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NEGOTIATIONS
TRAINING
The
following material is the script for a short training demonstration
at Money
Management International in
Houston on August 30, 2004.
The presentation describes
negotiations tactics from the book and audio program
Secrets of Power Negotiating by Roger Dawson. It also
includes material from the audio program, The Art of
Negotiating by Gerard I. Nierenberg.. The audio materials
were published by Nightingale-Conant of Niles, Illinois.
Good
afternoon. My name is Grady McAllister, and I'm going to
be sharing some ideas on how to be a better negotiator.
Let's start by taking a look at this famous quote from President
Kennedy:
"Let
us never negotiate out of fear, but let us never fear to
negotiate."
—
John F. Kennedy. Inaugural Address, 1961
Now let's set
that quotation aside, and I will read some biographical
material which may seem familiar to you:
On a cold
January day, a 43-year-old man was sworn in as the chief
executive of his country. By his side stood his predecessor,
a famous general. Fifteen years earlier, this general
had commanded his country's armed forces in a war that
resulted in defeat of Germany. The young leader was brought
up in the Roman Catholic faith. After the ceremonies,
he spent five hours reviewing a parade in his honor and
stayed up celebrating until three in the morning.
To most Americans
familiar with the 1960's, those words seem to be talking
about President John F. Kennedy. In fact most of them do
accurately describe Kennedy. However, the fact is that the
words even more closely describe Adolph Hitler as he assumed
power in Germany on January 30, 1933.
This example
shows the hazards of jumping to a conclusion. So, as we
get into this subject of negotiation, let's make our starting
point the need to avoid assumptions:
1. Don't
assume that you can narrow the negotiation down to one issue.
2. Don't assume all people want the same thing.
3. Don't assume money is all-important.
Much of negotiation
involves clearing away hidden assumptions:
1. Establish
criteria (for both your side and theirs).
2. Get information.
3. Reach for a compromise
The bulk of
our material today is based on The Secrets of Power Negotiating
by Roger Dawson.
Born in England, Roger Dawson emigrated to America in 1962.
For a long time, the American Dream eluded him. During the
thirteen years he worked as a manager in a department store,
he barely earned enough to support his family. Everything
started to change when he suddenly quit his job and entered
real estate.
Dawson attributes
much of his success to the negotiating skills he acquired.
According to
Dawson, power negotiating "leaves the other person
feeling that they won. The poor negotiator comes away with
the other person feeling that he or she lost."
Dawson says
that you should always ask for more than you expect to get.
He offers five reasons for this tactic:
1. You might
just get it.
2. It gives you some negotiating room.
3.It raises the perceived value of what you're offering.
4. It prevents the negotiation from deadlocking.
5. It creates a climate in which the other side feels that
they have won.
The objective
is to set up a MPP--"maximum plausible position"
during the negotiating process. In doing this, it is important
to also imply flexibility. This will help maintain a tone
of mutual trust.
Dawson writes
that you should "never say yes to the first offer or
counter-offer from the other side" no matter how reasonable
it appears. Rather than feeling good about your acceptance,
they will resent you. This is for two reasons: They will
think that they could have done better, and they will start
to wonder if something is wrong with what you are offering.
Dawson says
the power negotiator will "gasp in shock and surprise"
at the other party's first offer. This will often elicit
an immediate concession on their part.
Another opening
tactic is "feel, felt, found." It is a
way of dealing with the objection that your price is too
high. Borrowed from sales training, you say, "I understand
how you feel. Many people have felt that way. However, they
later found…" Then you mention the benefits the
other party will receive if they agree to your terms.
Here are some
of the other tactics that can occur during a negotiation:
Splitting
the difference. Splitting the difference may seem like
the fair thing to do. However, if you are the seller, it
can weigh the negotiation against you. The reason is that
the other person may want to split the difference again,
bringing the price even lower. Instead, encourage the other
person to offer to split the difference. Once they have
set it at the midway point "you can reluctantly agree
to their proposal, making them feel that they won."
The set-aside.
This is a way of handling an impasse on a particular point:
"Let's just set that aside for a moment and talk about
some the other issues, may we?"
Good-guy/Bad
guy. Also known as "Good Cop/ Bad Cop. We've seen
examples of this on numerous TV shows in which one police
officer talks tough to a suspect, and then another one walks
in who treats him gently.
Dawson offers
a political example from recent history. In 1994, former
President Jimmy Carter was called to play Good Guy when
he and Colin Powell went to Haiti to see if they could get
General Cedras to give up power without a fight. Powell
was there to impress the might of the armed services upon
Cedras. Carter was there to cozy up to the dictator, even
suggesting he come to Plains, Georgia, and teach a class
in Sunday School.
Withdrawing
an offer. This is a tactic that you should only use
when the other party is grinding away at you. You back off
from your last price concession, or withdraw an offer to
include freight, installation, training, or extended terms.
To avoid poisoning the tone of the negotiation, you blame
the withdrawal on someone who is not present. That person
becomes the "bad guy" for your side.
Dawson also
describes some of the "unethical gambits" that
you may encounter:
The decoy.
The other side creates a phony issue to take your attention
away from the real one. They may, for example, demand that
you meet a deadline that they know is impossible. Your eagerness
to keep them happy can lead to concessions that cost you
money.
Cherry picking.
This happens when someone obtains bids from different contractors
and asks them to price each item separately. He accepts
the low amounts in each proposal. He then asks each contractor
to match their competitors' low amounts. By emphasizing
the parts of each proposal rather than the total amounts,
he plays each contractor against the others to obtain the
best overall bids.
The deliberate
mistake. A salesperson writes the contract for the purchase
of a car and "forgets" to charge for its CD player.
The hope is that the buyer will be eager to get something
for nothing and rush to conclude the sale.
Escalation.
This happens when someone suddenly wants more after both
sides have already agreed to the terms.
The default.
This involves a "unilateral assumption that obviously
works to the advantage of the side proposing it." For
example, a client might send a check that is two per cent
less than the amount owed. A note explains that, "All
of our other vendors discount for payment within 15 days,
so we assume you will too." What they are really assuming
is that people will be either too lazy or too busy to take
action and will simply let them get away with it.
Dawson states
that the way to deal with these unethical gambits is to
"call the other side on it and gently explain that
you expect to see a higher level of ethics from them in
the future."
You have to
always be prepared to walk away from a negotiation. Dawson
writes:
If there is
one thing that I can impress on you that would make your
a ten times more powerful negotiator, it's this: Learn
to develop walk-away power…There's no such thing
as a sale you have to make at any price, or the only car
or home for you, or a job or employee that you can't do
without.
In his seminars,
Dawson often meets people who tell him about a failure in
negotiation:
Some place in
relating the story, they'll say to me, "I made up
my mind that I was going to get it," and I know that
was the turning point in the negotiation. It was the point
at which they lost.
Dawson believes
that negotiation can become the universal problem-solver:
I look forward
to the day when all conflicts are avoided because people
know how to get what they want with good negotiating skills.
I invite you to share this vision with me by pledging
now to remove conflict from your life, and the lives of
those around you, by always practicing good negotiating
skills. The example that you set will help lead us into
a bright new future where violence, crime, and wars become
anachronisms.
Finally, please
let me say to conclude our brief look at this big subject
. . .
I don't know
how soon you will be putting these ideas to work.
I don't know
if it will be in your personal or professional life.
I don't even know when we will meet again to explore this
exciting subject.
I do know that a whole new world awaits you put these techniques
into practice as you master the art of negotiating.
The
Vasthead is the professional web site of Grady McAllister
of Houston, Texas.
http://vasthead.com.
This web site has been edited using Macromedia Dreamweaver
and Adobe Photoshop. Web page design, text, and photography
are by Grady McAllister.
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