STOP Doing These 10 Things to Become a More Effective Negotiator in 2021
Like many endeavors in business and in life, effective negotiation requires “hard” (technical) and “soft” (people) skills. Depending on their background, executives will attribute more weight to one or the other, but they will do so at their peril. Technical and people skills don’t just complement each other, they reinforce each other and bringing both to the negotiation table will have a multiplier effect.
Effective Negotiation (EN) = Technical Skills (TS) x People Skills (PS).
It does take both and both must be developed. Executive skill development happens with three basic approaches: (1) keep doing what works, (2) start doing new things to raise your game, and (3) stop doing things that don’t work or, worse, are counterproductive. The third category is often the most overlooked.
Here is my stop/don’t do list for those who want to become more effective negotiators in 2021:
- Don’t rush in without knowing the deal
Ineffective negotiators are eager to jump in - even before knowing exactly what they are negotiating. Following this urge is akin to starting the negotiation about a vehicle transaction without first deciding whether you are buying, leasing, or using some other mobility option such as car sharing. In B2B negotiations (especially those involving technology and new business models) rushing in without deal clarity is as widespread as it is troublesome: Business developers, salespeople and even senior leaders are excited about a new-found customer or partner who might have some (vaguely understood) use for their company’s product or service; they ask the legal department to “send over” an agreement template and start negotiating without much further context. The situation gets even messier in multi-party/stakeholder negotiations: Roles are unclear, expectations are fuzzy, and the whole thing is just not thought through. And yet everyone wants to make a deal. Rushing into a negotiation without upfront clarity, however, will cost you. It will take more time, generate more friction, and cause more frustration. Don’t do it. - Don’t negotiate without the required expertise
It is hugely difficult, if not impossible, to negotiate an important deal without the right subject matter expertise. In some instances, a sophisticated party may be able to take advantage of a novice, but a lack of subject matter expertise in key areas can actually hurt both parties. For example, as head of human resources for a world leading manufacturing company I negotiated my fair share of severance agreements, some of them in acrimonious circumstances. In these instances, I was relieved when the terminated executive was represented by competent and trusted counsel - they would help calm emotions and tamper outlandish expectations. I have experienced the same in an M&A negotiation where a company founder sold his stake after many years - inexperience with the deal process created impediments for both seller and buyer. You simply cannot be an expert at everything and proceeding without the required technical expertise (in the broadest sense) will hurt you. Don’t do it. - Don’t operate in isolation
Negotiation is a team sport. The more complex the deal, the more it will touch on areas where you need help. Moving pieces can range from technical specifications, solution customization, service levels, pricing, risk distribution, regional support requirements, international certifications, and a raft of legal issues. With the unstoppable advance of data driven or data dependent business endeavors you must also expect negotiation of data privacy, data security, data residency, and data usage matters. As discussed under #2 negotiating without subject matter expertise can put both the deal at risk and lead to a risky deal. But even if you do bring in expertise, the negotiation can be hampered if experts are too far away. The most successful negotiators will therefore assemble a “tiger team” (soon after or even while the deal is being architected) where the required specialists are fully up to speed, available to explain specialized deal aspects, and ready to engage with counterparts in real time. Operating in isolation, on the other hand, adds inefficiency and awkwardness. I have been in a negotiation meeting where the counterpart brought their chief privacy officer, but it quickly became apparent that they knew nothing about the deal. They hadn’t received any kind of briefing and all available meeting time was used to educate them on the non-standard aspect of the deal. In other instances, negotiation partners recognized in the meeting that they had brought the wrong experts. This is a sign that the deal was either not yet fully architected (see #1) or the relevant issues were not fully understood prior to bringing in the experts. In addition to being inefficient, bringing the wrong people and or people who are not briefed can come across as either arrogant or incompetent, or both. In other words, operating in isolation is transactionally and relationally counterproductive. Don’t do it. - Don’t act as if everything matters
Power imbalance is a reality in almost all negotiations. The dynamics of a buyer’s or seller’s market, availability of alternatives, company size, financial strength, specialized expertise, product “stickiness” are just some of the factors determining negotiation power. Almost always, one party needs the deal more than the other. A realistic assessment of your negotiating power and leverage is therefore a must. If you are the weaker party, you must expect that your counterpart’s answer to many of your negotiation points is a simple “no.” And so you must prioritize radically: What are your absolute must-haves? Why are they important? How do you effectively communicate their importance? What are the options to modify must-haves to get around objections? And at what point will you walk away? You can of course try and get “credit” for conceding the lesser points, but you must concentrate your negotiation energy, creativity, and leverage on the two or three points that matter most. Acting as if everything matters will fritter away what little power you have. Don’t do it. - Don’t neglect to ask great questions
Break-out sessions are my favorite part of executive negotiation seminars. Observing participants interact and dealing with problems on their own provides unexpected insights. In mock negotiations (as in real life) lack of information is always a key issue. In particular, participants are challenged to discern the other side’s interests. The unexpected observation is that participants discuss various assumptions within their negotiation team but then neglect to ask the other side in the negotiation. They assume that the other side would not tell them, would mislead them, or they just don’t think of asking. Yet asking questions is one of the most effective ways to gather information - just take the answers with a healthy dose of caution. Well thought out questions can take the negotiation beyond a fact-finding mission. The other side or both sides may even discover new insights about themselves! This is why posing great questions and listening carefully to answers is so powerful. Neglecting this powerful negotiation tool, however, will lead to wasted deal potential. Don’t do it. - Don’t tell “scripted” stories
Storytelling is a powerful way to get your point across - hence the rising popularity of “business storytelling.” In one negotiation with a large corporation, I asked my counterpart for the use of their company logo for advertising purposes. In response, he told me the story of a supplier who had ever so slightly altered their logo when using it for promotion and how this ever so little deviation had terribly upset the iconic company founder. This tragic episode had happened 90 years ago and had shaped the company’s culture ever since. The story was well chosen. It was vivid, it fit the context, and it was compelling. In a negotiation with another multinational corporation, however, the experience was the opposite. They had imposed a number of “foreign supplier” restrictions and, in response to our protest, told the story of an irresponsible supplier from Egypt whose reckless behavior had caused much calamity (prompting the restriction). But we were diligent, and we were from Canada! Thus, instead of convincing us, the story offended us. I have had similar experiences with other negotiators - they seem to have ready-made stories with little concern whether they fit or not. Instead of a powerful illustration, these types of stories create the perception of thoughtlessly towing the company line. Authors Don Brown and Bill Hawkins call it “rote, repetitive, out-of-context, meaningless, scripted booyah.” Don’t do it. - Don’t say “because I say so”
Negotiating with a mighty corporation can be a humbling experience. There is no question who holds the power. But if you are the one holding the power, unnecessarily annoying, patronizing, or humiliating your counterpart adds little value. You may get your way, but it may come at the cost of ongoing resentment or the weaker partner walks away in disgust - even if by giving up on the deal they inflict greater harm on themselves. A sure way to patronize a counterpart is to justify your demands with a general reference to the company’s size, number of years in business, and insistence on standard policies - whether such policies make sense (in the context of the business relationship) or not. A close cousin to the above-mentioned scripted story, such explanations tell the counterpart that they are “a number,” that they are being asked to submit to a soul crushing bureaucracy, and that their concerns do not justify any consideration. Such may be the state of transactional contracting in many industries but there is a relational cost of imperious behavior. It is better to provide the courtesy of a meaningful explanation and - if it matters much to the other side and costs you little - a modification or workaround. No one likes to be told “because I said so.” Don’t do it. - Don’t want everything and give nothing
Canadians are nice, sometimes in fact, too nice. It may be this national trait that makes us perceive others who drive a hard bargain as nasty - a dynamic that easily occurs when Canadians negotiate with Americans. Of course, international business is not for the faint of heart and one would be well advised to “stay out of the kitchen when one cannot stand the heat.” The United States are a massive and indispensable trading partner for any Canadian business of size and expecting them to adapt to Canadian sensitivities would be utterly naïve. But there comes a point where wanting everything and giving nothing - just for the sport or the principle of it - becomes counterproductive. As the Harvard Program on Negotiation points out: Agreements are more durable when the needs of both parties are met - at least at some level - and when both parties leave the negotiation table with a feeling that they were taken seriously in the process. Giving up something helps build the relationship, never giving up anything destroys the relationship. Don’t do it. - Don’t go over people’s head.
Entrusting the right person to lead a negotiation matters hugely; a skilled and empowered interlocutor will make a significant difference especially when that person can draw on other subject matter experts and even a tiger team. He or she will get their point across compellingly and will work to diffuse perceived slights. They will also keep their own ego and emotions in check and stay focused on the deal. And while they often will be and should be a person with standing, influence, and authority in the company, they will not be the decision maker on every issue. The requirement to defer certain matters to a higher authority (a main principal or subject matter expert - e.g. “I am OK with this, but I will need the lawyers/engineers/finance people to confirm”) is a valid and effective strategy. It facilitates showing genuine empathy for the other side and exploring options all while avoiding hasty commitments. It also allows constructive escalation when final sticking points need to be unblocked - bringing in the principals on both sides can be a powerful signal that we are getting serious about closing the deal. But there is also a school of thought that says that you must always start at or get to the top. In one negotiation I informed my counterpart that a critical decision maker was on holiday. He actually was on a Caribbean island that was - at that very moment - being battered by a severe storm. My counterpart placed a call to the decision maker nonetheless and asked for their participation. He got what he wanted but I was close to excusing myself from the discussion - being upset both at the counterpart and “my guy” who had played into their hands. Going over people’s heads comes at a cost. Don’t do it. - Don’t forget to build rapport
While somewhat intangible and certainly not sufficient in and of itself to come to an agreement, rapport does help to make a better deal. This is why corporate bureaucracies often put in place mechanisms to inhibit or even destroy rapport: Corporate purchasing departments will insist that negotiators for suppliers only speak to them rather to the people who will use (and value) the product being purchased. Rapport building has become more difficult during the remote working in the pandemic, but it remains a key tool in the effective negotiator’s arsenal. It starts with negotiating “camera on” and having a proper set-up. On this see my blog on How to Project Executive Presence While Working from Home. So please, spend some time on chit chat about the weather, ask how your counterpart has been faring through the pandemic, and discover mutual points of interest (favorite sports teams, alma maters, etc. are all fair game). A quick peek at the interlocutors LinkedIn profile is de rigueur. Just keep it real and keep your antenna up as to whether you are overdoing it, especially given the cultural context. In some cultures, people will love to tell you about themselves and their families whereas others will just remain more distant and will want to get down to business. But missing rapport altogether would be a big mistake. Don’t do it.
Effective negotiation requires technical and people skills. On the people side, we must adjust to the temperament of our counterparts, consider the stage of the process and/or situation, and remember building a high-quality relationship as a goal distinct from the deal itself. Therefore, one size does not fit all. Being able to come across as firm and even aggressive, or as understanding and accommodating - each depending on the circumstances - is the hallmark of a masterful negotiator. Annoying people is rarely a good strategy, and neither is reacting emotionally. So, keep your eye on the prize. On the technical side, proceeding with insufficient competence or knowledge is equally ineffective - but there may be exceptions here as well. Sometimes, we have to do what we have to do. So, I will temper the advice on all 10 “don’t do it” rules with “unless you think you have to.” But remember this: no matter what anyone says, negotiation is ultimately a people business and there is nothing people crave more than respect and a win. Having made every mistake listed here myself, I am convinced that respecting your counterparts and giving them the feeling that they have done well will not make you look weak. It will make you a better negotiator.
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