Watkins, who is a nationally recognized expert on business
negotiations, teaches his students to break the negotiating process
down into four fundamental steps.
- Diagnose the situation — “The
first step in preparing to negotiate from a position of strength is
to diagnose the particulars of the situation thoroughly,”
says Watkins. In particular, you need to learn:
- Who are the players? Who will (or could)
participate? — The key parties to a negotiation may seem
obvious. Sometimes they are, but not always. There may be players
in the background who can influence the outcome, or new players may
enter the discussions and unexpectedly influence talks.
If you’re negotiating with an equipment supplier or a
prospective client, for example, the cast will probably consist of
just the two of you. However, if you’re negotiating with an
organization, you need to know if the person or persons
you’re dealing with have the authority to make a deal.
- What are the rules of the game? — A clear
understanding of the “rules of the game” will be a big
advantage in your next negotiation. There are basic codes of
conduct that apply to all business negotiations. Although these
rules deal largely with courtesy, diplomacy, and other aspects of
behavior on the part of the participants, there are other important
factors as well.
Watkins suggests you take time to consider the following
questions before you enter into any negotiation:
- What laws and regulations might apply here?
- What social conventions will shape the parties’
behavior?
- Do professional codes of conduct apply?
- What other rules of the game may influence the other
parties’ behavior?
A clear understanding of these rules will help you start off in
a position of strength.
- What are the issues that will (or could be)
negotiated? — “It’s easy but dangerous
to treat the agenda as fixed,” says Watkins, who explains
that by doing so you risk shaping the course of events in your
favor.
“The agenda — the set of issues the parties will
decide to negotiate — is itself subject to
negotiation,” says Watkins. “No matter how simple and
obvious the basic issues to be negotiated appear to be, it is
worthwhile to probe beneath the surface.”
You should also identify and deal with what Watkins calls toxic
issues or potentially volatile issues that have a high emotional
content. “It may be prudent to defer a toxic issue until the
other issues are worked out,” he says.
- Defining your BATNA — The next step is to
define your walk-away position. Negotiating experts Roger Fisher
and William Ury, who wrote the book, “Getting to Yes:
Negotiating Agreement Without Giving In,” call the walk-away
position your best alternative to a negotiated agreement (BATNA).
In other words, a BATNA is a planned course of action that you can
take in case you are unable to reach an agreement. Depending on
what’s at stake, your BATNA might mean going to court,
refusing to renew your lease, or changing suppliers. Taking time to
think through your BATNA will clarify your alternatives and
strengthen your negotiating position.
What is the least you’re willing to accept to enter into
an agreement? Establishing this value as a benchmark — and
keeping it clearly in your mind — will help you avoid getting
so caught up in the heat of negotiations that you turn down an
alternative deal that was better than your walk-away position.
- Shape the structure — Once you have
diagnosed the situation — and have a clear idea of the
players, the issues to be resolved, and the rules to be followed
— it’s time for you to shape the structure of the
negotiations.
According to Watkins, it’s possible to shape the structure
of negotiations because they are to a degree socially constructed.
This means that key elements, such as the participants and the
issues agenda, are not fixed in advance but are influenced by the
negotiators and their perceptions.
“The biggest mistake is to approach the ‘game’
as fixed,” he says. “Like most negotiators, people in
business focus too much on what will happen at the table and not
enough on influencing the context in which deliberations take
place. You should pay more attention to who is, or could be,
involved as well as what’s at issue and how the situation
should be framed.”
- Self assessment — In past negotiations,
have you tended to accept the situations and structures as the
other party presented them? If so, you should determine not to fall
victim to that pitfall again. One simple way to shape the game is
to invite other players into the negotiation. For example, during
negotiations with your landlord for a new lease, you might invite
your lawyer or accountant to join in. You must also take great
pains in building, maintaining, and improving your BATNA. Knowledge
of your walk-away position will add hidden power to your
position.
- Setting the agenda — Virtually all
negotiating professionals agree that influencing the makeup of the
agenda is a crucial step in successful negotiations. By helping to
define the issues to be discussed and setting their priorities, you
put yourself in a position of strength when the discussions begin.
“Good negotiators don’t just play the game,” says
Watkins, “They shape the game.”
- Controlling information — Information is
power. Arguably, there is no other activity where this old axiom
holds truer than in the practice of negotiating. Exerting control
over who gets access to what information is another way to gain a
position of strength in discussions. In negotiating a new lease
with your landlord, for example, you would probably want to share
the fact that you have been looking at another location. On the
other hand, if you know of a potential tenant who would like to
move into your building, sharing that information would be a poor
strategy.
- Managing the process — The third
step in breakthrough negotiations is determining the best way to
handle the actual face-to-face negotiations. The important steps in
this phase include:
- Sensitivity to early interactions —
“How a negotiation begins tinges everything
thereafter,” says Watkins. “Initial impressions, based
on limited information, persist and are resistant to
change.”
Watkins stresses that mutual respect at the beginning of the
process increases the likelihood of eventual agreement, but bad
blood at the beginning of the discussions can poison all that
follows. In what he calls “irreversibilities,” Watkins
observes that negotiators often walk through doors that lock behind
them. In particular, he cautions against trying to take back a
concession once you have made it. Any action that undermines trust
is likely to provoke an irreversible change in the attitude of the
other participants.
- Tipping points — You should keep yourself
aware of thresholds in negotiation that Watkins calls
“tipping points.” These are the sensitive points in the
talks where even tiny concessions or refusals can lead to major
shifts in positions. “You should always be aware of your own
emotional thresholds and coping mechanisms to avoid being pushed
over the edge,” he says. “Be very careful when raising
issues that are hot buttons for the other side.”
- Emotions — Emotions, either real or
feigned, play a part in most negotiations. “A timely display
of anger, for example, can demonstrate resolve so long as it is
employed infrequently,” says Watkins.
However, you must keep any display of anger under careful
control. Emotional outbursts of any sort can easily escalate,
generating emotional conflicts that make rational judgments next to
impossible. “Once strong emotions are triggered, they
dissipate slowly,” cautions Watkins. “The psychological
and hormonal effects of anger can’t simply be turned off; the
result may be temporary inability to think rationally.”
In their book, Fisher and Ury maintain that the ideal stance is
to separate the people from the problem. However you do it, keeping
your emotions under tight control during negotiations will give you
an important advantage. As one negotiator puts it, “When you
lose your temper, you lose.”
- Assessing the results — Once
negotiations have begun, Watkins suggests that you step back
periodically to evaluate how well you are doing. While it’s
natural to do this between negotiating sessions, he says that you
should also take score in the heat of battle. Ury calls this
“going to the balcony” — the ability to look at
your situation from a distance.
“Appraising an ongoing negotiation is partly about whether
you are meeting the goals you set for yourself,” says
Watkins. “Clearly identifying your goals while preparing to
negotiate is only half the battle; you have to keep those
objectives firmly in mind as you go forward.”
Among the questions you should ask yourself at this stage
are:
- Do you have a clear view of the
situation? — A clear understanding of the
negotiating situation is essential to bargaining success. If your
view is incomplete or flawed, then you are unlikely to meet your
objectives. This is the point at which you should reexamine your
assessment of the points discussed under diagnosing the situation:
Who are the parties? What are the rules? What issues will be
negotiated?
- Are you building your BATNA? — A strong
BATNA builds bargaining power. Ask yourself whether there are
alternatives to a negotiated agreement that you haven’t
thoroughly explored.
- Are you channeling the flow? —
“Channeling the flow of a negotiation is like directing the
course of a river,” says Watkins. “You can dam it, or
you can reroute it.”
Inevitably, one of the parties to a negotiation will do more
than the other to control the agenda of issues and their
priorities. According to Watkins, the biggest mistake you can make
is to approach the game as fixed. “Don’t allow the
other party to channel the flow by default,” he advises.
“Make certain that you are an active participant in this
important part of the negotiation process.”
- Are you learning individually and
organizationally? — Every negotiation is an
opportunity for you to learn, making you better prepared for your
next negotiating experience. However, learning does not come simply
because you went through a negotiation. “Learning takes place
only when you take the time to reflect on your experience,”
says Watkins.
At that point, his firm was close to the second highest bid (he
had weeded the bottom bid out because it was too low). “I
used the sales training I had several years ago involving the
‘if I, will you’ question,” he says. “I
offered an extra to the project that could be done at no real cost
to us, but presented it in the form of a closing question:
‘If I install this extra at no charge to you, will you give
my firm this project?’ The customer accepted, and the project
was ours.”
This lesson taught Kizer to always look for a plausible reason
to drop the price, even when he feels he’s given the best
quote.
Hansen remembers a similar negotiation strategy on his
firm’s biggest job last year. “I knew from having
worked for the client before that some extras were going to be
needed in addition to what was on the plans,” he says.
“I went in with a high number, and when they came back to me,
I knew I had a little room so I threw in some extra work they were
asking for a separate quote on. That sealed the deal.”
Even if you feel you’ve quoted a fair price, Hansen urge
you to remember that the other party may not agree. That’s
why your offer must always leave you a little room for
negotiation.
When negotiations are over, Watkins recommends asking yourself:
What went well? What could I have done better? What did the other
side do well, and what did I learn from them?”