Unless you’re marooned on an uninhabited island or the sole survivor of an extraterrestrial exploration mission, you will inevitably have to
negotiate with another person at some point in time. It is therefore imperative that you equip yourself with this lifelong skill.
The first thing that you need to understand is that negotiation has to be a win-win situation for both parties [or atleast on the face of it], failing to do that will result in loss of faith, bad relationship and worse a situation that will backfire on you. The below diagram gives a rough sketch of the 4 major outcomes of a deal, with the top left corner representing the highest magnitude of the loss for both the parties and bottom-right representing a healthy partnership bringing huge returns for both the parties.
The diagram above gives us a clear picture of what we should strive to do in order to lead the agreement to the bottom right corner. However, more often than not, in a real life situation we
do not know these boundaries. The negotiating parties deliberately hide these boundaries thinking that it will give them an upper hand in the negotiation, which is true to certain extent, but what this mindset does is it inevitably leads both parties to pull each other in their zone [highlighted orange in the above diagram]. This tug-of-war if not handled gracefully [which happens most of the time] leads them to a complete dissent and throws them both to the red zone as shown above. This is quite similar to a classic game theory example.
So to have a successful negotiation, one must learn how to break the tension, not sound greedy but at the same time extract as much information as you can so that you can pull the other party towards your zone but in a way that your negotiating partner accepts it willingly. Here are some of the most essential techniques used by professional negotiator.
- Dynamic Silence
- Calibrated Questions
- Accusation Audit
- Yes and No Questions
- Defeating fear of loss
- Bargaining Strategies
- The 7-38-55 Rule
- Find the black Swan
Mirroring is a conscious repetition of your counterpart’s words. They are designed to show the other side that you’re listening to them and understanding them. It also helps in getting more information from the other party. For example,
Your negotiating partner:
“We’ve had a bad year and this new contract might put a lot of strain on the already busy staff”
Try and identify one to three key words for mirroring but never more than five. The question should flow naturally and should show genuine interest or concern.
Labelling is verbally acknowledging the other side’s feelings and positions. Labels are powerful tools for reinforcing positive feelings and deactivating negative ones. For example,
“It seems like…”
“It looks like…”
“You look like…”
Labeling if used correctly tells the other person that you’re thinking about them, especially when the situation is a bit tensed. Another application is to deliberately
mislabel a feeling. This will provide a chance to the other person to provide more information about their position.
Never use first person pronoun as shown below
“What I’m hearing…”
Such statements makes the other party feel that you are only concerned about yourself. Chose your words wisely as it subconsciously changes the tone of the conversation.
Dynamic silence can magnify the impact of your mirrors and labels. It let’s the other person sink into a particular feeling. It also makes them nervous if they were lying to you, you will notice their agitation and unnecessary clarifications to justify themselves.
People love to have autonomy. Nobody like to be questioned their authority. So never ask questions, like “Why..?”. They sound more accusatory.
Calibrated Questions is just effective rephrasing of your questions that change the power dynamics and forces the other party to see the problem from your side of the table. For example,
rather than asking
“Why is it delayed ?”
“Why do I have to do this ?”
you may ask
“What issue are we facing that is causing this delay ?”
“How am I suppose to do that ?”
The rephrased questions provides opportunity to both the partners to understand more about the deal. Another example, let’s say you’re doing a contract with business partner and you have some reservations regarding their position to deliver on time rather than asking
“What if you’re delayed ?”
which sounds like you don’t trust them and are accusing them. Rather than that you may use,
“How do we deal with this if it is delayed ?” or
“How can we ensure that the plan is achieved within the deadline ?”
Replace I, me, you with ours, us and we. The discussion should sound like a collaboration.The
calibrated question can lead to increased empathy for your position and give the other side the illusion of control.
The best way to make a unacceptable clause palatable to your negotiating partner is to provide an even worse case scenario or give an exaggeration that makes the other person come back and say, “Hold on, you’re being too hard on yourself.” Compiling an
accusations audit helps you get ahead of the types of negativity and objections that could hinder the successful completion of your deal. A simple example is let’s say you’re at a hotel and you need to extend the checkout time. You may approach the receptionist and tell them,
“Hey I am really sorry to bother you.I think it’s going to make your life difficult. I would really appreciate if you could help me out with this. May I ask for your favor…”
By this time the receptionist is so alarmed that their brain in rummaging through all the terrible scenarios. Now if you put forward your request, after a good pause and these extreme accusations on yourself, your request to extend the checkout might not look that bad and in most cases you will get it.
Yes and No Questions
“Can you agree to do it this way?” could be better presented as “Do you think it’s unreasonable if we can both agree to take things in this direction?” When answering a yes question, people are going to feel that every piece of information they provide is another commitment to be made. By contrast, a no relieves them of the sense that they may have just surrendered their entire negotiating position. Avoiding yes in favor of no helps ease the other side’s fear of commitment.
Defeating fear of loss
Fear of loss can completely distort your counterpart’s perception so much that it effectively bends the reality. People can walk away from a good deal if they feel cheated. Try and understand what are they scared of losing and that they do not think you’re cheating them. Mark their use of word
unfair and try and clarify what part of the deal is unfair for them.
When negotiating, it’s always best to steer clear of a bargaining situation. But some- times it’s unavoidable. Below are the stages of the Ackerman system. It’s paramount to employ tactical empathy between each round:
- Establish a target price for the goods you want to buy.
- Make an initial offer at 65 percent of your target price.
- Assuming no deal, raise your price by 20 percent.
- Assuming no deal, raise your price by 10 percent.
- If still no deal, raise by another 5 percent.
- Your final offer should be an odd number, and you should be prepared to include some non-monetary compensation to show them you’re committing all of your available resources.
The point of the Ackerman system is to make the other side feel that every price increase is creating a real burden for you. Resist the temptation to set an anchor price that is unreasonably low. Lowball offers can create negative emotions like resentment, and the deal will be doomed from the start.
The 7-38-55 Rule
In interpersonal communications, 7 percent of a person’s effort is conveyed
via spoken words, 38 percent by tone of voice, and 55 percent through body language. All of which is to say, your tone of voice is more than
five times as important as what you’re actually saying. If your counterpart’s tone of voice and body language indicate that he or she is about to lose their bearings, harness the power of your
late-night FM DJ voice to soothe your counterpart and slow down the pace of the negotiation.
Find the black Swan
Black swans are pieces of innocuous information that, if revealed, can change the course of the whole negotiation. In many ways, negotiation is all about finding the
black swans. To discover them, you must open your mind, maintain an endless curiosity, and be on the lookout for surprises.