Negotiation Blog

Negotiating Salary: Tactics, Blunders or Best Negotiating Practices - Part I

By Marianne Eby

The recession has resulted in layoffs, and the fortunate among us were able to turn that disappointment into opportunity, possibly even to pursue a new career or job path.  A Watershed workshop participant did just that. Here’s a chance to learn from the mistakes of someone else negotiating his salary, who we'll call Bill. To protect everyone’s privacy, we’ve changed the names.

Bill had taken our Best Negotiating Practices workshop when he was in international sales at his previous company. He had since been laid off in a recession-induced downsizing. He decided to switch career tracks, and follow his passion in international labor relations. He easily landed a temporary position at a large corporation, and after almost a year, his manager indicated that she wanted to bring him on as a full-time employee. Bill was thrilled, and stopped his job search.
 
A few weeks later an HR recruiter at his company, who we'll call Jen, scheduled Bill for an interview. This surprised Bill, as he felt that the company already knew his work quality and production. Bill researched salary ranges and prepared for the interview.
 
Bill knocked on Jen’s door and she beckoned him in, but was distracted reading a report on her computer and making comments under her breath. She then picked up another document on her desk and flipped through a few pages, laughing quietly to herself before turning to Bill. 
 
“How much do you want?” Jen asked. These were the first words out of her mouth. Bill had done his research on salaries (he knew the upper limit of $125K and the lower limit of $70K) for similar positions at the company and in the field, and had asked other colleagues about Jen’s negotiation style. He was prepared for Jen’s direct approach, and asked for $127,000 (just above top of the salary range for someone like him with a masters degree in international labor relations and 3 years of general international business experience.)
 
Jen responded, “Absolutely not.” She then told Bill that the more appropriate salary is $78,000.
 
What should Bill have done next?
Some would start negotiating up from $78K and focus on the number, and some would try to convince Jen that her market value of the position was wrong. The Best Negotiating Practice would be to refrain from engaging in bargaining from persuasion. Neither approach is recommended. The Best Negotiating Practice would be to show surprise in a congenial way (wow, that sort of salary is a surprise to me), and then ask lots of questions about the position in general. The idea would be to clarify what the company was envisioning in terms of expertise, experience, travel, visibility, etc., and only after exhausting that line of discussion, start asking about how the $78K was derived.
 

 

Negotiating Tip

Prepare, prepare, prepare and stay on plan. Don't let the other party's tactics throw you off plan. Tactics are designed to do one thing - to get you off plan. Only new facts should change your plan.


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Don’t “Just Ask”: 3 Keys to Negotiating a Raise

By Marianne Eby

 

Satya Nadella, Microsoft CEO, recently suggested that women should have faith in the “system” that will give them the right raise, rather than ask for a raise. He went further to call women superheroes for not asking. Nadella has since admitted that he was “completely wrong”. But in his mea culpa statement to Microsoft employees, Nadella got a few more things wrong, and that's where this blog begins.

In his original statement at the Grace Hopper Celebration of Women in Computing conference (GHC), Microsoft’s CEO, Satya Nadella, said that women shouldn’t ask for a raise; they should  have “faith that the system will actually give you the right raise as you go along.” He went on to say that women who don’t ask for a raise have a “super power” in that they know how to use this “good karma” of not asking in order to get what they want.

Every good negotiator knows that you have to ask for what you want, and certainly there’s been a lot said (BloombergCBCSalon, et al.) about Nadella's live interview comments. We can take some comfort in the fact that Nadella's other stories, and his post fumble tweet, give us some indication that he too can have his eyes opened and learn from mistakes -- the mark of a good leader, and a good negotiator.

Nadella was being interviewed by Maria Klawe, a Microsoft Board Director and President of Harvey Mudd College, who was very professional and passionate in disagreeing with this man she respects so much:

"This is one of the very few things that I disagree with you on."

She gave some examples from her own career, and then said to the audience:

Here's my advice to all of you. First of all, do your homework. Make sure you actually know what a reasonable salary is."

Klawe also reminded women to role-play, or practice, the ask.

Klawe was right of course. And Nadella acknowledged that Klawe was right when he issued his written mea culpa to Microsoft employees:

“And when it comes to career advice on getting a raise when you think it’s deserved, Maria’s advice was the right advice. If you think you deserve a raise, you should just ask.”

I want to share a negotiator’s perspective regarding what Nadella said in this more prepared written mea culpa. I want to talk about whether "deserving" is sufficient, and if the best way to go is to "just ask."

Deserve v Worth
Should you ask for a raise because you think it’s “deserved?”
Not exactly. You should ask for a raise because you are worth it.

You can accuse me of splicing words, but maybe the words we use to describe why we want something are critical to getting it.

You may deserve more money for lots of reasons, but are you worth it?

  • To “deserve” more connotes that you have been cheated out of something. This leave the boss on the defensive, feeling the need to protect her/his own past decisions.
  • "Worth," on the other hand, connotes value; value gets the boss’s attention. The boss starts to conjure visions of success, reward, and what happens if you leave.

Also, if you think in terms of deserve, you may talk yourself out of asking for a raise if you think the system is not able to adjust based on unique talent or results. For example, if you are working in a system that is stepped, like a training program, law firm associate, government jobs, or someone who recently got this year’s compensation increase and is not due another one for a year, you might hesitate to discuss what you “deserve.”

But if you think in terms of worth, you are more likely to initiate the conversation anyway, because a “worth” conversation leads to ideas – like higher profile assignments, other positions, switching geographic or subject areas, meetings with key leaders, etc. When possibilities emerge, you and your boss can find ways to compensate you for your worth.

Master negotiators leverage the worth v. deserve distinction all the time. Don’t pay us more, or provide a higher quality product, or meet a shorter deadline because our company deserves it after we took a hit on the last deal; instead master negotiators say (and demonstrate with legitimacy sources) --  give us more in this negotiation because our product or service is worth it. Now the counterpart feels psychologically motivated to give more.

“Just ask” v. Plan your approach strategically

“Just ask” rubs me the wrong way too. If you are worth more to the organization, more than likely you will have to show it, not “just ask.” And to do that effectively, Klawe was spot on when she said you have to do your homework.

There are 3 main considerations that should be part of your homework – People, Data and Plan B:

People Support

  • Decision maker: Who’s decision will it be? Has that person been exposed to you, and if not,  how can you get that exposure before you ask for the raise.
  • Influencers: Who influences the person who will make the ultimate decision?
  • Peer relationships: What will colleagues say about you? If asked, would they say you are worth it? Have you formed the relationships that will reinforce your request?
  • Ego needs: Know the ego needs of the person you are planning to ask for the raise. Is her/his ego need to be respected, right, in control, liked, feared, etc? Uncover the person’s ego need and find a way to satisfy it before you make the ask. If you don’t satisfy the boss’s ego need, it may conflict with your ask.

Data Support

  • Market data: How does the market value your skills, talent, position? Would another organization pay you more to come to it?
  • System Comparables: What does the internal measures say about your worth in your position? Are they paying you low for your position, or are you in the wrong position? In other words, should your ask be for a raise, a promotion and a raise, or a different position?
  • Results: What data or examples support your worth? What did you do that brought value to the organization – leadership, savings, revenue, margin, strategic partnerships, risk avoidance, team building, etc.?
  • Fairness: If you believe you are being unfairly compensated vis a vis similarly/less talented/skilled peers who deliver the same or less results, this is a far more delicate conversation and needs to be addressed with the right people. Be prepared to make fair comparisons so your credibility is never at risk in the discussions. But do make the ask - you are worth it!
  • Read more on Standards of Fairness as you negotiate.

Plan B

What’s your plan B or BATNA -- Best Alternative To a Negotiated Agreement? If this raise doesn’t work out, what are your next steps? Don’t wait. Network, share access and influence, help others. Test the market. Begin working on your plan B, or BATNA, now.

Remember...

Any “ask” is the beginning of a negotiation – a conversation about how to address your worth. To be a real superhero, don’t “Just Ask “– Plan strategically to ask for your worth! And all my fabulous male negotiator colleagues -- this applies to you too!

One absolute positive from Nadella’s comments is that the ensuing discussion is loud and hopefully has legs beyond the tech sector.

The tech industry has 30%/70% workforce split of women to men. And as reported in the New York Times, while female computer scientists are catching up and making 89 percent of what men in the same occupation make, other professions in the tech industry may not be so lucky. For finance professionals across professions, for example, women make only 66% of what men make. And across industries, another study showed that in 2013, women working full time earned only 78% of what similarly situated men earned.

Raising awareness about women lagging behind in salaries and leadership positions is always a good thing because it propels change. I always opt for controversy over silence; controversy sparks conversation, which can lead to solutions. Similarly in negotiation, controversy (you want x and I want y in exchange) drives conversation, and that conversation leads to solutions.

        (Review information on Watershed's Advancing Women Negotiators workshop.)​

Negotiating Tip

Ask "why" to understand interests. Ask your counterpart’s advice on how to achieve shared goals. Be sincerely curious.


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Hagglers in Paradise

By Marianne Eby

There are many places in the world where consumers haggle and would never pay asking price – like the souks of Marrakech and the Beijing Silk Street Market. But nowadays even the US retail stores are fertile haggling territory. Know how to extend your holiday haggling into the January 2014 retail sales bonanza.

Haggling is a cousin to serious negotiations. Haggling is the back and forth that is used to get a quick deal from someone you aren't likely to deal with again, like in the souks and flea markets. A 2009 Consumer  Reports survey found that only 28% of Americans say they haggle often. But by 2011, talk of negotiating price tags at retail stores became a common sport of savvy consumers who read Kiplinger advice columns. And now it’s so common that one click on wikihow teaches us how to do it.

As reported in the New York Times, what’s more interesting in this last holiday season is that retailers are both training their floor sales managers to haggle, and inviting the public to do so. This may be an attempt to turn the tide from consumers who use brick and mortar stores for looking, only to return home and search the Web for the best price on the same item. The retail stores are fighting back. One has trained its managers not only to meet competitors’ prices, but given them authority to beat them. And they’re not just focused on price, but are creative in offering you add ons (that may or may not meet your needs).

As consumers, our job is to answer this call to action. You don’t need to be someone who negotiates deals at your day job; you just need to follow a few simple guidelines -- the fundamentals all master negotiators hone:

  • Prepare: get information so that you know why they should lower their price for you or what else they can offer you (or you them). It’s never been easier to do research on the price and quality of what you want before entering a store, or just use your smart device while browsing.
     
  • Plan your positions: Determine your opening request (what would be the most awesome deal, but one that you can defend), and know at what point you will walk away. Write those two positions down to prevent yourself from asking for less, or settling for less.
     
  • Have a planB, whether it’s foregoing the purchase, waiting for a big sales day, or going elsewhere. Having a back-up plan (referred to by business negotiators as a Best Alternative to a Negotiated Agreement, or BATNA) will give you the confidence to ask for what you want, and to engage in a conversation about the possibilities.
     
  • Do engage! Friendliness wins every time, not arrogance. Every master negotiator knows that people give the best deals to people they like. But don’t waste the retail staff’s time on lots of small talk about the weather and yourself; use sincere curiosity to ask themquestions about the company, the job, their long day, the product or service, the other customers, the market this year. Show an interest in them and they will show an interest in you.
     
  • Don’t make assumptions that prices and terms are set in stone. At a clearance sale at a high-end retailer the other day, I asked for help with the down coats (facing our first cold winter in years). I fretted over the high price which showed a markdown of only 20%. I then asked the sales person if she could try the coat on so I could see how it looked on someone else. I added in some flattery when I saw the coat on her, and only then asked if a further reduction was coming. She whispered that that there will be a pre-sale in 3 days with another 40% off, where shoppers can purchase then and pick the item up a few days later once the actual sale begins. Knowing I would risk losing the perfect down coat, I asked if I could do a pre-pre-sale – getting the extra 40% off now, but willing to wait to pick up the coat with all the other shoppers in a week. I’ve been nice and warm ever since!
     
  • Be creative: offer them something (like cash, buying in bulk, taking the odd size off their hands, a comliment to their manager). This is where your creativity can pay off, as you give something of value that costs you little or nothing but that they value, in exchange for something you want. What value can you find, beyond the price and the profit margin, to bring into the negotiation? Would using cash save them money? Will it go on sale soon anyway? Do they work on commission and would rather you buy from the now than from their colleague on another day? Would a referral, or a positive “Yelp” review be valuable PR?
     
  • Above all, respect your counterpart as a person making a living. Haggling over a retail price, if you engage in it, is a game which involves a short-term relationship. Insulting your counterpart or being a jerk will ruin the game and most likely, your chances of a good deal.  

Want more advice? Here's 10 Tricks for Haggling Over Price at Any Store.

One more reason to haggle in this January's retail sales?

Negotiation takes practice. The more you practice, the better you become at building rapport, asking for what you want, seeing possibilities, asking questions, and leveraging your willingness to walk away. The more you do it, the better negotiator you will become.

Have fun haggling in and out of your vacation paradise!

Negotiating Tip

Be sincerely curious and ask three questions after their offer. Listen as an ally! This will tell you how legitimate they think their offer is.


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A for Apple: Impacting the Negotiation long before the Negotiation

By Thomas Wood

It may be months before you start trading concessions with your customer, supplier or business partner, but good negotiators know that every conversation preceding negotiations is an opportunity. With all eyes on Tim Cook, CEO of Apple Inc., as he follows in the footsteps of his legendary predecessor, Steve Jobs, we see a master negotiator who knows how to seize the opportunity to create value in negotiations that seemingly haven’t yet begun.

With September almost over and the school year in full swing comes the anxiety of grades, so we looked around to see who is likely to earn an A this year.  We had to take note of how Apple’s CEO, Tim Cook, handled his testimony before the US Congress at the start of this summer.  Along with other Apple executives, Cook responded to a battery of questions from the Senate Permanent Subcommittee on Investigations.  Tim Cook, who is still proving his mettle as the nation’s most famous succession CEO, ostensibly arrived on Capitol Hill to defend Apple’s corporate position on tax matters.  He had not been invited to negotiate with Congress, but to be grilled about Apple’s use of tax loopholes. Yet, he used the opportunity to influence the negotiations that inevitably will unfold on this issue over the next few years.

Tim Cook deftly and proficiently demonstrated strategies consistent with Watershed Associates’ Best Negotiating Practices®.  He reframed the issues to Apple’s advantage, was more prepared than his counterpart, and recognized and adjusted to his counterpart’s culture. 

First, Cook used the opportunity of testifying to reframe the debate.  Rather than solely responding and attempting to justify Apple’s corporate tax practices, Cook framed his corporate position based on the source of the rules. Cook accurately argued that Congress is the ultimate author of U. S. tax policy.  Cook’s defense was primarily that Apple acted completely within the bounds of the law, and that Congress owns the authority and prerogative to change the law and its specifications.  It’s the negotiator’s version of  “don’t blame us when your lawyers wrote the clause!” Reframing this debate worked as an effective negotiating strategy so far for Apple, and caused Business Week and other news entities to declare that Cook “dominated” Congress.

Second, compared to some of the Congressional Committee members asking questions, Tim Cook appeared far more prepared.  The vacuous nature of some of the “questions” posed, and fawning remarks delivered, to the Apple CEO is well documented.  Cook’s answers, by contrast, were so deliberate and thoughtful that his extensive preparation for this appearance was made plain.  The depth of Cook’s advance preparation was notable and widely observed in the Wall Street Journal's commentary. Similar to any business negotiation whether a mega-merger or spot buy, being more prepared gave Apple the upper hand that would not otherwise be easily retrieved down the road in the negotiation.

Finally, Cook seemed aware, and responsive to, distinct differences in culture between his organization—a massive, secretive, market-driven, successful for-profit corporation, and the comparatively dramatic, public and august entity that is the U. S. Senate.  At Watershed Associates, we train clients about negotiating in contexts where there are definite cultural differences -- between corporate cultures, transnational or multinational.  Our cross-cultural Safe-skills help businesses identify and assess distinctions in how their counterparts may operate, such as relationship v task orientations or collective v individual decision-making.  Variances in style and strategy with regard to time, team hierarchy, and familiarity to name a few, are to be expected when negotiations take place across cultures.  These variations need to be noted and appropriate adjustments incorporated into the negotiation plan.

Apple’s CEO recognized the most basic of these distinctions between cultures: formal versus informal hierarchies. Cook consistently (and perhaps insistently) referring to his Congressional interviewers very formally, as “Sir” and “Madam”.  Conventions of address such as these are very rarely used in American corporate activity, and certainly not in the Jobs era of Apple.  However, in other cultures—like the US Congress, but also in other countries—formal address is expected and is an effective signal of respect for the negotiation process and the negotiation counterpart. Apple corporate executives are unlikely to use these modes of address in any of their daily business, but in the business of negotiating with the Senate Subcommittee, Tim Cook acknowledged this cultural variance, and acted in a way that captured value for Apple’s objectives.

Although Tim Cook probably has years to go before he can be measured against his legendary predecessor, after Mr. Cook’s performance in front of the Senate Subcommittee on Investigations, he brought Apple’s corporate practices through unscathed, and for the moment, unchanged.  By reframing the debate, preparing extensively, and honoring the differences in organizational cultures, Mr. Cook led Apple with supreme effectiveness. Apple and its leader earned a Negotiator’s “A”.

Negotiating Tip

Reputation matters. Select a lead negotiator for the bargaining stage who is respected by both sides. They should be fair, firm, professional, experienced, trustworthy and ethical.


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Top 5 Negotiation Lessons from Summer Vacation

By Marianne Eby

Like me, many of you are returning from summer vacation. You relaxed, explored, and played. But you didn’t sharpen your negotiation saw. Or did you? Without realizing, you likely practiced your negotiation skills, and upped our negotiation quotient.  Here’s my Top 5 negotiation lessons from summer vacation:

  1. Have confidence in the process. 
    Almost two thirds of Americans work during summer vacation, as reported by the Los Angeles Times. .  We know we have to work, at least some, while we’re gone.  And yet, we go, with confidence in the value of vacation -- expecting we will come back refreshed for a positive impact on our lives. We should go into negotiations the same -- confident that if we follow a disciplined process, we will achieve predictable and repeatable results that create value for both parties. 
     
  2. Be creative. 
    Vacation presented us opportunities to play outside the sandbox. In a new place our personality wasn’t known, so we experimented with our approach or style to get the results we wanted. We experienced new things: different foods, new ways of taking photos, other cultures. Being creative with our choices allowed us to discover new things. Being creative in a negotiation allows us to find new solutions to difficult issues.
     
  3. Adjust your style and build rapport.
    People we had to deal with on vacation were unfamiliar -- hotel desk clerks, beach patrol, waiters, tour guides, friends of friends. Naturally we wanted a pleasant experience, so we explored common areas of interest to build rapport. And because so much was new and different on vacation, we asked lots of questions. Because we were sincerely curious, we listened well to the answers. Some of these people even made it into our virtual rolodex. Think of your negotiation counterpart similarly. Adjusting your style to the situation or person, and making a personal connection, builds trust. And as we all know, building trust allows both parties to share their true interests, and find hidden value in negotiations.
     
  4. Plan, Propose options, and develop alternatives.
    Most of us planned our vacations more thoroughly than we plan most negotiations – hotel reservations, addresses to enter into our GPS, must-go concert tickets. We knew the budget we wanted to keep and the money and time limits we could not exceed. When different members of our family were unhappy with the offering, we proposed options. We suggested a willingness to hike the long trail today if everyone would get up early for kayaking tomorrow. Indeed, one of the best negotiation practices is to offer options. People stay involved when they have to respond to options.  And on vacation we thought of backup plans if rain stole a beach day. Our vacation /learning-center-item/batna.htmlBATNA! Without knowing it, we practiced our negotiations skills on vacation!
     
  5. Take breaks.
    We took breaks to relax – mini-vacations within a vacation. Relaxing gave us time to reflect and rethink our needs and priorities, or to calm friction from too much time with family and friends. Taking breaks during negotiations is equally beneficial. Time away allows issue clarification, a chance to reset the emotional climate, and check in with stakeholders. Taking a breather is rarely a step back; more often it provides a renewed vigor  to work toward common goals.

We’re refreshed upon our return from vacation. And without realizing it, we honed our negotiation skills in the process. Be sure to apply those summer lesson to your next negotiation.

Negotiating Tip

Path to enduring agreements: build trusting relationships; share interests; create value as you address interests; distribute that value.


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Prevent An Ambush: Five Tips

By Marianne Eby

In a recent seminar, a client described a negotiation crisis he'd had: at a meeting he believed was going to be an information exchange with his wholesaler, he was ambushed: without warning, the other side brought a team of eight from his company, made a lowball offer, and then announced that they no longer needed our client's business.  What to do?

Our client was less stunned than he might have been -- the same person had pulled the same stunt two years before. Why was our client still doing business with him? A surprise attack is for competitive, not collaborative negotiations, since it tends to sacrifice the relationship to the outcome. And indeed, our client had avoided contact with the bully after the last deal, believing he would be gone by the time the contract needed renegotiation. Ending the relationship was difficult, because the bully's company had become our client's sole source of distribution.

When you have to negotiate with a bully, here are five tips for preventing and defending against a surprise attack:

  • Keep Working on Relationships. Like nasty neighbors, hostage-takers, dictators, oligopolies, and sole-source suppliers, a wholesaler who is has a large portion of your market is difficult because you can't avoid them -- you have to find a way to have a relationship with them. Prior to bargaining, work harder than you otherwise might to find affiliations, make gestures of friendliness, and get to know other people on the team and in the company. Even if you find the "bully" difficult to deal with, you will get to know him or her better, which will help you anticipate tactics and resist the angry reaction that a surprise attack can trigger.
  • Build a Strong BATNA. Your BATNA is very important in this kind of negotiation, because it is more difficult with a sole distributor. Finding alternatives to a deal with your main distributor requires a lot of probing, conversation, and relationship-development with other potential wholesalers and retailers. You may be able to negotiate with second-tier wholesalers, or plan an "end-run" around the bully and offer a deal directly to retailers. Do this legwork before an information exchange.
  • Develop a joint agenda. Get the other party to agree ahead of time on what will be discussed in a meeting. If an ultimatum or something comes up that you didn’t discuss when you negotiated the agenda, remind the other side that their new item is not on the agenda both parties agreed to and will have to wait for the next session.
  • Focus on Interests. One way to help distract from the hostility or negativity created by a tactic like a surprise attack is to focus on your own interests, and on the legitimate interests of the other side. What is the real reason for the hardball tactic? What do you really need out of the deal? Consider your BATNAs and the possible BATNAs for the other side.
  • Manage emotions. If you find yourself faced with a surprise attack despite your attempts to prevent it, it will be critical to keep your cool. Anger blurs thinking.  Our client wisely did not respond to his counterpart's ambush and mostly kept his cool -- then went to gather intelligence about the other side. He found that the bully had treated a number of other companies to a similar tactic, but had not met with most of them. Thus our client discovered he had more bargaining power than he realized.

Our client's plan after our discussion was to circle back to other retailers and wholesalers and explore his options and strengthen his BATNA before returning to the bully. Stay tuned for an update!

Negotiating Tip

It's helpful to get a verbal commitment of willingness to be cooperative at the start of a contentious negotiation.


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Negotiator's Keys to a Powerful BATNA

By Marianne Eby

Never enter a serious negotiation without knowing your Best Alternative To A Negotiated Agreement, or BATNA: a plan that you are willing to execute if there is no agreement.

The value of your BATNA is not just that you'll know what to do if a negotiation falls through (your Plan B) -- it's that your BATNA gives you power while you are negotiating.

On one hand, a BATNA is just another piece of important information you prepare. It is one element of your "negotiating envelope" that you must define before engaging with the other party -- along with your Goal, your Most Desirable Outcome (MDO), and your Least Acceptable Agreement (LAA). Although negotiation is a fluid process and you will continually revise your parameters in response to the other party's, this negotiation envelope guides your concessions in Bargaining.

The BATNA differs from the other defining decisions because its execution stands outside the negotiating process—by definition, it’s what you do when negotiation is not working. So while other parameters help you steer the negotiations, it is your BATNA that makes you a stronger negotiator -- because you don't need the other party’s permission or involvement to execute it.

Recently the Chicago Teachers' Union (CTU) demonstrated the power of every union's BATNA: the ability to strike. Although recent decades have seen a decline in union bargaining power, teachers unions are increasingly vulnerable, and the union leader in Chicago lacked influence with the Mayor, Chicago's teachers were able to force 300,000 students out of the classroom, shut down the third largest school system in the country, and win some key compromises from the Mayor.

Under US law, a union's potential BATNA is always to strike. Yet, many a union’s strike BATNA doesn't always have the power that the CTU's did, because some organizations will counter with their own BATNA: the use of "scabs," or non-union workers who can take the place of the striking workers. The NFL, for example, prepared for its recent referee strike by preparing substitute officials to run its games.

Of course, the implementation of a BATNA isn't always preferable (Chicago students lost instructional time) and if it's not well-planned, it can backfire as a means to more power in your negotiation. The NFL's use of replacement referees certainly backfired, causing several weeks of outrage, greater esteem for the regular referees, and ultimately some damage to the NFL "brand."

The ideal way to use a BATNA is to let the other side know you have one. Though an executed BATNA can mark the end (at least temporarily) of the negotiating process, that doesn’t mean that a contemplated BATNA shouldn’t be an integral part of that process. Letting your counterparts know—in an advisory rather than threatening way—that you have other options is an important part of your negotiating stance.

Despite the word "Best" in BATNA, you can have more than one—in fact, you should have more than one, because the more you have, the greater your flexibility and power. BATNAs can vary from a move as simple as finding a new supplier of goods or services, to one as radical as dropping a project altogether. The better conceived and more numerous your BATNAs, the less likely you’ll need them. The other side will know you have viable alternatives, which will make them more willing to deal.

Here are the main things to remember as you develop your BATNA:

  1. The more BATNAs you have and the more willing and ready you are to execute one, the less likely you will need a BATNA.
  2. Consider short-term and long-term BATNAs. Sometimes you don’t have a BATNA and must reach agreement. Be sure to continue working on a long-term BATNA for future use.
  3. Find a graceful way to ensure the other side knows you have BATNAs and you are willing to execute them. Reveal this information during the Exchange stage. In the Bargaining stage, you will decide if and when to reveal your BATNAs.
  4. BATNAs can be used as an advisory or a threat. Threats damage relationships; advisories strengthen them.
  5. If you are not willing and able to execute your BATNA, it's not a BATNA -- it's a bluff.
  6. You don't need your negotiating counterpart's agreement to develop or execute your BATNAs; these decisions are yours and your organizations.
  7. Any BATNA should be a solid, viable alternative to an agreement, and one the other party will recognize as such. The NFL learned from experience that a poorly conceived BATNA will backfire, often costing more than the originally requested concessions.

Negotiating Tip

Prepare. Identify Most Desirable Outcomes, Goals, Least Acceptable Agreements, and Best Alternatives.


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Are You Ready To Negotiate? 5 Steps To Take If You're Not

By Thomas Wood

What if you find yourself in a negotiation you're not prepared for?

At one of our workshops recently, a petroleum landman, who negotiates mineral and land rights, asked this question. Earlier that week he had received a phone call from a corporate executive with whom he eventually hoped to negotiate land leases.

He had begun his research, and knew some things about the land value, the corporate owner, and the executive. But when this executive called him out of the blue and started shooting out ideas, making offers, and using terms he didn't understand, the landman stumbled. He said that by the end of the call he had a sour taste in his mouth. The class came up with 5 powerful steps to turn lemon into lemonade.

Our client had found himself, unprepared, in the middle of a negotiation that he hadn't meant to start yet. He didn't know whether it was more important to try to capitalize on the moment, the enthusiasm, and the momentum, or whether to stall. He also wondered if the executive had purposely tried to catch him unprepared in order to gain an advantage. 

What would a master negotiator do?

There are certainly times and places for informal, impromptu bargaining. Much negotiation is accomplished at cocktail parties or business meals that are ostensibly social occasions, and in all bargaining learning to improvise is a key part of your skill-set as a negotiator.  

But improvised negotiations are an oxymoron, because they are the purposeful result of much planning. Improvised negotiations are for negotiators whose interests, positions, goals, and arguments are so familiar to them that they can talk about them spontaneously. In web designer blog "A List Apart" awhile ago, we ran across "Improvising in the Boardroom," which describes the advantages of improvising a presentation to a client if you really know your subject. "What you really bring to bear in the moment is not a rehearsed plan, but the sum total of your cumulative knowledge and experience to that point."

So when you find yourself in a negotiation or an exchange you're not prepared for, as in our landman's situation, or even something smaller in scale in the elevator or at a cocktail party, don't try to think on your feet.

Five steps you should take:

1) Stay calm. Thinking is short-circuited by anxiety. Deep breathing convinces your body and brain that it is calm and protects your cognitive ability.

2) Compliment the other party on his or her obvious expertise, and use this conversation as a chance to show respect and begin developing rapport.

3) Ask "dumb" questions (this is when "dumb is smart"). Say "clearly, you know a lot about this -- explain x to me." Change the nature of the phone call from a bargaining session to an information exchange, and take notes on answers that are useful to your process. Let them know you're taking notes, and repeat things back to them to slow the process down.

4) Buy yourself time. After a brief exchange that provides you information and builds rapport, get off the phone. Say "look, it's really great talking to you, you have some great ideas and I'm sure I'm going to learn a lot from you. I was about to head into another meeting when you called -- can I call you back?" Then do not pass go, do not collect $200, but go directly to your other meeting with yourself -- where you get back to preparing for the negotiation.

5) Prepare. Even if you have only five minutes, prepare the essentials.  Write down what you know about your and the other party's interests, likely opening offers and bottom lines, BATNAs and valuable concessions. Writing down the essentials forces you to think through your position and whether you are ready to bargain.

Negotiating Tip

When the other party says no to your offer your most powerful response is simply to ask Why or Why Not. – with sincere curiosity.

 


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Negotiation Blog

Film Award for Best Negotiating Practices

By Thomas Wood

The lead up to the Academy Awards always gets me excited about seeing great films. This year Martin Scorsese's "Hugo" and Michel Hazanavicius’s “The Artist” were fabulous, and received 10 and 11 nominations respectively. But will they win at the 2012 Academy Awards? I hope it's not deja vu of the 2011 Academy Awards, when brothers’ Ethan and Joel Coen’s “True Grit” received 10 nominations but didn’t win. Well, True Grit definitely won Best Picture for Negotiating Practices among our team of professional negotiators here at Watershed Associates.
True Grit tested the “grit” of every character’s negotiation moxy in the various negotiations that transpired in this movie, and there were many.
 
The story is tried and true:  Teenage girl seeks revenge on her father’s killer, and pairs up with two strong willed lawmen-for-hire to chase down the killer in Indian territory of the 1880s. There’s an opening scene with Dakin Matthews playing a tough and crotchety old businessman and trader, Colonel Stonehill, and Hailee Steinfeld playing the vengeful teen, Mattie Ross. As Mattie prepares to set out on her adventure, she needs resources, and she comes to the trader to negotiate for them.
 
Before he died, Mattie’s father had purchased and paid for two ponies from the trader. Her father had paid for the ponies, but the ponies had not yet been delivered to him and are still in the custody of the trader. Mattie’s father also had his saddle horse boarded at the trader’s stable. Along came a thief who, upon murdering Mattie’s father, stole her father's saddle horse, and left behind the saddle, the two ponies, and the less valuable horse Mattie's father had lent the theif.
 
When Mattie approaches the trader, her astute preparation becomes apparent. The trader is quick witted from years of experience (and a great script), but has to determine whether Mattie has a strong BATNA (plan B), or is bluffing. Mattie uses just enough friendliness and legitimacy to her advantage, while also showing she is prepared and goal oriented (a picture perfect example of Watershed’s mantra: be firm, fair and professional). The trader is caught off guard by this shrewd teenager, and to his disadvantage underestimates her negotiation skill and determination.
 
There are lots of negoiation missteps, mostly on the part of the experienced trader. There are things the trader could have learned about Mattie’s need for resources if he wasn’t caught off guard and had asked better questions. Simply by using sincere curiosity and probing more effectively, the trader could have landed a much better deal. He focuses only on dollars instead, missing low cost/high value trades he probably could have made with the girl. He also makes other common erros in his haste, such as
  • responding to her offer in a way that makes it difficult to explore Mattie's interests,
  • negotiating against himself without waiting for a counteroffer when faced with Mattie’s various BATNAs/bluffs, and
  • declaring multiple times that this is his final offer.
And yet, the trader held all the cards from the start. At the opening of the negotiation, Mattie has nothing and the trader has everything – the ponies, the payment, the saddle, the less valuable horse, and the expertise. Mattie doesn’t beg or play the victim who needs charity. She uses many Best Negotiating Practices, among them
  • an assertive but defensible opening offer,
  • legitimacy,
  • persuasive analogies,
  • a strong BATNA, and
  • a tapered concession pattern.

Mattie has almost no power in this negotiation, but she leverages something much more potent – her skill as a negotiator – her true grit.

And that’s only one of many negotiating scenes in the Oscar nominated movie from 2010.
 
See True Grit again or for the first time, and test your “grit” as a negotiator by spotting all the missteps and Best Negotiating Practices interlaced in this great film.

 

Negotiating Tip

Try not to negotiate if you are in a negative emotional mood. Research shows you will make inappropriate or unnecessary concessions.


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Negotiating Salary: Tactics, Blunders or Best Negotiating Practices - Part III

By Thomas Wood

Let’s magnify the various moves Bill and Jen made in their salary negotiation that my colleague explored in previous blogs Part I and Part II. They reached a deal, but was it to thier mutual satisfaction? We’ll categorize the moves as Tactics, Blunders and Best Negotiating Practices (BNPs). Do you agree?

  1. Negotiating Tactics – moves made for short term advantage that risk losing credibility or trust;
  2. Negotiating Blunders – moves or approaches that fail to achieve their objective or any other positive outcome; and
  3. Best Negotiating Practices (BNP) – skills, strategies and behaviors that are designed to create and capture value in negotiations.
Tactic, Blunder or BNP?
 
 
Move
 
 
Response & Impact
Blunder
Bill relied on this part-time position and didn’t have a Plan B – other interviews or networking
Bill’s failure to continue to build his BATNAs (his Plan Bs) puts him at a disadvantage
BNP
Bill prepares an opening offer and support
He is ready when Jen asks
Tactic
Jen ignores Bill at first to make him feel unimportant
It works mildly, but Bill’s preparation keeps him confident
Blunder
Jill opens the conversation without any rapport building or excitement about Bill joining the organization
Jen misses the opportunity to build an alliance with Bill, which will make it more difficult for her to learn what matters to him. She also risks him deciding against the job.
BNP
Jen asks Bill what he wants
Hearing from Bill informs Jen up front if this conversation is worth her time. But it did come with the risk that Bill would anchor Jen by opening first.
BNP
Bill opens with his prepared opening offer of $127K.
Great opening offer – high, but justifiable, and therefore credible
Blunder
Jen says “Absolutely not” to Bill’s opening, which is the same as saying “No.”
Saying the word “No” or a similar negative response shuts down conversation
BNP
Jen opens with her opening offer of $78
Jen’s opening seems appropriate – she starts low but within a justifiable range
BNP
Bill asks “Why?”
Always a great probe, when said with sincere curiosity and not as an attack. Jen is so far from Bill’s preferred salary that he can only benefit from more information.
Blunder
Bill doesn’t wait for Jen’s answer. He starts defending his stature.
Jen is unfazed because Bill isn’t engaging her – he’s presenting to her. Bill is waiting too long to start asking questions – the best way to engage his counterpart.
BNP
Finally Bill realizes that he is not convincing Jen, and starts asking lots of engaging questions.
You can’t probe too much!
BNP
Bill next asks for Jen’s advice as to what he needs to succeed in this job.
Great open-ended question. Engaging the other side is critical. Jen’s inclination now is to help Bill, rather than to win against him.
BNP
Bill asks Jen to reconsider the salary given the information they have discussed about his background and fit for the position.
Bill needs Jen to move a lot, so his open request is a good strategy. He’s giving her a way to save face if she is convinced that his salary can go higher.
BNP
Jen makes a huge move from $73 to $103K.
Jen’s first move is big, but she saves face by having reconsidered the expertise required for the job and Bill’s fit for the position.
Blunder
Bill seems inclined to accept the offer.
Bill could have asked more questions about the new salary range, and further built the relationship. Jen probably had more to give. But Bill lacked confidence due to his non-existent BATNA (plan B).
Tactic
Bill asks about getting an alternative work schedule given the lower salary than what he had anticipated.
At least Bill asked for something to justify why he would move off his opening of $127K – the alternative work schedule. It was a “nibble,” but because he knew Jen could give it, there was little risk to the relationship in employing this tactic.

 

Negotiating Tip

Contrary to popular belief, 9 out of 10 times you will benefit greatly by making the first offer.


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