Monday, February 18, 2019

Afraid of Negotiations

I am never surprised to find a business executive who is a terrible negotiator. I am, however, surprised when a business person admits they are a terrible negotiator.

It takes a great deal of humility and self-awareness to concede a lack of skill at something so critical to success as negotiating. Some people have told me they are afraid of negotiations. When I ask them why, the answer usually has to do with the perception of conflict. They claim they don’t like to have difficult conversations. 

While a good negotiation should be about problem solving, and not conflict, there is no doubt the discussions can get contentious. We are all different “types” of negotiators, and what type you are will determine how you deal with conflict and what you can achieve as an outcome. Identifying what type of negotiator you are can help you become a better negotiator if you work at it.

For example, if you are the type of person described above, you are an “avoider.” Rather than deal with issues you perceive as contentious and emotional, you will avoid having the conversation. How do you change? Think about your own goals and ask how you will achieve them if you don’t actually address the issues. At some point, you will have to come to the table, or you will never get what you want.

The avoider who solves his or her problem by saying “yes” to another party’s demands is an “accommodator.” How do you know if you’re an accommodator? Well, if your customer says, “I really like what you’ve proposed, but can you cut the price by 10 percent?” and your reaction is to figure out how much you can cut the price, you’re an accommodator. Rather than ask why a price cut is necessary and what you will get in return, you immediately believe that you have to give the customer something “or else the customer will be mad or might go to the competition.” News alert: the client can always go to the competition, so that “threat” is never new. Also, if the client would drop your services because you wouldn’t lower your price, you never sold the value and won the deal. Losing on price means the client views you and the other bidders as commodities, so lowest price was always the winning factor.

If your reflex is to say, “Let’s split the difference,” you are a “compromiser.” While you may listen to the customer’s request, and think about how to respond, in the end, you give up your own self-interests to “cut to the chase” and get the deal done. This is not to say that compromising is always a bad solution. Sometimes the only way to resolve a problem is by compromise, especially if continuing to work the issue has diminishing returns. But it should not be your initial reaction to resolving an issue.  

If you say “no” and refuse to have a conversation about other options (“My way or the highway”), you are a “competer.” For a competer, negotiations are about winning, and are very ego-driven. The problem with being such a positional negotiator is it doesn’t work well when establishing a business relationship. When buying a house or a car, where relationship is less important, it is OK to focus on getting the best deal. But if you want to sell a multi-year services deal, the quality of the relationship is a critical part of the success of the engagement. In addition, as a competer, you may get your way some of the time, but you are also likely losing a lot of value by not brainstorming on other ways to address the problem and create greater synergies.

The ideal negotiator to build strong business relationships is a “collaborator.” A collaborator wants a deal that benefits her company and meets her interests, but is also focused on the other party’s interests and seeing how best to meet them. A collaborator listens actively, trying to find the clues in what will best work for the other party. She also promotes brainstorming around the engagement to see if the parties can find more value to share, so rather than dividing a fixed “pie,” they are increasing the size of the pie. A collaborator brings all the parties together to maximize the benefits, outcomes and efficiencies in the deal for everyone.

How do you improve your skills and become a better negotiator?

A woman was walking in midtown Manhattan carrying a violin case. She stopped a stranger and asked: “Excuse me, sir, how do I get to Carnegie Hall?”

The stranger replied: “Practice, practice, practice.”