It always has struck me how much formal schooling prepares us for inane and relatively unimportant things in life and how little it educates us on the skills that can make a substantial difference. Things like personal finance and learning how to budget and manage your finances are glossed over. As are true critical thinking courses, public speaking, learning to manage emotions, goal setting etc. These may be “softer” subjects than physics or chemistry but in the long run they tend to prove way more important.
One of those skills is negotiating, which is in essence a means of conflict resolution. (And we all know conflicts arise every single day in each of our lives.) If you are trained in law you likely had some exposure to this topic and perhaps this article will be fairly rudimentary by your standards. But if you are trained in medicine, or the sciences or perhaps are an accountant, you may have been too focused on upping your MCAT or GMAT to care about your abilities as a deal maker.
In my opinion that is a big mistake. Similar to “selling” which we are doing constantly, whether we are aware of it or not (i.e. you are “selling” your patient when you advise them on what you believe the most prudent way to treat the condition is; you are “selling” your kids when you try to explain to them the virtues of fruit over candy, and you are “selling” your significant other on that particular vacation you always dreamed of), you are also always negotiating, whether you know it or not. And even though most negotiations in life are not really a zero sum game (if you win then they lose or vice versa), it is still really important to be able to articulate your arguments in a way that can benefit you rather than harm you.
The vast majority of us are very uncomfortable with any confrontation even when you feel justified and even when the stakes are somewhat trivial in the grand scheme of things (think of how many people enjoy asking their boss for a raise). Yet, it seems clear to me that one of the foundations of success is mustering the courage to do what you believe is right. Once you have made the commitment to negotiate, the next step is to prepare and rehearse your plan of approach.
Ascertain your value
Perhaps the first step in planning your negotiation is to survey the landscape. In real estate and investment banking they talk about comparables (“comps”). What is someone with your background, skill set, experience and intangibles “worth”? Or if you are negotiating for a home, how much would a similar home, in a similar neighborhood sell for? This requires an honest assessment as well as some research. Figure out what the market is valuing the thing you are negotiating (perhaps it is you) and work from there. This will at least give you a starting point to develop reasonable “asks” in the negotiation process and make you feel justified in your position and your requests.
Know your BATNA
Those who study/write about negotiating have a term they use: BATNA. This is an acronym for Best Alternative to A Negotiated Agreement. Basically, what is your next best option if things don’t work out with this negotiation? It is very important that you identify your BATNA early on. Without a good BATNA you can feel vulnerable or pushed into a corner during the negotiation process and make a decision that you may regret. Realize that everyone has a BATNA. Though we call it the “best” it doesn’t always mean it is a great option.
A truly great BATNA gives you the confidence to approach the negotiating process with creativity and conviction. Without one you are more likely to act meekly and be at the mercy of the other party. Or you may go all in with your chips on a bluff but this is genuinely risky. Once you have articulated a BATNA, then you should translate it into monetary terms – i.e. what is the lowest unit (salary, home price etc) I am willing to accept before I walk away from this process and execute my BATNA? In this manner you can more accurately gauge how successful the negotiation is proceeding.
Develop the Right Mindset
When approaching the negotiating “table” come in prepared and confident. You want to appear assertive but not overbearing or unreasonable. Write everything down – articulate your propositions carefully and have a counter to every objection you believe the other party could come back with. By anticipating the other party’s concerns you can be well poised to take advantage of the situation and limit the concessions you have to make to achieve an agreement. Negotiations are, in a sense, three-dimensional chess. You make a move, they counter, then you counter their counter and so on. If you can see 3,4, or 5 steps ahead you will increase your chances of success tremendously.
Understand the Difference Between Positions and Interests
In “Getting to Yes-Negotiating Agreement Without Giving In”, authors Fisher, Ury and Patton really drive home the point that one of the keys to successful negotiations is understanding the difference between arguing from positions versus arguing from interests or principles.
The example they use (contemporary at the time of the first print’s book writing) was the Egypt-Israel peace treaty of 1979, signed by Anwar Sadat, Menachim Begin, and Jimmy Carter. The peace treaty centered over lands taken by Israel in the 6-day war, especially the Sinai peninsula. Initially, Israel was adamant that at least a portion of the Sinai lands would remain in Israeli hands while Egypt insisted that all of the Sinai be returned. Of course, on those terms no progress could ever be made, as both sides clung to incompatible positions.
But in actuality what both sides wanted was something else – Israel wanted security in the region and Egypt wanted to restore sovereignty. So, once both sides agreed to understand each other’s genuine interests, develop creative solutions and negotiate from principles rather than position (with the help of a mediator, in this case the US), an agreement could be reached. Israel would return the Sinai peninsula to Egypt on the condition that this land would be demilitarized, along with other key concessions such official recognition of the state of Israel. In this way, Israel got the security it needed and Egypt got the land it wanted.
A more recent example of the drawbacks of not following this advice is the government shutdown of 2018-2019. One side insisted on funding for a wall along the southern border of the US and the other side was obstinate in its flat out refusal to do that. Instead of coming together to develop creative solutions that could address the needs of both sides, politics and a commitment to positions over interests led to the longest federal shutdown in history. This stalemate only ended once the personal stories of privation and destitution could no longer be ignored, and even then a genuine positive solution was not yet found.
Separate the People from the Problem and Get Creative
Perhaps one of the most important things one can do when negotiating is to look below the surface and really understand the other party’s motives and values. This is achieved by first separating the “people from the problem,” as Fisher, Ury and Patton advised in their seminal book. Significant negative emotions directed at the other party will only poison the entire negotiation process. Rather, look beyond any prior issues and focus on the task at hand. Try to understand where the other person or party is coming from and try to think as they may think so that you can anticipate their needs and their approach. Doing that really allows for the opportunity to develop creative solutions that can benefit both sides, as seen in numerous political and business examples. When we get stuck on focusing just on positions oftentimes we make little to no progress. It may mean ultimately conceding on certain things but in the end it can benefit everyone.
Take Home Points
- Few if any negotiations will lead to acceptance of all of your initial demands so be prepared to make reasonable concessions.
- Focus on the process and try to leave emotions and ego at the door.
- Positions that are based on principle and objective measures have a better chance of being agreed upon than those that are not.