What CEOs Need to Know About Hardball Negotiating
October 11 2011 by George Nicholas
For more information on successful negotiation, check out Six Do’s and Don’ts for a Win-Win Negotiation.
The negotiation is moving along nicely and it looks like a deal will be reached — but suddenly the opposing party makes a stiff demand. What’s going on? You’re encountering a tactic commonly used by hardball negotiators, authorities say. It’s what one of them calls the “hovering pen strategy” and another, the “ninth inning zinger.”
Your opposition is trying to wring another concession from you. Maybe they believe you can’t walk away from the deal, or you’re up against a deadline, or you’re getting fatigued or you’re willing to settle because you’ve invested so much time negotiating already.
“If the negotiation is going smoothly and both sides are in it for a win-win outcome, such a demand may be regarded as a dirty trick,” says John Golden, CEO of Huthwaite, the sales improvement consultancy. “Beware of the phrase ‘We are almost there,’” warns Linda Richardson, author of ten books on selling and sales management.
Walk away from the deal if it doesn’t meet your minimal expectations, authorities on negotiation and complex selling stress. The deal doesn’t have to cover all your wants but it must cover all your needs. Always remember what the experts call your BATNA, or your Best Alternative to Negotiated Agreement.
Sometimes the ninth-inning demand is so unreasonable that it has to be rejected out of hand. “If the demand is too stiff it’s probably not from an experienced negotiator,” according to Neil Rackham, a researcher and author on sales processes. “Experienced negotiators make demands at the very edge of acceptability.”
Prof. Don A. Moore of U. Cal.’s Haas School says you can play hardball too. “It’s okay to say ‘This is bad faith negotiating and I’m walking out because you’re wasting my time.’ Don’t feel at a disadvantage and don’t panic. Don’t start giving things away,” he advises.
Consider your adversary’s sudden surprise in light of your experience in the negotiation thus far, recommends Bob Zagotta of Project Leadership Associates. You’re more likely to come to terms if the two sides have been able to reach consensus on the difficult issues that have come up.
The authorities interviewed for this article stress that any concession given should be matched by a concession gained. They advise negotiators to make concessions that the other side will particularly value but cost little to provide. This is the “bigger pie” theory, where the parties join forces to create value rather than try to take each other’s share. Putting lots of issues out there at the negotiation’s start allows lots of trade-offs.
As you make tradeoffs, you can ask for a concession that you hadn’t brought before or one that the other side rejected that you now want to put back on the table, advises Michael Schatzki of Negotiation Dynamics.
“Always, always, always ask for something in return if you are going to make a concession,” stresses Keld Jensen, managing director of the MarketWatch Centre for Negotiation, at the University of Copenhagen, who has written 16 books on negotiating. If you’re faced with a last-minute demand, he favors using silence to make the other party explain its rationale. “The first thing to do is nothing,” he says.
Be a tough trader, everyone agrees, but aim for harmony rather than dissonance in your talks.
A negotiation will create more value and is less likely to involve a last-minute surprise demand if the parties begin their talks by making a strong effort to understand each other’s needs, commit themselves to forging a solution that satisfies both and establish a trusting relationship. “Excellent negotiators discover perceptions, feelings, attitudes, motives, beliefs and personality,” says Huthwaite’s John Golden. “The deeper you see, the more you trust and the more you trust the more likely you are to cooperate.”
Begin your research well before the negotiation starts, recommends Ms. Richardson, who chairs Richardson, a global sales training firm, and teaches sales and management at Wharton. “Don’t negotiate until you understand the needs of the other person — and he/she understands the value you bring. The other party can give you lots of information early on. They’ll be more guarded at the table.” If you’re the seller, she suggests, ask exactly who the competition is, what’s being offered and how the customer feels about it.
As the negotiation plays out, you can learn a lot about what’s important to the other side with careful observation. What issues does your adversary return to constantly? What issues cause stress? What issues does the other party talk about rather than listen? What issues cause the most stubbornness when you ask for a compromise?
Be free, though guarded, with the information you give — but be sure not to reveal you have a deadline, or even a plane to catch. You’d be inviting a ninth-inning zinger.