Turning the Tables: Negotiating Effectively When the Odds are Against You
Everything in life, from formulating strategy to deciding who picks up the kids, involves negotiation. Yet it is possible to obtain what we want even when we find ourselves in a weaker position.
Introduction / TL;DR
Human are social creatures, and negotiations pervade EVERY aspect of our lives. You may be an executive formulating strategy with the rest of the company’s leadership team, a manager deciding who gets what share of the team’s bonus pool, or even a parent discussing with your other half who has responsibility for picking up the kids after work. Whatever our situations may be, our lives are a series of negotiations.
We may sometimes find ourselves in a weaker negotiating position, and this is a particular salient theme in the current dismal economic climate. Yet whether you are like myself, a small business owner negotiating contracts with larger clients, or a job seeker with a family to feed trying to impress a prospective employer, it is still very much possible to achieve our objectives, or at least some of them.
Here are some practical steps to improve your chances of reaching a better outcome.
#1 Be clear about our objectives: Explicitly considering and prioritising our objectives allows us to make trade-offs between our goals and provides us with room to be more flexible and creative during negotiations.
#2 Consider our alternatives: The stronger and more viable our Plan B, the greater our negotiating strength. Aim to establish and strengthen our Plan B as much as possible before discussions begin.
#3 Prepare ourselves mentally and emotionally: Effective negotiators are calm and alert, patient and proactive, practical and creative, with a mindset that is flexible and open to new ideas. Identify and address negative mental and emotional triggers before negotiating.
#4 Build a collaborative relationship: The human component of negotiations should never be ignored. Aim to build good relationships which make it much easier to negotiate. Use verbal and non-verbal cues to signal your willingness to the other party to solve a mutual problem.
#5 Identify the underlying interests: More often than not, some of the interests each party will be compatible and can form the foundations of a beneficial agreement. This requires us to ask questions effectively and to empathise with our negotiating partners. Please feel free to review an earlier article about the art of asking insightful and empathetic questions.
#6 Be flexible and create options: Flexibility is required because negotiations evolve over time. Think of multiple options that meet your interests. Genuinely consider options offered by the other party, and be creative enough to generate new models that work for both parties.
#7 Insist on objective criteria: Stay clear of crude positional bargaining. Aim instead to use objective criteria that are focused on the merits of a solution. Such an approach produces agreements that are fair, more resilient, and beneficial for relationships.
Read on to learn more about these critical negotiation techniques, tips, and examples!
There’s always a way to turn the tables
I used to think of negotiations as large, one-off, high-stakes events – corporate M&A deals, international trade discussions, or agreements between political parties. Yet a negotiation is simply any communication aimed at reaching an agreement.
Children negotiate with their parents on the time that they will need to get up in the morning (“Just five more minutes, Dad” was a choice phrase in my younger days!). Friends negotiate with each other on which bar to head to for drinks. Employees negotiate with their managers on their workload, deadlines, and compensation. Day and night, dawn-to-dusk, negotiation is a part of who we are as social creatures.
In many situations, we may find ourselves in a weaker negotiating position relative to other parties. During a recession for instance, employees typically feel that they need to put in longer hours and hold back on their demands for fear of losing their jobs. In today’s economic climate for instance, the days of “quiet quitting” have quietly gone away. Yet a less favourable negotiating position does not imply that it is impossible to obtain what we want and certainly does not mean that we should give up.
But you need lay the right groundwork
In negotiations, as in many things in life, preparation is at least half the battle. Regardless of our relative negotiating strength, the higher the significance or value we place on the outcome, the more time and effort we should expend to lay the appropriate groundwork. Here are a few preparatory steps we can take to increase the odds of swinging things in our favour:
#1: Be clear about our objectives
Start by being clear about what we want to obtain from the negotiation and include not only our primary goal(s) but also our secondary one(s). Explicitly considering and prioritising our objectives will ensure that we are better-placed to make trade-offs between our targets and provide us with room to be more flexible and creative (something we will discuss later) during negotiations.
For instance, an employee may primarily seek to negotiate a higher salary with his manager, but may also have secondary objectives related to flexible working, improved work-life balance, or being sponsored for a professional development course. Suppose the manager says that she is not in a position to raise the employee’s salary. The employee could then consider bringing up the other objectives as potential points of negotiation.
#2: Consider our alternatives
In general, the stronger and more viable our alternative(s), the greater our negotiating strength. Conversely, without a clear Plan B in mind, we are likely to face more stress and potentially become desperate during negotiations, further exacerbating the problem of an already weaker negotiating position. In negotiations, a Plan B is known as the best alternative to a negotiated agreement (BATNA).
If we do not have a Plan B, we should aim to establish one before negotiations begin. The situation of an airport facing a labour strike of 50% of its baggage handlers asking for a 20% salary raise may look very perilous to begin with. Prior to discussions however, management explores a range of potential alternatives such as sourcing temporary labour, redirecting some flights to other airports, and filing an injunction against the strike with the courts. While none of these alternatives have to actually be employed, letting the labour union know that these options are in play will almost certainly shift the balance of negotiating strength in the airport’s favour.
In cases where we already have a BATNA, we should then do our best to strengthen our BATNA prior to negotiations, by improving its value and / or viability. The airport may consider the sourcing of temporarily labour to be its best option. To increase their BATNA’s viability, they could reach out to recruitment agencies for actual quotes or a term sheet.
#3: Prepare ourselves mentally and emotionally
Mental and emotional preparation is a key step that is frequently overlooked. In the “Art of Negotiation”, Michael Wheeler summarises some of the psychological virtues required to be a good negotiator: the ability to stay calm and alert, patient and proactive, practical and creative. While apparently contradictory, these characteristics are mutually reinforcing. When our relative negotiating position is weak, we are more likely to experience stress and anxiety, both of which have the potential to severely hamper our ability to negotiate effectively. It is therefore even more critical that we take the appropriate preparatory measures.
Setting aside dedicated time before discussions to meditate, reflect upon or even consciously visualise our desired mental and emotional states can be very beneficial. Such practices can help to put us in the right frame of mind and remind us to stay on track even when the going gets rough during negotiations.
As a negotiator, it also helps to have a mindset that is open to new ideas, and flexible enough to shift and adapt based on new learnings. This is known as a Learner Mindset, which is discussed in more depth in one of my earlier articles.
As a final step in our preparations, we should identify any potentially negative mental and emotional triggers and aim to eliminate or address them prior to negotiating. Based on the example above, the airline’s management knows from experience that their conference rooms are small, stuffy, and are associated with negative emotions from the last round of failed negotiations with the labour union. They could therefore propose to the labour union to hold the discussions at an independent conference venue.
And you need to actively manage the negotiation
Our performance during negotiations can be improved by cultivating strong relationships and understanding the underlying interests of other parties.
#4: Build a collaborative relationship
Building on the theme of mental and emotional states, the fathers of modern negotiation approaches, William Ury, Roger Fisher and Bruce Patton, in their book, “Getting to Yes: Negotiating Agreement Without Giving In”, write that “negotiators are people first”, each with their own sets of “emotions, deeply held values, and different backgrounds and viewpoints”. This human component can facilitate and ease negotiations if properly managed, or can severely derail discussions if ignored.
Whereas an adversarial relationship is likely to breed conflict from the get-go, a good relationship between parties usually makes it much easier to negotiate. Based on the example from earlier, a manager would find it more difficult to turn down an employee’s request to negotiate his salary and working conditions, if they were not only colleagues but also friends. It therefore makes sense to begin building a good relationship with our negotiating partners from the outset. Even when the other side is not initially known to us, it is possible to start building a relationship before negotiations begin. For instance, we could invite them to an informal dinner if you happen to be meeting in another city or country. Alternatively, we could also arrive early to chat before negotiations kick-off.
Use verbal and non-verbal cues to signal that the negotiation is a partnership of people looking to solve a mutual problem. From a language perspective, convey this mindset consistently and frequently. For instance, “Let’s discuss our collective interests”, “What are our shared goals?”, or “Let’s aim to crack this together so we can go get a beer!”. Arguably non-verbal cues are even more important than verbal ones. Rather than facing each other across the table for instance, move over and sit alongside your negotiating partner. We should also aim to have our posture and body language (e.g. an upright, relaxed and open posture, while maintaining good eye contact) communicate confidence but also openness and a willingness to engage.
#5: Identify the underlying interests
In “Getting to Yes”, Ury, Fisher and Patton suggest that “The basic problem in a negotiation lies not in conflicting positions, but in the conflict between each side’s needs, desires, concerns, and fears”, which we can collectively define as each party’s underlying interests.
While in some situations, the interests of each party will be in conflict, more often than not, at least some of their interests will be compatible and can be used to form the foundation of a more beneficial agreement. For instance, consider a start-up that is looking to purchase some hardware from a large IT systems vendor. On the surface, the former’s negotiating position looks relatively weak and they believe that they have no choice but to accept the initial quote from the latter. Digging deeper however, we learn that the IT systems vendor is not only interested in price and volume, but also in having a contract of a longer duration which affords more security. As they are new to the start-up space, the IT systems vendor is keen to sign-up companies that could provide testimonials to support future sales. Armed with this knowledge, the start-up could propose a contract of a longer duration (as this is also what they are looking for) but with a lower unit price. They could also offer to write a testimonial and become a reference for other potential customers, following an initial trial period.
The key to identifying underlying interests is to ask questions and to empathise with our negotiating partners. When it comes to asking questions, open questions (e.g. “What do you think about the options on the table?”) tend to provide much more information than closed ones (e.g. Do you accept this option?). Ensuring that we provide the proper framing for our questions is also critical. Let’s return again to the example of the salary negotiation, when the manager tells the employee that she is not in a position to raise salaries. The employee may want to understand why this is the case, but should provide some context to ensure that his intentions are clear. The employee could say for instance, “Could you please share more about why a salary raise is not possible? The reason I am asking this is so that I fully understand the potential challenges, and consider if there might be anything we can do to overcome them.” Please feel free to refer to an earlier post where I dive more deeply into the art of asking effective and empathetic questions.
When the time is right, focus on closing the deal
Ultimately, all of our preparations and negotiation efforts will come to naught should we fail to obtain each party’s signature. In many ways, this is the trickiest step and requires us to steadfastly insist on basing negotiations around objective criteria, while simultaneously also being flexible and open to improvisation.
#6: Be flexible and create options
The respected German general and military theorist, Erwin Rommel, once remarked that “No plan survives contact with the enemy”. This is certainly the case with negotiations, where in the course of discussions both parties will very likely uncover new information (e.g. the other party’s assumptions regarding the negotiation context, underlying interests, BATNA) and meet potentially unexpected stumbling blocks (e.g. the other party’s refusal to budge on what we had thought would be an easily addressable issue).
One way to be more flexible is to think in terms of more than one option that meets your interests. For instance, during the labour union’s negotiations with the airline, the former might learn that management expects to face cashflow issues over the near-term which is expected to only resolve in 6-9 months. Instead of pressing solely for an immediate increase of 10% in wage rates, they could potentially consider the options of a 12% raise starting in 9 months, or even a riskier but likely more lucrative profit-sharing model that could see their actual wage rate rise by 15% if cashflows improve beyond current expectations.
Flexibility also requires us to genuinely consider options offered by the other party, and if need be, be creative enough to “mix and match” components of each option to create a new model that works for both parties. In a real-life example from previous role in partnerships, my team and our negotiating partners considered a total of six different commercial models but ultimately landed on one that contained elements from three of the original options. In this case, both parties’ willingness to collaboratively brainstorm ideas and pre-alignment on objective criteria (see next point) for assessing each option was critical to success.
#7: Insist on objective criteria
One of the hallmarks of many failed negotiations is when discussions revolve around crude positional bargaining. Each party typically opens with an extreme position in the hope that a compromise is ultimately reached. A compromise, if reached, simply reflects a middle ground that frequently leaves both sides feeling as if they have lost out.
Those in stronger negotiating positions frequently default to positional bargaining in the expectation that they will be able to “bulldoze” their way toward the best deal. Just as often, those with lower negotiating positions simply cave into the pressure. There is a more effective way, and that is to insist on objective criteria.
The benefits of using objective criteria for evaluating options are significant. Such an approach focuses on the merits of a solution rather than simple force of will. When based on mutually agreed criteria, agreements are also more likely to withstand the tests of time, and offer the highest chance that the relationship between parties is maintained (or even strengthened). It also appeals to the innate human need for fairness.
In the case of the negotiations between the labour union and the airline, a discussion about wage rates and vacation days should not simply revolve around the labour union asking for a 10% increase and the airline arbitrarily offering 2%. Instead they could consider objective benchmarks such as the official inflation rate, what other airlines are offering their employees, or even the recommendations of an independent third-party arbiter.
Conclusions
You should hopefully now be convinced that having an initially weaker negotiating position should not preclude us from obtaining some or even all of our goals. However, this requires us to put in the necessary homework before discussions begin, and to both work hard and work smart during negotiations.
A central theme running through all of these practical steps is the importance of adopting a collaborative and merit-based negotiation process that is characterised by openness, flexibility and creativity. As opposed to crude positional bargaining tactics, such an approach is more likely to increase our chances of success as they tend to yield “win-win” solutions that expand the pie as opposed to “win-lose” compromises that simply divvy up a fixed pool of resources.