The Art of Negotiating

Although everyone negotiates informally all the time without even being aware of it, formal negotiation is a skill that can be learned through experience and practice. People who negotiate a lot tend to be much more skilled at it than people who have not participated in many formal negotiations. Experienced people are more likely to know what to say when, when to make concessions, when not to, what to concede, what not to, and, in general, how to manipulate the situation to their own advantage. For this reason, negotiation tends to favor the experienced party.

We should be prepared to negotiate even if we are presented with the most favourable deal of our life.

Let's say you would like to sell a car and a couple approaches you, offering what seems to be a very good deal - much more than you expected. If you shake hands immediately, you will trigger two kinds of thoughts, also known as buyer's remorse:

• We could have paid less - we shouldn't have offered that much - we could have done better

• There is something wrong with the car.

Always negotiate! Research tells us that trading concessions is the most effective way to gain people's commitment to a transaction. Negotiating concessions is also the best way to ensure all-round deal satisfaction.

Effectiveness at the conference table depends upon overstating one's demands - Henry Kissinger

One key negotiation principle is that you should always ask for more than you expect to get, the obvious reason being that it gives you some negotiating room.

"A negotiation is an interactive communication process that may take place whenever we want something from someone else or another person wants something from us."1

"Take it or leave it!" "This proposal is non-negotiable." "Don't ask me to go back to my client on this. This is all we are going to do." "This is it. If you don't want to accept it at that price, forget it." "Negotiating with you is a waste of time. We'll see you at the courthouse!" How do you feel when you hear statements like this? How do you feel when people are belligerent; when they hang up on you, literally or figuratively; when they let you know that they do not want to have a dialogue with you about such ethereal subjects as your needs, interests, or concerns about a proposal or a transaction?

If you react negatively to ultimatums, inflexibility, and statements like those in the preceding paragraph, you may come to the realization that other people feel the same way. Unless you are in the military, or subject to some similar hierarchical organization, you will conclude that, if you want to have a relationship with the party on the other side of the table or the other end of the phone, you must negotiate. Negotiation is unavoidable.

Most of us negotiate with one another frequently. Once we realize this, theoretically, we have two choices: accept the fact that negotiation is a way of life in our culture and improve our skills so that we can negotiate with confidence; or, do nothing about it. Some may argue that negotiation is an art, that it is intuitive; or, that we all know how to negotiate, learning basic skills on the playgrounds of life. Perhaps there are naturally gifted negotiators. But, as a lawyer and a mediator who has spent over 20 years litigating, negotiating settlements, negotiating transactions for clients, and negotiating personal transactions, I can attest to the fact that a lot of negotiators are not naturally gifted.

"... most people simply don't know how to negotiate. Our parents don't teach us how to negotiate, probably because their parents didn't teach them how to negotiate. And despite the fact that negotiating is a vital skill, we're taught nothing about it in school. That leads to the second reason there are so few negotiators: people don't think it's possible to learn how to become one. Since we're not taught how to negotiate we just assume it cannot be taught. The third, and I believe most powerful, reason is fear."2

We can all improve our skills as negotiators. But, how? Conjure up two individuals: the "Master Negotiator" and the "Novice Negotiator". The Master Negotiator is not someone who works miracles, who can pull off remarkable "swindles" or hypnotize his or her opponents into barking like dogs and doing other things that they would not ordinarily do. The Master Negotiator is simply demonstratively better than the Novice Negotiator. The Master Negotiator's skills are obvious. While he may not walk on water, he will consistently get the best deal possible under the circumstances. On occasion, perhaps even frequently, he will get remarkably good results.

If you are selling, you can always come down, but you will never have a chance to go up in price. If you are a buyer or a seller you may be able to manage your counterparty's expectations by creating an anchor or a frame that the other side will have to deal with.