Why Anything Of Value Should Be Negotiated
Thu, 19 May 2016, in General
We probably don’t notice it, but we spend our days negotiating for something.
For our spouse to do more housework, a child to eat just three more bites, an extended deadline on a project, a better vacation package.
Speaking of vacation packages. If you’ve ever traveled – particularly to less developed places of our planet you might have noticed that others take negotiating a bit more seriously than we do.
In most developing countries (think Mexico, Egypt or Thailand), you’re able to negotiate the price for almost anything outside of big supermarkets or restaurants. This not only includes items such as food or souvenirs in a local market, but larger items such as clothing, appliances or electronics.
On confronting your fears
If you’re a westerner, chances are you hate negotiating. It’s just not a part of our culture. If you’re ever slightly shy, I’d imagine you’re someone who goes to great lengths to avoid any type of negotiation altogether.
Why is that?
The main reason people don’t like to negotiate for things they want is due to their fear of rejection. They aren’t confident – they believe they aren’t able to articulate their position effectively. Then there’s concerns of being perceived of as “cheap”. Those who have issues with public speaking or being put on the spot have these fears compounded further by the desire to be taken seriously or keeping their ego intact.
Negotiation skills are imperative in employment, as you need to negotiate things like job offers or severance packages. It’s a necessary skill to have in business development, sales or in other upper management positions. It also comes pretty handy in customer service.
Most importantly, negotiation improves your communication skills. It forces you to engage with the other party on a deep level. You’re learning to give-and-take, problem-solve and improve yourself as a person at the same time.
A balance of power
Successful people aren’t better negotiators because they have no fear. On the contrary – they just tend to be in touch with their self-worth or the value of their product. In addition, a successful negotiator must always operate in a constant mindset of abundance. “I don’t need you – I can go somewhere else”.
For example, job interviewers can put the pressure on you by asking “Are you entertaining any other offers?” or “If we were to give you an offer tomorrow, would you say yes?” There’s a huge difference in saying “I have 10 other offers I’m considering” or “I don’t have any other offers right now”. You must strike a balance between sounding like a desirable candidate without losing your bargaining power.
Despite your best efforts, it’s not always easy to understand the other party. An interviewer wondering if you’ll accept an offer tomorrow may want to gauge how genuinely interested you are in the job today. Similarly, the question about other offers doesn’t mean the interviewer is looking to gain a competitive advantage – but to learn about what you’re actually searching for. They may also be performing a social marketing experiment to understand how they stack up among other employers on your radar. So by understanding the question’s intent, you’ll be able to craft better responses that won’t make you appear vulnerable (worse still, victimized).
This isn’t all. What you actually do matters, too.
image source Green Room Films/Sportsphoto Ltd/Allstar
In the movie Arbitrage, *spoiler alert*
Richard Gere’s character, a successful businessman trying to sell a company, needs to deal with constant no-shows by a seemingly interested bidder. By missing meetings, the adversary hopes that Gere will push for the deal quicker or settle for less money. Similarly, substituting agreed-on negotiators is often a ploy to get the other side to reveal their hand, thereby weakening their position.
Know your leverage
And not to give any more of the movie away…
Towards the end, Gere’s character ends up meeting with the interested bidder. By threatening to issue a press release claiming the company isn’t for sale, he instantly gains more leverage. This would negatively affect the bidder’s stock price and signaled the power balance has now shifted away from the bidder to Gere’s character.
Negotiation is also about leverage – more leverage means taking control over what’s valuable and supplementing it into the negotiation process.
Where it gets tricky is when you don’t have something that can be leveraged. Meaning, you can’t negotiate if you can’t 1) provide value directly or 2) providing value indirectly through some sort of leverage – and picking out what’s most valuable in your arsenal of tools is synonymous with how well you know yourself, too.
What are you worth?
It’s not enough to simply know what you’re bringing to the table – you must be proficient at articulating it, too. This helps the other party understand why you deserve what you are asking of them. However, misrepresenting yourself can make you sound arrogant or unreasonable.
When I was still a teenager, my good friend was in the market for his first car. When he settled on the one he wanted, he bought his hardliner father with him. For his father negotiation was a sport – and he managed to bring the price of the car down from $15,000 to $10,000.
How did he do it?
He made a compelling and convincing case that the seller should receive less money for what’s being offered. Whatever information was exchanged, it was good enough reason for the seller to take a $5,000 hit on his sale.
If you aren’t negotiating, you aren’t improving
What makes someone a successful person? They exude high self-esteem and confidence. As a result, they know how to take a “don’t think so” and turn it into a “maybe” and then morph it into a “yes”.
These people are masters at using their self-esteem as a value point. That’s because the more confident you are, the better you’ll be able to communicate a counteroffer, the further you’ll be willing to go to extract maximum value at a minimum cost to you. And this applies to anything in life, whether it’s money, material objects or a lucrative contract.Successful people are also successful negotiators.
Negotiation is a learned skill, and just like any skill, it must be practiced constantly. When you’re looking for a travel companion, it’s safe to say that a person who’s traveled to 50 countries will be able to know what to do when traveling to the 51st. If someone started five businesses before, they probably won’t make many mistakes when starting the sixth. Sure, there’s no guarantee of success, but this greatly stacks the odds in your favor.
And odds are, a person that’s comfortable negotiating is likely just as comfortable with themselves, too.