You want a discount from your suppliers or a rise from your boss. But don't just barge in. The top business negotiators are able to 'read' people as well as any police cracker. Ben Rooney gathers the essential tips on how to talk 'em down - or up
Jim Alvarez is a big man, filling a room when he enters it. Perhaps it's an asset in his line of work, for Alvarez is The Negotiator. A New York psychologist who trains the NYPD and now the Metropolitan Police in the art and skills of hostage negotiation, he learned his trade at the coalface of the British NHS.
'I worked at the world's oldest mental facility, in something called the Challenging Behaviour Unit. You could call it that. The British knack of understatement was never put to better use. Our stock-in-trade were rapists, murderers and arsonists. I'd call that pretty challenging behaviour.'
Alvarez's knack for dealing with even the most intractable of individuals is a skill that business people can benefit from as well. The 'challenging behaviour' you encounter in the course of working on a merger or a new supplier contract may not put your life on the line, but it will affect the health of your career. So here's our guide to making sure that you negotiate a good deal, every time.
The fundamentals of any negotiation boil down to two aspects, believes Alvarez: 'Solving problems and building relationships. Problems become almost the third party in a negotiation. They are something both sides have in common, and concentrating on them helps to build a relationship. That way it becomes easier to make headway.'
Building relationships, as any marriage guidance counsellor will tell you, is all about listening. So avoid the temptation just to show how important you are, and let the other person have their say. Don't forget that 55% of communication is non-verbal (according to the classic research by UCLA professor of psychology Albert Mehrabian). So you should be listening with your eyes as well as your ears.
That is one reason why women often make better negotiators than men. 'Women tend to be better communicators,' says Alvarez. 'They are often better at listening to the emotions behind the words. That is the key to unlocking talks.'
'Charles', a specialist mergers and acquisitions negotiator who prefers to remain anonymous, agrees. 'Understanding what makes your opposite number tick is at the heart of every successful negotiation. That means listening to what they say and, just as importantly, what they don't say. Most people are driven by a combination of four factors - face, status, position and money.' Figure out that combination and you're on the way to a happy conclusion.
But you don't have to be closing million-dollar deals to make honed negotiation skills pay dividends. These days, just asking for a pay rise can be a tough conversation. What happens if your boss says no? Before you go in, understand why you deserve a rise and how valuable you are to your employer. Doing your homework ahead of face-to-face encounters is vital for the success of any negotiation. 'Know your facts,' says Alvarez, 'be clear about your goals; know about your partners in conflict and identify your fears.'
Says Clive Sexton, principal consultant for IT recruitment agency Harvey Nash: 'Negotiating a rise in hard times is tough. It's about showing to the company the cost of not paying you. Do they really want to lose you? How much will you cost to replace? Can you be replaced?'
With the current state of the job market, the answer to that last question is probably yes, believes Sexton. Threatening to leave if you don't get the rise you want is not very credible at the moment. But don't be cowed. No employer wants a demotivated workforce, especially among its senior executives.
When you are talking money, pitching at the right level is vital. Lose financial credibility and you lose the deal, says Charles. If your first offer is so far off the mark that it is laughed at, it is hard to be taken seriously after that. That means knowing the going rate for your position, and understanding how much the company can afford to give you.
In any negotiation, help the other party to say yes. Negative responses may be couched in monetary terms, but the real problem is likely to lie elsewhere. If your boss claims to be powerless to pay you more in the face of fixed departmental budgets, he or she is probably really worried about losing face - having to go back and re-negotiate with their own boss. Are there ways of getting round the problem that don't have such a negative effect on the bottom line - for example, a productivity bonus?
The same principles apply when you're negotiating with suppliers - they may claim that they can't do a better price, but unless you push them you'll never know for sure. And remember that in this case you're in a position of power - 80% of a smaller deal is better than 100% of no deal at all.
'How will it look to his boss if he loses you as a customer?' asks Alvarez. 'You need to show him that what you want and what he wants are not incompatible. He wants a good customer, you want a good price.'
Another technique you may encounter is the strong, silent approach, the hardened negotiator who simply drops the deal on the table and says: 'Take it or leave it.'
Don't be intimidated, says Charles. 'There are usually ways round the hard-nosed type. Typically, their objection will involve one of the four factors. Talk to others on their team and give them an indication that you are prepared to compromise if they are.
'With any talks, you have to build a ladder of confidence. You need to establish a relationship and keep it going. And, as in any relationship, you have to build trust,' he adds.
If things aren't going your way, asking questions is a good means of opening talks up. 'Statements generate resistance, questions generate answers,' advises Alvarez. 'Even if they don't respond verbally, your question will be answered in your opponents' heads. When that happens, you are exerting influence over them, getting them to think along your lines.'
An important aspect of doing your homework is making sure you know what a win looks like. Inexperienced negotiators often don't, and push too hard when they're already there. If you don't leave anything in the deal for the other guy, you risk losing it all.
The area between your best and your worst possible outcome is known as the settlement range. If you can reach an agreement within this, that's a win. You've asked for an pounds 8,000 rise and would settle for pounds 4,000, so don't keep fighting if offered pounds 5,000.
If the worst happens, talks will fail. It may be there is no negotiating space between your position and theirs. So your last piece of homework is figuring out what your other options are. In the parlance, this is known as your Batna - Best Alternative to a Negotiated Agreement. Are you prepared to quit, or go and look for a new supplier or a new merger partner if things don't work out? You need to make this decision coolly, ahead of time - not rashly, on the spur of the moment.
Negotiating is neither rocket science nor a black art that only the chosen few can handle. But don't try to busk it or you'll come a cropper. Better by far to stick to the fundamentals described here until you've got plenty of experience under your belt. Our tips won't turn you into Alan Sugar overnight, but they should stop you from winding up as Del Boy.
- There are only two goals in virtually every negotiation. They are: to solve problems and to build relationships.
- Do your homework. Know your facts, be clear about your goal(s) and identify your fears. Know what your best alternative to a negotiated agreement (Batna) is.
- Don't ask 'What do you want?' You are putting questions in your opponent's mouth. It will force them to take a position.
- Separate interests ('I want the window open') from positions ('I want to be comfortable').
- Don't allow yourself to get emotionally involved. Assume nothing, ask questions. Be curious, not furious.
- Do actively listen. Not just to what they say, but read their body language. Remember that less than half of human communication is verbal.
- Don't treat the party and the conflict as the same ('You are stupid').
Failing to find out what the other party wants ('I know what I want and I don't care what you want')
Failing to define what you want ('I don't like it but I don't know why')
Adopting a win-lose attitude ('If I win, you lose').