3 Ingredients of Effective Negotiation
Confidence. Creativity. Conditional Trading.
The Weekly Walkaway highlights negotiation in its ‘good’, ‘bad’ and sometimes ‘downright ugly’ forms. Issue No. 49 (13th October 2023)
What to expect?
Quotes of the Week - “Place a higher priority on discovering what a win looks like for the other person”
Tactic of the Week - The Salami Slicer
Thought of the Week - 3 Ingredients of Effective Negotiation
Remember: You are a negotiator!
You are always managing some form of conflict, a difference of opinion or interest.
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QUOTES OF THE WEEK
“Place a higher priority on discovering what a win looks like for the other person.”
Harvey Robbins
“Negotiation is NOT a wheel. It is not linear. But if it was, because there are no rules in negotiation, the ground the wheel was designed for would keep changing and therefore the wheel would not be fit for purpose!”
Giles Morgan
TACTIC OF THE WEEK
The Salami Slicer
Salami Slicing is a negotiation tactic where one party negotiates each variable in isolation.
Dividing their demands into smaller positions, striping them of complexity and ‘total value’, and sometimes in seemingly insignificant parts.
Each request can appear reasonable and maybe even justifiable, on their own.
Once you agree to the first demand, they then propose the next, and so on.
Recognise this as an Eastern Negotiator Tactic. A Win Lose tactic.
By breaking down their demands into smaller slices, they are looking to achieve their overall goal, the whole sausage, by a thousand cuts, and an unfair distribution of the value to them.
Stick to your plan. Continue to link your issues and trade them conditionally whilst also telling them that nothing will be agreed unless everything is agreed.
THOUGHT OF THE WEEK
3 Ingredients of Effective Negotiation
I’ve just got off a call with a favoured client of mine who I’m designing a piece of work for.
I won't mention who, obviously, nor will I share what the work is but I’ll share the 3 bullet points that underpin the delivery.. Why? Because I know they will resonate with you all. The 3 Ingredients of Effective Negotiation;
Confidence (calm assertiveness)
Creativity (innovative thinking)
Conditional Trading (if you.. then I…)
In fact if we were to simplify the game of negotiation for human capital sales these three key elements will emerge as pivotal to effective negotiation.
Lets dip in the three while you sit down for a well deserved Friday morning coffee..
Confidence (Calm and Assertive)
Confidence is the bedrock of effective negotiation. You require:
Calmness;
and assertiveness.
Calmness: You must remain composed, regardless of the storm around you.
If behaviour breeds behaviour, then ego creates ego, aggression creates aggression and therefore calmness will create calmness, professionalism will create professionalism.
‘The Law of Reciprocity’
Remaining calm not only sets the tone for productive discussions but also helps manage yours and their emotions.
When tensions rise, as a calm negotiator, you can de-escalate conflicts and create an environment appropriate for rational decision-making.
Assertiveness: You must clearly and firmly state your needs, boundaries, and expectations.
An assertive negotiator does not shy away from expressing their concerns or confronting challenging issues.
Assertiveness creates respect, as it signals that you value your own position, making it more likely for others to respect and consider your positions and interests seriously.
Creativity (Climb to the top of your lighthouse)
Human Capital Negotiation should not be about haggling over positions; it should be about identifying and satisfying underlying interests.
Creativity in negotiation involves you climbing to the top of your lighthouse and viewing the situation from a different perspective. What are their real interests?
Looking beyond surface-level positions and delving into the genuine interests and concerns of the other party uncovers hidden value, opportunities, and issues often obscured by the fog of positions.
Think of a position as a 12 foot wall blocking your view of their real interest
Look past their immediate demands and shine a light on what truly matters to them.
The essence of creativity lies in questioning (with empathy) and listening (actively);
When you empathise with the genuine interests of others, you ask questions that are not self interested, you build rapport and most importantly, you build trust. Only then will you have a chance of seeing through the fog of conflicting positions;
Active listening ensures that these interests are truly understood, allowing you to create solutions that resonate with ‘their’ core needs.
This deeper understanding opens the door to creative solutions that go beyond the obvious.
This fosters a positive and collaborative atmosphere.
Unleash Creativity and Innovation (from previous post)
Let's be blunt, boring conformity stifles creativity which in turn kills innovation.
Conformity is like wearing a straitjacket to a party, it traps you in a never-ending loop of predictability; not getting what you want or need.
Limiting yourselves to predictable and unimaginative solutions puts you in a negotiation straightjacket.
Solution: Search out those who have already embraced their inner rebel. Use them, do not stifle them. Let them show you how to break free from these constraints and open the door to new possibilities.
Specifically invite your rebels, your disruptors into negotiation planning meetings. Let them challenge your assumptions and let them be free to think outside the box.
There is never a silly question with a rebel. As hard as it is for you let them do their thing and reward it, don’t punish it.
They will encourage innovative thinking and promote creative problem-solving.
This approach allows you to uncover unique perspectives, consider unconventional strategies, and discover solutions that may have been previously overlooked.
Your rebel now gives your negotiation team the competitive edge.
By challenge assumptions, embracing creativity, you can transform an Eastern Negotiation into a value-creating Western Negotiation.
This builds a foundation for lasting relationships based on trust and cooperation and steers negotiations away from haggling over just price.
Conditional Trading (Low Cost, High Value Trading - If you.. then I..)
Conditional trading is a structured approach to negotiation, underpinned by the principle of "If you... then I...".
Pain before gain. Take before the give.
The key is to ensure that concessions are met with proportional reciprocation and that both parties focus on the idea of seeking low-cost, high-value trades, exchanges.
Low-cost, high-value trading involves offering concessions that are relatively inexpensive for one party but highly valuable for the other.
This approach creates a sense of goodwill while maximising gains.
For example, a consulting firm might agree to longer payment terms (low cost for them but high value for the buyer) in exchange for exclusivity (high value for the consulting firm but low cost for the buyer), resulting in a mutually beneficial deal.
The easiest example is where price and volume are linked to create a volume incentivised discount. If you give us a volume of 5 ‘thingy’s’ then the price is 100 per ‘thingy’ but if you give us a volume of 10 then the price is 50 per ‘thingy’.
Conditional trading enables you to make concessions carefully, maximising value while at the same time protecting yourself from being exploited.
These value exchanges are conceded, proposed, in a way where they are connected, also known as ‘linked’. Linking issues ensures that concessions on one aspect are conditional on gains of the another.
By linking your issues you prevent The Salami Slicer tactic and ensure they don’t isolate variables where haggling and Eastern negotiation behaviours surface.
Simply put, each concession enables a reciprocal response; they only get what they want if you get what you want.
If you guarantee a KPI of ‘X’ % and payment terms of ‘Y’ days then I’ll give you a contract length of ‘W’ months.
By framing your negotiation in this way you create a sense that you are working with them, not against. The feeling of mutuality and cooperation.
When you create value it will need to be distributed. Conditional trading ensures you're not exploited. It ensures they don't get ‘greedy’.
By linking all the variables, conditionally, as a total package you also bring in the concept of ‘nothing being agreed until everything is agreed’.
This ensures you never give anything away for free, you get something of equal or greater in return while also policing the principles of your relationship, the principles of reciprocity and mutuality.
Conclusion
In the game of negotiation you need Confidence, Creativity and the skills of Conditional Trading.
They transform negotiation from a haggle on the Eastern Side of the negotiation Compass to commercial diplomacy on the Western Side.
I look forward to working with my client and their team in helping them develop these skills.
Develop these three key elements in your own negotiation tool set and secure favourable outcomes that also lay the foundation for long lasting relationships built on trust and mutual respect.
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