How many times a day do you negotiate? If you define negotiation as “a transfer of trust”, as negotiation expert, Jack Kaine, does, you probably negotiate more frequently than you think. Jack recently spoke to a couple of my CEO Peer Advisory Boards, and here are some of his key insights.
After you have verified that you have an environment which supports negotiation, follow these 10 rules:
1. Speak first. Most CEOs worry about having the last word in the negotiations. Kaine believes it’s far more important to have the first one. “Negotiations are all about control,” he says. “When you let the other person take control, you end up in a reactive rather than proactive mode.” Start the discussion by scripting your opening (the first 2-3 sentences). It is not sufficient to only write it. You need to practice it enough to commit the words to memory and practice until it sounds spontaneous.
2. Ask more questions. Too often, we talk our way out of deals instead of questioning our way into agreements. The person who asks the most questions controls the negotiation and determines its content and direction. Yet, Kaine has found that most CEOs don’t do a very good job of asking questions, instead preferring to demonstrate their knowledge and expertise. Forget about showing how much you know and start asking questions. Think about what questions to ask before the negotiation.
3. Never, ever argue. Arguments serve no purpose in negotiating. Instead, always ask questions to increase your understanding, and avoid the need to prove that you are right. This doesn’t mean that you need to agree with everything the other party says. It means you need to understand and acknowledge the other’s position.
4. When negativity surfaces, focus on what connects you to the other party, not what separates. Start listing and then stacking everything that was agreed on to generate positive feelings. Positive emotions get deals done!
5. Focus on the other party’s position. People do things for their own reasons, not yours. When preparing for a negotiation, most people focus only on their own needs. However, to get the best deal, you also have to prepare for the other person’s needs. In fact, argues Kaine, “You’re not prepared to negotiate until you can state the other party’s case better than they can and be in a position to answer it. Find out what the other side wants and then help them get it.”
6. Listen. The person who listens the best will always have the greatest effect on the outcome of the negotiation. Always planning ahead (in your mind) while the other person is talking, prevents good listening. Become conscious of why you are listening; is it to learn or are you just waiting to respond? Be sure to listen completely to the answer, then pause, evaluate, and respond. Empathic listening and pausing sends a message that you care. People won’t care about what you say, until they know that you care about what they are saying.
7. Change your price, but never cut it. Take the price gun out of their hands by stating, “We are probably going to cost you more than anyone you will be talking to.” Then, explain why. When your prospect interviews other vendors, they will ask other vendors,” Do you do this?” In addition, never bargain with yourself by reducing the amount of your original proposal before it is presented. Be proud of your pricing and the benefits that your product or service provide.
8. Eliminate assumptions and close knowledge gaps. Have you ever learned something after a negotiation that would have changed its course and the ensuing agreement? This is a very common mistake according to Kaine. The greater the knowledge gap between you and the person you are talking to, the greater the chance of misunderstanding. Assumptions create knowledge gaps. Collect as much information as possible by asking questions. Always ask one or two clarifying questions before you answer a question. Use “what” questions to obtain as many facts as possible and to verify or invalidate your assumptions. Avoid “why” questions as they tend to evoke emotions.
9. Control time-it changes everything. Time is power and the party that has the longest time has the advantage. Ask yourself what self-imposed deadlines are you under that makes it hard to negotiate. It is likely that you put more pressure on yourself and your own people to meet a deadline than the other party. Ask about the stated deadline. Is it when they would like your response or when they actually need it?
10. Control the Climate:
a. Maximize your power. Power is the result of attitude, options and taking risks.
i). Attitude: If you walk into a negotiation thinking that you don’t have any power, you don’t. If you walk in thinking that you have power (even when you don’t), you do.
ii). Options: To be a good negotiator, you have to enter every negotiation believing that there’s always a way to enlarge the pie by adding elements, not by subtracting from it. There is always a better deal for all parties involved than is first apparent. Kaine firmly believes that if there’s one good outcome, there’s also a second. If there’s a second, then there’s a third, and so on. The more alternatives you create and the more flexibility you have, then the more power that you have. Never want anything so badly that you won’t accept something else or let the negotiation boil down to one point, because then it turns into a win/lose mentality. Always keep another issue out there to use for “horse trading.”
iii). Risk requires intestinal fortitude. Unless you are willing to take a risk, you cannot have power.
b. Make every negotiation personal. You are negotiating with another person not an organization. Develop a deep enough personal relationship so that the other party feels as if they are rejecting you, not your organization.
c. Slow down your tempo! “CEOs are in too big of a hurry to get the deal done”, Kaine says. “They move too fast, especially in the early stages of a negotiation, and as a result put themselves at a real disadvantage”. Ego causes many problems. In fact, more deals are killed by ego than any other single reason. How can you tell when egos get involved? People become loud and irritated. They start pounding the table and saying things like, “It’s the principle!” When you hear things like that, you know the people involved are acting emotionally, not rationally. In my experience, 90 % of CEO’s have made up their mind about what they want before they even sit down at the table. Of course, you must have a minimal acceptable solution as a starting point. Most CEOs enter a negotiations thinking they know exactly what they want, and then it’s “damn the torpedoes, full speed ahead!”
d. Control your tone. “Any time negative emotion enters into a communication, the conversation will continue but the communication stops. If you find yourself becoming angry or argumentative, call a halt to the discussion, take a break and come back to the table after you’ve calmed down.” Negative emotions always lead to bad deals, or worse, no deal at all.
Follow these 10 rules and you can create better relationships and agreements. Try them in your next negotiation, and please share which of the rules was the most helpful for you.