Leadership Magazine: Negotiating your
way around the negotiating table
My
father said, “You must never try to make all the money that’s in a deal. Let
the other fellow make some money too, because if you have a reputation for
always making all the money, you won’t have many deals,” ~ Dwight D. Eisenhower.
I
recently caught up with Derek Pead who has many years of corporate experience
at chief executive and board level in large financial services groups, is
passionate about deal-making and dispute resolution and is one of only a
handful of South Africans who have successfully completed the Advanced
Negotiation Masterclass at Harvard Law School in the United States of America
(USA). As a trained mediator, accredited by the Centre for Dispute Resolution
(CEDR) in the United Kingdom (UK), Derek teaches and consults to corporate
executives and entrepreneurs in the art and science of negotiation, helping
them to negotiate better business deals, and helping them to settle disputes
with clients and suppliers without the need for time-consuming and costly
litigation with uncertain outcomes. On top of that, he is also currently the
President of the Waterfront Rotary Club in Cape Town, South Africa.
Where
did your interest in negotiation come from?
More
than 30 years ago I read the original classic on negotiation, entitled “Getting
to Yes…Negotiating Agreement Without Giving In” by Roger Fisher and William
Ury. This book changed the way the Western world negotiates and led directly to
the establishment of the Program on Negotiation at Harvard Law School.
I was
fascinated, and it was a huge thrill to put these principles into action and
see that they work! Of course, I’ve read many negotiation books since, in fact
I’m currently busy with two, and the more I learn the more I enjoy negotiating.
However, if you’re only ever going to read one book on negotiation, then this
is the one. It’ll make a huge difference to your life. Although I have met
William Ury, I don’t get any referral fees!
Why
are negotiation skills so important?
I love
this definition of negotiation by Deepak Mulhotra: “Negotiation is the process
by which two or more parties, who perceive a difference in interests or
perspective, attempt to reach agreement”. So clearly this skill is important
from the highest level of government right down to the home. In short, we all
negotiate every day! We are continuously negotiating be it with subordinates,
bosses, project team members, spouses, children, clients or suppliers.
There
are no “born negotiators”. In fact, people who think they fall into this
category, are usually mistaken. Anyone can learn to be a very good negotiator
with a bit of training and courage!
What
was the very first lesson you learnt about negotiation?
There
is a very powerful little story about two learners fighting over an orange in
the class. You’ve probably heard it. The teacher gets irritated, grabs the
orange, cuts it in half, gives each of them half an orange and sends them on
their way.
If
she’d had the patience to ask them why they wanted the orange, Johnny
might have said he was hungry, and Mary may have wanted the peels to decorate a
cake. Both Johnny and Mary could have got everything they wanted.
This
illustrates the difference between “Positions” (what they say they want) and
“Interests” (why they want it). Both Johnny and Mary had the same position.
They both wanted the orange. However, their interests were different. The
solution to apparent deadlock in a negotiation almost always lies in differing
or overlapping interests. I’ve solved many apparent deadlocks by just
remembering this little story.
In
your opinion, how does negotiation link to reputation management?
At the
end of the day (and all the way through the day as well!), all we have is our
reputations. Really skilled negotiators have two goals in a negotiation, and
that is to arrive at a win-win solution while simultaneously not only
preserving the relationship but improving it as well. This doesn’t mean you
must present yourself as a pushover. On the contrary you can be tough and fair
at the same time. Win-win does not mean 50-50. If your counterpart will benefit
from a deal there is nothing wrong with you benefitting more. It’s still a
win-win solution. Most of your counterparts will respect you for trying, and
your reputation will be enhanced, as someone to be taken seriously.
Conversely,
people who arrive at a negotiation un- or under-prepared, play games like “good
cop, bad cop”, exploding offers, flinching, etc., or make ungrounded or
unsubstantiated offers in the insult zone, are doing themselves and their brand
no favours. Unfortunately, this is not uncommon, and more common in large
companies than in smaller entrepreneurial ventures. This is possibly because
they think their sheer size will force the issue and the deal will be closed in
their favour. They’re usually wrong.
What
do you think are the most important skills needed to negotiate?
This
may come as a shock to the table-pounders out there, but the most important
trait of a good negotiator is “empathy”, i.e. an understanding of where the
other side is coming from. This requires you to be an excellent listener, to
show interest in what the other side is saying, and expressing appreciation for
their point of view, while making it clear to them that you don’t necessarily
agree. It is very hard to listen to someone and show interest in what they’re
saying when you fundamentally disagree, but it is crucial. Start practicing at
home!
Clearly,
patience is required as well. Sometimes negotiations can drag on for hours or
even days. Avoid saying things like “let’s cut to the chase”; keep your body
language under control.
Thirdly,
it is important to remain calm, even when the other side is very angry.
Sometimes your own “back-table”, negotiation jargon for your principals (your
boss or bosses), may get impatient and angry. Your job is to remain calm, and
keep the other parties calm as well.
What
are the three key things to consider prior to negotiating?
Firstly,
it is important to know what you’re going to do if this deal fails. So,
consider your options and choose the best one, often referred to as your BATNA
(best alternative to a negotiated agreement) or your “no-deal” option. This
will determine your walk-away point and it’s vital to know that and to walk
away if a deal better than your BATNA seems unattainable.
Secondly,
consider what their BATNA might be, so you can prepare your case (why your
proposal is better than their BATNA).
Thirdly,
prepare your opening statement so that you come across as prepared when your
time comes to speak. I often practice my delivery in private and video myself
with my cell phone to see how convincing I look and sound when I play it back.
I recommend it; it can be quite a humbling experience!
What are the common pitfalls of negotiation?
The
first one is, without a doubt, insufficient preparation. Usually, people who
are guilty of this don’t even know what to prepare. They may crunch the numbers
and arrive at a figure that they hope to get, and then just turn up at the
negotiation table and wing it!
Secondly,
people make offers when they shouldn’t, and don’t make offers when they should!
There is a significant advantage to making the first offer, but it can be fatal
to make an offer when you don’t know as much as the other side about the value
of the product or service under consideration.
For
both of these, there is a whole lot more that should be considered but that is
a discussion for another time.
Finally,
remember that you are negotiating with people, and people have feelings and
emotions. Remember that when money (price) is the only issue on the table, it’s
never just about the money. Interestingly, sometimes it’s not even about the
money at all! It’s important to separate the people from the problem (or the
substance of the negotiation) and deal with both, separately.
Anything
specific you would like to add about negotiation?
I sincerely
believe negotiation is one of the most important skills you should learn.
Taking a course is not enough; it’s like learning to drive in the classroom. If
your job requires a high level of negotiation skill, hire a negotiation coach
to guide you through your first two or three negotiations. That’s the fast
track to becoming a good negotiator.
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