The classic Hollywood one-liner you will all be familiar with is, "we do not negotiate with terrorists!". Unfortunately, the reality of that statement means that you have to negotiate with everyone else! In day to day business, negotiation is unavoidable and critical. Therefore, in managing a practice, it is essential that you understand how to negotiate and how to negotiate well.
There is no doubt, negotiations can be tricky. On the one hand, you are unlikely to be looking to ruin a business relationship, however, on the other, you don’t want to be stuck fulfilling a contract or agreement that is not satisfactory to you in one way or another. We have set out below some useful tips and tricks that you may want to consider implementing before you engage in your next negotiated outcome:
Be Prepared
Knowledge is power and you should be thoroughly ready each time you negotiate. The more you are armed with, the more likely you will be able to persuade the other side. Do your research on the topic or areas relevant to your negotiation. For example, you should know what the average price of a product or service is prior to negotiating the specifics of your contract with a third party supplier. That way, if the other side tries to offer you an inflated price or include something below the industry standard, you will have a robust counter argument.
Win-Win Outcomes
It is a common misconception in a negotiation that one side is the "winner" and the other is the "loser". Heading into a negotiation with this mindset is unlikely to foster the best outcome for either party. Instead, try to consider an outcome that is mutually beneficial for everyone involved. That way, there is more likelihood of it being accepted. One party may leave the negotiation with a more favorable outcome, however, if all parties gain more from the outcome of the negotiation, a win-win is usually achieved. Be creative about the results. Is there a non-monetary compromise you can request or give to the other side which could be used in formulating a win-win solution? Always try to enlarge the pie rather than divide it up.
Be Willing to Walk Away and Mean It
It is essential in any negotiation to have the ability to walk away when the offers are at a point where the outcome would be too unfavourable for you to proceed. Before you start negotiating, establish what Harvard professors Roger Fisher and William Ury call the Best Alternative to a Negotiated Agreement (or BATNA found in the following diagram). This means establishing the most advantageous alternative course of action a party can take if negotiations fail and an agreement can not be reached. In other words, this is the last and final offer you will accept before the offers become so unfavourable that it is better for you to walk away from the negotiation entirely. If the other side does not accept that last and final offer (your baseline), it is important that you walk away and feel satisfied to do this. There is always another option open to you and keeping that in mind when you negotiate will often allow you to improve the quality of the deal you strike.
Don’t Act Like a Bully
A common misconception is that behaving aggressively and in a bullish manner increases your power and your results in a negotiation, however, instead, the research suggests that behaving like a bully actually reduces your skills in negotiation. It has the effect of blocking your ability to see, understand and appreciate the other person’s point of view and, therefore, decreases your chance of reaching a mutually beneficial outcome. Instead, convey professionalism, courtesy and always try to respect the other person’s point of view, even if you don’t agree with it. Finally, if you do encounter a bully on the other side in any negotiation, it is best that you rise above their level.
Please contact Meghan Warren and Stewart Davis of Burke Lawyers for further assistance on the issues discussed in this article.
