Negotiation skills

Matthew Crouch has undertaken his fair share of negotiations, and provides a few tips on helping you get what you want.

 

Story by Matt Crouch

 

I had a great time at Christmas with my young family. Christmas Day started nice and early with our daughters, both of whom are usually happy to snooze well into the morning, bouncing on our bed to wake the missus and I from blissful slumber:

Daughter (9, between bounces) – “When can we open the presents?”

Me (over 40) – “Geez, what about the true meaning of Christmas?”

Daughter (4 going on 44, on the off-beat bounce) – “Yeah, presents!”

Me – “Well how about we all just have a little snooze and a cuddle?”

Daughter (4) – “Okay, just one snooze and one cuddle – then presents!”
 

I was later struck with just how early in life we begin our career as negotiators. Even for a four-year old, the conditional nature of a deal is well understood: If I do this for you, you have to do that for me. Sticking to a deal (“I promise I will eat all of my veggies”), now that is an entirely different matter!

As a lawyer I am often involved in negotiations on behalf of clients.  And over the years I have encountered many negotiating styles, ranging from the very amicable to the downright hostile.

In one case, late at night after a marathon session, my opposite number swore at everyone around the table (including his own client), walked out of the room and blustered that if the rest of us didn’t resolve the particular issue at hand within 20 minutes he would throw us out – and we should all go forth and multiply (but not in those words!). Indeed, typical of his type in my experience, the culprit on that occasion came back into the room after five minutes as though nothing had happened. But what if we had called his bluff and walked?

The spectrum of negotiators at one extreme has those who see the process as one in which they must win; and this necessarily means that their counterparty must lose. This is otherwise known as a “nil-sum game” approach, since the winnings and the losses cancel each other out. These negotiators are often “alpha” types (dare I say it, usually males!), not unlike my colleague mentioned above, who are used to getting their own way.

At the other end of the spectrum are those who are so uncomfortable with anything remotely confrontational that they give away the farm much too early. For them, the endgame and the handshake cannot come too quickly, because its spells an end to conflict.

Most of us fall somewhere in between. But knowing a little about negotiating styles and tactics can go a long way in helping us get what we want. And that is a good working definition of what negotiation is all about – persuading your counterpart to let you have what you want, whether that is the removal of a harsh indemnity clause from a contract or permission to tear the wrapping paper off a Christmas gift.

In my experience the most effective negotiators are those who can see the possibility for a win-win outcome, where both parties end up with what they want, or a good chunk of it.

So what of our friend who is so quick to threaten the walk-out? The threatened walk out can be a useful negotiating tool, but only if you know your so-called “BATNA” or best alternative to a negotiated agreement. In other words you shouldn’t threaten to walk out and abandon the negotiations if the best alternative deal open to you is not as good as that currently on offer.

The trouble, in my experience, is that so often the negotiators who threaten “my way or the highway” have not really worked out their BATNA and have used the tactic as an expression of their simple need to win the argument. Also, many negotiators over-estimate their BATNA, ignoring the fact that, very often considering all the circumstances, the bird in the hand is worth more.

Working out your BATNA means not just assessing the price you can get elsewhere, but also involves working out the costs of converting that alternative to a done deal. By the time the alternative deal can be struck, how much time, expense and opportunity has been lost – and how much goodwill have you lost with the current counter-party?
Space has beaten me again – more on this topic next time! And – happy new year to you all!

 

For further details contact Matt Crouch on (02) 8281 7800 or email mcrouch@bartier.com.au.