You have a job offer and you have a choice; will you negotiate or not? If you decide not to, and another colleague negotiates a $20,000 increase for the same job, over the next five years they will be paid $100,000 more than you. Negotiation skills matter. By Christine Wattie.
Over the last decade I’ve worked with hundreds of leaders around Australia, New Zealand and globally to learn the secrets of effective negotiation.
Life at work (and outside it) often seems like one long negotiation and most people want to be better at it. The good news is that negotiation is a skill that can be learned. In this article I’ll discuss three keys to effective workplace negotiations.
1. Your negotiation approach matters
There are two types of negotiation; positional and principled and both have their place. Positional negotiation is when both parties take a position, argue for it and make concessions until they reach a compromise. It is a competitive approach, which can result in time-consuming negotiations and stalemates.
Positional negotiation may be the preferred approach when you want the best price, for example, when negotiating the price of a property sale. It’s often not very effective if you want to have an ongoing relationship.
Principled (or win-win) negotiation is based on expanding the cake and mutually agreeable outcomes, not positions. It involves a back and forth communication in which some interests are shared and some are opposed.
The purpose is to have your interests met through agreement. Rather than being an opponent, the other party is your partner as you brainstorm to establish and build mutual interest, before working together to resolve the situation.
Using this approach even when the solution can’t be perfect, the person usually feels quite differently about the outcome.
Principled negotiation is the most effective negotiation style when you want to maintain relationships such as in the workplace.
2. Preparation is everything, or nearly, in negotiation
“Negotiation is the basic means of getting what you want from others. It is a back and forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed,” says Fisher and Ury in Getting to Yes: Negotiating Agreement Without Giving In.
The reason we negotiate is to produce something better than the results that can be achieved without negotiating. However, without the knowledge and skills, we may well enter a deal we will later regret.
A number of years ago, while working abroad I experienced this first hand. An astute business woman placed an order with me for customised goods and paid the standard 50 percent deposit upon signing the contract. It was not until the order was delivered that she began her negotiation. Knowing that the custom goods were of limited value to my company as we would be unable to resell these to another party, and knowing that the costs of us pursuing the contractual terms and conditions would outweigh the benefits, she held the upper hand. While she got what she wanted, we got the raw deal.
You can be sure that in the years since I have made it my business to acquire some negotiation skills of my own, albeit ethical ones, to ensure that I am at the negotiation table when I need to be.
When you need to resolve a workplace issue, make sure you prepare well by thinking through the following points before you start your negotiation.
- Separate the people from the problem: What is the real problem? What are your goals? What is your optimistic assessment of what could be achieved? What might be the other parties’ goals? What is their likely style, emotional and cultural response based on experience? What approach will you use to deal with the problem and maintain the relationship?
- Focus on interests not positions: Ask why do I want this outcome? Why does the other person want this outcome?
- Invent options for mutual gain: Creatively explore what possible solutions could satisfy both your interests and the other parties’ interests.
- Focus on objective criteria: What objective criteria will you use to assess options?
- Know your TRP (total resistance point): This is the point, also sometimes referred to as the reservation price, where you are indifferent between saying yes and invoking your alternative. Where a no looks as good as a yes.
- Have a BATNA (Best alternative to a negotiated agreement): Your BATNA is what you can or will do if an agreement cannot be reached. Ask yourself questions like: What could the other side’s BATNA be? Why are they talking to me? What is preventing them from negotiating with someone else or doing it all on their own?
Considering the above example with the benefit of hindsight, there are a number of ways I could have handled the situation differently. Knowing the cost price of the order and my BATNA was to simply rewrap the woman’s artwork and walk away, I might call her bluff. We did learn from this experience and started to request full payment prior to delivery.
3. Get the communication basics right
Negotiation is about communication and in the context of the workplace, communication also involves ongoing relationships. In fact, quoting Nitin Nohria, Harvard Business School Professor, “Communication is the real work of leadership.”
Get the communication basics right by demonstrating confidence, being optimistic, authentic and prepared. Use good listening skills, tailor your message to your audience, build a persuasive case and find alignment. Demonstrate adaptability and maintain a relational approach.
As leaders and negotiators in our workplaces, we will be more successful in our negotiations if we choose a principled win-win approach, prepare well, and pay attention to how we communicate.
Reference: Fisher, R. and Ury, W., Getting to Yes: Negotiating Agreement Without Giving In, New York, Penguin Books, 1983.
Christine Wattie is IMNZ’s Auckland-based learning and leadership facilitator. Institute of Management NZ. Helping leaders step up and lead since 1946.