Negotiate the positive

Many people do not enjoy negotiating at all. They become very anxious about it and feel they are going to fail. Often this manifests as a “losing” attitude. This kind of attitude may well be rooted in previous experiences which have created a “filter”, an automatic cue which feeds them this negative state of mind whenever the prospect of negotiating arises. Unfortunately these attitudes tend to be self-fulfilling. If you think you are going to lose out in a negotiation then you will bid unambitiously, you will look hesitant or nervous and the other side will pick up these cues and push you harder.

So what can you do if you have this kind of unhelpful attitude? The good news is that we can change our “filter” if we want to, from a negative one like “losing” to a more confident outlook. Some of this can be done by asking ourselves questions designed to challenge the language around these negative filters. Do we really always fail in a negotiation? Can we not think of any time when we have been successful? What do we mean by “fail”? How do we know we “failed”? This kind of self questioning can create a more realistic perspective on our previous experiences.

Equally we can gradually shift ourselves to a more confident point of view with a good self-talk. We can tell ourselves that although it’s difficult to change our state of mind we are going to give it a go on this occasion. We can remind ourselves that this time we are well-prepared and have a good team around us. We can think back to the last negotiation that went well and remember what that felt like. We can say to ourselves that even if the negotiation doesn’t work out that doesn’t mean we have failed. We can say we really believe in our product or service and we know it makes a difference. We can say that we now feel optimistic we are going to improve our negotiation this time – whatever the result.

By the time we get to the end of a sequence like this we will have incrementally improved our negotiating attitude to the point where we feel more confident.

This comes up a lot – especially in the world of small businesses where cash is crucial and investment or borrowing is tough to find in the present climate. My advice to those who ask me how best to negotiate for funding is that they should marshal their bargaining power. It’s very easy to overestimate the number of bargaining ‘aces’ that the other side has and underestimate our own, but there are at least 10 sources of bargaining power in a negotiation and they are rarely arranged 10-0 in favour of anybody. Sure, an investor has ‘market’ power if they hold cash that you want for your business. But you may have other advantages.

You may have ‘network’ power – the power to access a network which somebody else covets. Or perhaps you have expertise in a particular sector or industry that gives you bargaining power, or extra information – people often say “information is power”. You may have some ‘authority power’ arising from your unique reputation or seniority, or even your title. You can have numbers on your side – if there are more of you in the room than there are people on the other side then that gives you some extra bargaining power. You may be small but you may have some niche market power because you are involved in a particular area that a larger party doesn’t know or understand. So, if you are negotiating for funding, think about marshalling these other aces and you will feel more confident about the outcome.

I grouped these two together because crucial to each is an ability to understand and manage the negotiating “process”. There are normally seven stages to any negotiation – they all have to be gone through to reach agreement, but people frequently skip the early stages or operate at different stages. If either of these things happens then the negotiation will be in trouble, and is unlikely to lead to a successful conclusion until the parties go back to the stage they missed or start operating from the same stage.

One early stage that the parties often skip is identifying the needs on both sides. What are the likely emotional drivers on each side? Does the other negotiator need respect or reassurance? Do they need to feel they have achieved something? Normally negotiation focuses exclusively on price, delivery dates, royalty rates. However, whatever position people adopt in relation to these surface issues, there will be a reason why they want it. That reason gives you the clue as to their underlying motives. Most negotiations are sorted out on the basis of ‘emotional payments’ which address these underlying issues, even though the deal may still be expressed in terms of surface issues such as price and delivery dates. These emotional needs are often not spoken about, so you need to be alert to spot them – ask questions and notice how people’s moods and body language shifts as the negotiation develops. What makes them look angry or sad, seem energised or go quiet?

Once you have understood and met the needs on both sides you can get back what you require in return. If, say, a purchaser of a business has a need for achievement, there may be more than one way to meet that need. They may be expressing that need by demanding a very low valuation, but there may be other ways to address it, such as creating a unique deal structure which has never been tried before, or showing them innovative possibilities such as development of new products or creation of new overseas markets.

One thing we all know but is forgotten about when we negotiate is that everybody is different. There are more than seven billion people in the world and they are all different from each other. This makes it all the more surprising that when people negotiate, they tend to behave the same way every time, using their favourite behaviours to try to make the difference rather than responding differently to the person who is actually in front of them.

There are many different types and typologies and you don’t need to be a psychologist to spot some of them. Some people love making decisions, others like to avoid them. Some people love the big picture, others are very focused on the detail. Some people are very “associated” and in-the-moment when they negotiate, and others are very disassociated or distant. Some people love having lots of options, while others prefer a very linear approach where there is a clear path. Who are you dealing with?

The knack is to work that out and then deploy behaviours which suit that person. If you do that they will feel you are speaking their sort of language or are ‘their type of person’ and you are more likely to persuade them of your point of view. For example, if someone likes the big picture then a behaviour like ‘visualisation’ – painting a positive picture to inspire them – will work well. If they prefer detail then visualisation will go over their heads. You will need a behaviour like ‘proposing with reasons’ for this person, so that there is lots of data for them to focus on. If someone is ‘associated’, then a sociable behaviour like sharing problems or sharing solutions will work well.

If they are very ‘disassociated’ then give them space – factor in lots of breaks and make use of silence so they have the opportunity to think. When negotiations go wrong it is often because people are using the wrong kind of behaviour for the type of person they are dealing with.

However, having the right attitude, managing the negotiation process and dealing with different behaviours are key pillars of successful negotiating.

Download PDF version:

• Finance & Management magazine, Issue 210, May 2013 (pp.16-19)

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Further reading on negotiation is available through the resources below.