With research conducted by YouGov (external link) showing that the UK loses an estimated £17bn a year (£66m per day) through bad negotiating, the dos and don’ts can be a minefield. Master the noble art of business negotiation with these tips and tricks from business psychologists and coaches.
Make the deal
Contained in almost any intelligent negotiation is the DEALS approach: Discover, Establish, Ask, Lead, Seal. Developed by Natalie Reynolds, CEO of advantageSPRING (external link) and author of We Have a Deal (external link) (Icon, 2016), the acronym outlines the key pillars of any sensible negotiation strategy, whether you’re reaching an agreement, resolving a dispute or closing a deal.
- Discover means knowing the facts, understanding the market and researching the person or company in question. ‘Do you know who will be involved? Do you know the timescales? Are there industry baselines you can look at?’ asks Reynolds.
- Establish means deciding on your own and your partners’ key priorities. That way you’ll avoid a solution that suits one or neither party. ‘Once you’ve established [a breakpoint] – stick to it! In the heat of a negotiation we often agree to things we wouldn’t if we were more calm or confident.’
- Ask is perhaps the trickiest step, and means setting out exactly what you want and on what terms. ‘Anchoring is a phenomenon from the world of psychology that means we are often overly influenced by the first number put on the table and you are then likely to finish closer to that figure. Don’t worry if you don’t manage to go first though; just remember to not reinforce their proposal by going on and on about it.’
- Lead is another facet that may not suit every character but is vitally important in clinching the deal. Nerves are a natural part of any negotiation. ‘Be confident. Take a deep breath and speak calmly and professionally. Don’t allow your emotions to control you.’
- Seal is the final stage of any negotiation. Never walk away without written confirmation and certainly don’t celebrate in a way that implies you’ve gained more than the other party.
It’s a good framework to hang a negotiation strategy on, but remember that there are many more nuanced aspects of business negotiation to consider – a simple five-stage plan is just a starting point.
Know when to quit
Not everyone has to win in a negotiation, sometimes no one does. Mike Schultz (external link) of the RAIN Group argues that by seeing negotiation as an agreement, we imply there’s no alternative. Remember that there is usually the option to walk away and move on to a new opportunity.
‘Taking this mindset is not only empowering, it builds confidence,’ says Schutlz. However, it’s important not to pursue a win-lose (external link) approach – otherwise known as ‘getting your own way’. An outcome that benefits one party far and ahead of the other may be good in the short term but risks damaging a valuable relationship in the long term.
Lower the barriers
During negotiations there’s a tendency to adopt a guarded or somewhat cynical position. Doing so offers protection against those who are out to exploit or deceive, but research (external link) shows the best policy is to be transparent – trusting others the way you would like to be trusted.
‘Think of the party you are negotiating with as your partner, rather than an enemy you need to defeat in order to not be defeated,’ says Carson Williams, Operations and Research Manager at Cognacity. ‘This will stop you putting up these defences and allow you to remain rational and strategic.’
Whether it’s a casual mention of your hobbies, family or personal life, there’s good reason to believe that openness is conducive to more agreeable terms.
Don’t get manipulated
Negotiation isn’t only about delivery but response. Global training and technology company Baker Communications suggests that you keep an eye out for manipulative tactics (external link) or telltale signs of a win-lose negotiator.
Tight deadlines and the threat of competition are two ways of forcing a quick, disadvantageous settlement. The solution is to ask for evidence or further information to ensure you’re not being forced into an early bargain.
Delay tactics are another all-too-common roadblock that can not only stall negotiations but also lower expectations. Look out for when a person of authority is not around to seal the deal, or a person inconveniently – or conveniently – exits negotiations early to stop an agreement being reached.
It’s what’s inside that counts
From spreading your arms to signal openness to crossing them to signal inflexibility, negotiations can sometimes begin before a word has been spoken. Mirroring position and posture can be a powerful way of building empathy between two parties, so think about your body language and the message you want to convey.
Emotion is another important factor. ‘During difficult or challenging situations, our emotions and knee-jerk reactions kick in,’ says Williams. ‘Feelings like stress and anxiety are very normal when entering into a negotiation and can even help us to prepare. But sometimes these emotions cause us to be led by our instant reactions, which are often not rational or appropriate; and that can get in the way of making effective decisions towards our goals.’
Whether it’s spoken or unspoken, conscious or subconscious, negotiation is ultimately about appreciating the psychology of the situation – that you’re in the room with another person who is affected by your behaviour. With some preparation, an intelligent approach and a bit of self-awareness, you should be able to identify the right behaviour and achieve the right result.