Negotiate like a pro

Do your homework in order to secure better deals and better relationships

by John Di Frances

Mention the words “negotiation session” to virtually any business executive and you’re sure to see some signal of apprehension. In fact, most executives relish upcoming major business negotiating sessions with about the same zest as they do a root canal. They know the stakes are always high: Negotiate too hard and the deal is lost; be too timid and they may leave money on the table, which in today’s economy is nearly as bad as losing. 

The fact is that successful negotiation is an art, not a science. And the three most important concerns in any negotiation are the relationship, the risk and the value. These concerns are the real decision criteria that underlie any business transaction leading forward into the future. Before beginning any negotiation session, smart executives cross three essential mental bridges in order to have a successful outcome. 

1) Clarify the relationship
Prior to negotiating, ask yourself, “What is the current real and perceived business and personal relationship, and what is its true value to my organization’s future?

Far too often, people hold on to the past, not realizing that frequently they must be willing to let go of what they have in hand if they are to be free to reach out for something better.

Carefully consider what could be lost in this negotiation, but alternately, also understand what new doors may open given a successful negotiation outcome. Too many business leaders continue pursuing existing relationships beyond their prime simply because it is easier and more comfortable than striking out to develop a new relationship that better suits their organization’s future. Thus, you must place a well-thought-through value on continuing the relationship in view of the pending negotiations.

2) Clearly structure the outcome both parties desire
Very often, people enter a negotiation with the drive to win, but they never commit to paper beforehand precisely what that means. Yes, they have a general idea (i.e., to place the contract at the best price or cost); however, they have not defined the optimal combination of price/cost and all other terms that reflect both parties’ best long-term interests.

Identify that magic package that allows everyone involved to believe they have been treated fairly. A good way to begin is by preparing a written scenario that outlines what each party should view as a “great deal.”  This often leads to the optimum “win-win” agreement.

3) Determine your personal “walk-away” point
The hardest and most important part of any negotiation is knowing when to walk away. This is a decision you must reach before the negotiation process, as it is difficult to identify this point in the heat of the negotiation.

You must be able to approach your walk-away point calmly with the prior two points in mind, for negotiators truly need to understand what each side requires to make it a “great win-win” agreement. Then, if the other side becomes unreasonable and prevents your desired outcome from happening, you can weigh the predetermined value you placed on the relationship as well as ask the question, “Do we really have a mutual relationship or merely one party taking undue advantage of the other?”

Negotiation basics
With the above three steps clearly laid out, you can begin negotiating. Here’s when truth and candor are of paramount importance in building trust between the parties. This does not mean, however, that you should reveal all of your intentions at once.  After all, negotiating is merely a more formalized variation of common marketplace bartering. It is all about give and take and each party’s perceptions of value. You offer; they counter; you respond . . . and so it goes.

This is why it is so important that before the negotiations begin, you clearly understand the structure of what that “great deal” looks like from both perspectives.

Realize that negotiation requires you to have the patience and confidence to be still. If the other party precipitates a long silence, then wait and say nothing. Let them break the silence. If it is truly a relationship, they will. Remain steadfast and solemn, but not sullen. Hold out firmly for your high-priority/high-risk issues.

During this process, however, understand that holding out for a lost cause is not only against your best interest, but it also makes you appear stubborn and foolish. Know when to give in on a point. If it is not a walk-away issue, then concede graciously and negotiate onward.

Most important, you clearly need to know when you are approaching the point of no return — that point where you have already concluded when you will walk away. Thus, you have the opportunity to steer the negotiations away from falling unnecessarily into a lose-lose downward spiral where relationships deteriorate and from which it is often impossible for the parties to recover.

If the deal cannot be had without violating your prior walk-away decision, then do walk away. Clearly articulate your position and reasons, then leave courteously, letting the other party know that you mean what you say but are still leaving the door open for them to reopen the discussion after conceding to your walk-away issue(s).

In the most extreme instances, the other party may demonstrate bad faith or a disregard for the truth.  If this happens, run from the negotiations. No business relationship is worth the risk and inevitable pain. Run away from dishonest negotiations and do not leave the door open behind you. Let them know that you have no time or interest in doing business with those who do not understand the meaning of truth and integrity.

Above all else, never talk openly about how much you or your company will profit from the deal, and refrain from gloating over the terms of the agreement afterward. Both are evidence of bad taste and a severe lack of personal discretion. Also, news like that has a habit of getting around. Very often, successful negotiations sour after the fact because someone with loose lips let slip an indiscreet comment that led the other party to believe they had been taken advantage of or mislead.

On the positive side, however, do celebrate the outcome together with the other party at the conclusion of the deal. Go out together to lunch, dinner or whatever. In doing so, you celebrate the success of everyone involved and thereby further reinforce the relationship for the future.

Negotiate to win
Few things are sweeter than a successful negotiation session where both parties leave with a winning solution. In order to arrive at this point often, implement the above negotiation strategies into your next session. The results will lead to more successful relationships for all parties involved.

John Di Frances is the managing partner of Di Frances & Associates, LLC. For more information, visit his Web site at www.DiFrances.com.

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