Business negotiations as a key component of the life of a manager in the middle- whether they are negotiating a new supply contract, discussing incentives and rebates with customers, or asking for a raise, how skilled your negotiation approach dictates the potential outcome.
Professor George Siedel, of University of Michigan Ross School of Business, is a recognized expert on negotiation around the world. He is currently teaching 50,000 students in his Coursera course “Successful Negotiation: Essential Strategies and Skills,” which is among the best free online courses identified by several commentators online.
Prof. Siedel highlights the four most common mistakes many new negotiators make and describes how to avoid them.
1. New Negotiators don’t listen.
A negotiation isn’t simply offering a deal and accepting either a “yes” or a “no” after a chance to persuade the other side to change their views.
“Good negotiators are the ones who walk into a deal in listening mode,” Siedel says. A key component to a good negotiation is to ask plenty of questions to understand the thinking of your negotiation partner, understand where they are coming from and what they’re trying to get out of this deal.
To get ahead in these negotiations, you really need to be trying to gain an advantage through the accumulation of knowledge regarding the perception of this deal by the others side rather than just focusing on what you want to say.
2. New negotiators too quickly get straight to business.
“You need to know the other side before becoming involved in trading concessions,” Siedel says, adding that Americans in particular traditionally have a harder time than people of other cultures accepting the need to taking time to understand their negotiating partners.
If you and your team are meeting with representatives of another company, consider meeting them for drinks or dinner the night before the negotiation. If it’s just you and you’re going to see your boss to negotiate a raise, ease into it a week or so before hand by building confidence in your skills and attitude. It’s about creating a solid negotiation foundation built on trust and easing tension.
3. New negotiators go into the negotiation without a clear sense of what they want.
“The richest people in the world go into a negotiation knowing exactly what they want,” Siedel says.
Before entering the negotiation, determine your ideal situation. Balance this with a reservation price and conditions, which is the point that you won’t cross or concede. If you’re in a position to sell, this would be the minimum you’re willing to part with your assets. And if you’re in a position to buy, this would be the maximum you’re willing to spend.
Don’t be caught off guard by anything the other side proposes, and don’t get manipulated beyond your limits. If necessary take a break to consider the implications of their proposals before coming back with your response. Especially if the approach was not something you prepared for.
4. New negotiators don’t have a best alternative prepared.
One of the fundamental aspects of Siedel’s course is using your “BATNA” as a secret weapon. It stands for the “Best Alternative To a Negotiated Agreement” and refers to what you have to fall back on if this negotiation results in no agreement.
If you’ve got a strong BATNA, you should let the other side know. Siedel offers by way of example that if Ford Motors approaches a supplier it may say that if they do not agree on a price Ford is happy with, then it will take its business to one of five other suppliers it is ready to go to.
If you can’t use your best alternative as leverage, refrain from explaining it to your opponent.
And going back to point 1 and 2, its vital in preparation to discover what your negotiation partners best alternative (or lack thereof) is so that you can attempt to disarm it or to build your proposal as a much better alternative.
If you’d like to go beyond the fundamentals but don’t have time for Siedel’s class, you can check out his book, “Negotiating for Success: Essential Strategies and Skills.”