Natalie Reynolds, CEO of advantageSpring and author of We Have a Deal delivered the first Westminster Business School Masterclass on Thursday 15 September, kicking the evening off by answering the question posed in her title: “No, and it’s a shame we have to ask it, but we do”. Natalie trained as a barrister, and started her career working in government. She developed a fascination both with the negotiation process, and the extent to which so many people disliked – and tried to avoid – negotiating.
This is part one of a two-part edited transcript of the event.
“Throughout every role that I had, whether I was negotiating on policy, advising ministers on implementation of commercial contracts, negotiating outsourcing agreements,” she says, “the same things came up again and again and again. I ended up working for one of my now competitors, a big global negotiation training firm – one of the biggest in the world. I worked there for three years and travelled the world training major corporates how to negotiate. I loved my job. I had a great time doing it, and it was brilliant.
But, I believed that what they taught was just scratching the surface. I believe that you can teach a process about negotiation, but actually, we need to understand the psychology of why we do what we do when we’re seeking agreement. To sum it up, you might make me a proposal and this gentleman here might make me the exact same proposal, but I might choose to say “yes” to you and “no” to him.
Why? What’s prompted that decision? What has influenced my decision-making? We need to understand that as much as we do anything else. And clients were asking me whether or not unconscious bias influenced how we negotiated. I was particularly interested in gender, so I started to research. I spoke with academic institutions, particularly in the States who were looking at this.”
On her return from maternity leave, Natalie was told by the (all male) board that they wanted her to stop doing “the woman thing”. So, as she explained, “I quit and founded advantageSpring. We work with global corporates, teaching whoever’s negotiating – pretty much everyone – how to negotiate effectively. We work out of London, Hong Kong and New York and I still, very proudly, get to do “the woman thing”, though our pro bono programme, working with UN Women, the Clinton Foundation, the NSPCC, delivering negotiation skills to people who really need them. This isn’t just about negotiating a contract. This can be life or death for some people.”
Negotiation is a life skill
Natalie’s Masterclass covered
- Why negotiation matters
- Common negotiating mistakes
- Gender stereotypes
- Five top tips to allow you to be a brilliant negotiator (to follow in a future post)
Why negotiation matters
Let’s start at the beginning with what we mean by negotiation. Negotiation, we believe, is the most important skill in business and in life to get what you want, need or deserve. We do it all the time. We just don’t always realise that we could be doing it, should be doing it, are doing it, or, indeed how to always do it as effectively as we could. You might negotiate with your colleagues in relation to deadlines. Who’s going to deliver the difficult message to the boss? Who’s going to nip outside and pick up the coffee for everyone? You might negotiate with your boss in relation to salary, promotion, pay rise, location, terms and conditions. You might negotiate with customers or clients of your business, and you may also negotiate with contractors and service providers into the business. But we don’t just negotiate in the workplace. We negotiate in our personal lives as well.
“If you… then I…”
I wake up most mornings, turn to my husband Chris and say “If you walk the dogs, I’ll get Leo ready for school.” And I tend to say that on cold, grey, wet windy mornings. There’s a very simple phrase that I’m using with my husband: “if you… then I”. “If you can do this for me, then I can do this for you.” We also negotiate with our wider family. Every year I end up negotiating with my mother in law about where we’re spending Christmas that year, and actually … I don’t do very well on that one, I have to say. That then leads me on to children.
Children are master negotiators. I have a four-and-a-half-year-old son called Leo. In fact my book is dedicated to him. I’ve dedicated it to Leo as the most fearless, wily and persistent negotiator I know.
There’s a reason why children are so effective at negotiating. It’s because they have this absolute ability to focus purely on the result and will do whatever it takes to get that result. So, for my little boy, who’s four and a half, the results he tends to want to achieve are staying up late and eating chocolate for breakfast. In order to get those things, he will do whatever he needs to. He will shout. He will scream. He will throw himself on the floor. And, quite frankly, if I’ve had a difficult day, or I need to get out the door, I tend to give him what he wants. Now I’m not suggesting that’s good parenting. But we can learn from children. I’m not saying that every time you go and negotiate the terms of a contract or a salary you adopt those strategies. That won’t help.
The fear of not being liked
What we need to realise is that, as children, we are relatively unconcerned with what people think about our behaviours. We’re not that concerned if we throw a tantrum about what people might think, because, you know what? It’s just our mummy and daddy and they love us anyway, so it doesn’t really matter. But the older we get, the more concerned we become with how other people view us, whether or not they like us, whether or not they think we’re reasonable or not. For some people, the fear of not being liked can be crippling. At the negotiating table, that can really hold them back in focusing on what they want.
It’s not that you shouldn’t care at all about whether your counterparty likes you, because the science of influence tells us very clearly that we are more likely to say “yes” to someone we like. But in that instance, likeability is driven by similarity. You’re more likely to say yes to someone with whom you have common ground, which is why every good sales person knows, find the shared link. Find if you went to the same school, if you support the same football team, if you like the same music. Whatever it might be.
The liked and respected test
So, when it comes to negotiation you shouldn’t be so concerned with them liking you, that you end up not pushing for what you want. For me, the test is the liked and respected test. In negotiation, in business, would I rather be liked or respected? Well, ideally, I’d have both, but if I had to pick one, I’d pick being respected.
That leads me to the counterparty that we so often neglect, the counterparty that influences the outcomes in the vast majority of our negotiations. We just don’t realise it. I’m referring to the negotiation we are doing constantly, with the little voice in our head. And we all have a little voice in our head. It’s just that some are better at controlling it than others.
The little voice in our head
The little voice in our head tends to speak to us when we least want it to or need it to. So, normally, when we’re stressed, anxious, nervous, under pressure, or under a deadline. It focuses in on all the reasons why we feel insecure about what’s going on. Classic example, of course, is you’re going to negotiate your salary. You’ve done your research, you’ve done your preparation, you’ve got the number in your head, you’re feeling pretty good, and you’ve got the meeting in the diary. And as that meeting gets closer and closer and closer, your heart starts beating faster, your gut starts churning, your palms start sweating, and, as you walk into that meeting, all of a sudden, the little voice in your head kicks in and says to you “d’you know, you probably shouldn’t say that. It’s a little bit over the top, isn’t it? You can’t prove that other people are paid that, because they told you in confidence. Maybe there’s a reason they’re paid more. Maybe it’s because they’re smarter than you. And if you then ask for that, they’re going to think that you’re an idiot. Probably best you say nothing at all, eh? Or say this instead.”
And then you say something completely different to what you planned to say. Or, you say very little, and just go along with whatever they suggest.
The little voice in the head is a very real phenomenon. And what we preach to people is you have to negotiate with yourself long before you get anywhere near the real negotiation. It’s a fundamental part of the success of the negotiation
Negotiation is so important, it’s a fundamental part of what it is to be human, it’s how we get things done, it’s how we establish boundaries, it’s how we manage risk, it’s how we look for solutions. It’s a fundamental part of our DNA, but we do tend to struggle with it. When I was writing my book last year, I did a lot of research, and I started to identify a number of common negotiation mistakes.
Three negotiation archetypes
So these are mistakes that are made the world over, regardless of industry, regardless of expertise. In the book there are 20 common negotiating mistakes and I don’t have time to go through all of those for you tonight. So I’ve whittled it down to three negotiation archetypes. The people that we see again, and again and again. And I want you to see whether or not you recognise yourself in any of these three negotiators. And if you do, my advice is stop being this type of negotiator if you can.
These are people, who, as the name suggests, will go to great lengths to avoid negotiation completely or to massively limit the amount of time they spend negotiating. And in my view, there are three core reasons why people avoid negotiation.
The first one is probably the biggest. A lot of people avoid negotiation because they just do not like how it makes them feel. They see it as conflict, they see it as combative, they find it uncomfortable and awkward. It’s a very physical response. Other people will avoid negotiating because they think it’s a waste of time. They’ve done that kind of deal hundreds of times before, they know exactly what the outcome’s going to be, so let’s just cut to the chase. It’s a waste of time. The third reason a lot of people avoid negotiation, is because they don’t want to damage the relationship with the person they’re about to negotiate with and they think that if they negotiate too hard on something, the relationship will break down or be compromised.
There is a massive issue with avoiding negotiation. Negotiation is a necessary ritual. It’s how human beings get things done. We need to recognise that human beings like to be given the chance to establish the best deal they can for themselves. We like feeling like we’ve got the best outcome and we’ve been part of shaping that.
Human beings value the things they work hard for
We also need to recognise that human beings value the things they work hard for. If you work hard for something you value it more. If something is too easy, we will start to wonder why. Maybe not immediately, but we will eventually.
I’m looking to buy a used car. I’ve got a budget of eight grand. One day, I go on Autotrader and I type on the make and model I’m looking for, £8,000 and my postcode, and a new listing pops up. So I call up and go and see the car the next day. The car looks good, I look under the bonnet, no idea what I’m looking at, but I do it anyway, look at the paperwork, give it a test drive. When I’m driving back round the block, I know I want this car. But, because I’m human, I want to see what the best deal is that I can get for myself.
So I say to the seller, “I like this car. And I don’t want to waste your time, and I’m going to make a serious offer. And the offer I’m going to make you for this car is six and a half thousand pounds.” Now, imagine, he as a seller, looks at me and goes “six and a half thousand? Brilliant! You’ve got a deal! Nice doing business with you. Thanks very much!”
He shakes my hand, I walk home. What am I thinking? What’s wrong with the car?, Could have paid less, Why was it so easy? What’s wrong with it?
Now, interestingly some of you might be sat there very quietly thinking I’m not thinking that. I’m just thinking I’ve got the car of my dreams for a grand and a half under the asking price. What’s not to like?And I always say that, trust me when I tell you that you might well think that, but you will only think it for around 12-18 hours. Fast forward to the next day when you’re sitting with a cup of coffee in your kitchen, that little voice we were talking about earlier? It will kick in, and it will ask you why it was so easy, was it overpriced, is there something wrong under the bonnet, can I get out of this deal, is a handshake legally binding, have I been shafted?
It will happen, because if you deprive someone of their chance to explore the best option, if you make it too easy for them, they will start to wonder why. Maybe not immediately, but they will eventually. And there’s a very dangerous point in the negotiation – I call it the post-handshake, pre-paperwork point. It’s the point at which you think you’ve got a deal, but you’ve not yet signed the contract. If they doubt that deal, on any level, at that point, that’s when they come back for the nibble.
The final reason why people avoid negotiation is because they try and justify it as being inconsequential. People will often say “I didn’t push for more, because it was only an extra £500 here, or a thousand pounds there. It didn’t really matter.” When I was writing the book we revisited a study from 15 years ago that showed the implication of small percentages. So, if two people accept a job on the same starting salary, but one goes back and tries to negotiate a bit more and gets an extra 6%, the guy who pushed for the extra 6% would be able to retire a whole 6 years sooner than the person who didn’t, because of the cumulative effect of that small increment at the start of their career.
Also a lot of our professional service clients say if only we could get people to recoup an extra ½% on their bills. Because globally, my god, that would add up. If only we could get them to negotiate an extra 2% rather than just backing down because they don’t want to push for the extra. You need to think about the implication of small percentages.
The Fighter views negotiation as a battle. They view it as someone winning and someone losing. It’s no wonder that we avoid it, when we view it as something very unpleasant and combative. It doesn’t have to be that way. I’ll often ask my audiences “how do you want your counterparty to feel at the end of a negotiation?” Nine times out of ten, the audience will say. I want them to feel happy. Like they want to work with me again. Like the outcome is fair. Like they’ve got the great outcome. But every now and then, someone will say something different.
On Monday, I was training a very big IT company, a graduate scheme. And I asked the question, and one guy screamed out BROKEN!! And I was like, Okay, fine, you’re 21, I’m not sure why you’re so angry, but there you are. Similarly, I remember speaking at a breakfast in Canary Wharf. It was an investment bankers’ breakfast, it was 7.30 in the morning, the first thing that stands out for me is how much champagne they’re drinking, and then going back to the trading floor… I ask that question. “How do you want your counterparty to feel at the end of a negotiation?” One guy stood up, glass of champagne in hand in front of all his colleagues and went “SHAFTED!”
Now, most people view themselves as being collaborative. They don’t like to shout out that they may be competitive. A lot of us are – I am – I’m quite happy to admit it. But I think a lot of us view admitting that we’re competitive as a negative. And yet we are all competitive. We all want to win. And that’s a good thing. But what you shouldn’t want to do is win at all costs. Or, rub your counterparty’s face in it. Some people behave completely inappropriately. They want to rub their counterparty’s face in it. Or they do it without realising.
I’m talking about the person at the end of a negotiation who fist pumps while their counterparty’s still in the room. Now you might think that’s an exaggeration. It’s not. Sometimes it might just be through a beaming smile and thumbs up at their colleagues. Making it very clear that they got everything they needed and more.
Human beings hold grudges
If your counterparty sees that, how’re they going to feel? Annoyed, frustrated, embarrassed. They’re going to wonder what they’ve missed, if you’ve shafted them. They might still sign the contract, they might still shake your hand, they might have no choice by that point. But you know as well as I do, they’ll be the customer or client who never pays your invoice on time, always questions the quality of your work, bad-mouths you to other people in the industry, never recommends you to anyone else. Human beings hold grudges. We remember how people treat us. We remember and we act on it later on. We don’t like to admit that we do, but we do. How people treat us influences how we treat them in the future.
You need to remember is sometimes your need to win could make you lose in the longer term. We need to stop viewing negotiation as combat, and we need to start to view it as an opportunity to build consensus.
What happens often in negotiation is we will identify a couple of things that we really want to achieve. And, in order to achieve those things, we will then identify a whole load of freebies, that we can give to incentivise our counterparty to give us the thing that we really want.
One of the Big Four professional services companies that we’ve worked with for four years called us in because they were seeing margin erosion in part of their business. To cut a long story short, we discovered they had just given out new target hourly rates across the business. In this part of the business, the new target rate was £500 per hour. All the fee earners had been told quite explicitly if they didn’t routinely secure this, there would be negative implications in their performance reviews at the end of the year. Of course, they were all going to their clients with £500 per hour seared into their brain. And the conversations went like this.
“Hi, great to see you! We’ve costed up the job, the proposal’s in front of you, it’s gonna be £500 per hour.”
“WHAT?!? £500 per hour? That’s obscene! That’s way more than your competitors!”
“Sorry, I should have said. £500 per hour, and we’re going to give you a year’s worth of technical training for all your associates for free.”
“Well, that’s better, but still £500 per hour’s too much.”
“£500 per hour, a year’s technical training and you can use our conference facilities in central London, whenever you like, for free.
Client thinks, and before she can answer…
How about this? £500 per hour, technical training, conference facilities and we’re going to do you a VAT health check analysis on all of your different divisions for free.”
They got their £500 per hour or thereabouts, but the cost of all those freebies has completely eroded the margin on that deal. Now that’s fine if just one of you is doing it, but if you’re all doing it all the time, it can add up.
Trading, not giving
We have to be aware of the impact of our concessions. And rather than just giving, we need to start trading instead. Let’s return to the phrase that will facilitate all of this: If you, then I. That should be the foundation of every proposal you make. If you do this for me, then I’ll do this for you. If you can agree to this, then I can agree to that. If you can move on this point, then I can move on that point. That way, you’re not just emptying the account, you’re getting some deposits back in as well.
Unfortunately, there are still a plethora of negative stereotypes that exist about women at the negotiation table.
It’s sad that I still have to stand and talk about this, but I do. You might look at those stereotypes and think I’m fine, because I do ask. I am ambitious when I ask, and I can do the tough stuff. So no biggie. But the issue with stereotypes isn’t about whether we think they apply to us, it’s about whether the influencers and decision-makers around us subconsciously think they might apply to us. That might then influence the decisions they make about what we get to do. For example, if your boss subconsciously thinks that, as a woman, you’re going to capitulate more quickly than a guy, because you can’t do the tough stuff, guess who they’re going to give the tough negotiation to?
We need to talk about this because if we don’t, these stereotypes are allowed to thrive and to go unchallenged.
Women don’t ask
This is the view, that when presented with an opportunity to negotiate, nine times out of ten, women don’t compared to males in the same situation.
One study included in Women Don’t Ask by Babcock and Laschever shows that when men and women leave college and are offered their first job, men will negotiate for a higher salary 57% of the time, women only 7% of the time.
Another on the US Open tennis championships shows that female tennis players are 80% less likely than male tennis players in the same kind of scenario, to dispute a close line call.
A study where students were offered $3-$10 to play a board game with researchers, and were all given ¢3 at the end showed that male students were nine times more likely than the female to push back and say hang on, you said between three and ten. I want ten. The girls just went Oh – $3. Thanks.
About two weeks ago, a new study, conducted in Australia, came out that challenged this, saying women do ask just as much as men.
Missing the point
All the headlines missed the major point. Perhaps men and women do nownegotiate as much as each other. That’s not a massive shock to me. I have noticed over the nearly ten years I’ve been specialising in negotiation more and more women have been feeding back that they are negotiating, and they are negotiating regularly and successfully. Maybe time has moved on, society has changed. If that is true, great and women do ask.
But the study was also showed that even when women ask just as much as men, people are far less likely to give us what we want. Isn’t that the story? That women are asking and yet we’re far less likely to get what we ask for?
The point for me is the how and the why. How are we negotiating? And why are we getting this negative outcome compared to guys?
Women aren’t ambitious enough when we do ask
This says that even when we do negotiate, women tend not to aim as high as guys in the same kind of situation. One study showed that women tend to undervalue their worth in the market massively compared to guys, both at the start and at the pinnacle of our careers. At the start, women tend to undervalue their market worth by 13% compared to men. At the very top of our careers, we tend to undervalue our worth by 32% compared to men.
Why is this relevant to negotiation? Because when you’re planning for negotiation, when you’re thinking of what you’re going to ask for, your perception and value influences what you ask for. If you’re consistently undervaluing yourself, you’re going to ask for less. If you ask for less, you’re going to get less.
You have to stretch
So, one of the things we advise all our clients when we’re coaching them is you have to stretch. If you were going to ask for an 8% pay rise, ask for a 12% pay rise. If you were going to ask for a three-week deadline, ask for a four-week deadline. Push it a little bit, because you might be underestimating what they are willing to give you.
Women can’t do the tough stuff
This is another well-held view that guys are naturally very competitive, and good at the tough stuff, whereas women are naturally more collaborative and better at the softer relationship kind of stuff. Now my view is that this stereotype – excuse my language – is a load of crap.
I think all of us are competitive. I think every single person in this room has the ability to be competitive, but we don’t like doing it. Yes, there are different expectations societally about how men should behave and how women should behave, but they are breaking down.
My view is that women are more than capable of doing the tough stuff.
More about our Masterclasses and Natalie Reynolds
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