The Intelligent Negotiator (2 page)

Most people detest the ritualistic nature of bargaining encounters. Why don’t negotiators say what they really think? Why must they employ disingenuous games that seem designed to exploit others? Why do we spend substantial amounts of time discussing seemingly irrelevant considerations such as traffic, weather, sports, politics, and mutual acquaintances before we begin to focus on the fundamental issues involved? Why can’t we simply state at the outset what items we want and what we are willing to give up to obtain those items?

Ritualistic aspects are inherent to most bargaining interactions for several reasons. When people begin a negotiating encounter, they are anxious—even when they interact with friends or acquaintances. They don’t know whether amicable agreements can be achieved, nor do they know the actual terms to be agreed upon. If both parties
begin in a stressful state, they will encounter difficulties that may preclude mutual agreement. By taking the time to establish some rapport and create a more positive negotiating environment, they greatly enhance the probability of a pleasant and productive interaction.

Gerry Williams, a negotiation scholar and teacher at Brigham Young University Law School, spent several years in Afghanistan, where all consumer goods are negotiable. He had to barter for fruits, vegetables, meat, poultry, breads, and so on. He regularly went through the same ritual with the potato merchant, asking, “How much are the potatoes?” He was told they were 12 afs per kilo. He replied that they didn’t look too good, and offered 2 afs. The merchant countered with 10, Gerry with 4, the merchant with 8, and Gerry with 6, which was accepted.

One day, Gerry decided to avoid this ritual and directly offer 6 afs for his potatoes. He went down early and watched a woman go through the usual 12, 2, 10, 4, 8, and 6 afs exchange. He then placed 6 afs on the counter and asked for a kilo of potatoes. The merchant said they were 12 afs. When Gerry said he had been paying 6 afs for weeks, the merchant replied that there had been a drought in the North causing the price of potatoes to rise. Gerry then reminded the merchant of the sale to the woman ahead of him for 6 afs, but was told that deal was a “mission of mercy.” That woman had recently lost her husband and had to feed a number of small children. He thus took a loss on that sale.

Gerry spent more time on that day with the merchant than on any other occasion, and he left with no potatoes. The merchant was not willing to sell for Gerry’s opening offer of 6 afs because that would be an insult, and Gerry was not willing to pay more than the 6 afs he had become accustomed to paying. Gerry returned the
following morning and asked: “How much are the potatoes?” Gerry finally appreciated how crucial ritualistic behavior is to negotiating interactions.

During the preliminary portion of a bargaining encounter, the participants are sizing one another up. Each side wants to ascertain information regarding the other side’s personal and professional background, its negotiating experience, the external options that may be available to the other side, and the degree to which it needs the items being exchanged. Individuals who ignore the importance of these preliminary discussions are likely to provide their opponents with beneficial information that they may subsequently use against them.

When you engage in the bargaining process, let it develop deliberately. Realize that it takes time for nervous participants to begin to feel comfortable with these encounters. Impatient negotiators are doubly cursed. Ironically, the more they rush a negotiation, the longer it takes. The stages break down and have to be repeated. In addition, the more impatient negotiators hurry a bargaining encounter, the less efficient the distribution will be of the items being exchanged due to the lack of cooperative bargaining. Patient negotiators who permit the process to develop slowly achieve both faster and better overall results.

The second bothersome factor in negotiating situations is the frequent deception involved. Someone willing to pay $21,000 for a particular car does not begin an encounter with the salesperson by disclosing this figure, nor does the salesperson, who is perfectly willing to sell the vehicle for $19,800, initially disclose that price. The buyer and seller engage in an awkward dance during which each tries to get the other to state a specific monetary figure. The salesperson emphasizes the $22,500 sticker price,
while the potential buyer mentions the $19,000 dealer cost. After a seemingly interminable exchange of incremental concessions, the parties agree on a price in the $20,000 to $20,500 range—satisfying the underlying interests of both sides. Although the exchange might have been more pleasant and less stressful had the parties agreed upon this price at the beginning, participants usually can’t do so. They must understand that, without the ritualistic testing of each side’s resolve and the preliminary disclosure of disingenuous positions, the buyer cannot determine how low the dealer may be willing to go, and the salesperson can’t tell how much the buyer may be willing to pay. Those who ignore the bargaining aspects of such an interaction are likely to pay their $21,000 limit—and some may even be induced to go $500 to $1,000 above that benchmark.

When the car dealer begins the initial discussions by saying “I cannot go below the $22,500 sticker price,” and the prospective purchaser begins by saying “I will not go above the $19,000 dealer cost,” have they engaged in reprehensible dishonesty? Most people who consider this issue carefully are likely to answer “no.” A truthful individual is not a person who always tells the truth, but a person who tells the truth when the truth is expected. Most of us would not consider it dishonest to compliment a colleague’s new outfit or hairstyle though we do not find it attractive, or to falsely tell an acquaintance we have another engagement when asked to attend a dinner we would prefer to avoid. We recognize that a truthful response would be considered needlessly cruel.

When we negotiate, some deception is expected—especially when we engage in commercial discussions or business dealings. Each side wants to induce the other to believe it must provide more generous terms than are
required to consummate the deal. As a result, we don’t anticipate entirely candid responses to questions about price or value. We expect some “puffing” and “embellishment,” so long as these statements don’t go completely beyond the bounds of reality. We expect car dealers to emphasize sticker prices, and car salespeople assume that experienced buyers will focus on dealer costs. Both will indicate an unwillingness to go much above or below these benchmarks. The salesperson will stress the $1,000 retail price of the advanced sound system in the vehicle being discussed (which actually cost the dealer $600), while the prospective buyer will disingenuously suggest no interest in such an expensive item. So long as these misstatements pertain to such things as our true settlement intentions and the value we place on the different items being exchanged, the dissembling will be tolerated. Only when the misrepresentations concern issues we have the right to know do claims of dishonesty arise. For example, if a car dealer claimed that a vehicle had side air bags when it only had front air bags, or stated that a six-cylinder engine had eight cylinders, such misstatements would be considered unethical and even fraudulent.

Intelligent Negotiators know the difference between expected puffing and embellishment—and improper deceit. They realize the critical degree to which personal integrity affects their ability to negotiate effectively. Most bargaining exchanges are made orally, in person or on the telephone, with the participants relying on the factual information being exchanged. If people lost their reputation for honesty when truth-telling was expected, they would greatly undermine their ability to negotiate. Everything they said would have to be verified, and all agreements would have to be reduced to writing and signed. The bargaining process would become cumbersome
and inefficient. If you ever contemplate the overt misrepresentation of pertinent information, remember the degree to which such dishonesty will affect your future interactions if discovered.

By reading this book, you will learn the definitive stages and techniques of the negotiating process. The first section details the necessary preparation before you even get to the table: Be familiar with common negotiating styles and understand which one you should use, define your bottom line, determine what your counterpart’s bargaining power is, establish firm aspiration levels for yourself, prepare your opening offer, and choreograph the sequence of events.

The second section shows how to build rapport, create value, and claim value during the stages in which participants size one another up, exchange basic information, then determine who gets what. You will learn how to ascertain information regarding the other side’s personal and professional background, their negotiating experience, the external options that may be available to them, and the degree to which they need the items being exchanged. You will also learn how to shape the pie, support your positions in the strongest possible way, plan your concession strategy, and deal with various bargaining ploys you encounter.

The third section provides dozens of negotiating techniques, methods to firmly close the deal, and ways to expand the pie with cooperative bargaining to maximize the results achieved by the bargaining participants.

The final section contains practical applications of techniques to negotiating employment situations, buying cars and houses, and dealing with repair shops.

You may believe you are already an effective negotiator because of your advanced educational training, or you may fear that you are an ineffective bargainer because you
lack formal education. In more than thirty years of teaching negotiation courses, practicing law, and mediating disputes, I have found no correlation between negotiating proficiency and educational attainment. Good students and good negotiators possess different mental skills. Successful students possess high abstract-reasoning skills represented by elevated IQ scores, while adept negotiators possess advanced interpersonal skills—what brain-researcher and consultant Daniel Goleman calls
emotional intelligence.
¹
Intelligent Negotiators know how to prepare for the negotiating exchanges, they understand the crucial verbal and nonverbal communication skills involved, and they appreciate the different games being played.

My goal is to help you develop the skills to become a more proficient negotiator. When you learn the definitive stages and practice the techniques, you will find that every negotiation—whether personal, professional, or organizational—looks different to you than it once did. Your bargaining encounters will be more manageable, and you will appreciate the fact that they represent opportunities for you and your counterparts.

F
ELICIA
B
ROWN’S
E
MPLOYMENT
Q
UEST

The story of job-seeker Felicia Brown will appear throughout this book. Her hypothetical situation illustrates the techniques in each chapter.

Felicia and Bill Brown are in their early thirties. Married for ten years, they have a seven-year-old son and a five-year-old daughter. When they first met eleven years ago, both Bill and Felicia were teaching high school science in Smallville. Four years ago, Bill left teaching for a scientific position with the State Environmental Protection Agency office in Smallville, for which he is currently earning $52,000 per year. Three years ago, Felicia earned her Master’s Degree in computer science and network management and has since been teaching computer science courses to eleventh and twelfth grade students. She has also helped manage her school district’s computer network. She is presently earning $42,000 per year.

Bill has been offered a supervisory position with the State EPA in Metropolis, the State capital. His salary would increase to $57,000, and he and Felicia would be able to relocate near both sets of parents who live in Metropolis suburbs. Felicia has been thinking of leaving teaching for a network manager position with a small retail firm located in the Metropolis area. If Bill and Felicia are to relocate, Felicia must obtain a job offer from one of the several retail companies that have current network manager openings, and she must negotiate her new employment terms.

P
ART
I
T
HE
E
SSENTIALS

C
HAPTER
1
N
EGOTIATING
S
TYLES

D
on’t even try to adopt just one negotiating style or philosophy, for there is
no single
approach that can effectively govern
all
bargaining transactions. Whether negotiating with family, friends, business and professional associates, service providers, or community bodies, people conduct themselves differently in each and every negotiation, depending on their relationship to the other party involved.

The more distant the relationship between the parties, the “harder” the bargaining will be. Consumer purchases are excellent examples of this because they are among the most impersonal of our negotiations—typically one-time encounters with people who are, more often than not, strangers. Purchasing big-ticket items such as cars or houses beautifully illustrates transactions in which we not only lack ongoing personal relationships with our
bargaining counterparts, but are also dealing with sophisticated sellers—or their proficient dealers and agents. Here most of us believe that
caveat emptor
(buyer beware) rules should apply.

When we negotiate with business and professional associates or community bodies, we are acting within already existing relationships that we plan to continue, or may hope to develop a relationship with a regular contact. In such situations, it is best to seek mutually beneficial results that satisfy the basic needs of
both sides.
For example: One of your employees has procured a job offer from another company and tells you that, if you match the salary the other firm offered her, she will reject that offer and stay with you. You very much want to keep this employee, so you give her the salary increase plus additional job responsibilities. This solution satisfies your budget constraints, maintains equilibrium in the department, and allows your employee to advance her career and remain at her preferred firm.