Negotiation is everywhere in our lives – we just don’t realize it. Dealing with bosses, spouses, kids — so often it’s a veiled negotiation. High prices and low salaries are often a tax on the inability to cut a deal well.
Problem is, some of us really don’t like negotiating. We equate the word with “zero-sum Thunderdome battle to the death.” And in our personal lives we’re afraid of being too pushy and alienating loved ones.
It doesn’t have to be that bad or involve the breaking of furniture. It’s less about innate skills and more about understanding some fundamental principles and preparing. And you don’t need a personality transplant to get better at it. The research declaws the idea that you need to be competitive to do well. The best negotiators are actually more cooperative, not more hardball.
We’re going to review some key concepts that apply to all kinds of negotiations, from increasing your salary to dealing with family members. We’ll reduce your fears, increase your confidence, and make sure you spend a lot less time screaming into a cushion.
Our Obi Wan will be G. Richard Shell, a professor at the Wharton School at the University of Pennsylvania. His book is “Bargaining for Advantage: Negotiation Strategies for Reasonable People.”
This post could be worth fewer arguments around the house and possibly thousands of dollars. (You and I can negotiate my commission later.)
Let’s get to it…
Research says the single most important part of becoming an effective negotiator is preparation. Why? Because that’s often where leverage comes from.
“Leverage” sounds intimidating. Most people define it as “that thing I never seem to have.” And when I explain leverage I end up sounding like Inigo Montoya: “I don’t think it means what you think it means.”
We assume that people with the most money or power always have more leverage. Nope. Leverage is about situational advantage, not objective power. Mom and Dad are trying to make a good impression at the boss’s pool party and the toddler won’t stop screaming. Mom and Dad have more power – but the kid has all the leverage here.
Simply put: In general, the person who feels better about “no deal” has the most leverage, and the person that’s less okay with “no deal” has the least leverage.
And that’s why you need to do your preparation. Leverage comes from knowing what the other party needs and having more information. What does this employer usually pay? Are you the only person who has what they need? Do they have a good alternative? Do you? Is time on your side — or theirs?
It’s also important to know that having the ability to make the other side worse off is an important source of leverage. A spouse prone to sullenly stomping around the house days after a spat, unfortunately, has some leverage.
So what if you have zero leverage? Then you want to bolster the idea that the other side has something to lose from “no deal.” And you want to emphasize your comfort with the status quo.
The golden leverage moment during a salary negotiation is after you’ve gotten the job offer – but haven’t accepted it yet.
Leverage is key but there’s more prep to be done. You need to know what you can ask for…
You want to have specific, justifiable goals and high expectations.
Base your requests on what you know of their prior deals or use third-party standards. You don’t want to just be asking for your “wishes” – you want to be able to back things up with precedent. (“The industry average salary for this role is higher than your number.”) When you can point to an outside standard, you’ll be more confident and they’ll be more accepting. (“All of your friends have to do chores at home.”)
Think about all the things that are important to you – not just the obvious ones like salary. Do you want a better title? A nicer office? This not only gets you more of what you want, it also creates more ways to reach a deal acceptable to both sides.
Alright, we’re done preparing. You’re talking to them. Time for horse trading? Not yet…
Negotiate process before substance. Some people may find this weird. They want to get right to making offers but taking a little time here helps prevent misunderstandings and optimizes value.
For instance: in a business negotiation you want to check that they have authority to approve the deal before you do anything else. Otherwise, you go back and forth, reveal all your cards and they say, “Let me check with my boss.” Now you’re in a bad situation because you didn’t discuss process.
If possible, you want to agree that presenting information is not the same as concessions. You can both bring things up as possible parts of the deal before anything is finalized. This gives you both flexibility and a chance to take back concessions without anger if things don’t feel fair. “Nothing is settled until everything is settled.” Both sides can restructure the whole package to find a final deal that works best.
So what’s the single most important thing early in the conversation?
Always be trustworthy. I’m not just saying this because my mom reads these posts – it’s also smart and strategic.
If it’s not there, trust is the single biggest obstacle to a good deal. If you don’t trust me, little else matters. You want the deal to stick, you want them to follow through and you want the “friend price” in future negotiations. So don’t have credibility; have incredibility.
Everyone you negotiate with is not going to be made out of flower petals. The other side might be a morally impoverished bandit. So extend trust slowly. Increase trust as they reciprocate. Remember: The most deceptive person you know is not the most deceptive person you know.
And maintain trust. If you take full advantage of all your leverage all the time you’re not going to be seen as very kind or generous. Restoring trust after it’s lost is hard. Very hard. Hiding a body is easier.
If they act unethically or behave like a jerk, don’t sink to their level. You may not trust them but it’s still valuable for them to trust you. Otherwise you have two cagey people and the whole thing will collapse like a cheap tent.
Negotiating with friends and loved ones is tricky. Often, we want to immediately compromise so nobody gets angry. But this is usually a mistake for both parties. Research shows negotiations with people we’re close to usually fail to create optimal value. By slowing it down and talking it through you can come up with better ways to offer more and get more instead of just compromising to achieve a fast (and mediocre) result.
Okay, time for wheeling and dealing, right? Nope, nope, nopedy, nope, nope…
You want them to tell you what they want and why they want it. More information – from their mouth – is more potential leverage.
This is one of the ways aggressive negotiators falter. They don’t listen. More listening = more leverage. Top negotiators ask twice as many questions. Probe first, answer second. You want to know more about what they need.
A criminally underrated concept in negotiation is “value creation.” This is yet another place where aggressive types screw up. They fight a zero-sum game to get the biggest slice of the pie instead of finding ways to expand the pie.
What are low-cost ways to give the other side more things they want so you can justify more things you want? Price is usually only an issue when the other side doesn’t feel enough value is being delivered. They can’t offer you more salary but if you take on more responsibility could you get more vacation days? I’ll go to that awful family gathering if you help me with the fusion reactor I’m building in the basement.
We often try to simplify things but it’s actually better to have more variables. This creates more Rubik’s Cube combinations where everybody gets more goodies.
And information exchange isn’t just about listening. You also want to communicate your expectations and your leverage. If you have any dealbreakers, you want to mention them early. Don’t wait until the horse trading has begun to raise these issues or the other side is likely to get angry.
Okay, time to start making offers…
If you’re not well-informed, let them go first. You don’t want to ask for too little. (You always hear about the early bird; you don’t hear a lot about the early worm.)
But if you’ve done your research and are very well-informed, you definitely want to make the first offer. This creates a psychological “anchor” that is very powerful. Research shows final results are strongly correlated with first offers.
Your first offer should be the highest amount you can make a case for. And you want to justify your offer, not apologize for it. Apologizing makes it seem like it’s not legitimate and invites haggling.
There is a danger in being too reasonable early on. I know, you want to just be “fair” and get this done with, but some give and take makes both sides feel better about the deal. Make room for later concessions because most people expect this to happen.
And speaking of concessions…
Instead of just giving in to their requests, link your concessions. Use “If…then.” If I give you X, then will you give me Y? (Of course, you would prefer X to be cheap for you and Y to be more valuable to you.)
Make it clear you are giving something costly to trigger reciprocity in them. If you make it seem like no big deal, they might not feel obliged to give you something back.
An important distinction to keep in mind here is positions vs interests. Positions are the concrete things you want. (“Give me more money.”) Interests are more general problems you’re trying to solve. (“I do everything around here and don’t feel this is fair.”) Always focusing on positions can cause things to get stuck. (“You must give me more money.”) But being aware of interests can solve them. (“More vacation days would make me feel this is fair too.”) So ask the other side why they want what they want and you might be able to address interests when you can’t meet positions.
Alright, don’t go shopping for that new caviar spoon just yet. In negotiations Murphy’s Law is almost as consistent and reliable as Newton’s laws. Things can go sideways…
Yes, I know they’re being unreasonable. Do not detonate the vest just yet. A core principle of the FBI negotiation program is: never confuse getting even with getting what you want.
Say your emotions; don’t display them. “I’m disappointed…” beats throwing lamps. Don’t make ultimatums if you can achieve your objectives without them. And never make ultimatums you don’t intend to carry through with.
What if they make ultimatums or threats? Ignore them. They are likely to go away if you both keep talking. And the more you acknowledge ultimatums the harder it will be for them to back away from them. Never make the other side choose between smart decisions and saving face.
To break stalemates make one small step toward their position and wait for reciprocity. Often this is all it takes. If you arrive at a total impasse you might want to involve a third party both sides trust to resolve things on your behalf.
Hopefully, it doesn’t come to that. You probably worked something out. So this is the part where you roll around naked in the piles of money, right?
Of course not. This involves humans so it can never be that simple. Thinking that agreeing to the deal means it’s over is a rookie error…
Deal seems good to you? Cool. Here’s the thing you need to remember: you want them to be happy.
Again, this is where aggressive types falter. This isn’t war. You don’t want the other side vanquished. You know why? Because 1) they still need to follow-through and, 2) there may be future negotiations. (Spouses need to be happy with deals so you aren’t murdered in your sleep.)
You don’t just want agreement — you want commitment to execute. Does the other side have something to lose if they renege? This is why it’s good to get it in writing, to use security deposits, or to make things public so reputations are at stake. (Withholding a child’s allowance works too.)
If you’re likely to do future deals, tactfully remind them of this. People behave better if they feel payback may be on the horizon.
And be on the lookout for “the nibbler.” Remember how we talked about the high leverage moment where you got the job offer but haven’t yet accepted? This can happen to you too. The nibbler asks for more stuff right before the deal closes. And this is very effective. So hold something back to give them here. This is why doing your preparation is necessary and why being too reasonable on a first offer can backfire.
Alright, we just did a full MBA class in negotiation. Time to round it up – and learn the easy trick that makes everyone a better negotiator…
This is how to be an expert negotiator:
Some people are still going to find negotiating icky and awkward. Remember that you’re not trying to bankrupt the other side so you can buy a gold-plated toilet. You want to provide for your family. And if you keep that in mind, your negotiating powers will magically increase…
Research consistently shows that when we see ourselves as negotiating on behalf of others, we do much better. Think about it. Do you argue more stridently to get stuff for yourself or for your spouse? For your kids? For your friends?
It’s not sleight of hand, it’s sleight of mind. Thinking about the ones you love who stand to benefit from your negotiating gives your confidence and makes the process feel less grubby. And, as we said, an important part is to make the other side feel happy too.
When negotiating is done well, everyone comes out better. You don’t have to lose your shirt. Or your soul.