The Intelligent Negotiator (5 page)

If Felicia is asked about her present $42,000 salary, she plans to note two critical factors. She only works nine months per year and is contemplating a career change because of the low salaries paid to school teachers. If her $42,000 salary were calculated on a twelve-month basis, it would rise by one-third to $56,000. Since she still enjoys teaching, she would only accept a new position paying at least $60,000.

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One of the initial steps in preparing for a negotiation is to determine the items that may be exchanged. What are you willing to trade? Keep in mind that the most important goal during this step is to expand your bargaining options and bargaining power as much as possible, and to do so while maximizing the potential joint return of both participants. You can identify these items by asking yourself two questions:

1. Which items in your possession does your counterpart want?
   

2. What does your counterpart have that you wish to get?
   

Compile a list, putting as many items on the table as possible. The greater the number of items to be exchanged, the stronger the possibility for cooperative bargaining. When only one or two items may be exchanged, the encounter becomes more competitive, as “I want/They want” thinking takes hold, making it more difficult to generate mutually beneficial trades.

Remember, bargaining items do not have to be only tangible goods with objective values; intangible items may also be relevant. For example, if you are trying to resolve a dispute with a neighbor who has demonstrated that the beautiful fruit tree you chopped down was on his side of the property line, it won’t be enough simply to offer a replacement tree. An apology will be necessary as well. If you do not offer such an apology, no amount of replacement trees will be considered adequate.

Perhaps in your attempts to negotiate a lower price for a house you are thinking of buying, you criticize the size of the dining room, the absence of a fireplace in the family room, or the color of the exterior walls. These comments may offend the sellers, causing them to withdraw from the discussions even though this limits their selling opportunities. In cases such as this, it is more appropriate for you to take a self-deprecating approach. Praise the aspects of the house you do like, but indicate your financial limitations. This may generate sufficient sympathy to induce the sellers to consider a reduced price. Most people would prefer to sell their house to someone who
loves it for a lower price than to someone who has criticized their home for a higher price.

Prioritize Bargaining Items

Next, determine your bargaining priorities. These objectives can be divided into four broad categories:

1. “Essential” items
   include those that you
   must obtain
   to satisfy your fundamental interests. If these key terms are not resolved to your satisfaction, you would prefer your non-settlement alternatives.
   

2. “Important” items
   are those that you would very much
   like to obtain,
   but which you would forego if the “essential” terms were resolved favorably.
   

3. “Desirable” items
   are those of secondary value that you would be pleased to have, but which you would be willing to exchange for “essential” or “important” terms.
   

4. “Indifferent” items
   are those you would be perfectly willing to concede to achieve your other bargaining objectives.
   

Consider Substitutes

When you initially determine the value of particular items, contemplate substitute terms you might accept if you cannot obtain what you want. For example, when buying a new car, you might agree to a higher price if the
dealer includes “free” service for the first two years or an extended five-year warranty. Someone shopping for a new outfit might pay more if the salesperson throws in a lovely scarf or a tie. These are win-win exchanges, because the buyer values the additional items at their retail price while the seller values them at their wholesale cost. By sharing the difference between the retail and wholesale values, the transacting parties can agree upon mutually acceptable terms.

Similar trades can be made with respect to less tangible terms. If a new employee is given an exalted title, he or she may agree to a lower salary or a more modest office. Someone else negotiating a new job may focus almost entirely on the salary being offered. If the prospective employer offers $5,000 less than the employee believes she deserves, she may reject the deal. If she doesn’t think she can obtain a higher salary level, she should consider indirect forms of compensation. Perhaps the firm would agree to provide her with a company car she could use for personal travel or with valuable training opportunities that would enhance her future employment opportunities. These non-taxable fringe benefits may actually be worth more than the extra $5,000 in salary she was seeking.

Add Extras

Good negotiators recognize that we can rarely get everything we ask for. We also may have to forego some important or desirable items to obtain our essential demands. The Intelligent Negotiator increases the likelihood of achieving his or her critical objectives by expanding the issues being negotiated. If you merely ask for two or three
items, you are unlikely to get all those terms. However, if you include several “extra” items, you give yourself some bargaining room.

A friend once told me she was preparing for an important negotiation with her manager. She said that she especially wanted two things—a better office and an elevated job title—but thought he would not agree to both. I asked her what else she could realistically request that her manager would be unwilling to grant. She thought for a minute, and came up with a specific request: a 10-percent pay increase. I suggested that she include this monetary item with her other requests, to give her something to exchange for the two things she really wanted. When she finally met with her manager, he was relieved to give her the two terms she preferred—once she retreated with respect to the pay raise he did not wish to grant! Once she demonstrated her competence in the higher position, she did obtain a modest salary increase.

F
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Once you have a firm sense of what items are to be negotiated and have the largest possible number of items on that list, prepare cogent arguments to support each one. (That’s right, each and every one!) Negotiators who provide persuasive arguments to support the issues they want resolved in a certain way are always more likely to prevail. In addition, if you do this, you will exude a quiet confidence in your own positions that will cause less prepared counterparts to doubt the validity of their own positions.

When you prepare arguments for the items you want, it is imperative that you try to anticipate the arguments your opponents are likely to make. This is true for two reasons: You are unlikely to have your confidence undermined when confronted by claims that you anticipate. In addition, if you accurately predict the arguments your counterparts will advance, you can prepare effective counter-arguments against them.

In commercial negotiations, it is especially helpful to obtain a thorough understanding of the value of the items to be discussed. You may have to do some preliminary comparison shopping to ascertain the typical price range for particular goods or models. For many items, such as cars or services, a perusal of appropriate newspaper or trade journal advertisements may provide sufficient information. Internet shopping services can also be quite useful.

When you are negotiating employment terms, research critical information regarding the compensation plans of your target organization. Seek not only salary data but also fringe benefit packages. On occasion you might find some public information about comparative compensation programs within a field or profession. However, in most cases involving private firms, public salary information is rarely available. Industry studies or friends employed by other companies within the same industry may be able to provide useful figures. If you know people working at the specific firm involved, asking them to provide relevant information is reasonable, as long as you agree not to disclose your source.

The Intelligent Negotiator formulates proposals that are beneficial to both sides. So after you have formulated arguments in support of your positions, develop an understanding of your bargaining counterparts’ needs and interests. What are the factors that will induce your
counterparts to give you what you hope to achieve? If sales of commercial items are down, retailers may be anxious to make quick sales. If it is near the end of the month or the model year, car dealers may have corporate rebates and corporate incentives encouraging fast deals. How long have particular houses been on the market? The longer they have been available, the more likely it is that sellers have begun to lower their sights in an effort to get on with their lives. Have the sellers already purchased another home elsewhere, generating great financial pressure to take this house off their hands?

When you negotiate with family members, friends, or professional colleagues, intangible interests are often more important than tangible terms. Fairness is one such intangible item. For example, if you got to select last year’s vacation destination, deferring to your spouse’s desires with respect to this year’s choice may be the fair thing to do. Another kind of intangible interest is respect. If you are a supervisor negotiating with subordinates, try to avoid embarrassing your subordinates in front of their peers. In some instances, this may necessitate a thorough discussion of the underlying issues only
after
the subordinates have been separated from their coworkers. If the subordinates appreciate your willingness to postpone the talks until they can be conducted away from other employees, they are more likely to consider your viewpoint. If, on the other hand, you fail to wait for a propitious time and you directly challenge a subordinate in front of his or her colleagues, an unpleasant reaction may result in a needless escalation of the controversy.

Similar considerations apply to bargaining encounters with business partners. If certain proposals are likely to embarrass or anger your partners, soften those proposals when possible. Seemingly equivalent concessions may
be offered to minimize the negative impact of unpleasant discussions. Never permit your short-term interests to adversely affect your longer-term relationships, whether business or personal.

Felicia thought her two interviews went well and is pleased when she gets a call from the vice president of Andersen, the company she prefers, offering her a job. Andersen is a three-year-old retail establishment that has been selling high-tech gadgets through four retail locations and mail-order catalogs. Last year, Andersen began to expand its e-commerce and has generated increased Internet sales through its Web site. It needs a network manager who can advance its e-business capabilities. She has to meet tomorrow afternoon with the vice president to discuss the terms of her employment. The original position announcement described the basic employment conditions: a salary of “up to $60,000,” employer-paid health coverage, two weeks vacation per year, and a defined-contribution pension plan to which the firm contributes 8 percent of employee compensation.

From a friend at a similar company, Felicia has learned that most network managers at such firms earn from $58,000 to $70,000. Three to four weeks vacation is common, with pension contributions ranging from 7 to 10 percent. A few businesses have bonus programs, with bonus payments of $5,000 to $10,000 for exemplary employees during profitable years. Some have stock option plans that enable employees to purchase company stock at favorable prices. Several provide workers with company cars.

Salary is important to Felicia. She hopes to get $60,000 to $65,000. She plans to mention a $70,000 figure to the vice president to sensitize him to a number in the mid-$60,000 area. If she is unable to get $64,000 or $65,000, she plans to ask whether she could earn a several thousand dollar bonus for good performance. She will also ask whether the firm would consider a raise within six months if her work is excellent.

Felicia plans to ask for four weeks of vacation, hoping to get Andersen to offer at least three weeks. The 8 percent Andersen pension contribution seems fine, and she doesn’t need a company car. If necessary, however, she may mention the fact that several similar firms supply network managers with cars in an effort to obtain a higher starting salary or an extra week of vacation.

Although Felicia has a graduate degree in computer science, she wants to take several week-long training programs that pertain to specific software applications. Because these courses would enhance her value to the firm, she wants Andersen to pay for these classes and give her the time off. She also plans to ask the company to pay her dues in several professional associations. Since Bill’s agency would pay for most of their moving expenses, Felicia plans to use this item as a bargaining chip to obtain other benefits. She will mention the $5,000 they expect to incur in moving expenses, and agree to forego moving expense reimbursement if she can obtain permission to attend company-paid training programs and get the firm to pay her association dues.

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