Posts Tagged ‘negotiate’

« Older Entries
Newer Entries »

Negotiation Firestarter: The Take It Or Leave It Tactic

Thursday, January 8th, 2009
Take It Or Leave It Is A Negotiating Tactic That Can Cause Hostility

Take It Or Leave It Is A Negotiating Tactic That Can Cause Hostility

If you really want to set off the other side of the table during a negotiation, one great way to do this is to tell them that they can “take it or leave it.” This is pretty much the verbal equivalent of throwing gas on a fire – you are guaranteed to generate hostility on the other side of the table when you use this phrase.

We react in exactly the same way if the other side tries this tactic on us during a negotiation. This is understandable; however, if we take just a moment to think about it, we should probably be used to dealing with this negotiating tactic.

The deals that are presented to you in the course of an average day are almost all of the “take it or leave” it nature. You see these types of deals in the insurance bills that you get, the groceries that you buy, and the parking ticket that you pay. Although they might not say it explicitly, these are all subtle forms of the “take it or leave it” tactic.

Before you decide to burst into flames the next time that someone uses this tactic on you, take a moment and give some thought to why the other side might be using this tactic. They have decided to only offer a fixed price and here are some of the reasons that they might be doing this:

  • They don’t want every one of their employees to have to have good negotiating skills or to take the time that a negotiation requires in order to successfully complete a deal.
  • They might be willing to negotiate with you on this deal; however, they don’t want to have to negotiate with you in the future.
  • If they negotiated with you and ended up lowering their price, then they would have to lower their price for all of their customers.
  • They know that you cannot afford to “leave it”.
  • They have already dealt with many other customers who had no problem paying their fixed price.
  • They can’t afford to lower their price any more because they are already selling at their rock bottom price.

When you look at it this way, you’ll realize that most business is normally done using the “take it or leave it” tactic no matter what we choose to call it. We need to realize that many prices are set because of existing laws or regulations.

If you find yourself in the position of having to use the “take it or leave it” tactic during a negotiation, then you need to search for ways to reduce the natural hostility that this is going to cause in the other side.

Here are the best methods for reducing hostility when you decide to offer only a “fixed price” to the other side:

  1. Show the laws / regulations that are causing you to have to offer the product at the stated price.
  2. Show the company policy that requires the product to be offered at the given price.
  3. Publish a price list.
  4. Publish a standard list of discounts.
  5. Display the price of your product / service where everyone can see it.
  6. Provide proof that shows all potential customers that the price that you are using is the same price that is being offered to everyone.
  7. Simply make sure that you provide a good justification for the price that you are using.

As always in any negotiation situation, the more discussions that can be held face-to-face the better the negotiations will go. Listen to what the other side has to say and make sure that everyone has a chance to save face and come out ahead.

Have you ever been confronted with a “take it or leave it” deal during a negotiation? How did you react to this? Have you ever had to present a “take it or leave it” proposal to the other side? How did they handle it? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , , , ,
Posted in art of negotiation | 4 Comments »

Succeed By Bringing The Ghost Whisperer To The Negotiation

Thursday, January 1st, 2009

Don't Look Now, But You're Negotiating With More People Than You Think You Are

Don't Look Now, But You're Negotiating With More People Than You Think You Are

So there you are, sitting across the the table from the other side starting a negotiation. If only you are able to use your considerable negotiating talents to convince them that what you want is best for them, then you’re sure to get what you want – right? Nope, it turns out that although you might think that it’s just you and the other side talking, it turns out that room is actually crowded with negotiating ghosts that you’re going to have to learn to talk to…

The other side of the table rarely represents just themselves. No matter if you are trying to buy a car from them or sell them a house, you are really talking with someone who is really part of a larger organization. This can be a whole company, a spouse, kids, a banker, etc.

What this means to you as a negotiator is that the other side is going to have to satisfy the demands of their extended team (upper management, sales, the union, the spouse, etc.). They are going to have make sure that everyone on their side has their needs met before they can reach an agreement with you.

Although there can be quite a mix of people whispering into the other side’s ear, there are four common characteristics that all of these impacted parties will share:

  1. Not All Will Agree: This means that there will be conflict among members of the same team. If they can’t agree, then this will impact the other side’s ability to agree to your proposals.
  2. Nobody Is The Same: All of the different individuals that the other side is representing have different needs and different priorities. This may be why the other side seems to be changing their direction so often.
  3. Not All Are Equal: Although there may be multiple parties whispering into the other side’s ear, not all of them have an equal role to play when it comes to making a final decision.
  4. Not All Benefit The Same: Just as all are not equal, so too not all will benefit the same amount from whatever deal you are negotiating.

All of these Ghost Whisperer issues lead you, my dear negotiator, to one simple conclusion: you need to come up with a way to deal with all of these “negotiation ghosts”. Here are four tips for doing so:

  1. You need to find out who is really making the decision on each issue in the negotiation. Keep in mind that it might be a different person for each issue.
  2. Make sure that you get commitments from the people behind the other side when it comes to the value of the thing that you are offering and the validity of your offer.
  3. Have the fundamental realization that the other side will be unable to give you the “yes” that you are looking for until his people allow him to give it. This means that your job is really to help him to get them to give him permission.
  4. Oh yeah, you’ve got the same issues – you are really negotiating on the behalf of many different parties. You need to be a good enough negotiator that you are able to get your people to approve your ability to reach an agreement with the other side.

When you negotiate, whom do you have whispering in your ear? Have you even negotiated with the other side when you didn’t know who they needed to please? How did you handle this? Has a deal ever been agreed to and then nixed because some outside party’s approval was not given? Leave me a comment and let  me know what you are thinking.

Tags: , , , , , , ,
Posted in authority | 2 Comments »

So Just How Do You Negotiate With Pirates?

Thursday, December 18th, 2008
Pirates Aren't Just In Movies - So You Had Better Be Ready To Negotiate With Them!

Pirates Aren't Just In Movies - So You Had Better Be Ready To Negotiate With Them!

Negotiating is both an art and a science. We study what works and what doesn’t in order to make sure that the next time that we are in a business situation in which somebody has something that we want, we are able to negotiate to get it. But what about pirates?

The newspapers are all abuzz about the pirates who are operating out of Somalia. So far this year, there have been 96 pirate attacks this year. 40 of these attacks have resulted in pirates boarding a ship, taking over control, and then demanding a ransom for the ship and its crew. World wide there have been 83 reported pirate attacks in the 3rd quarter alone.

When pirates capture a ship, they then demand a ransom in order to release it. These ransom demands are generally in the range of $1 – $2 million dollars. However, in the case of a Saudi oil tanker the ransom may have been as high as $15 million dollars.

What is a ship owner to do if his ship is captured by pirates? Apparently a lot of them are calling Holman Fenwick Willan, a London maritime firm. HFW has 6 lawyers who are currently working on pirate cases. Ashby Jones wrote an article in the Wall Street Journal in which HFW stated that they are working on “over a dozen” of the 20 pirate hijackings that have occurred in the Somalia area.

So just how does one negotiate with pirates? At HFW, their first job after being notified of a pirate highjacking is to calm their customer’s fears – nobody seems to know how to react to this sort of thing.

The next step is straight out of the negotiators handbook – do some research. HFW then works to find out just where the hijacked ship was registered, oh, and where exactly the hijacking occurred. This will set boundaries around the negotiations and will determine what laws are in play and will determine who is liable.

The issue of paying a ransom is, of course, a big deal. One key question that the negotiator needs to resolve right off the bat is if it is even legal to pay a ransom. It turns out that under U.K. law, paying a ransom IS legal and that’s important because for some reason most marine insurers are located in England.

The actual negotiations with the pirates are, to put it mildly, stressful. The negotiations are conducted by negotiators that HFW obtains for their clients. Forget suits and ties, this special breed of negotiators generally come from the miltary special forces. Probably the right men (I think that I can be sexist here) for the job.

Once a deal has been struck and the ship has been returned to the crew, the negotiations are not over. Indeed, they are often just beginning. The boat owners will now start to negotiate with the firms who were shipping cargo on the boat in order to get them to reimburse them for part of the ransom that was paid. These negotiations can drag on for a very long time.

We are all privledged to live in the 21st Century; however, sometimes aspects of the 1800′s, such as pirates, intrude into our world. Thankfully the negotiation skills that have been developed over the centuries serve us just as well now as they did then.

If you were called on to negotiate with pirates, what research would you do? Do you think that they would have the power in the negotiation or would you? Would creating a solution with mutual satisfaction be important to you in this type of deal? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , , , ,
Posted in art of negotiation | 2 Comments »

Whatever Happened To That Boeing Negotiation?

Thursday, October 2nd, 2008
Boeing Workers Are On Strike And Everything Is Shut Down

Boeing Workers Are On Strike And Everything Is Shut Down

We’ve talked before about the labor negotiatons and the strike that is happening at Boeing. Since we last talked, the International Association of Machinists and Aerospace Workers has gone out on strike against Boeing. This has caused Boeing’s commercial airplane factories to be idled for over three weeks so far. Probably what’s even more important here is that this strike is starting to show signs that it could turn into a protracted standoff. Where’s a good negotiator when you need one?

There appear to be two major issues on the table right now: job security and rising health care costs. Both sides seem to feel that if they are the first to suggest a resumption of negotiations, then the other side will believe that they blinked and will negotiate from that position. The end result of all of this is what we’ve seen in other negotiating situations: the party that hurts the most will be the party that requests to resume negotiations. The strikers will start to feel the pinch from their lost paychecks soon and Boeing is rumored to be losing $100M per day of the strike. Oh, and Boeing has the extra problem that their suppliers are going to start to get skittish when they can’t deliver and can’t get paid.

Federal negotiators have become involved (that’s where the negotiators are!). The union has presented a long list of items that they say must be addressed before they would be willing to accept a new contract. Boeing is trying get the union to shorten the list before they will agree to participate in the negotiations.

Doug Kight is the lead negotiator on the Boeing side. What’s interesting is that Doug is the head of HR and as been so for the past two years. Before that he was a lawyer. Hmm, that’s all good stuff, but how good of a negotiator do you think he is? More importantly, has he been involved in major labor negotiations before?

Folks close to the strike believe that it could last 45 days or more. The workers have missed one paycheck so far and the union has started distributing strike pay of $150 / week per member. Meanwhile, suppliers are starting to furlow their workers in order to not create too much of a backlog of parts.

So negotiators what needs to happen here? First, the two sides definitely need to get back together and start talking. It really doesn’t matter what they talk about, just start talking. Next, they need to find some common ground. If the union has been able to create a long list of demands, then that’s the place to start. Boeing needs to agree to some minor issues and push back on others. This will get the ball rolling. They’ll encounter big issues that can’t be solved right now, but that’s ok – put them off to the side. Eventually all that will be left will be the big issues. Perhaps everyone can agree to go back to work while these are worked on? If not, then both sides need to be willing to give in some. Boeing won’t be able to get all of the health costs that they want to push to the workers to be agreed to. However, they can probably get the workers to take up some of the costs. Boeing needs to find ways to keep its workers healthier so that their health costs go down due to lifestyle changes. Boeing can probably get permission to allow some suppliers to get closer to the production line. However, they aren’t going to get everything that they are asking for. The workers will have to give a little, but not too much. The real question is just how long it’s going to take before both sides can get here…?

What do you think that Doug Kight should do? Do you think that Boeing or the strikers should make the first offer to go back to the negotiating table? How do you think that whomever makes the suggestion can not appear to be weak? Leave a comment and let me know what you are thinking.

Tags: , , , , , , , ,
Posted in strike | No Comments »

Say Hello To The Bogey-Man – A Negotiator’s Best Friend

Tuesday, September 30th, 2008
When Negotiating, The Bogey Is Your Best Friend

When Negotiating, The Bogey Is Your Best Friend

As a negotiator, the key to your long-term success is to have a number of different techniques that you can use when a situation calls for it. One way to think about this is like a carpenter who has a tool belt with his most commonly used tools on it. As the carpenter is working on a job, just about any situation can be solved with one of the tools that he has close at hand. Today we’re going to talk about the negotiation equivalent of a carpenter’s hammer: a practical, simple, and ethical tool that everyone should know how to use. What’s this negotiating tool called you say? The Bogey.

The easiest way to define what the Bogey is, is to show you it in action. Let’s say that you want to have your house painted. You have a contractor come out to the house, he looks it over, and then he gives you a quote for $20,000 to do the job. You then tell the contractor “Hey, I love your proposal and I think that you do great work; however, all I have to spend is $17,000 that I got from an insurance claim. Here is a certified check for that amount.” The painter accepts your offer and gets to work.

So what happens when you use the Bogey technique? There are three fundamental principals of negotiating that are at work here and it’s important that you realize what they are:

  1. By complimenting the painter, you have boosted his ego. He realizes that you now expect something from him in return. In a subtle way, you have actually asked for his help and in most cases you will usually get it.
  2. In all negotiations, the seller knows more about his product than the buyer ever will. The Bogey is one way that the buyer can give the seller a chance to show what they know about the product.
  3. One of the fundamental rules of negotiating is that there is always a better deal available for all parties that are participating in the negotiation if only they are willing to search for it. The Bogey technique is how the search for this better deal starts.

When you present a Bogey to a seller, the seller generally won’t roll over and accept it. Instead he will come back with a more complete description of what he is selling to you: the quality of his product, his workmanship, the quantity of different items included in his quote, etc. Out of all of this you will now have a much better understanding of what you are buying. Now the real negotiation begins. The seller may lower his price, drop some options, change the delivery schedule, etc. No matter where it goes from here, you will end up ahead of the game.

Have you ever used the Bogey technique when you were negotiating? How did it work out for you? Has someone ever used this technique on you? How did you react as a seller – did you start to describe all the values of your product / service? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , , , ,
Posted in how to negotiate | 1 Comment »

« Older Entries
Newer Entries »