Monday, March 17, 2008

A few ideas about Negotiation

A good friend of mine asked me for some negotiating tips. This is what I told her. Use, agree, or disagree with them at your own risk.

1) Never put numbers in email. Email lives forever. Numbers are only discussed on phone or in person. Only written down when you're signing the contract.

2) There's an old saying "Whoever puts the number on the table first - loses". In general, this is good fallback advice.

I modify this according to several factors:
a) The less you can predict the outcome, the more likely I let the adversary say the first number. (i.e. revenue-less company valuations are often voodoo - its quite possible your buyer will give a higher number than you ever imagined).
b) The more I need a deal, the quicker I am to say this first number. This sets a tone.
c) Conversely, the less I need a deal - I'm willing to let them show me just how bad they want it. The danger is if they give an extreme lowball, I need to be able to walk.

3) No matter what they offer, ask for more. How forcefully depends on how good the deal already is. If they offer you 10% when you were expecting 3, meekly ask for 12% and back down fast if needed. If they offer 1%, strongly go for 4% and settle for 2.5.

4) Don't answer the phone if they call to discuss the negotiation. You are probably thinking about the chicken mcnuggets you just ate and they have been thinking the last 20mins how the phone negotiation will go. In short - they are prepared, you aren't. Let them goto voicemail. Wait an hour.. spend 10 minutes focusing on the possibilities of the negotiation and call them back. Their mind will be elsewhere now. You'll be ready.

5) Seriously - don't ignore #4. Fifteen seconds is just not enough time to swap your mind into the right context. Besides, information they leave in the voicemail could be advantageous.

6) (Unless you're reading this and you end up negotiating with me - then we might as well set a time in the future to chat otherwise we'll never answer each other's calls.)

7) *Everytime* you sign a contract, you are giving up something. Take a step back and make sure you fully understand all that you are giving up - and all that you are receiving in return. Never sign a contract (or sleep with someone for that matter) because you feel bullied into it.

8) A common negotiating tactic is to put your adversary in an uncomfortable situation. The hope is that the adversary will compromise some just to relieve the discomfort (the more experienced the negotiator, the less likely this is). If you can, reverse the discomfort instead. (This is a class used-car-salesman tactic - think "But you told me yesterday you were going to buy this car!")

Surely negotiation is an art and there's plenty more to it. These ideas are at best a few tricks and tips. Negotiation is a dance - you can't exactly know what you'll have to do until you are forced to react to what your partner does. Thus just like dancing, practice does wonders for your skill.


Shane said...

I'm expecting to get a new car soon, so these tips couldn't have come at a better time for me. Thanks Paul!

Anonymous said...

Great post! Many of these negotiation tactics are forgotten or simply left out during pressing times. It's always good to see it written down on paper -- or in this case the Internet.

By the way, recently came across and am loving it. Keep up the great work.


I have been asked to join a company these tips will come in handy for salary negotiations.

Simon said...

While I generally agree with this advice, it seems somewhat adversarial. Negotiation should emphasise problem-solving and mutual understanding as well, otherwise the relationship is likely to sour.

Brian said...

While job-seeking, a prospective employer called me. Upon being asked, "are you free to talk right now, " I immediately thought, "Paul Tyma says the correct answer is no and is correct," but answered yes anyways. For the rest of the conversation and after the conversation, I regretted this decision.

#4/#5 is really excellent advice. It's somewhat tempting to ignore it (they're on the phone now!), but wow is it easy to realize how foolish it is to do so.

Anonymous said...

Great tips! I love the phone one! Thanks for your time writting those!

addcoachglen said...

I already try to use the one about what to do when answering the phone and someone wants to talk business. Loved the article. And in addition, how is it you know enough about Zwickau, Germany to use it and variations in your mailinator pages???
I know a family from there (and don't they make great wooden Christmas ornaments as well as the technical college)because it's so unusual I thought you'd like to know I noticed! I recommend mailinator use to all my ADHD coaching clients to help simplify their life.

Hans said...

For several of your advice I have done the exact opposite for years with very bad results (not my best area).

That atleast tells me that it is good advice :-D

Eken said...

Ha ha, I'd be pathetic to many commentators above, I really enjoyed the ideas about negotiations.

I'm an engineering student and even more on my field negotiations will certainly enroll me, so hands up and great stuff out there.

thanks Paul

Kathryn Sias said...

It's never a matter of just negotiation in general, it's a matter of "personality" in negotiation. Are you coming off as fair in your requests, people trust good people, and it's much easier to negotiate if you are genuinely genuine.