Effective Negotiation

Adapted from Articles & Advice Columns

by

Steven Cohen, President,

The Negotiation Skills Company

Negotiation is a Life Skill• Everybody negotiates all of the time. • It helps people reach decisions jointly in a civilized way

Successful negotiation is a process that yields an agreement, as part of collaborative decision making, that each party

will willingly fulfill.

The fundamental asset of negotiation is information.

Definition of Negotiation

Negotiation is not a competitive sport

Taking a hard line may be fine -- but only in the short term, and only if you really believe that your counterpart is your adversary. Before you come up with a “take it or leave it”

approach, consider the consequences.

Negotiation is often a series of episodes, which means that considering your counterpart as a partner or a collaborator is the foundation of trusting, fruitful, and ongoing negotiation.

“How the game is played matters more than who wins.”Steven P. Cohen, Pres., The Negotiation Skills Co.

Negotiating Requires Multiple Steps

Knowing:1. what you really want, why and how badly you want or need it, and at what point you're willing to walk away without getting it. 2.Know what the other party wants and why it's important to them. 3.How much do they need or want what you have to offer?4.What would make them really happy?5.Are they being honest & sincere?

This is vital information if you're going to craft a creative resolution that will satisfy everyone.

Six Stages in the Negotiation Process:

1. Orientation and fact finding

2. Resistance

3. Reformulation of strategies

4. Hard bargaining and decision making

5. Agreement, and

6. Follow-up

Acuff, Frank L. (1997). How to Negotiate Anything with Anyone Anywhere Around the World. New York: American Management Association

Five Levels of Communication

Information from: Resource International

1. Facts – what someone sees, hears, touches, & perceives the facts to be.

2. Thoughts – what their thoughts about the facts are.

3. Emotions – how they feel because of their thoughts about the facts.

4. Meaning/Importance – why it’s important to them.

5. Actions/Expectations – what they want.

Eight Pillars of Negotiational Wisdomby Steven Cohen

1. Be Conscious of the difference between positions and interests. If you can figure out why you want something - and why others want their outcome - then you are looking at interests.

2. Be Creative. Using brainstorming techniques, listening to outlandish proposals and opening up to unanticipated possibilities expands agreement opportunities. If you respond with new ideas and do the unexpected, you can open doors to far greater gains than when you behave predictably. Creativity can make everyone look good.

3. Be fair. If people feel a process is fair, they are more likely to make real commitments and less likely to walk away planning ways to wriggle out of the agreement

4. Be prepared to commit. You shouldn't make a commitment unless you can fulfill it. Your commitment isn't worth much unless the parties to the negotiation are Drop-Dead Decision-Makers. Moreover, commitment is not likely to result unless all parties feel the process has been fair.

5. Be an active listener. Focus on what others say, both on their words & their underlying meaning.

6. Be conscious of the importance of the relationship. Most of your negotiation is with repeaters, (family, friends, employers, team mates, etc...).

7. Be aware of BATNAs. BATNA stands for the Best Alternative To a Negotiated Agreement. Your BATNA is the situation you want to improve by negotiating with a given party or set of parties. But BATNA is not your bottom line. It is a measure of the relative value of negotiating a particular issue with a particular party -- or whether you can fall back on better alternatives.

8. Be Prepared. In order to negotiate effectively, efficiently, and wisely, it is crucial to prepare. Your job is not to outline a perfect, total solution; that would be a positional approach. Preparation means studying the interests and BATNAs of every possible party. It means understanding the short and the long term consequences you use and the substantive results you pursue. Doing your homework can save a lot of time.

Good Negotiation Habits• A key to negotiation is knowing the other party’s primary & 2ndary

needs.

• The more info you gather prior to formal negotiations, the better-prepared you are to negotiate.

• Create an interest map listing the opposing party’s interests in the outcome & the reasons behind them. It focuses you on the info you’ll need, the questions you’ll ask & areas of common ground.

• Do a reality check – test the accuracy of your information.

• Ask Questions during the negotiation.

• Hear the other person – listen, focus, ask clarification questions, pay attention, summarize.

• Don’t rush to judgment – collaborate & cooperate.

• Be flexible

• The key communication skill in negotiation is to listen. You have two ears & one mouth – use them in that ratio.

Two Categories of NegotiationPositional -- someone who is inflexible, says 'my way or the highway',

and who cannot change his/her demands without losing face.

Positional negotiators place their demands on the bargaining table and expect their negotiation partners (the folks on the other side of the table) to respond by saying 'yes' or 'no'.

 Interest-based -- negotiation focused on the underlying reasons for pursuing one's negotiation objectives.

Interest-based negotiators try to learn what factors offered by their negotiation partners will help them achieve their own interests -- and what those other parties believe the interest-based negotiator can offer to respond to what they themselves want.

Interest Based Negotiation• Determine what both parties’ interests are & any other

special interests they might represent.

• It’s not what they want, but why they want it that’s more

important.

• Once the reason behind the other party’s stance is

identified, it becomes much easier to reach common

interests.

There aren’t any specific models for negotiating specific kinds of issues. Each negotiation depends on many issues & may

be amenable to a variety of different approaches.

Negotiation is quite different from flying an airplane. A pilot must go through a precise pre-flight process before taking

off. There is no room for varying that process.

A good negotiator understands that the process involves a continuous series of choices as to strategy and

tactics.

Being locked into one strategy or set of tactics to implement that strategy weakens a negotiator's capacity to reach wise

solutions in an efficient manner.

Evaluating a Job Offer - Pros and Cons 1. Does the prospective job meet the criteria that I laid out when my job search first began?

2. Will the prospective job improve my level of satisfaction, personally and professionally?

3. Will this job take me down the path that leads to future career and/or personal goals?

• Salary

Even if money isn't what gives you the most job satisfaction, no one can argue its importance. You need a certain amount of money to pay the bills, for example. Most of us also want to make sure we are being paid what we're worth and what is the going rate for jobs similar to ours. It's important to find out what others are making for related work in the same industry, and in the same geographic region. You can start gathering this information by looking at salary surveys and other occupational information. And don't forget, if other aspects of the job appeal to you, you can try to negotiate the offer.

• Office EnvironmentEvery office has a different feel to it. Some feel kind of "dark pin-striped suit" while others feel a little more relaxed. Years ago I interviewed for an internship in a public relations firm. From the second I set foot in the office I knew I wanted to work there. There was a big bubble gum machine in the corner and colorful pictures hung on the walls. A few years later I interviewed for a job at a large investment bank. The office was the complete opposite of the one I just described. I was interviewed in a formally decorated conference room and given a tour of the department I'd be working in. It was brightly lit, yet furnished in dull colors. I was offered and accepted both positions and loved both jobs. As you can see, you can be happy in two totally different environments. You just need to know which environment you'd be unhappy in.

• Corporate CultureDefined by Merriam-Webster as "the set of shared attitudes, values, goals, and practices that characterizes a company or corporation," corporate culture should be an important factor in your decision whether to accept a job offer. If you value your time away from the office, a company with a corporate culture that encourages late hours may not be for you. Is the potential employer's philosophy "win at all costs?" Is your philosophy "always play clean?" This company isn't for you. Are you an ardent proponent for animal rights? Through your research you learn that one of the company's subsidiaries does animal testing. Although this won't affect the day-to-day activities of your job, it may not be a situation in which you'll feel comfortable.

The Best Possible Pay/Benefits Package• Know your financial needs & what is important to you.• Look at the company & the general marketplace – do

your research to know what they pay & what other firms pay.

• Find out all you can about the company’s policies about pay, salary reviews, seniority, & other issues that impact pay.

• Take a piece of paper & list what you want & for each item, list the reasons WHY each of those objectives is important to you.

• Aim as high as you feel necessary to gain the best deal for yourself. It is easier to play down than to gain.

Evaluating a Job Offer - Economics

Compensation will probably be a key factor in your decision. Even if compensation doesn't rate number one on your list of priorities, you should at least take it into consideration.

To truly put the economics of your job offer into perspective, all things must be taken into account. Salary, benefits, and bonuses should be considered, and if you are moving to a new area, you will want to figure in relocation expenses and the area's cost of living.

Unless you are motivated only by money, a few extra bucks will never turn a bad job into a good job.

The best approach is to decide if the job interests you and suits your needs. Once that has been established, decide your bottom line.

Evaluating a Job Offer - The Bottom Line• The bottom line is the lowest compensation amount that you would be

willing to accept. For example, if you really want $30,000, but would think about $28,000 or settle for $26,000, then you haven't actually established a bottom line.

• Your bottom line needs to be firm and encompass the figure that you would be willing to walk away from. For example, if you would not be willing to work for less than $25,000, then your bottom line should be set at $25,001. Setting a bottom line clarifies your financial goals and makes negotiation easier. Never reveal your bottom line to a potential employer- wait for them to make an offer. If they offer you more than your bottom line, feel good about it. If they offer you less, you have the option of turning it down or better yet, you can reveal to them what they would need to pay to gain your acceptance.

• Unless you are extremely offended by their offer, negotiation is always worth a try. Many employers expect it and that's why job applicants often get low-balled from the start.

• What's the most important thing to consider? Is it salary, health benefits, or vacation time? Or could it be the corporate culture or the length or your commute? What about your boss and co-workers -- will working with them be pleasant?

• As you can see there are a number of factors to take into account and only some are negotiable. You can try to get a higher salary or more vacation time. However, health benefits are often standard packages. The corporate culture isn't going to change for you, and your boss and co-workers aren't going anywhere.

• Each of us, of course, is different. And what carries a lot of weight for some of us is insignificant to the rest of us.

• Assess your own situation, your interests both short- and long-term. You should also think about the situation faced by your employer, both the organization and the individual(s) involved in your salary decisions.

• Research comparative salaries paid to others both within the organization and outside.

Evaluating a Job Offer - The ExtrasIn some cases, money can present a problem for employers, especially when your salary requirements exceed their budget or create inequity within their company.

Little known fact: Internal equity issues are the cause of most deals that fail due to financial reasons.

To remedy these problems, look for ways to increase your overall compensation without increasing your salary. Here are just a few examples of what you can ask for: •A sign-on bonus •Performance bonuses (paid in 30, 60, or 90 day intervals after pre-determined goals have been achieved.) •A relocation bonus /Relocation expenses•Stock options •Vacation packages , additional vacation•Increased vacation time •Working conditions or location•Working at home or flexible hours•Timing on salary increases•A car lease or purchase •Title•Parking Space•An agreement to switch shifts with a coworker •A sabbatical when the terms aren't clearly spelled out in the employee handbook •Health insurance: dental, medical, optical•Long-Term Care Insurance/Disability Insurance•Retirement Funds•Flexible Hours•Tuition reimbursement &/or time away from work for classes•You can also ask about how their firm handles salary reviews, sign-up bonuses, year-end bonuses, retirement plans, & other elements of the total compensation package.

Know Your Market Value• Do some serious homework to know as much as you can about the market value for your

position for people with your experience & qualifications, both in that organization & at others. Check with others, are they telling everyone the same thing?

• Know the facts about all of the elements of your compensation package: salary, benefits, & relocation expenses.

• Figure out how much you are willing to settle for as a guaranteed minimum & how much you are willing to gamble you can add to the minimum through bonuses, commissions, or overtime. Weigh short term vs. longer term financial issues.

• When asked “how much pay do you want?” answer with a range that gives the interviewer room to bargain without offering them space to go below your minimum.

• The old saying is that “the first person who mentions a number loses in the Game of Chicken.” If they say “name your price” – ask for what you really want. Remember, they expect to negotiate down from your proposal.

• Bracket the range you are willing to settle within – for example: if you say “high 30’s or low 40’s” they will work within a range of approximately $37,500-42,500. This is known as the ZOPA – Zone of Possible Agreement.

• You set up the bargaining range, give them the opportunity to do the bargaining.• Taking the first offer is often a mistake, as is taking your minimum. • A pay offer that does not meet your fair expectations should be given a clear response: “Based

on my research I had anticipated receiving an offer in the low 40’s.” • You can also say something like “I have been thinking about the package we have been

discussing & there are several open issues I would like to re-examine with you.”

Determining Market Value for Experienced Folks

• For more experienced candidates – when asked about their current income, they may ask what their current income tells the employer about their value to the employer’s company. They can also ask what they hope the candidate will provide to the company & what the value of that contribution is. They may also reply that they are trying to learn about the job & how the company pays its staff to see whether the salary reflects the responsibilities the job entails.

• Find out about the transferability of your prior experience – is it something that will induce them to hire you?

• If the salary doesn’t meet your expectations – give a clear response - In order to justify changing jobs I need a variety of incentives including better pay. I had anticipated getting paid something in the low forties (e.g.$40-45k).

• It’s reasonable to let them know they are your #1 choice, but that given your salary history & financial responsibilities, you cannot accept their current offer.

Accepting the OfferTake things step by step. Focus on what is most important to you – both short & long-term.

If everything about the employment offer meets your expectations, accept it as soon as possible. Don't keep you new employer on pins and needles. Not only does it show a lack of enthusiasm, it also shows a lack of commitment and professionalism.

Either way, once an offer is on the table, you shouldn't take more than a day or two to decide. If you have legitimate concerns or questions that need to be answered, don't hesitate to bring them up before making your decision. Thinking about the offer doesn't do any good if you don't have all of the facts.

And always keep in mind, if you decide to reject the offer, it may be impossible to get a second chance at a later date. The position may be offered to someone else or depending upon how the rejection is handled, the employer may feel insulted. Whatever you do, make sure your decision is final.

Accepting or Declining the Offer

• Whether you choose to accept or reject a job offer, you must inform the employer who made that offer.

• This should be done formally, in writing, and if you wish by telephone as well.

• If your answer is "yes" it's obvious why you'll want to make a good impression with your future employer.

• But, why is it important to be polite to someone you don't plan to work for? You don't know where your future will take you. You may at some point wind up with that employer as a superior, a colleague, a client, or even your next door neighbor. You certainly don't want to leave a bad impression.