A “Playbook” for Difficult Negotiations

We routinely advise and prepare clients who are entering difficult or complicated negotiations.  Entering an important negotiation or one with an unfamiliar subject matter can be stressful.  We remind our clients that good negotiators are not born good negotiators; even the worst negotiators can improve with a few simple strategies.  Here are ten we have used successfully throughout the years.

1. Understand your Objectives – It is important to know your own bottom line.  Spend the time to do the financial analysis and talk to the stakeholders within your organization to see what they need to get from the agreement.  It can be easy to lose sight of these objections in the midst of negotiation.  Writing these goals down for your own reference can help to keep you focused.
2. Determine Whether the Negotiations are Recurring – The recognition that you will deal with your counterparty again, either in another negotiation or in the context of an ongoing working relationship, is important.  While this does not mean that you should soften your position, you should avoid a “last-dollar” mentality.  If you “win” too big in a deal, it may make ongoing relationships and future negotiations more difficult.
3. Look for Objective Standards – Attempt to find objective measures of value outside of the negotiation.  Ask yourself how a disinterested third-party might assess risks and assign value.  You might be able to gather objective values by talking to third-party suppliers or purchasers, market data or researching. 
4. Examine Your Starting Point – An extremely high or extremely low offer may offend the other side or may cause them to believe you are not serious.  Keep in mind that counterparty may be more inclined to walk away from negotiations early – before they have invested substantial time and money in the negotiation – if they feel your starting point is unreasonable.
5. Don’t Lie – Lying in negotiations has little chance of improving your position and has serious risks.  Maintaining your credibility is critical in negotiations; once lost, it is difficult to reclaim.  Trying to keep lies straight is mentally taxing and distracting.
6. Negotiation is Key – Some back and forth is desirable.  If an offer is accepted early and negotiations are settled very quickly, it may lead to questions about the success of the outcome.  Many people need negotiation to make them feel as if they have received a fair price.  Do not start a negotiation with your bottom line.  Allow the process to give the other side confidence they have found your bottom line.  On the other hand, avoid offers that increase your previous proposal by a miniscule amount.  They are a waste of everyone’s time.  Proposals should be substantial enough that it makes an impact on the opposing parties’ response.
7. Avoid Bidding Against Yourself – Never let the opposing party force you to bid against your proposal.  “Bidding against yourself” means changing your proposal before the other has even responded to it.  Negotiating against yourself only ends up changing your offer with no concessions from the other side.  Statements such as, “I have no authority to offer this but would you take $X dollars (which is lower than your last offer)” should not cause you to lower your number.  Make sure the opposing party offers a real proposal before you respond with a real proposal.
8. Explain your reasoning – Explaining your reasoning can help to enlist the other side in helping to reach your goals.  It can lead to a “win/win.”  It can also provide a viable impersonal focus for discussions.
9. Get Comfortable with “No” – Naturally, individuals want to say “yes” – it is socialized and hardwired into us.  Although saying “no” can be uncomfortable, it is liberating and gets easier over time.  Your ability to quickly and definitively say “no” depends on how well you know your own position.
10. Don’t Split the Difference – It is normal when a negotiation is coming to a close for someone to suggest splitting the gap between the two offers in order to settle the deal.  This is unwise since it reveals to the other side that you are willing to settle on a number between the current proposals.  A skilled negotiator will then try to move you from that amount, leaving you with less than half of the difference.