15 Rules of Negotiation

Negotiation is a process that can be learned.

By following the 15 rules outlined here--and practicing, practicing, practicing--you can perfect your skills at negotiating deals in which everyone wins. 1. Remember, everything is negotiable. Dont narrow a negotiation down to just one issue. Develop as many issues or negotiable deal points as you can and then juggle in additional deal points if you and the other party lock onto one issue.

2. Crystallize your vision of the outcome. The counterpart who can visualize the end result will most likely be the one who guides the negotiation.

3. Prepare in advance. Information is power. Obtain as much information as possible beforehand to make sure you understand the value of what you are negotiating. Remember, very few negotiations begin when the counterparts arrive at the table.

4. Ask questions. Clarify information you do not understand. Determine both the implicit and explicit needs of your counterpart.

5. Listen. When you do a good job listening, you not only gain new ideas for creating win/win outcomes but also make your counterpart feel cared for and valued. This also allows you to find out what the other party wants. If you assume that his or her wants and needs are the same as yours, you will have the attitude that only one of you can win the negotiation.

6. Set a goal for each deal point. Define your minimum level of acceptance for each goal. If you arent clear on your goals, you will end up reacting to the propositions of your counterpart.

7. Aim your aspirations high. Your aspirations will likely be the single most important factor in determining the outcome of the negotiation. You can aim high just as easily as you can aim low.

8. Develop options and strategies. Successful people are those who have the greatest number of viable alternatives. Similarly, successful negotiators are those who have the most strategies they can use to turn their options into reality.

9. Think like a dolphin. The dolphin is the only mammal who can swim in a sea of sharks or in a sea of carp. Dolphins are able to adapt their strategies and behaviors to their counterparts. Remember, even when negotiating with a shark, you have an option-you can walk away!

10. Be honest and fair. In life, what goes around comes around. The goal in creating win/win outcomes is to have both counterparts feel that their needs and goals have been met, so that they will be willing to come back to the table and negotiate again. An atmosphere of trust reduces the time required to create win/win outcomes.

11. Never accept the first offer. Often, the other party will make an offer that he or she thinks you will refuse just to see how firm you are on key issues. Chances are, if you dont have to fight a little for what you want, you wont get the best deal.

12. Deal from strength if you can. If thats not possible, at least create the appearance of strength. If the other party thinks you have no reason to compromise in your demands, he or she is less likely to ask you to.

13. Find out what the other party wants. Concede slowly, and call a concession a concession. Giving in too easily tells the other party that you will probably be open to accepting even more concessions.

14. Be cooperative and friendly. Avoid being abrasive or combative, which often breaks down negotiations.

15. Use the power of competition. Someone who thinks its necessary to compete for your business may be willing to give away more than he or she originally intended. Sometimes just the threat of competition is enough to encourage concessions.

Negotiation Mistakes
Disciplines > Negotiation > Mistakes

Negotiation is a difficult art as it requires managing, in real-time, both the other person's mind and your own. Here are a number of mistakes that negotiators can make (and what you can do about them). Accepting Positions: Assuming the other person won't change their position. Accepting Statements: Assuming what the other person says is wholly true. Cornering Them: Giving them no alternative but to fight. Hurrying: Negotiating in haste (and repenting at leisure). Hurting the Relationship: Getting what you want but making an enemy. Issue Fixation: Getting stuck on one issue and missing greater possibilities. Missing Strengths: Not realizing the strengths that you actually have. Misunderstanding Authority: Assuming that authority and power are synonymous. Misunderstanding Power: Thinking one person has all the power. One Solution: Thinking there is only one possible solution. Over-Wanting: Wanting something too much. Squeezing Too Much: Trying to gain every last advantage. Talking Too Much: Not gaining the power of information from others. Thinking in Absolutes: Assuming that there are only a few possibilities. The Walk-away Trap: Becoming too fond of your walk-away option. Win-Lose: Assuming a fixed-pie, win-lose scenario.

Negotiation Ethics
I was in business school right around the same time the Enron scandal broke out. Cooperate corruption in the media seemed to explode like the waters breaking from a dam. I blame all the twofaced businessmen who made their way onto the nightly news for

the reason why ethics was so purposefully beaten into us at school. When you really think about it, ethics should be a disciple that deserves our attention, especially for those of the business world. After all, if you are in a position of supreme power, like so many scandalous CEOs, your moral compass should point true. One area of particular ethical concern is in negotiation. The line between right and wrong can often be hard to find when the pressures on and the stakes are high. How should you go about walking this tightrope of ethical negotiation? Read the following guidelines on negotiation ethics for a start:

Interests of Others
When faced with an ethical dilemma in a negotiation situation the first question you should ask yourself is, Who and how will my actions affect? If using questionable tactics in negotiation will have a negative impact on one or more parties, take this time for a detour to explore your next step. It is oaky to take a break during a negotiation if you need time to clear your head to find a better solution. If you are able, open up and be honest with whom you are negotiating. Share your dilemma and work together to find a resolution. Sometimes candor can be the best way to create win-win solutions.

Relationship Value
If you have an established trust with the other side of the negotiation table, the rules of the game change. When negotiating with a stranger, such as when buying a car, it is expected that you may use more harsh tactics to get what you want. If on the other hand you are negotiating with someone whose relationship you value, like a friend or family member, you should respect that trust and be clear about your intentions from the get-go. If you ignore these unspoken rules, you could end up loosing a lot more than the negotiation.

Ethics Gap
An ethical gap is the point at which you question what is right and wrong. Take into consideration what was previously discussed, the interest of others and relationship value, when you encounter a situation that is not black and white. I will restate what I mentioned above, a time-out during the negotiation can bring light to the situation. If you are still unsure about what road to take, consult an associate that you trust and get their thoughts on the matter. The act of taking through the decision making process in itself can often revel the answers you seek.

Your Moral Compass

When all else fails, listen to you inner conscious. Everyone has variations of what they consider to be ethical, but this innate moral compass is universal in all of humanity. Whether or not we choose to listen to the angel, or the devil, in us is another story

Six Ways to Build Trust in Negotiations

Published: April 5, 2004 Author: Deepak Malhotra

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Executive Summary:
All negotiations involve risk. Thats why establishing trust at the bargaining table is crucial. Professor Deepak Malhotrapresents strategies to build trustworthiness. FromNegotiation.

About Faculty in this Article:

Deepak Malhotra is a professor in the Negotiation, Organizations and Markets unit at Harvard Business School.

More Working Knowledge from Deepak Malhotra Deepak Malhotra - Faculty Research

What began as a misunderstanding about specifications and deadlines between a manager at RLX, a
software development firm, and a manager at Impress, one of its clients, had escalated into a conflict charged with growing mistrust. Both RLX and Impress had money to lose if the partnership ended, but in the heat of conflict this became a secondary concern. Just two weeks after the first flare-up, Impress announced that it would be taking its business elsewhere.

Kristen worked in a division of RLX that had few dealings with Impress, but she nevertheless approached her manager, who was also the VP of the division that had lost the account, to ask if she could try to win it back. After all, RLX had nothing to lose by letting her try, she argued, and she had her own reasons for taking on this formidable taskas part of her work toward an MBA, she was taking a class in negotiation and mediation, and "negotiate something in the real world" was her current assignment. The VP eventually agreed to put her in touch with the Impress representative. After a number of meetings and a lot of negotiation, Impress agreed to re-sign with RLX, and Kristen saved her firm more than $25 million in annual revenues. How did Kristen pull it off?

She realized that to win back the account, she had to win back their trustand fast. So before the first meeting took place, she took several critical steps:

She became an expert on Impress and its needs. This included talking to the RLX manager
who had handled the account to find out the concerns Impress had had before the conflict escalated.

She arranged to offer Impress a few perks in a new contract as a show of good faith. She asked the president of another RLX client, who knew people at Impress, to speak with the
partner at Impress about her own positive experiences with RLX.

While the RLX-Impress negotiation was particularly tricky to get off the ground, establishing trust is critical to achieving success in any negotiation, because all negotiations involve some level of risk. Negotiators usually say that they're prepared to bargain in good faith, yet talks sometimes collapse because each side lacks trust in the other's competence and good intentions. One party might want to make a concession or share sensitive information in the hope of inspiring disclosures and compromises in return, but there's always a risk that the other side will refuse to budge, or even worse, exploit the information to their own advantage. Trust is particularly elusive in high-stress, high-stakes conditions, as when you're negotiating with strangers, facing deadlines, coping with differences in power and status, or hammering out unenforceable contracts.

Trust may develop naturally over time, but negotiators rarely have the luxury of letting nature take its course. Thus it sometimes seems easiest to play it safe with cautious deals involving few tradeoffs, few concessions, and little information sharing between parties. But avoiding risk can mean missing out on significant opportunities. For this reason, fostering trust on the fly is a critical skill for managers. As Kristen knew, the first step to inspiring trust is to demonstrate trustworthiness. All negotiators can apply the six strategies that follow to influence others' perceptions of their trustworthiness at the bargaining table.

1. Speak their language Some years ago, an airline that was seeking to go high-tech with its ticketing process invited a number of consulting firms to bid on the project. At the kickoff meeting with prospective consultants, the airline's executives described the limitations of their current system and gave an overview of their needs and expectations. After the presentation, a dialogue opened up between the executives and the prospective bidders. Representatives from consulting firm X, who had never worked for an airline before, noticed that everyone was throwing around the word lifts. Feeling lost, they nominated one of their members to raise his hand and ask for a definition. Almost everyone in the room, including the airline execs they were trying to impress, stared at the group from firm X in amazement. How could they not know that airlines' paper tickets were called lifts? By failing to understand this industry-specific term, firm X had committed a major gaffe. One innocent question, and the company was suddenly out of the running.

Trust is particularly elusive in high-stress, high-stakes conditions.

It's important for negotiators to speak one another's language. This principle goes beyond understanding technical terms and lingo. It also means catching the nuances and cultural implications behind what's being said, and noticing how the other side uses words to convey ideas. By taking the time to understand the other party's history, culture, and perspective, you send the message that you're committed to the negotiation and the relationshipan integral step in trust building. This fluency also signals your readiness to follow through on your negotiated settlement.

And if you happen to make a gaffe, some early preparationbefore the negotiation even gets under way can lessen its impact. State at the outset of talks that you have worked to understand the other party's perspective, needs, and interests, but that you recognizeand hope that they do, toothat a lot of learning will take place as the negotiation moves forward and the relationship builds. Express the hope that when a mistake or misunderstanding occurs, as some inevitably will, both sides will see it as a natural part of the learning process and redouble efforts to reach an understanding of the other's point of view.

2. Manage your reputation In negotiation, as in all aspects of life, your reputation precedes you. A bad reputation can be a deal killer from the start, while a great one can help transcend an impasse. Effective negotiators realize that their reputation is not just a backdrop, but a tool. How can you make your reputation a factor in negotiation? You might provide references from mutually trusted third parties that vouch for your character and competence. If appropriate, a third party could communicate with the other side prior to the negotiationas in the RLX exampleor even serve as an intermediary during it. You can also offer other forms of evidence of past success in similar relationships, such as media or trade reports.

3. Make dependence a factor The more dependent you are on someone, the more willing you'll be to trust her. This phenomenon plays out to the extreme in the Stockholm syndrome, in which hostages become so psychologically dependent on their captors that they will trust their captors' statements and demands more than those of the officials who are attempting to negotiate their release. We tend to cope with the psychological discomfort associated with dependence by believing in the trustworthiness of those upon whom we depend. In negotiation, when both parties believe that they need each other to achieve their individual goals and that other options are limited, trust between parties will increase. As a negotiator, you can trigger this trust-building process by highlighting the unique benefits you can provide and by emphasizing the damage that might result from an impasse. This technique can be particularly useful when a stalemate looms large and alternatives to agreement appear painful or costly. In such situations, a negotiator who senses he has no other recourse may come to trust even his "enemy."

4. Make unilateral concessions Negotiations with strangers and enemies tend to be calculative, with both parties carefully measuring what they're gaining with each concession made by the other side. By contrast, negotiations based on long-term relationships are usually less focused on tallying up wins and losses. A carefully crafted unilateral concession can work wonders for trust, for it conveys to the other party that you consider the relationship to be a friendly one, with the potential for mutual gain and trust over time.

A true unilateral concession requires no commitment or concession from the other side. Such concessions must come at little cost or risk to the provider, but be of high benefit to the recipient. In addition to establishing trust, carefully crafted unilateral concessions also demonstrate your competence by portraying you as someone who understands what the other side values.

Label your concessions Actions may speak louder than words, but actions in negotiation are often ambiguous. Concessions, unilateral or otherwise, are only influential in building trust or encouraging reciprocity if the receiver views them as concessions. Parties are often motivated to discount and devalue each other's concessions and contributions, because doing so relieves them of the obligation to reciprocate. As a result, many concessions go unnoticed or unacknowledged. This may lead to confusion, resentment, or an escalation of hardball tactics and unaccommodating behavior by the slighted party.

In their 1991 book, A Behavioral Theory of Labor Negotiations (ILR Press), Richard E. Walton and Robert B. McKersie recount such a scenario. After a string of long, protracted contract negotiations with his employees' union, a manufacturer was fed up. He decided to start off the next round of talks with a take-itor-leave-it offer and then refuse to haggle. He opened with an extremely generous offera wage that was almost certainly higher than what the union would have reasonably expected even after another week of bargaining. But instead of seeming delighted, the union's chief negotiator responded: "We'd like to caucus to consider your offer." The manufacturer was shocked by his opponent's caution. But should he have been? The union, expecting another drawn-out battle, presumably reasoned that if the opening offer was this good, another week of haggling would bring huge payoffs. This difference in perspective between the manufacturer's and the union's negotiating styles resulted in a strike.

Effective negotiators realize that theirreputation is not just a backdrop, but a tool.
In negotiation, there's no reason to let actions speak for themselves. When you've made a significant concession, be sure to communicate exactly how much you've given away and what the sacrifice means to you. By doing so, you'll not only affect the other party's perceptions of your goodwill but trigger your partner's desire to reciprocate, and increase the level of mutual trust.

5. Explain your demands Unfortunately, when you start a negotiation with someone new, you can expect that he will assume the worst about your motives and intentions. If you hold out for a better offer, he might think that you're greedy, that you like to see him suffer, or that you're simply unfair. In reality, of course, it could be that you're representing a constituency that will not accept the deal on the table, or budget constraints might be forcing you to stand firm.

Psychologists have found that people tend to view themselves in the best possible light and others in a much less positive lightespecially those with whom they're in conflict. For this reason, it's especially important that you make a strong case for your moves in a negotiation and provide the other party with explanations of your demands. An opening offer, if viewed by the other side as extreme, can diminish and even destroy trust. An offer that is explained and justified will probably preserve trust, and may enhance it.

Consider the case of an author negotiating with a literary agent over the right to sell his book. The agent mentions that her commission is higher for profits received in international deals than in domestic ones. At first, the author is annoyed. The higher international rate sounds arbitrary, just a sneaky way to squeeze more money out of him. But the agent goes on to explain that she charges a higher commission for an international deal because she has to split her percentage with the agent in the foreign country. Her net commission is actually lower for international deals than for domestic ones. Though this explanation has no effect on the writer's bottom line, it smoothes his ruffled feathers and makes him like the agentand trust hereven more.

Maximizing joint gain Believing that the other party is competent and has character allows negotiators to take the risks that are necessary to achieve negotiated outcomes, and to implement agreements in ever-changing social, economic, and political environments. When profit, security, or peace depend upon the motives and actions of another party, trust becomes essential. Fortunately, as these strategies suggest, negotiators can build the trust that's necessary for a negotiation to yield maximum joint gain.