I use to be in a fantasy basketball people. One of the other fantasy owners was the son of a lawyer and was destined to be a lawyer (and he actually did become one during my 5 year stint in the pool). He never ever made the first trade offer. He would always start with “I am interested in [insert player here] on your team. Why don’t you make me an offer?” or “I hate [insert player] on my team. If you want him, make me an offer.”

It was a very clever tactic on his part because he was letting the other fantasy owners set a valuation for a player which allowed him to counter-offer. If your opening offer was too high, you just set the floor too high for yourself. If it was too lower, he could withdraw without ever showing what he thought a player was worth.

In essence, he was following a rule that all good negotiators adhere to- never throw out the first number. Whoever throws out the first number always sets a valuation and basis of negotiations and allows the person to counter-offer based on that. If you have negotiated against yourself and gave a too high/low number, it just may be taken.

In non-fantasy pool life, think about how this works. Most car dealerships teach their salespeople to ask customers “how much do you want to spend?” The trick in the automotive sector is to tailor monthly payments to how much you say you want to pay even if the loan ends up being unusually long and detrimental to the customer. But, in the heat of the battle, the customer thinks they got a good deal since the salesperson got them a car at the price they told them to.

Or, to turn the tables, I have seen this done a lot to salespeople in the business world. The salesperson gives a quote and a shrewd potential customer says: “Well, I got a quote for lower than that. Can you do better?” The key is to not tell the salesperson how much lower the quote is (if you got another quote at all- you sly bluffer). What a lot of inexperienced/bad/desperate salespeople will do is to undercut their price without even asking you how much lower the other quotes where.

The other example you see is a lawyer saying: “well, that offer is utterly insulting to my client”… and then not make an counter-offer. They want you to negotiate against yourself and lower your offer without them doing anything.

Now, if you meet a shrewd negotiator, you end up in this strange dance where no one wants to throw out the first number. Then you basically become Job and become super-patient and outwait them or you know you are against a good negotiator and walk away. If you have to make an offer, make sure you do your research carefully.

In today’s post on negotiations, I wanted to address something patently obvious. Don’t make negotiations personal. In some cases, like child-custody or separations, the nature of the negotiations are very personal. But, in most business negotiations, it is not about you. Its about the deal. So don’t turn it personal.

Some people are personally upset if negotiations did not turn out as planned. That is just part and parcel of negotiations- not every deal has to get done (a post for another time) and they are not rejecting you. They are rejecting the terms and conditions you have put forth. Everyone has different expectations and, more often than not, things don’t work out because of expectations of the person on the other side of the table and not you per se.

How do you turn negotiations personal? Watch for phrases that begin with:

“you said….”

“My problem with your position is…” (positions also implies posturing)

“How do you expect me…”

You, you, you….pointing fingers at someone; you turn the interest of parties into a personal power struggle. Instead try:

“the proposal does not work because…”

“how about trying things this way…’

“This doesn’t work because…”

Remove the words “you” and make it neutral and things don’t sound so blunt. Even if you think someone else’s position is crazy, its the position and not them and you end up removing the personalities from the discussions as much as possible (let’s face it, all negotiations have some degree of emotions in it, the key is to remove as much of it as possible).

Good luck.

I have created a new category called “negotiations” and added all my previous posts on negotiations into them. I hope you enjoy this once in a while series. Today’s negotiation tip comes courtesy of our friends at Last Minute Training who suggested that one of the cardinal sins of negotiating is to take absolute positions or make definitive pronouncements.

When I was a junior lawyer, I was taught many things about communicating by some great mentors. One of the key fundamentals I was taught was that any statement made or written should not be definitive unless it is an undisputed fact by the other side. Try to put escape routes in your communications and generally make things as broad as possible (the other side’s mission is to make you as “narrow” as possible in your position; hence  trial lawyers are taught to phrase questions that only have yes or no answers). For example, if you read this blog frequently, you will notice I like writing using the words “generally” or “i understand” or “subject to” or “assuming…” Generalities have exceptions. Understandings can change. Subject to means a set of conditions must apply before a statement is true. Assumptions shift.

All of these phrases couch a particular statement to some exception (fundamentally, legal drafting is based on a rule, an exception to the rule and an exception to the exception). Non-lawyers call them “weasel words” for a reason. They allow you to get out of positions since the position itself has a built in escape hatches. It is probably 1 of 9,862 things that drive people crazy about lawyers (and why lawyers marry other lawyers- its fun to win arguments but not so good for personal relationships).

The opposite are the absolute statements: “Daddy is always right,” “This is the best used car ever,” “you can get great returns with no risk,” “this is the cheapest Blue-Ray machine in the city.” They paint you into a corner and if that absolute is proven to be wrong, several things can happen:

1. You look like a fool and your creditability just went down several notches;
2. You immediately become on the defensive about your absolute statement (”…did I say no risk? Well, there’s risk in every investment isn’t there…”) which means you are not negotiating from a position of strength; or
3. You spend an inordinate amount of time trying to prove your absolute statement was right instead of negotiating the real point.

I was once told that there are three absolutes in life: taxes, death and change. Everything else is a varying shade of gray so why be absolute when so little in life is not?

Of all the negotiations tactics, do you know what I think is the worst? Negotiating by email. Let me count the ways. Email messages lack tone and context and what the writer believes is a polite but stern negotiating position suddenly becomes overly harsh and rude to the reader and the negotiations get off the rails because people are offended (if you email your spouse  at work about something pedistrian and it degenerates into you being “mean” in your emails, you know what I mean). Two-there’s the plain practicality that people get avalanches of email a day and they miss responding to an email on an important point and answer the less important ones (it always seems to happen that way) so now the parties have a communication gap. Three- have you sent an email with 4 questions and you only get back answers to 2? Now you wonder if they deliberately avoided answering the other two or if it was just an oversight because the email was long and their attention span couldn’t handle all those questions. Do you call them out on it and appear rude? Four- emails encourage general rambling (that’s what blogs are for!) rather than specific answers. Thus there’s a lot of emails going back and forth without getting anywhere.

Last one- a lot of us get emails on blackberrys and hand-held devices which promotes two types of response: (i) fire and forget- let me just shoot off any old response to get this off my inbox; or (ii) short, non-specific responses to long questions-  what exactly did you say yes to? Both are very problematic since you may have agreed to something you do not because you were firing off short answers.

Emails are great for getting information but, once you dig below the information and try to engage in a point and counter-point discussion which typically characterizes many negotiations, the medium of communication hinders the process rather than helps.

Don’t negotiate by email. Do it face to face. Body language gives you a much better read on feelings, positions and stances than an email would. Face to face negotiations traps the parties in a time and space where they HAVE to think about the issues in dispute at hand without all the distractions of emails. This allows you to bear down and really figure out what the parties want from one another (in business and in life).  I have been part of negotiations where nothing happened after 50 emails on a topic (I am sadly not exaggerating as I think of these negotiations) because everyone was on a blackberry and just firing off 10 words answers and the lawyers were pulling their hair out trying to figure out what the parties really meant. After a 1 hour meeting, everyone was on the same page. Think about how much the lawyers charged reading that stream of emails (so there is a cost by negotiating through email).

Yes, people don’t like meeting face to face because it is easier to say no by email than face to face (with Facebook, you can actually break up with someone without even an email, just change your status for the world to see…does Generation Y even go on dates or is all done by text-messaging and instant messaging?). But the hard things in life are the one’s worth doing.

If you would like more negotiating tips, I previously wrote a post on effective negotiating tactics. Good luck.

There seemed to be many misconceptions about successful negotiations. If you watch enough television, it seems like negotiations involve a lot of yelling, throwing of objects and a general scorched earth policy. Meanwhile, one of the most successful books on negotiations, Getting to Yes, has been criticized for not looking at the emotional aspects of the parties and negotiation, opting to rely too much of a clinic analysis of negotiations (to the authors’ credit, their next books addresses the emotional side of negotiation). Unless you are a lawyer, mediator or some other persons who negotiate on a daily basis, most of us don’t use this skill very often but it can be rather painless.

When I first starting practicing the law, a very senior lawyer said to me that the essence of a good deal is that neither side is happy. In other words, both sides gave up something valuable in order to reach a deal. The problem with trying to totally crushing the opponent in negotiations is that no one wants to play ball with someone who will not give anything up at the negotiating table and, after a while, you end up negotiating only with the most desperate and vulnerable which brings up a whole moral/ethical issue.

I am by no means a master negotiator but I have picked up a few tips over the years.

COME PREPARED

This sounds so trite but how many times have you heard of friends driving around town one afternoon, walking into an open house and then buying the place? Then, they are stuck with buyer’s remorse because they didn’t do their research properly and they over-paid for the place or the place is a dump etc.

There seems to be a correlation between the amount of preparation put into negotiations and the result. The less research and intelligence gathered, the more likely the unprepared will be taken. I may have linked to this post before but look at how the writer got the best price for a car by doing their research.

If you are going to make a big-ticket purchase, look at it one day, go home and do your research and buy it on another day. If you walk in never intending to buy and you did, you probably left money on the table.

PEOPLE ARE IMPATIENT- AFTER A WHILE, THEY WILL AGREE TO ANYTHING

When I was in undergrad, my brother called me asking me if I wanted to buy his old Honda. Turns out that he was in the car dealership for 7 (!) hours and, even though he never set out to buy a car, he thought that spending so much time there meant that he HAD to negotiate some type of deal to buy.

I once attended a sales seminar aimed at investment advisors (even though I am not one) and one of the key points was that a good investment advisor got an answer quickly. A “no” is a good answer. It allows you to move on to the next potential client. The worse answer a salesperson can get is “let me think about it.” The key was to force “yes” or “no” answer as quickly as possible. Patience is not key in sales.

The point being that negotiations are often wars of attrition. Whomever can wait out the other side the longest sometimes wins the point. If you don’t have to buy the car or house that day, then don’t. People will cut you deals rather than watch you walk since there is some certainty of sale with the person in front of them rather than the unknown (is someone else going to walk in tomorrow to buy?). Why do you think car dealerships make you wait in office after office; as your impatience grows, your desire is just to get the deal done regardless of whether it is the best deal or not.

On the flip side, tell a saleperson you want to think about it after they have spent some time with you- watch them make you a better offer than their “best” offer 10 minutes ago; you have occupied their time for a while, they don’t want the time spent, and their potential commission, to go to waste so they’ll cut a deal with you even if it is not the best one for them.

PRIORITIZE YOUR DESIRES

I work with a lot of salespeople as co-workers. Whenever we talk about a new project they want everything in the marketing materials- lot of information, lots of pictures, lots of sales language. However, we can’t fit that all into a small brochure. At some point in time, one of the more experienced salespeople will say that they have to pick one thing as a priority whether that be information, pictures or whatnot. At that time, the salespeople really begin to give you a sense of what they want and the conversation becomes much more focused and you hear a lot of: “yeah that would be nice but let’s focus on this…”

It is the same thing with negotiations. Of course, we all want everything but what one thing is more important than others? Use the other important but lower priority desire as a bargaining chip. For example, I watch a lot of these property virgin/1st time home-owner type of shows and everyone always wants everything: a reasonably priced home but with a finished kitchen, large back-yard, minutes from school, access to public transit, a 2nd/3rd bathroom and, oh, the house has to be barely lived in. Then, watch what happens- people begin to find out that they can’t have their cake and eat it too and they focus on the most important desires and give up the other things they want but are not deal breakers (for some reason, it is always the big backyard).

If you cannot prioritize then one of two things happens: you either end up paying a lot more than you wanted to since everything is important and you can’t live without it or you can’t cut a deal because you won’t give anything up at the table to get something of equal value back.

Take a piece of paper and write down the absolute deal breaker terms; it can’t be more than 3. Then write down the “it would be great” terms. These you negotiate as if they were deal breakers but you would willingly walk away from if you got something back in return. It is a good exercise in trying to figure out what the most important thing is for you. When I bought a condo, I threw away my desire for a 2nd bedroom for my priority of living in a great location; I always say I could use another 100 sq. feet but I would not give up my location.

….those are my three big negotiating rules. If you are gearing up for a negotiation of any kind, I would read Getting to Yes as a starting point. Anyone care to share any tips?