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: Is Negotiation a Man’s Game? with “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 two of a two-part edited transcript of the event.
Negotiate so people say “yes”
This section is how to negotiate brilliantly, or, in other words, how to get people to say yes.
For me, effective negotiation is all about blending process with psychology. There is no point understanding the process and the academic theory if you don’t have the confidence to implement any of it. Similarly, there is no point being incredibly charismatic and charming, if you’ve got no substance or strategy behind how you’re negotiating.
This next part is about me giving you five ways to make sure you understand both sides of the coin.
The DEALS method
The first part of the DEALS method is Discover. About 90% of effective negotiation goes on in this discovery or research phase before you get anywhere near starting to negotiate.
Before you negotiate, you need to discover as much as you can about the issue that you’re negotiating. You need to know about the product, the service, the market, the people, the risk. You need to know about new developments, regulation, legislation. You need to know about the politics influencing it. Anything that has a knock-on effect on your negotiation, find out about it.
When you think you’ve found out enough, stop, and then find out more. We always think in too blinkered a fashion. We think about the stuff we always think about. You need to open up your mind and see everything that might influence your negotiation.
Understand all the opportunities
Next, we can map out all the different issues that will affect our negotiation. That way, we can understand the total value that’s there for the taking. A lot of people go into a negotiation and only ever maximise, or unlock about 60% of what’s there for the taking. There’s another 40%-worth of opportunity that we often don’t take advantage of.
Discovery is also about us going broader than just ourselves. When we negotiate, we can all get a bit self-obsessed. We tend to fixate on all the things that we want to achieve, all the things that matter to us. Our deadline, our bonus, our ambition, our fears.
Open your mind
We need to remember that the person we negotiate with is also only human. They might be intimidating, they might be very senior, they might be scary, but they also have a deadline, a boss, fears, ambitions, hope, nerves and you need to understand what these are.
A lot of people make the mistake of thinking that in a negotiation you’ve got two counterparties or three counterparties. That’s never true. All the other things influencing every other counterparty come in to play. And they can be massive. Don’t just map out who you think the obvious key players are. Map out what’s influencing them and making them say yes or no.
The “Establish” phase is where you take all that discovery, and refine it down. You set some parameters, establish some boundaries and facts.
There’s lots I can talk about here – it’s all in the book – but today I’m focusing on break points. Your break point is your walk away point, your bottom line, your safety net, your worst case scenario.
As the buyer, your break point will be the absolute maximum you can pay for something. As the seller it’ll be the absolute minimum you can accept.
The reason we tell people to work out their break points in advance, is that a lot of people find negotiation difficult, stressful, time-consuming and awkward. And in those kind of situations, we generally don’t perform at our best. If you are clear in advance on your break points, you won’t find yourself in a situation, post-negotiation, realising that you’ve agreed to something that is financially inviable. By then it’s too late.
An interesting thing about break points
Now, break points also allow us to work out the best outcome we can reach in a negotiation. Now, it can be easy to work out what your break point is: as a seller, for instance, you know your market, your mandate, what your manager has told you that you can and can’t agree to.
But, as a buyer, I want to pay as little as possible. So I’m interested in the seller’s break point. What’s the minimum they’ll accept? But your counterparty is highly unlikely to tell you, in advance, what their break point is. Why would they? It’s not in their interests to do so.
So, if you’ve ever been in a negotiation where your counterparty has openly and honestly, and transparently shared with you the absolute best they can do in advance, can I suggest that figure was bullshit? [laughter]
The reason they’ve told you that figure is because it’s what they want you to focus on. It works well for them. But they want to come across as transparent and open and friendly and honest, because then they think you’re more likely to agree with them. But you need to bear in mind that all they’re doing is telling you their ambitious opener.
The ambitious opener
One of the best ways you can start to establish the other side’s break point is to open ambitiously. That way, you give yourself wriggle room, and can explore what they might be willing to agree to.
For instance, if I’m the buyer and I know I can go as high as, say £14k, if I’ve found out in my discovery phase that the seller might be able to go as low as maybe, nine, ten or £11k, I’m going to start by offering that seller only £6k. That way, I can move and explore how low they’re willing to go. Now, a lot of people feel very uncomfortable with that idea, but this is exactly what your counterparty will be doing. They are also opening ambitiously, trying to get the best they can out of you. They’re not telling you that’s what they’re doing. But they are.
Be ambitious but realistic
You do need to be careful, because there is a danger that if you open too ambitiously, you might lack credibility. Then you’ve got a problem. So, if, for example, I was the buyer and I decided to open ambitiously by only offering €1k, that might constitute what we refer to as the “piss off” point. And it’s basically the point at which you’ve opened so ambitiously, you lack credibility and the other side’s going to tell you to do just that.
3. The Ask
You need to think about how you make the ask, and in the book I talk about the importance of planning proposals in advance, making sure you’ve got multiple options, being creative. And I also talk about anchoring.
When I am speaking, wherever I am in the world, I’ll ask audiences, who do you want to make the first move in a negotiation.
I get a range of answers, but the bulk tend to be “I want them to go first”. And when I ask why, they say, because I want to hear what the other side might be willing to give me.
That is one of the most commonly held views in negotiation and one of the biggest errors. Every study tells us why.
Anchoring: always go first
In negotiation, anchoring is the phenomenon by which we are overly influenced by the first proposal that is put on the table. Because we anchor to it, we think about it too much. It then has a disproportionate effect on every subsequent move we make after.
There’s about 50 years’ of research into anchoring, and it all tells the same story. You are statistically more likely to get a deal that is preferable to you if you go first. There is not a single published study on anchoring, in negotiation, that shows you gain any benefit by letting the other side go first.
It’s so powerful, that even when we are warned in advance about the dangers of anchoring, we still end up being anchored.
And the people who are most at risk of anchoring are educated, professional people, because we hold the subconscious view that we are too smart to be anchored.
Imagine that I’m about to go pitch to a client. I’ve got £55k in my head. And I’ve built a bit of wriggle room in that, so I’m planning to open ambitiously, but I’m thinking: £55k. But, before I can say it, my counterparty offers me £46k.
Now, whether I like it or not, this is a £46k negotiation, because this is the only number on the table.
The first mistake we make with anchoring, is we go on and on about it.
So I might actually start going £46k? That’s outrageous! There’s no way I can accept £46k! £46k is crazy! It’s obscene I’m not going to accept that. Can you explain where you got £46k from?
We ask them to explain themselves as if we think they’re going to have nothing to say. But, of course that’s not true. They’re going to explain probably very eloquently, why £46k matters, and why it’s relevant.
The more you talk about what they want, the more likely they are to get it.
At the end of all my protestation and pushback and telling them why £46k is wrong, at the end of me inviting them to explain themselves, and them doing it, we’re still at £46k. I’ve not moved them anywhere. I’ve not brought them any closer to £55k. In fact, I’ve probably not even mentioned it. And the science is clear on this, the more you talk about what they want, the more likely they are to get it.
Of course, the more you talk about what you want, the more likely you are to get it.
Now, let me show you what else can go wrong. So let’s imagine, I’m thinking £55k, but before I can say it, they say £46k. Now imagine I then start to think like this:
£46k? Well I was going to say £55k? Well, I can’t say £55k now, because that looks unrealistic, and like I’m being greedy. I can’t accept £46k. What am I going to do? I need £55k. I can’t say £55k. It’s going to make me look greedy.
And I then open my mouth and say I can’t do that, but I can do £50k. And I immediately revise down my expectations to more closely match their opening proposal.
The sad thing about this, is that £46k was their ambitious opener. They were probably thinking that they could have gone far higher , but I’m never going to know, because I’ve already come galloping down to meet them.
You might be cynical about the science of anchoring, but I bet you’ve done that before. A situation where you had planned to say one thing, but based on what they say first, you change your plan and you say something different. That’s why anchoring matters, that’s why we have to think about it.
My advice is always this. Try to go first if you can. But you can’t always, can you?
If you can’t go first…
If you can’t go first, don’t reinforce their anchor by going on and on about it and don’t try and argue with them
Stick to your plan and negotiate from there. The best thing I could have done is say thank you for that proposal, my price is £55k. Then, that’s what they’re thinking about and we’ve re-anchored. The best way to beat a proposal is to make another one. Cast out a new anchor.
The “L” of DEALS is Lead. This is about taking the lead.
This is about how you behave in the negotiation, and how you come across. It’s about the language you choose to use. For instance, a lot of people give their counterparty a get-out. They start by apologising for their proposal. Or saying “I know you’re busy, I don’t know if you have time for this conversation now”, “I hate to ask”, “I don’t know if you have the budget”. Giving them reasons to say no. We also see “soft” language, where someone says “I’m looking for something somewhere in the region of round about 20k?” They sound totally moveable.
We recommend that you’re clear and concise:
I would like to schedule a review of my pay. I believe I am being underpaid and here is why. Thank you for your time. My proposal to you is this.
Not rude or aggressive, but direct
I’m not advocating rudeness or aggression, I’m advocating directness. If you pad it out, or apologise, you’re sending a certain message.
Similarly, you need to think about your body language. There are all these little physical tells. Clues that tell your counterparty that you feel uncomfortable, awkward, backed into a corner, that you’re moveable, and so on. And, if you came to negotiate against me and you were fidgeting in your seat, biting your lower lip, tapping your feet and chewing your pen, I’d have a field day with you.
It’s not just what you’re saying, it’s how you’re saying it that has a big impact.
5. Seal the deal
This is about future-proofing your deal. You’ve got to make sure your counterparty feels satisfied at this point because if they don’t they’ll come back to try and get an extra percentage here, change a term there, or walk away all together because they’ve had second thoughts.
We also need to be cautious of the yes that comes too easily. When you negotiate, and they say yes to your first proposal straight away, I suggest that wasn’t the best deal you could have got. Because it was way too easy for them to say yes to it.
As negotiators, we need to get comfortable with hearing the word “no”. Yet we know that human beings have a neurological over-sensitivity to “no”. Put very simply, we remember the pain of “no” longer than we remember the happiness of “yes”. We don’t like to hear “no”. It’s horrible and uncomfortable, so we’ll avoid it.
No: an invitation to explore
How you respond to “no” defines you as a negotiator. If you hear “no” at the negotiation table, and your response is, “Oh, all right, sorry, what was I thinking?”, that’s not good.
But if you view “no” as an invitation to explore possibilities, as your chance to ask questions, build solutions and get creative, that makes you an excellent negotiator. This is why I advise people
When life shuts a door, open it again.
It’s a door.
That’s how they work.
You may have seen that before, but it applies beautifully to negotiation.
When you negotiate, people are going to close doors on you. They’re going to say no. It’s how you respond to that door closing that defines you as a negotiator. If what you want is behind that door and it matters to you, find another way to open that door. Take someone else with you. Take a different mechanism to open it. Push harder. Push more gently. Find another way to open that door. And if you can’t, then go and find a slightly different door. But make sure you give it a good old nudge first.
People negotiate differently… and reach different outcomes
The final biggest mistake when we negotiate is underestimating the impact of the people involved. Given the same facts, briefs and break points, the same time and conditions, different people will reach different outcomes when they negotiate
So, remember. Negotiation is never just about the facts of your case. It’s not just about the strength of your case, or the statistics, or the precedents or the numbers. It’s about you. Because negotiation is about how we interact with each other, behave with each other, react to each other, view each other, test each other, perceive each other and how confident we feel on the day. And that will differ with every single person and every single negotiation.
You need to know your negotiation, but more important, you need to know yourself and you need to know your counterparty.
More about our Masterclasses and Natalie Reynolds
To be added to the mailng list for future WBS Masterclasses, please email Dr Ruth Sacks