push with the other side, what could you lose? We are all about minimizing pain and maximizing reward. Consider both.
Returning to the three points from above
Is now the best time?
When we start to become angry, we only have six to ten seconds to prevent ourselves from flooding our blood stream with chemicals and hormones that may stay with us up to 22 hours or until we go through a sleep cycle. Keep that in mind and work on not letting yourself become angry. This takes practice, patience and planning. Planning for what can go wrong can lead to a broader range of alternatives.
It is tough in a negotiation when dealing with difficult people or those that may threaten you. When negotiating with difficult people you need to take additional steps as part of the preparation process.
Remember that you always have your best alternative to a negotiated agreement or BATNA
Think of a teenager arriving home after curfew and how each of you feel at that time. Might it be better to go to bed now and address what ever happened in the morning than having a drag out fight, when you are both tired and likely to say something you may both later regret? Consider the consequences of having the discussion in the heat of the moment. Consider similar elements in a business or other setting.
What are the chances of winning?
What does winning mean? Does this mean making the pie bigger so we can all win and be better off? Does this mean a demand for our side to win at the expense of the other side?
Be careful how you define winning?
Ensure you and your team are both on the same page as you consider what winning might look like you and your team and for the other side.
Once you define what winning is, look at both the magnitude and the probability of winning. Some things are so small who cares? Some things are so big, they matter significantly to your success, the success of the relationship, the success of the firm. What are the chances for success? If there is a limited chance for success is it realistic to pursue the negotiation? If the probability is high, might it not be worth it to pursue the negotiation? Both the magnitude and the probability of success should be given careful consideration.
How much effort will it take?
Think of your time, the time of your team and the length of time it may take to bring the negotiation to closure. If limited time, energy and resources are needed and you have successfully addressed the two other areas, the decision may be obvious. On the other hand, if indeed this will take considerable time, energy and resources, what are the opportunity costs that may be lost and the impacts on you and your team?
Are you stressed out?
Have you recently been through a stressful situation? Is the time right to enter into another stressful situation? How are you and your team doing? Are you ready to jump into this type of negotiation at this time?
Negotiations are tricky
As you can tell from the commentary there are a lot of questions to ask before entering into a negotiation.
Forcing yourself to consider these types of questions before entering into a potentially difficult negotiation may help steer you in the right direction going forward.
Better yet, if you are part of a team, bouncing these questions off of one another. By exploring the answers to these questions may help you to better evaluate additional elements that you had not considered. The feedback from other team members may allow you to consider additional concerns you had not thought of on your own.
If you want to learn more from the Harvard Program on Negotiation and take a three day course on this topic, check out this course.
About the author
Mike Gregory is an expert on conflict resolution business to government (IRS), business to business, and within businesses. Mike is an international speaker and he has written 11 books including Business Valuations and the IRS: Five Books in One, The Servant Manager and Peaceful Resolutions. Mike may be contacted directly at mg@mikegreg.com and at (651) 633-5311. [Michael Gregory, ASA, CVA, NSA, MBA, Qualified Mediator with the Minnesota Supreme Court]