Negotiation in black and white
Negotiation expert Paul Holmes on getting your ducks in a row, squeezing lemons and sealing deals.
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Words: Paul Holmes
Illustration: Tom Humberstone
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M y house is up for sale, and you’re interested. You pick up the phone and arrange a viewing. When you arrive I start by showing you around, asking what you’re looking for, telling you about the local amenities and so forth. We then get to a point when you say, ‘Paul, I like this house. I think it meets my needs.’ And without a mention of cost, I’ve sold you my house. Just like that.
I’d say that upwards of 80 per cent of people involved in selling don’t understand that there is a complete distinction between selling and negotiation. Negotiation starts when selling finishes. At the stage when there is an agreement in principle between the parties, when what is being offered meets the needs of the buyer, the selling function is complete. Negotiation then begins, and it relates to the terms and conditions upon which the transaction is (or is not) going to take place. In the example of a house sale these could be cost, deposit, move-in date, the sale of furnishings and so on.
So many sales fall through because of individual parties failing to agree on terms and conditions. And yet we practise negotiation on a daily basis, consciously or not. Where we go on holiday as families, where we shop, what we eat, who does the school run — rack your brains and you’ll realise that we are constantly negotiating.
Boiled down, negotiation is where two people have interests and they are coming to an accommodation. It needn’t even come down to price. Instead, consider negotiation as the buying and selling of ideas, and it becomes much, much broader.
No relationship? No hard feelings
It’s useful to categorise negotiation into two styles: competitive and cooperative. Competitive is where the parties involved are viewing the negotiation on a win/lose basis, and cooperative, on a win–win basis.
I would use competitive negotiation when buying a used car. Why? Because in a competitive negotiation the outcome is placed in higher regard than the relationship between the vendor and me. In all likelihood I’m not going to have a relationship of any sort whatsoever with the vendor once I’ve purchased the car. Whether the vendor is delighted with the deal or licking his wounds in frustration is not of the utmost importance; all I care about is getting the car on the best possible terms, which in this case probably does mean the lowest price.
On the other hand, I might be involved in a transaction involving a longer-term relationship — perhaps as a tenant negotiating terms with a landlord. If I’m looking to stay in her property for a number of years, the relationship between us is not unimportant. If I have problems that need fixing, I want her to be responsive, and so beating her down on price to get the best deal possible is not the primary factor in my thinking.
Cooperative negotiation is dependent on cooperation between two sides, and both tend to be much more open and willing to offer and exchange information. They genuinely look for things that meet the interests of both sides. They are more creative in terms of trying to find solutions. In many respects a cooperative negotiation would be a more productive negotiation.
It’s about the destination, not the journey
Good preparation can be the difference between winning and losing when it comes to negotiation, and it works like a mirror. You’re thinking about your needs, and the needs of the other party. You’re considering your opening position, and the likely opening position of the other party. You’re thinking about what concessions you could offer, and what concessions the other party might be able to offer. All of the questions you’re asking yourself, you’re asking of the other party. Of course, you won’t know their intent and planning in the way you know your own, but that shouldn’t stop you from empathising and asking yourself what you do know about them, or what you can predict.
This said, negotiation is not so much about the route by which you get to a destination as the destination itself, and this is where your focus at the start lies. A negotiation is like water running down a hill — it takes so many turns that it’s nigh on impossible to predict. But you’ve got to know where you’re trying to get through to.
Establish your objectives early. For argument’s sake, let’s return to the house sale scenario, and let’s consider four objectives: ideal, expected, acceptable and walk-away. If I was expecting £400,000 for my house but got nearer £500,000, then that would be great. Add to that a three-month entry lead, a 20 per cent deposit in my bank account tomorrow morning and the sale of all of my furniture for far more than I had anticipated and you could knock me over with a feather. That would be the ‘ideal’ objective.
But in all likelihood, things probably aren’t going to go like that. So the next question is: what am I realistically expecting to happen? I reckon I’ll get nearer the £400,000 mark, I’d be lucky if I got a 10 per cent deposit next week, they’re probably not going to buy my furniture and they’ll dictate the move-in date. That’s the ‘expected’ outcome.
The lowest possible point at which I’d agree to the sale and its terms and conditions would be the ‘acceptable’ outcome. Anything below this would be unacceptable, or ‘walk-away’. Whatever your objectives when negotiating, the key thing here is being able to walk into a negotiation knowing what ‘good’ looks like, and knowing what ‘bad’ looks like.
Put your concessions in one basket
If you’re selling bottled water in the middle of the Sahara Desert and you’re the only show in town, serving up water to a line of people who are gasping, you have 100 per cent of the power. You can ask for whatever you want for those bottles of water.
Not so if you’re trying to sell those people sand. Negotiation is always a relative thing between supply and demand, but generally speaking there is seldom complete power on one side.
As such, concessions can be expected on both. A good negotiator will list approximately 10 things he or she could potentially concede during a negotiation. The next stage would be valuing each of these concessions — both to you and to the other party. It doesn’t follow that the thing that costs you the most is of the highest perceived value to the other party.
What you’re trying to do, ultimately, is arrange your list of 10 concessions into an order that shows high value to the other party and low cost to you. If something’s going to cost you an awful lot to give away and not going to be valued much in return, that’s the last concession you want to trade, and vice versa. And because you’re mirroring the whole negotiation in your planning, you’re assessing concessions from the other party’s side too.
Who moves first?
Once under way, a negotiation is like a game of chess. You’re imagining the other party’s moves, and you’re starting to imagine your counter-moves and how the game will play out.
But who goes first? Take the 2016 doctors’ dispute. The doctors started off by making their demands, and the government responded with a rejection. Nonetheless, the starting point was made. Of course, things won’t end there, but this was the point at which the negotiation began in earnest. And had the doctors asked for something less ambitious, they’d likely be ending up in a different place.
There’s a considerable amount of evidence to support the fact that we are influenced by the first number or proposal put down in a negotiation, even if we don’t finish on it. It’s called setting the ‘anchor’.
The secret when laying an anchor has everything to do with this: you shouldn’t make demands which are so extreme that they cause the other party to close a negotiation before it begins, but you should make demands that are beyond what you’re expecting. It is a careful balancing act.
Pressure valves
Think negotiation and you might think pressure — but the more good planning you’ve done, the less pressure you’re going to feel. You’ve got your ducks in a row.
Role-play is massively helpful when attempting to mitigate pressure when it comes to negotiation. You’ve got to enter a negotiation having played the video from the beginning to the end, over and over. You’ve got to have considered everything you know about the other side — their needs, interests, concerns, track records — and have played out the negotiation beforehand.
Another pressure valve you can rely on throughout negotiation is this: take time out. Suggest to the other side that you need to have a break for five minutes. If need be, say that you want to consult a colleague. In a professional negotiation, both sides will readily do these things.
A final outlet is what I’d call ‘park and return’. You’ve made some progress during a negotiation but you’ve become stuck at a certain point. You’re not getting any traction, and there’s some tension and frustration building up on both sides. This isn’t serving the interests of either, so agree to ‘park’ the issue and return to it later.
In the heat of the negotiation it’s difficult to come up with creative, constructive ways around problems. By parking the issue you can get the negotiation back on track and into rhythm. Tension is easing and more is being invested by the parties. All of this creates a desire on both sides to want to arrive at the destination. The deeper you go into something, the more you want the prize, because you’ve invested time and effort. But locking horns early on prevents that investment and prevents any celebration of progress.
The actor-negotiator
There’s nothing you’re going to do in business that will require better control of body language than negotiation — both suppressing language that you don’t want to show and displaying language that you do want to show. Negotiation isn’t almost an acting role; it is an acting role.
By way of example, when making an ultimate statement, you’ll want to make eye contact. You might also want to shuffle your papers and look the other party in the face with confidence. Finally, you’ll want to sit back in your chair. That’s signalling: ‘It’s over to you now.’ What you absolutely must not do is be the next person to talk. If you talk after you’ve made an ultimate statement, it causes the other person to feel that you’re nervous and that there may be more that can be achieved. The best way to place the pressure back on to the other party is to stop talking.
“The best deal for a negotiator is when they squeeze the lemon as hard as they can and no more pips are coming out.
Half of the time, then, your job as a negotiator is showing what a lemon with pips coming out looks like, and your body language, your tone of voice and your actions are all there to show exactly this: a lemon being squeezed with pips coming out. The other half is squeezing every pip out of the lemon opposite you”
Negotiators aren’t often just looking for a good deal: they’re after the best deal. And the best deal is when they squeeze the lemon as hard as they can and no more pips are coming out. Half of the time, then, your job as a negotiator is showing what a lemon with pips coming out looks like, and your body language, your tone of voice and your actions are all there to show exactly this: a lemon being squeezed with pips coming out. The other half is squeezing every pip out of the lemon opposite you.
A done deal
At the end of a negotiation it’s quite common for both sides to think that they have a shared understanding of what’s been agreed, when actually they don’t. The negotiation has perhaps been tense, and after a long time people tend to feel a great sense of relief. Because of this there’s a tendency not to be thorough in terms of documenting what has been agreed and what the next steps will be.
At the table at the end of the negotiation, or directly after by way of follow-up, one of the parties should state their understanding of the agreed outcomes and next steps. That will prevent ‘negotiation creep’. A professional negotiator will often try to follow up by suggesting another point that wasn’t actually agreed, and the other party will accept, reluctant to go through the negotiation process once again. The other reason for documenting agreed outcomes and next steps is so that each party is clear in their mind when accounting for what has happened during a negotiation. It’s also a way of creating the feeling of a good outcome.
In all negotiations, people want to walk away with this feeling. That might sound blindingly obvious, but it’s not as clean-cut as you’d expect. To feel that a good deal has been achieved is not necessarily the same as getting a certain deal that was specified and written down beforehand. What did the other party expect to get, and what did they get?
If at the beginning of a negotiation you manage that expectation, you can lower it. It’s a case of opening and managing the negotiation in such a way that at the end of the day the other party can look at themselves and say, ‘I got a good deal.’
It’s why I always suggest that before a negotiation begins, the negotiators write down what ‘good’ looks like and what ‘bad’ looks like. That way, they control that emotion inside themselves; they continually remind themselves of good and bad, of do and don’t, of black and white.
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Four great negotiators from history
Some negotiators have been responsible for changing the course of the world as we know it. Here are four of the most brilliant.
Nelson Mandela
WHO: Anti-apartheid revolutionary, political prisoner, philanthropist and former President of South Africa.
WHAT: Initially classified as a Class D prisoner (the lowest grade), Mandela was quick to begin negotiating, first for trousers instead of shorts, then for games, better standards of food and even a tennis court. By 1975 he had become a Class A prisoner, and upon his release was heralded as the face of the anti-apartheid movement. In negotiating the end of apartheid, he brought peace to a racially divided country and led the fight for human rights around the world.
Alfred the great
WHO: King of Wessex from 871–99.
WHAT: Since the 790s, Viking armies had been claiming swathes of territory in England, torturing to death kings who did not flee. Wessex, the throne of King Alfred, was the last kingdom — but the Danes were on the march. Alfred and his modest royal bodyguard withdrew into the Somerset marshes. Incredibly, they won the battle. Realising he couldn’t defeat the entire Viking threat, Alfred negotiated a treaty which concluded in the ultimate unification of Anglo-Saxon England.
Steve Jobs
WHO: Co-founder, Chairman and CEO of Apple Inc.
What: Don’t let the meek demeanour or Zen faith fool you — Steve Jobs was a notoriously headstrong genius who excelled in hard-nosed negotiation. A now-famous email exchange with James Murdoch proves the fact. Chief amongst Jobs’s tactics was offering ludicrous sums of money when buying businesses. Lala, a music start-up Jobs saw as a potential iTunes, had been offered $11 million by Nokia. Jobs wrote his bid on a scrap of paper and handed it to Lala’s CEO. The figure? $80 million. It was a done deal.
Gerhard Ritzel
WHO: West German Ambassador to Tehran.
WHAT: On 4 November 1979, 52 American diplomats and citizens were taken hostage after the US Embassy in Tehran was stormed. A massively complex crisis, it was rife with failed negotiations. Keen to maintain export ties between Iran and West Germany, Gerhard Ritzel struck up a relationship with Sadegh Tabatabai, a key official in the Iranian prime minister’s office whose sister was married to the leader of the Islamic Republic of Iran. The relationship sparked negotiations between Iran and the US and led to the resolution of the crisis. Ritzel died virtually unknown.
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Paul Holmes has over 30 years of sales experience, having worked across a range of sectors, including media, telecoms, pharmaceuticals and consumer electronics. His career has included director level and general management roles within blue-chip organisations. As a partner of Sellmax, Paul now works with business developers, delivering training and implementing business development strategies.
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Based on an interview with Malcolm Triggs, Editor at White Light Media
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This story is taken from the fourth issue of Poppy. Our print run is strictly limited but, if you are based in the UK and work in financial services, you can request a printed copy via the ReadPoppy.com website.
