I once negotiated the purchase of a car with three different dealers. The first two were clearly only interested in making a sale that benefitted them, so I moved on. The third dealer made it clear that, although he wanted to sell me a car at a price suitable to him, he was also interested in meeting my unique needs and sending me away a satisfied customer; he threw in some extra upgrades and an extended service agreement. I drove off content with my new car and when it came time to purchase another car, you can guess which salesperson I returned to.

In most negotiations, fostering a cooperative atmosphere increases the chances of a win-win outcome. When each party obtains something of greater value in exchange for something on which he or she places a lower value, both parties win. Each of them may have wished for more, but at least they are both satisfied and will be willing to negotiate again later.

Some negotiators have a strong reputation for consistently achieving win-win outcomes in their negotiations. To achieve this favorable reputation for yourself, keep the following guidelines in mind.

1. Avoid narrowing the negotiation down to one issue. Focusing on just one issue sets the scene for a win-lose outcome. The most common example is arguing over the price of a product or service. To avoid getting stuck on one issue such as price, try to visualize a juggler. A juggler does not juggle just one ball. In fact, the best jugglers are those who juggle several difficult objects—like knives. Keep this picture in mind when you negotiate: Let’s say you want to buy 100 mid-range, pro-level tablets for your corporation and your budget is $1,000 per tablet. The model you prefer is listed for $1,299 per tablet. You may be tempted to lock on to the price issue and do your best to get the tablets discounted to $1,000. Why? Because price is the easiest and most logical deal point to discuss. If you take this tack, you may be successful at reducing the price, but you take the chance of laying the foundation for a lose-lose outcome. Keeping that juggler in mind, a better strategy would be to bring up additional deal points to negotiate, such as delivery date, financing, upgrades, warranty, training, and support—all of which contribute to the overall “price” of the product. Bringing multiple issues to the table provides the opportunity for you to “juggle” the deal points to create a win-win outcome.

2. Realize that your counterpart does not have the same needs and wants you do. If you do not take this factor into consideration, you negotiate with the idea that your gain is your counterpart’s loss, and vice versa. With that attitude, it is virtually impossible to create a win-win negotiation outcome. In the computer example above, most negotiators would assume that the number-one goal of each counterpart would be to get the best respective price. But if price were the most important factor for all buyers, they would all purchase the cheapest computer, and no other model would ever be sold! The reason there are so many models is that buyers almost always have needs other than price that drive the outcome in negotiations.

3. Do not assume you know your counterpart’s needs. It’s very common for negotiators to assume they know exactly what their counterpart wants. For example, a salesperson “knows” that the buyer wants to buy the product or service at the lowest possible price. That may be true—but the buyer may have a much more powerful need that influences his or her decision to buy. By asking probing questions, the sales- person may discover other relevant facts, for example, that the buyer’s biggest concern is what his or her boss will think about the wisdom of the purchase decision.

By utilizing the three critical elements of a negotiation you can start to achieve a win-win negotiation outcome and build on your reputation as a trustworthy negotiator that people return to again and again.

If you want to take your conflict management skills to the next level and build lasting, win-win relationships with customers that will benefit you for years to come, purchase our new book “The Only Negotiating Guide You’ll Ever Need” or contact us for more information on how a Negotiation Skills Training workshop could benefit you, your team and your company for years to come.

The post 3 Keys to Achieving a Win-Win Outcome appeared first on Peter Barron Stark Companies.

Let’s switch examples. You’re applying for an internal promotion in your company. The job has been posted both externally and internally in the company. Someone in HR has let you know they have received over 200 resumes and two other internal candidates besides yourself have applied for the job.

In both of these examples, the odds looked stacked against you. Let’s take a look at the options that may help bring you closer to a win-win outcome, or at least not leave you as the loser in a lose-win outcome.

Gain inside information: In the promotion example, if you really want the job, then you need to set a meeting up with the person who’s actually hiring for the position. Tell the manager that you aren’t even sure if the job is a fit but if he/she could meet with you for a brief 15 minutes, you could both decide if you should put in an application. In the real estate example, if the home is tenant occupied, you could stop by the house the evening before making an offer and ask if you could take a 5 minute tour to confirm that you want to move forward. Real estate agents hate this recommendation but, after buying multiple homes in my life, I’ve always been successful when I’ve been able to figure out the owner’s needs first-hand. Many times, the information the seller has shared with me has been the exact opposite of what my own agent had shared. While you think that your needs are identical with your agent, unless you have a long-term relationship with your agent, this may not be the case.

Determine your counterpart’s true implicit needs: Although we tend to look at most negotiations as being focused on price and money, there are many other types of needs that may be driving the behaviors of your counterpart. Is the buyer qualified to buy this home at the price they’re proposing? Is the buyer’s qualification verified? How quickly can the sale be completed? Will the new buyer make a good neighbor to the seller’s friends? Does the seller have the need to close the deal and then rent the home back until he can find another place to live? In a short sale or a deal where there is little equity, at what point will the seller have to add cash into the deal to make it work? If they want out of the home bad enough, how much are they willing to drop the price? In the employer example, does the boss already have someone in mind they want to offer the job to? Do they feel a need to hire someone from inside the company or are they committed to finding the best qualified candidate?

Do your own research: For whatever reason, people who feel they lack power and clout tend to do less research to validate what’s known and what’s shared by their counterparts. In the promotion example, talk to others in the department to find out what type of boss you’ll be working for. You can also talk directly to the boss to find out what type of work will be done and what the expectations are for the job. In the real estate example, besides generating comps to support the price you are thinking about offering, talk to owners and renters in the complex or people living in the neighborhood. Knock on a few doors and you may even find an owner willing to sell their unit without a real estate agent and split the savings with you.

Walk away: In the above real estate example, one thing that we learned in the last real estate bubble is the people who bought last in the cycle, and participated in a multiple offer/bidding situation, had the most to lose when the market turned. Although the same may not be as applicable today because we’re at the beginning of a new real estate cycle, you don’t want to be negotiating against yourself. That’s exactly what will happen if you agree when your agent tells you that the seller has multiple offers and that you better increase your offer significantly if you want the house. Only when you are willing to walk away do you regain or maintain your power. Why is walking away in your best interests? Because there’s a good chance you’ll find another house to purchase, most likely, without multiple bids. In the world of negotiation, some of your very best deals in life will be the ones you decided to pass on.

When you’re in the middle of a negotiation in which you hold little clout or power, you tend to give up deal points you wouldn’t normally in an effort to make the deal work. When the counterpart senses that you lack power, the natural tendency is for the counterpart to raise their goals and ask for more. They know that if you really want the prize, you’ll be willing to cave in and give them what they’re asking for.

So what do you do? You accomplish your goals. If your need to gain something is strong enough, and you’re willing to do whatever it takes to accomplish your goal, you will be successful. Don’t sweat the small stuff in small negotiations. When the size of the negotiation could have a significant impact on your financial well-being in the future, I recommend following the above four points. I believe that patience, most often, will help you to drive a better win-win negotiation. A great line to remember is, “I want this, but under these conditions or terms, I don’t want it that much.” And, after you’ve applied the recommendations of gaining inside information, determining your counterpart’s implicit needs, validating the facts and determining your willingness to walk away… if the deal is still so good you have to have it… GO FOR IT!

The post Negotiating When You Hold Little Power appeared first on Peter Barron Stark Companies.

The first story is from a manager who told me that an employee who was on a corrective action plan came into his office and stated, “Since I’m handling two additional assignments, I feel I deserve a raise.” This manager correctly handled the request by responding, “We do not consider requests for raises from employees who are currently on corrective action plans.”

The second story comes from a CEO who told us that one of her employees came to her and announced, “I’m not happy working here and I’m thinking about leaving. The only way I would consider staying is if you were to give me a 30 percent raise.” In this case, the CEO felt that she couldn’t live without the employee and gave in, giving up 30 percent more salary to ensure the employee stayed with the company.

Asking your manager for a raise is a high risk maneuver. Although people tell employees that, “It never hurts to ask,” the reality can be harsh. If the answer is no, the manager could harbor resentment about being asked for a raise by an ungrateful employee and the employee could be disheartened because the manager doesn’t see the value in their contributions. When this happens, the negotiation has a high potential to end up in lose-lose.

At some point in their career, every manager has had an employee come to them and ask for a raise. It’s usually requested at a time when the manager hasn’t had time to think through an appropriate response to the request. So what should they do?

Here are nine strategies for successfully countering or negotiating with an employee over a requested raise:

1. Ask good questions: “What makes you feel that you are not compensated appropriately?” “Do you have supporting data that confirms you have taken on additional responsibilities, or that you are not compensated adequately based on your experience or compared to people in your similar position?”

2. Don’t reward poor performance: The worst thing a manager can do is give a raise of any amount to someone who falls short in meeting performance expectations. Keep in a mind that a raise is a reward, not a given. If you say “no,” the employee will not be happy. That means that you need to be proactive in dealing with performance related issues, and if the employee doesn’t significantly change their behavior, share them with a competitor.

3. Provide a conditional no but build them a bridge to the future: I like this strategy the most because it makes the raise dependent on conditions. A great way to phrase this response would be, “I can’t give you a raise at this time, but if you successfully complete these additional assignments on time, then I feel a raise would be warranted.”

4. Give them a reward in heaven: Another option is to tell the employee that you feel they’re doing a great job, but since additional money is not in the budget for raises, you’re unable to provide them with a raise at this time. BUT, next year, you’ll make sure that he or she is taken care of financially.

5. Kill them with facts and statistics: Pull out the market data and compra ratios that tell the employee they are adequately compensated for the job they currently do. If you find data illustrating that they are over compensated, let them know you’re hesitant to bring up their request with Human Resources for fear that someone in HR will redline or red circle their position, making them ineligible for even a cost of living raise.

6. Make sure the employee considers the entire paycheck: In today’s world, benefits are quickly becoming a significant expense to organizations. When you show an employee the value of their health care plan, retirement benefits as well as the flexibility you provide in both leadership and their schedule, an employee needs to determine the value of those items that are not included in the paycheck. If an employee threatens to leave over a five percent raise (the average raise that employees leave companies for) when they have health and retirement benefits that contribute to 10 percent of their salary or more, the decision regarding the full pay package needs to be revisited.

7. Tell the employee that you’ll think about their request and get back to them later: If you feel you’re unprepared to provide an objective response or to make a good decision, you’re much better off buying yourself some time rather than providing a half-thought out answer on the spot.

8. Give them a raise before they ask: My goal is to think about my employees and the value they bring to the organization, and give them an appropriate raise before they ask. No manager wants their best employees to leave.

9. When in doubt, ask yourself: How easy would it be for me to replace this person if they left because they were not happy about me saying “no” to a raise? How much would it cost me in the search for a new employee or in loss of business? Some positions are much easier to replace than others.

Will the employee be successful in obtaining their raise? It all depends on the timing of the request, how happy the supervisor is with the employee’s performance, and who is least committed to the relationship. As always, the side who is least committed to the relationship holds the most power.

The post The Raise Negotiation: 9 Possible Responses for Managers appeared first on Peter Barron Stark Companies.

Anais Nin said, “We don’t see things as they are, we see things as we are.” The challenge with negative emotions such as anger, fear, and not feeling valued is that they divert our focus from the broader goals (i.e. what really matters) towards things which may or may not be important to the outcome of the negotiation. For example, let’s say your counterpart threatens you with a lawsuit if they can’t get their way. Most likely, this comment will trigger both anger and a lack of trust toward your counterpart. Regardless of whether the counterpart files a lawsuit or calls you a derogatory name, you will make better decisions if you keep your negative emotions in check and focus on your most important goals.

When you don’t trust your counterpart or are uncertain about the outcome of a negotiation, you might become preoccupied with negative thoughts about them or ruminate over potential bad outcomes. This preoccupation leads to fear. It’s important to know that in order to eliminate fear, you must eliminate this preoccupation and become totally engaged and focused on the preparation you have completed prior to the negotiation and the strategy you are executing to accomplish your goal.

On the other hand, I’ve been involved in several negotiations where I specifically said something to trigger the emotions of my counterpart. For example, I once told a Union President that even if I did make a concession, it wouldn’t matter because he lacked clout with his membership and wouldn’t be able toget the deal point approved. The Union President’s reaction? He became irate and started yelling at me. That was exactly my goal. As long as he was yelling at me, he wasn’t asking for another concession. It was a great strategy.

Although it’s fun from time to time to get your counterpart wrapped around the axel of emotions, it’s not in your best interest to do so. The following seven tips will help you keep your emotions in check and your focus on the broader picture.

1. Be aware of your emotions early on: When you feel your emotions starting to rise, you’re still in a good position to do and say the things that will help you advance your goals. On the other hand, when you are unaware of your emotions as they begin to rise, you’re more likely do or say something that will jeopardize the relationship and undermine your goals

2. Be positive: Don’t negotiate or communicate when you’re in a foul mood because you’re likely say something that will make it even more difficult to get your counterpart to concede to your goals. There is a lot of research that shows that when both parties have a positive attitude about the negotiation, they will be more successful in generating a mutually acceptable outcome

3. Assume positive intent: Make a positive assumption about your counterpart’s intentions. If you are uncertain about their intent, ask strong questions to clarify their goals

4. Be well prepared: When you are not prepared, your mind has a difficult time focusing and will wander off in multiple directions

5. Create a plan with options: Determine what is causing you to be stressed and create a plan, with options, to ensure the negative outcome does not materialize

6. Be honest: When you manipulate data or don’t tell the truth, it only complicates matters and makes the relationship more stressful

7. Get up in the balcony: A deal is a deal, whether it is with a good friend or a business acquaintance. If you visualize the transaction from up in the balcony as a third party, rather than an actor on stage in the middle of the play, you will find it is much easier to leave your emotions outside and respond much more objectively

Emotions are unavoidable and are a big part of being alive. While it’s impossible to not have emotions, with the above tips, it is possible to suppress the expression of the feelings and behaviors behind your emotions.

The post How to Keep your Emotions in Check While Negotiating appeared first on Peter Barron Stark Companies.

I disagree. I have found that almost always, the power in a negotiation is equally balanced. However, there is one exception to this finding: if the other party truly has no need for you and would prefer to move forward without you, then you may be right, they hold all the power. When clients tell us they have no power in a negotiation, we always ask the same questions. Do they return your emails and phone calls? If you did want to meet with them, would they agree to a meeting? If the answer is yes, then your counterpart needs you, and you have more power than you think you do.

Whether you believe that your counterpart holds all the power or that you hold all the power, you are right. Ask yourself this: if you believe you hold no power, why does your counterpart agree to continue the relationship?

While there are many different types of power in a negotiation, here are just a few that will influence the outcome of a negotiation:

Reward power: If you can gain agreement, the counterpart can distribute significant rewards. A sales person making a sale and winning the monthly sales contest may be one example.

Coercive or punitive: If someone threatens to sue you if you don’t comply, they may have coercive power over you, especially if you place a high value in your company on not being sued.

Ego: Some people will enter into win-lose negotiations, with them being the loser, to avoid giving up something meaningful to their counterpart or, even worse, losing something to a competitor.

Accomplishment: Some people have a high need to get things done quickly and will concede to a counterpart’s perceived power to cross the deal off their list. I recently sold my Ford F150 pick up for $2,500 less than what I was asking for it. The buyer came with a cashier’s check in hand, test drove the truck and in 30 minutes, the sale was done. When you’re trying to sell a $20,000 truck with 100,000 miles on it, accomplishing the task on the first showing is a huge win.

Relationship: Some people have a high need to be liked or loved. When they feel a strong relationship, they are more likely to concede. The opposite is also true. If these people who highly value relationships do not like you, they will avoid you at all costs and most likely will retain the power in the negotiation.

Knowledge and expertise: When you feel that someone else has more expertise and knowledge than you do about the topic being negotiated, your counterpart most likely will hold more power. To balance the power, you will need to recruit your own expert to support your side of the negotiation.

Time: Sales are a great example of the power that time holds in a negotiation. This is what a salesperson is banking on when they say, “The sale ended yesterday and the price went up $500.00. If I could speak to my manager and gain authorization to extend the sale price to you for one more day, would you want to make the purchase?” Time makes people do crazy things in a negotiation that they would never do if they were not influenced by the power of time.

Scarcity: I recently bought a new video camera. When I went into the store with the ad offer of a sales price of $999.00 on a $1,399.00 camera, the sales person said, “I think we only have one left in the back of the warehouse. If it is still there, do you want me to grab it for you?” Without even thinking, I said yes, and when he returned, I was excited about taking possession and heading over to the checkout stand. What I didn’t realize was that model would be obsolete in a week and something even better would have been available if I just believed in my power and waited.

BATNA: This is Harvard term that stands for Best Alternative to a Negotiated Agreement. An even better word for BATNA is options. The side that has the greatest number of viable alternatives or options tends to hold more power in a negotiation. If you really want to buy a one of a kind antique car that’s selling for one million dollars, and it’s the only one on the market for sale, you have few options.

Investment: If you have worked long hours to gain a piece of new business, it becomes a lot harder to say “no” when your counterpart asks you to make significant concessions. The more time and energy you put into something, the more committed you are to making the deal a reality… even when the power has shifted and no longer is in your best interests. This is why Ponzi schemes are so successful at sucking the same people in, multiple times. Once someone has put money into a worthless investment, they are more likely to put additional funds at risk.

Gender: As hard as I have worked my entire career to build equality in business with gender, it is a fact: gender can hold tremendous power in a negotiation. My two daughters are much more successful than my son in moving money from my wallet to theirs’. Combine gender with the power of touch or a hug and the only way I am successful in the negotiation is stepping back and letting my wife take over since she’s much more objective when negotiating with the girls.

Crazy: There’s one in every organization. One person who is so effective in being crazy or bizarre in their response that no one knows how to effectively deal with them. Crazy people are the yellers, swearers, or people who otherwise respond with a level of intensity that’s disproportionate to the situation. When negotiating with crazy people, you usually have one goal: do whatever you have to do to get away from them. This means that you either cave in to something you would prefer not to, or you avoid this person altogether.

So now that we know the types of power that are utilized in a negotiation, what can you do to ensure the power is balanced or, better yet, leaning in your favor?

1. Be well prepared: This means doing your homework before the negotiation, knowing your facts, and getting experts on your side of the negotiation. Confidence in a negotiation holds power, and the number one way to gain confidence is to be well prepared.
2. Know the benchmarks: If you are trying to gain a raise, know the documented salary ranges for people with your experience and skills. If you are selling your car, go to Edmunds.com or KBB.com and find out exactly what it’s worth. Industry norms and precedents will tell you if your goals are reasonable and fair.
3. Know the implicit and explicit needs of your counterpart: In order to have power in the negotiation, it’s critical that you truly know the explicit and implicit needs of your counterpart. Explicit needs are the goals they will happily tell you about, such as wanting to pay a lower price, but implicit needs are seldom stated. Although they will tell you they want you to lower your price, their implicit need is to have a successful project so they look good in the eyes of their peers.
4. Buy yourself time: Almost always, when you take more time, you will be able to negotiate a better deal, especially if your counterpart needs you and you have options.
5. Lean into conflict: In the martial arts business, they teach their students that when you lean into conflict, your opponent will be less able to inflict damage upon you. The same thing applies in negotiation. When you lean into conflict, you tend to demonstrate that you have confidence and power.
6. Be clear on your goal, wish and bottom line: Establish your goal beforehand so that you can open up the negotiations below that amount (if you are buying) or above the amount (if you are selling. Great negotiators also identify a wish–I would really be excited if I could buy/sell this for $X–and identify a bottom line–if the number goes over/under $Y, I am going to walk away. When you have clearly identified these three points, especially your bottom line, you have a lot more power in the negotiation.
7. Get a third party involved: When you are emotionally involved, there are times when a third party will be able to achieve a better outcome than you would on your own. Two of the greatest negotiations of my life were both negotiated by third parties: the home we have lived in for almost 20 years and the boat we spend sepdn so much time on. Because our real estate agent put our needs and goals above his when searching for our home, he has earned our business for a lifetime. The yacht seller’s agent had an even stronger need to put together a faster deal than I did, and did an impressive job of coaching his corporate client and myself. Getting a third party really did give us more power in these situations.
8. Be willing to walk away: If you’re able to say, “I want this deal, but not that much,” you will find yourself holding a lot more power. Sometimes you find out the hard way. Until you are committed to walking away, you will not be able to achieve your goals.

Remember, the power in a negotiation is almost always more balanced than you might think. Use the tips above to confidently negotiate your best possible outcome.

You may also like:

• Always Counter the First Offer in a Negotiation
• 10 Types of Power
• The Power of Competition

The post Who Has the Power in a Negotiation? appeared first on Peter Barron Stark Companies.

Your boss asks you, “How much more are they paying you?” On average, people leave their current company for approximately a five percent increase. But, as long as your boss is asking, you decide to tell him it is significantly more pay. Your boss says, “What is significant? 10 percent? 15 percent?” You respond by saying that it’s in that range. Your boss then responds, “Don’t tell anyone you’re resigning just yet, I think I can get the gods in power to match that offer.” Later that afternoon, your boss comes to you and says, “I have great news. We can match their offer by increasing your salary by 15 percent. So you’ll stay, right?”

So, now what do you do?

Although every situation is different, generally, we recommend that employees don’t accept or counter an offer for continued employment for the following reasons:

It’s not really about the money: Statistically, most people do not leave organizations just for more money. In our surveys, we find that people leave organizations far more often because they have a bad boss, they are bored with their job, they have little autonomy or empowerment, their department lacks teamwork, they don’t feel valued, they have no work-life balance, and/or the company’s values are not in alignment with the individual’s personal values. Even with more money, the reason you were leaving will still be there if you accept the counter offer. How much money would make it worthwhile to work for an ass?

You’ll eliminate your options: If you do accept your current employer’s counter offer, the company you interviewed with is not going to be happy they wasted their time interviewing you and will, most likely, never extend an offer to you again because you don’t keep commitments. That is not the type of personal reputation you want to build.

You’ll create resentment: People in your current organization will know that you held the organization hostage for more money. People in your own department will resent you because now they have officially learned that the way you get the big raise around here is by threatening to leave. If that resentment is not enough, your boss or other senior leaders may be actively recruiting for your position, possibly with someone at a lower cost, so they never find themselves in that situation again. No one, and I emphasize, no one, is irreplaceable.

Your next raise will be small, if at all: After a boss has given you a significant raise—a raise where you are now one of the highest paid team members—it’s much easier for them to justify a small raise next cycle, if at all. Even if you are not happy, what are you going to do, quit? Not a good option since you are now a highly paid employee and the competitor who wanted to hire you before, has rescinded their offer and never wants to see your face again.

Once you have made the decision to move on, and you have received your offer, you’re welcome to counter your new perspective employer’s offer to sweeten the deal. However, over time, accepting a current employer’s counter offer, statistically, does not go well.

You may also like:

• Nonverbal Negotiation Skills
• 10 Types of Power
• 10 Tips to Create a Win/Win Outcome

The post Should You Turn that Job Offer into a Raise? appeared first on Peter Barron Stark Companies.

Fear about negotiating something as important as your job or how much money you make is normal. In fact, we tend to find that the more important something is to a person, the more emotions are involved in the negotiation. When emotion is involved, the emotion is usually fear. Other common reasons people may fear negotiation include:

• Concern with how your counterpart will see you: In the above example, the employees may have been worried that their boss would see them as being greedy or ungrateful because they asked for a raise. Those thoughts had an impact on how they felt about approaching their boss and discussing salary.

• Lack of knowledge about the process or individual: If your goal is to buy a house, and this is your first home purchase, when the real estate agent tells you she has made a previous offer to this homeowner and she is quite certain that your offer of 30 percent below the seller’s asking price will infuriate him, it could make you fearful of moving forward with the offer.

• Fear of conflict: When we asked a CEO why he did not coach and counsel one of his hot-headed senior executives, he replied, “Because I fear sitting down with him and having his temper unleashed on me.” If the boss felt this way, you can only imagine how other peers and direct reports of this deviant vice president must have felt.

• Fear of the unknown: At a conference, I recommended to another consultant–who was not making enough money to sustain either his business or his family–that he increase his rates and offer even more value to his clients. His response to my suggestion was, “My clients will never pay a higher rate and I don’t want to take a chance of losing the business.” When I asked him if he had ever presented a higher priced, higher value proposal to one of his clients, he stated, “I have not, because I fear losing their business.”

• Size: Although this may sound funny, size can be fearful and intimidating. Big companies, people with big reputations and/or titles, big law firms, big numbers or quantities, and big deals can all be daunting, especially if you have never negotiated with that person or that type/size of deal in the past.

Although people may have needs and goals that they want met, if they fear the negotiation, or believe the outcome will be bad or unsuccessful, some people change their needs and goals and pursue other interests. A great example is marriage. A husband who fears talking to his wife about certain topics, eventually stops talking about the topics, and pursues another goal: getting a divorce and finding someone easier to negotiate with. An employee who is fearful of their boss’ reactions eventually gets the courage to find another job.

If you do discover butterflies in your stomach as you think about an upcoming negotiation, these tips will at least help get the butterflies to fly in formation and improve your outcomes.

• Identify what you fear: We recommend that you write down your specific fears. Our clients agree that if you don’t make note of your fears, you tend to have the same fearful thoughts over and over. Once you have your fears clearly identified, you are ready to tackle the key points listed below.

• Preparation: Once you have identified your fears, you can take on the next step of doing your homework to find the necessary information and develop a plan, with options, to ensure your fears don’t become a reality. If you feel you might pay a home seller too much, spend the time to do a market analysis on the property in markets that are up, down, and flat. With that information, you should feel more confident that your offer is in your long term best interests.

• Establish a goal, wish, and bottom line: People who are fearful tend to open up the negotiation at their established goal. If they want to buy a house listed on the market for $175,000, they offer $175,000. It is a mistake that most likely is going to trigger more fear. Great negotiators also identify a wish–I would really be excited if I could buy this house for $160,000 and make that their first offer–and identify a bottom line–if this house goes over $185,000, I am going to walk away and find another house. When you have clearly identified these three points, especially your bottom line, you have a lot less to be fearful about.

• Ask questions: People who are fearful can sometimes make the mistake of talking too much. Have the courage to ask questions that will help you to advance your goals or alleviate your fears. Once you have asked the questions, shut up and listen. And then ask another question based on the information you just received.

• Don’t assume your counterpart has the exact same goals that you do: When fearful, people tend to assume that their counterparts have the exact same needs and goals that they do. Nothing could be further from the truth. We bought a $15,000 copy machine that was listed for $18,000. I assumed that the salesperson wanted to get the highest possible price. My goal was to get the lowest possible price. After the sale was complete, the salesperson told me that his number one goal was to make the sale prior to the end of the month so he won the company’s contest. Knowing his true goal, I probably should have told him business had slowed and we could only budget $13,000 on the last day of the month. Price was this salesperson’s explicit goal. Winning the trip and being the company champion was his implicit, unspoken goal. Most of the time your counterpart will have unique needs and goals. With great questions, you can almost always find out what those implicit goals are and utilize them to your advantage.

• Remember, you have more power than you think you do: It is important to remember that, almost always, power is equally balanced. When clients debate this point with me, I ask them the following questions:

  • Does your counterpart still return your emails and calls?
  • Does the counterpart counter when you put in an offer for your product or service?

  If the answer to the above questions is yes, you have more power than you think you do. If the client truly does not need what you have, and they are unwilling to communicate with you, you are right, they may have an unbalanced power. But, even in this specific situation, if you wrote about the client in the newspaper or told their boss that they were unwilling to work with you to resolve a problem, you may find that with a new strategy, you hold power.

• Ask yourself, am I the best person to negotiate? The employee we talked about at the beginning of the article who fears holding this discussion with the boss, has other options. They may hold the discussion with someone in HR, let the HR team member know they feel they are not competitively paid, are thinking about leaving the organization, and would like HR to help them gain a higher compensation based on experience and job responsibilities. If this person’s boss and the HR person truly value the employee’s contributions, this could be an effective strategy.

• Be willing to walk away: A great line we like to use is, “I like or want it, but not that much.” When you are always willing to walk away, you have a lot less to fear. Of course, the best relationships, both personally and in business, are when both counterparts are equally committed to the relationship. The challenge with fear is, usually the fearful person feels they are more committed to the relationship than the other counterpart.

Negotiation can be intimidating, but understanding why you feel the way you do, and learning how to overcome the fear, will pay dividends in future negotiations.

You may also like:

• Overconfidence in Negotiation
• 10 Types of Power
• The Role of Power in Negotiation

The post Why Are Some People Afraid to Negotiate? appeared first on Peter Barron Stark Companies.

A great definition of negotiation comes from Gerard Nierenberg; he states that when two or more people communicate with the intent of changing the relationship in some way, they are negotiating. Another definition of negotiation is a search for common ground. Just the other day, my twenty-two-year-old son, who is gainfully employed in the United States Navy, asked me if I would pay for his cell phone on another two year contract. What was my response to this negotiation, “NO! NO! NO!”? Actually, my first tactic was, “You have got to be joking with me, right?!” But, being a great dad, I did let him keep his same phone number and helped him set up a contract in his own name. In the end, he was happy because he is now establishing a little credit in his own name and does not have to ask me when he wants to change phones.

There are many types of third parties who could be utilized in a negotiation. A few of the most common are judges, lawyers, and agents.

While the first three examples of common third parties are widely known and understood, the roles of the following third parties are sometimes misunderstood. Here’s what they are and what they do:

Mediators: Help parties develop mutually satisfactory solutions and strengthen relationships. It has been our experience that about 60 percent of the time, mediators are able to achieve an outcome and approximately 75 percent of people involved in any mediation are happy with the outcome.

Consultants: Are skilled and impartial third parties who attempt to facilitate problem solving through communication and analysis.

Arbitrators: Have the authority to dictate an outcome. A big advantage of using an arbitrator, whether voluntarily or compulsory, is that negotiations they are involved in always results in a settlement. Also, arbitrators are actually more powerful than judges because a judge’s decision can be appealed. However, both parties are not always happy.

Conciliators: Someone acting only as a communication conduit.

So, back to the original question: when should you use a third party to negotiate on your behalf? The following five situations are all opportunities to involve a third party.

1. When the situation is either very stressful or very emotional. Most people do not think as clearly or as rationally when they are stressed or emotional. If the negotiation has any significance, getting someone who can “stand up in the balcony” as an unemotional third party will be to your advantage.

2. When you lack technical expertise on what you are negotiating. When you are negotiating in a topic on which you lack technical expertise, while your counterpart has strong expertise, we highly recommend getting a third party involved to balance the playing field.

3. When you can’t get your ego out of the way. The classic example here would be marriage. Some marriages end in divorce because one spouse cannot say, “I am really sorry I did or said that.” Sometimes a good counselor or third party can help an individual or couple get their ego out of the way and rebuild the marriage. If the marriage is saved, the third party counselor was a bargain.

4. You are motivated to achieve your goals and produce an acceptable outcome. When you want something really bad, your emotions and desire can undermine your ability to obtain the best outcome. A real estate agent who truly has your best interests at heart, will stop you from making concessions or doing something that is not in your best interest.

5. When your strategy is not working. The other day, my eighteen-year-old daughter snapped at me when I asked her a question. I knew that no matter what I said, I was only going to make matters worse. My brilliant strategy was to get a third party involved. I went to my wife of 27 years, Kathleen, and had her go to Brooke and accomplish my goals. It worked GREAT!

So should our client involve a third party in helping them to short sell their home? Our answer in this specific situation is “no.” We say no for several reasons. One, there are a lot of people out there making promises that they will help distressed borrowers save their home from foreclosure or help them make a short sale. Many of those third parties who have come across with the intention to help, have left the homeowner in a financially worse situation. Second, this homeowner has open communication with the mortgage holder and feels like they are barely making progress. Third, whatever third party you bring into this deal is not going to work for free. They are going to charge an additional fee of 1 to 2 percent, or a minimum $3,000 flat fee which is only going to make it harder to get the bank to concede. In fact, the bank will most likely agree to the short sale price, but not agree to pay the third parties’ fee. That leaves our client on the hook for an additional $3,000.00.

In this case, a third party should not be hired.

You may also like:

• Always Counter the First Offer in a Negotiation
• Getting Time and Information on Your Side
• Three Keys to a Win/Win Outcome in Negotiation

The post When Should you Involve a Third Party in your Negotiation? appeared first on Peter Barron Stark Companies.

As a general rule, you should never accept the first offer. Why? People expect you to counter and I believe you should not disappoint them. When you don’t counter the original offer, you leave your counterpart with two bad thoughts: they should have made an even better first round offer, and there must be something wrong with your willingness to agree so quickly.

Let’s say that I’m selling my used 2008 Ford F150 King Ranch pick up for $21,000. You come by to look at my truck, take it for a test drive and then return, saying, “Your truck is in excellent condition and I am comfortable with the $21,000 price. Would you prefer a cashier’s check or all cash?” Now you have left me with the terrible thought that I priced my truck too low and I now think I could have easily gotten more from you. On top of this, I may be suspicious about you wanting to finalize the deal so quickly.

You don’t want your counterpart leaving the negotiation feeling this way, especially if you may negotiate with them in the future. To create a win-win outcome, you need to counter, however small.

By definition, a counter offer is an offer made in response to a previous offer, statement, or condition of a proposed product or service. It’s important to remember that, once you counter, the person making the offer is no longer legally responsible for honoring their initial offer. That means in our deal on my truck, when you counter back with an offer of $18,500, I am no longer legally responsible to sell you my truck, even at $21,000. I could counter back $22,500 which might be a great counter, even higher than my original selling price.

Now, let’s go back to our original question: should you still counter when you feel that the original offer is acceptable? Yes, and here are 5 important tips on how to do so:

1. Know your facts: If you want to buy my truck, you had better know the Kelly Blue Book and Edmonds.com value at the Excellent, Good, Fair and Poor levels. If you don’t know the facts, you might counter at 10 percent less than the asking price, obtain agreement and still get a rotten deal.

2. Set a goal: When you know your facts, you can establish your goal, your wish, and the bottom line of what would be an acceptable counter offer. If your wish is to save 20%, you might counter the $21,000 asking price by making an offer of $16,800.

3. Set a time limit: When you counter, especially by email, there may be delays in your counterpart getting back to you. I suggest setting a time limit that you can live with that would look something like this, “I am happy to pay you $18,000 for your truck. But, I am going to keep looking at other trucks and my offer will expire in 48 hours.” Putting a time frame into the counter will make me, the seller, feel a sense of urgency.

4. Use Your Power: The side least committed to the relationship holds the most power. This means that you want my truck, but you don’t want or need it that badly because you know that there will always be another truck to buy. For me, the seller, I want to sell my truck to you, but I’m not desperate enough to sell it at the low price of $18,000 because I know that here will always be another buyer to come along.

5. Be creative: What if my truck is reasonably priced or maybe even priced below the Kelly Blue Book suggestion? This is where you, the buyer, can get creative and counter options other than price. Some of the other negotiable issues besides price may include:

   • Repairs
   • Color or features
   • Time
   • Payment terms
   • Warranty
   • Service or service records

In summary, even when you feel that you have received a fair initial offer, starting the negotiation off with countering the first offer will increase the chances that both you and your counterpart will feel that the negotiation was a success.

What’s your experience with countering, or not countering, the first offer?

You may also like:

• Getting Time and Information on Your Side
• Three Keys to a Win/Win Outcome in Negotiation
• The Role of Power in Negotiation

The post Always Counter the First Offer in a Negotiation appeared first on Peter Barron Stark Companies.

Empathy is defined as “the intellectual identification with or vicarious experiencing of the feelings,
thoughts, or attitudes of another.” In a negotiation, empathy is an important asset because it allows both counterparts to see the other’s perspective and conduct the negotiation in a way that is beneficial to both parties.

Another benefit of empathy lies in the fact that if you properly construct your reflective response, your counterpart’s natural reaction will be to provide more explanation and information. You will find the following tips helpful in learning to be more empathetic.

1. Recognize and identify emotions. Most inexperienced negotiators are not adept at recognizing a myriad of emotions. However, you will find it easier to identify others’ emotions if you can easily identify your own. Make it a habit to check how you are feeling. Are you frustrated, stressed, angry, happy, sad, nervous? Now, use the following skills to identify your counterpart’s emotions:

   • Recognize body language
   • Skillful questioning
   • Attentive listening

2. Rephrase the content. If you restate your counterpart’s comments word for word, she will believe you are parroting her. Doing so not only sounds awkward, but also makes your counterpart angry. The key is to restate the content using different words.

3. Make noncommittal responses. A good way to start reflective statements is with such phrases as “It sounds like…”; “It appears that…”; or “It seems like…” These phrases work well because they are noncommittal. If you blatantly state, “You are angry because…” most people will proceed to tell you why you are incorrect.

4. Make educated guesses. Recently we were involved in a negotiation for the sale of a business. The seller told the potential buyer that the offer he had submitted for buying the business was ridiculous. The buyer responded, “It almost sounds like you are insulted by my offer.” The seller replied, “Not insulted, just shocked.” Although the buyer was not entirely accurate in his assessment of his counterpart’s emotion, it was a good educated guess. Educated guesses work well because even if your guess is not entirely accurate, it will most likely encourage your counterpart to clarify his true feelings.

If you put these 4 tips into action in your daily negotiations, you will notice a shift: you will find yourself better able to understand your counterpart’s perspective and objectives which will increase your chances of coming to an outcome that is mutually beneficial.

What have you learned about showing/being empathetic in negotiations?

You may also like:

• Purposeful Questioning for Negotiating a Job Offer
• Three Keys to a Win/Win Outcome in Negotiation
• The Ideal Negotiator

The post Empathy in Negotiation appeared first on Peter Barron Stark Companies.