Sean Gay, The Daily Record Newswire
If you dislike negotiating, you are not alone. The number of “no haggle, no hassle” car dealerships is but one indication that many people would rather not negotiate. At those dealerships, buyers walk in and pay a price discounted below the manufacturer’s suggested retail price. After all, who wants to spend hours waiting around while a salesperson is holed up in the sales manager’s office talking about who knows what? Successful negotiators, that’s who.
They do their homework, understand how to negotiate and embrace the opportunities that a negotiation presents. They also are more likely to get a better deal by negotiating than paying the “no haggle” asking price.
Whether negotiating a construction contract or change order, or trying to settle a complex construction dispute, good negotiating skills are a must. So how does one become a better negotiator? Emulate the habits of successful
negotiators. Among other things, successful negotiators:
Maintain credibility
Successful negotiators do not take unreasonable positions or make unrealistic demands. Instead, they take principled positions that they believe in. Bluffing may work occasionally, but a successful negotiator will put a bluff to the test. If the bluffer backs down (revealing the bluff), credibility is lost – and once lost, credibility is difficult to regain. In the meantime, a successful negotiator may assume that even a legitimate negotiating position is a bluff. This loss of credibility often adversely affects future negotiations and can have lasting negative impacts on the relationship.
Understand time pressure
Successful negotiators seek to understand what time pressures exist. For example, when negotiating a construction contract, the project owner may be under pressure to conclude negotiations so work can begin as soon as possible.
As time passes, the owner’s negotiating leverage erodes. A contractor who recognizes an owner’s time pressure usually becomes exceedingly patient. As a result, the owner may be forced to give last-minute concessions because there simply is no time left to negotiate. One strategy for avoiding this predicament is to anticipate lengthy negotiations and plan accordingly. Starting early, setting deadlines and keeping options open are all potential strategies for combating time-pressure related tactics.
Are happy to make the first offer
A common – and usually misguided – negotiating tactic is to insist that the other party make the first offer. Proponents of this tactic apparently believe they gain an advantage by making the other side move first. While there may be exceptions, making the first offer presents the successful negotiator with an opportunity to gain a critical advantage – the opportunity to set expectations. Successful negotiators realize that where they begin a negotiation – the first offer – has a direct impact on where they will end up when the negotiation concludes. By seizing the power gained by setting expectations, they gain an early and critical advantage.
Avoid giving major concessions early in the negotiation
Nothing telegraphs a negotiator’s lack of experience like conceding a major issue early in a negotiation. Successful negotiators concede slowly and in small steps. Like making the first offer, they recognize that the pace and size of their concessions are an opportunity to set expectations. By slowly offering small concessions, successful negotiators communicate expectations about their negotiating position and set the stage for future offers and counteroffers.
Avoid tit-for-tat negotiating
Tit-for-tat negotiators make counteroffers solely based on the other party’s offer. This simplistic negotiation tactic often fails because it establishes a pattern that is easily recognized and exploited. Because the pattern is predictable, the other party can anticipate how the tit-for-tat negotiator will respond to a given offer. The result is a shift in negotiating leverage, often to the tit-for-tat negotiator’s detriment. Successful negotiators develop a concession strategy in advance and adjust as the negotiation develops. They do not allow the other party’s offers to dictate their counteroffers.
Avoid splitting the difference too early
Reluctant negotiators may naïvely assume that the quickest way to reach agreement is for each party to meet in the middle. So, they begin by offering to split the difference, with the hope that the other party dislikes negotiation as much as they do. However, if they are wrong, they have just communicated that they are willing to accept the split-the-difference position. Recognizing this, a successful negotiator will attempt to negotiate an even better deal. Offering to split the difference should be a tactic of last resort used, if at all, after the parties have reached an impasse and when the gap between negotiating positions is relatively small.
Give themselves room to negotiate
By far the most important habit of successful negotiators is that they never start negotiations with their best offer. Starting with one’s best offer is tantamount to making a “take-it-or-leave it” offer. People generally react to such offers with hostility because they feel powerless. Successful negotiators know that, even if they have significant leverage, the ability to give concessions is an opportunity to empower those they negotiate with. Successful negotiators empathize with their counterparts and find ways to allow them to “win” concessions, so that when the deal is done, both parties are satisfied with the result.
A common theme in these seven habits is that, above all, successful negotiators have the ability to place themselves in the other party’s shoes. They seek to understand how the other party may perceive and respond to their actions. Keeping this principle – and the seven habits that flow from it – top of mind will help people successfully conclude negotiations, even if they prefer to buy a car at a “no haggle, no hassle” dealership.
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Sean Gay is an attorney in the Stoel Rives LLP construction and design practice group. Contact him at 503-294-9239 or sean.gay@stoel.com.
