Negotiation skills are essential for team leads, tech leads, and project managers. As they gain seniority, these folks frequently find themselves thrust into both formal negotiations with vendors and suppliers as well as informal negotiations with management and their own staff, often without benefit of much preparation or training in the art and science of negotiation.
Negotiation skills are essential for team leads, tech leads, and project managers. As they gain seniority, these folks frequently find themselves thrust into both formal negotiations with vendors and suppliers as well as informal negotiations with management and their own staff, often without benefit of much preparation or training in the art and science of negotiation.
Most of us acquire some natural negotiation skills as we gain experience in our professions, but, like most skills learned the hard way, a little formal study can save a lot of grief. While I want to share a few negotiating tips that I have picked up during my journey as a professional, consultant, and business owner, the very best advice I can offer is to recommend two books:
- Getting to Yes by William L. Ury, Roger Fisher, and Bruce M. Patton
- The New Negotiating Edge by Gavin Kennedy
You should own (and read) both of these books. They are interesting and quick reads that will give you insights and tools that last a lifetime.
When you are engaged in business negotiations it is likely that the person sitting across the table from you has formal training in negotiation. If you don’t, you are about to enter a knife fight unarmed. Preparation, skill, and practice will beat innate ability most of the time. Sales people, in particular, often receive negotiation training as part of their professional development or pursue the skills on their own time to improve their success rate and distinguish them from their less successful peers.
Approaches to negotiation can be partitioned into two basic schools of thought: adversarial and cooperative.
Adversarial
Negotiation is a contest. The goal is to extract as much from your opponent as you possibly can, while conceding as little as possible. The adversarial approach is often described as a “zero-sum game,” meaning that I cannot win unless you lose, and vice versa. People engaged in adversarial negotiations tend to treat each negotiation as an independent contest. Buying a used car in a strange town from someone you have never met before and are unlikely to meet again might be seen as tending toward adversarial negotiation.
Cooperative
Negotiation is a cooperative exploration of mutual needs and goals intended to find a solution that is acceptable to all parties and mutually beneficial. Cooperative negotiation is often characterized as “win/win,” because the outcome of a successful negotiation should be that all parties gain enough of what they need that they feel they are better off after the negotiation than they were before. The guiding principle of cooperative negotiation is “win/win or no deal.” Cooperative negotiation is often perceived most effective when each negotiation is seen as the next step in building and developing a relationship. Negotiating with your spouse, a friend, a client, or your boss—people you have a relationship with and expect to interact and negotiate with often—might often be seen as opportunities for cooperative negotiation.
Considering these two approaches, it becomes clear that if you choose one approach and the person you are negotiating with chooses the other, your interaction is off to a poor start. It might also be apparent that, in cases where you expect to have a continued relationship with someone, persistent use of adversarial approaches to negotiation can be relationship damaging and breed resentment.
I find it challenging to describe these two approaches in an even-handed way, because I strongly prefer cooperative negotiation, but there are circumstances where negotiations may have adversarial elements and you must be prepared to respond in kind. When I first began studying negotiation, I was appalled at some of the tactics that I learned as part of “the basics” of adversarial negotiation; ways to take advantage of the good nature of others and to frame an agreement to your benefit after the negotiation was “complete.”
The author of the book I was reading made clear that he wasn’t advocating these age-old tactics, but said he was explaining them because they were techniques that someone you might be negotiating with might use them against yourself; you would be better prepared if you recognized them and know the appropriate counter-measures. Exploration of shenanigans is beyond the scope of this article, however. I want to offer some basic ideas and an example of a principled negotiation:
- Know what you want. I find my project management background made me a better negotiator. Schedule, scope, and resources—the “iron triangle” of project management—can often be traded against one another.
- Know what you have to offer: schedule, scope, resources, and good will.
- Know your limits, both what you have to offer and what you are willing to settle for.
- Know what you have the authority to offer and accept and when you will have to escalate for approval.
- Find out what the person you are negotiating with wants; research can help a great deal, but asking is a great way to find out.
- Understand the authority of the people you are working with. Do they have the authority to make a deal?
- Avoid narrowing the negotiation to a single element (like price) too quickly. There are often other aspects that can be discussed that will be valuable to one party and less valuable to another that can be traded off beyond simply price.
- Be prepared to walk away. If you can’t find a mutually acceptable agreement you must be prepared to stop the negotiation. Sage advice among negotiators is, “Don’t sit down at the table if you aren’t prepared to walk away. You have already lost the negotiation, the only question is how badly.”
A Real-World Example: Room with a View
A client wanted a large block of training—thirty classes for four hundred people over eighteen months— but was concerned about the price, which was about $400 per person. The price I presented had already been discounted for volume, and there wasn’t much wiggle room before the engagement would no longer be profitable. The per person costs of providing this particular class broke into the following four parts:
- Materials, including textbooks, participant workbooks, and training consumables ($100)
- Instructor labor ($100)
- Facilities and catering ($100)
- Overhead, including the recovery of a portion of the investment made to develop the training materials, cost of computers, projectors, software, insurance, profit, and other miscellaneous items ($100)
During the negotiation, rather than pushing back and forth on the original price, we discussed ways to reduce costs that would result in lowering the price. For example, we discussed whether the client wanted to assume responsibility for reproducing participant workbooks for a corresponding reduction in cost, buy the 400 textbooks itself in bulk to get a discount from the publisher, eliminate the catering, and have the client provide a training facility for the sessions rather than using the hotel conference room that we had proposed renting.
A little research determined that the client couldn’t reproduce the workbooks more cheaply than we could, but discussing the textbook led to an exploration of whether each participant needed an individual copy. We agreed that the client could purchase fifty copies of the text and assure that there was one in each department and that each participant had access to one during the class (saving everyone the cost of 350 textbooks at about $70 each). The client didn’t have a training facility, but did have an unused building about twenty miles outside of town that could be dedicated to the training.
In the end we were able to significantly reduce the price per person for the training without significantly affecting the quality of the training for the client or the value of the engagement for my training firm. “Catering” was reduced to an industrial coffee urn and a box of donuts for each class. The training facility was a marginal, but was perched on the rim of a beautiful tree-lined canyon, had abundant free parking, and may have made the workshop more memorable than sessions in a sterile, windowless hotel conference room. The client saved about $75,000 and everyone was happy with the outcome.
Summary
Whether you realize it or not, you are constantly negotiating with co-workers, clients, suppliers, friends, and family. Learning the tools and skills of cooperative negotiation is a vital part of your professional development that will not only increase your likelihood of getting what you want, but improve your ability to build and sustain long-term relationships.
