Most people hear the word “negotiation” and feel dread. They think of these moments as antagonistic and scary. But if you’ve ever asked someone for something, you’ve negotiated. Often, these negotiations are easy because there are defined rules for you to get the resource (e.g. trading money for ice cream at the local shop) or the counterparty wants to help you (e.g. parents giving you a gift you want)
But these are nonetheless negotiations. The Oxford dictionary states that negotiation is merely “discussion aimed at reaching an agreement.” Everyone negotiates something every day.
The authors of Getting to Yes define negotiating as a “back-and-forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed.”
So we’ll approach learning about and practicing negotiations from the lens of having a productive discussion.
Elements of Negotiation
These are the “drivers” of negotiation: needs, wants, and motives. Whether spoken or subconscious, these are what guide our actions in a negotiation. A good negotiator probes to understand their counterparty’s interests.
A common value people share is “fairness”. In a negotiation, people are always looking to walk away with a legitimate or fair deal. It’s tempting to pull the wool over someone else’s eyes or take everything you can get, but it’s more useful in the long-run to create a fair, win-win outcome.
It’s easy to fall into the trap of seeing your counterparty as your enemy or, worse yet, subhuman – a corporate mouthpiece or some other simplistic reduction. Instead, it’s important to cultivate a relationship. Take time to build rapport: invite them to coffee, recommend a good book, treat them as you would a friend.
Good negotiators are aware of their alternatives when negotiation fails. Can I buy another software to do the same thing, will I walk away if I don’t get my desired salary, etc. You should consider your BATNA or best alternative to negotiated agreement. This is the backstop when things don’t go your way.
These refer to any available choices parties might consider to satisfy their interests, including conditions, contingencies, and trades. Because options tend to capitalize on parties’ similarities and differences, they can create value in negotiation and improve parties’ satisfaction.
This is an agreement, offer, or promise made by one or more parties. This can range from agreeing to meet at a certain time and place to signing a multimillion dollar contract. It’s exceptionally important to honor your commitments and hold others accountable to theirs.
This refers to your method of communication (phone, Zoom, IRL meeting) as well as your tone, phrasing, body language, and more. The success of your negotiation can hinge on your communication choices, such as whether you threaten or acquiesce, brainstorm jointly or make firm demands, make silent assumptions about interests or ask questions to probe them more deeply.
Tools for Negotiation
People wish to be heard, accepted, and understood. Therefore, being an active listener is a powerful concession you can make. By listening intensely, you demonstrate empathy and show a sincere desire to better understand what the other side is experiencing.
Great negotiators question assumptions. They are open to all possibilities and are more intellectually agile to fluid situations.
People who view negotiation as a battle become overwhelmed by the voices in their head. But the truth is, negotiation isn’t a battle; it’s an act of discovery. The objective is to uncover as much information as available.
To conquer the voices in your head, focus only on the counterparty. Understand what the other party actually needs and get them feeling safe enough to talk about what they really want. Negotiation begins with listening to the other party, validating their concerns and emotions, building trust and creating a safety net that allows for real conversations.
Then, to mirror, repeat the last few critical words of what someone has just said because we find comfort in similarity. Using mirroring encourages the other party to bond with you. It keeps people talking, buys your party some time, and eventually reveals their strategy.
Tactical empathy means understanding the feelings of the counterparty and hearing what’s behind them.
Once you can identify someone’s emotion, label it for them. Labels can be phrased as statements or questions. Labels almost always begin with the following phrases:
- “It seems like…”
- “It looks like…”
- “It sounds like…”
People’s emotions have 2 levels.
- A “presenting” behavior, which is the part above the surface that one can see and hear
- The “underlying” feeling which is the motivation behind the behavior
Great negotiators use labeling to address the underlying emotions. Labeling positives strengthens them while labeling negatives dilutes them. Because labeling acknowledges the other party's feelings rather than encouraging them to act them out, it helps defuse conflict.
Mastering the “No”
“No” is the start of the negotiation, not the end of it. In a negotiation scenario, “No” provides a great opportunity for you and the other party to clarify what you really want by eliminating what you don’t want.
“No” can often mean:
- I am not ready to agree
- You make me feel uncomfortable
- I don’t understand
- I can’t afford it
- I need more information
- I’d prefer talking to someone else
And there are three kinds of “Yes”:
- Counterfeit: This is one where the other party plans on saying “No” but feels that a “Yes” is an easier escape route.
- Confirmation: This is a generally innocent, reflexive response to a black or white question.
- Commitment: This is the real deal, one that most often leads to a definite outcome such as the signing of a contract.
Since these sound almost the same, you’ll have to learn to recognize which one is being used.
As you can see, a “No” can do a lot:
- It allows the real issues to be brought forth.
- It protects you from making poor decisions—and course-correcting ineffective ones.
- It slows things down, giving you time to analyze decisions and agreements.
- It helps you feel safe, secure, and emotionally comfortable.
- It moves everyone’s efforts forward.
Saying “No” makes the speaker feel safe, secure, and in control, so trigger it. That’s why “Is now a bad time to talk?” is always better than “Do you have a few minutes to talk?”
If a potential business partner is ignoring you, contact them with a clear and concise “No”-oriented question that suggests that you are ready to walk away. “Have you given up on this project?” works wonders.
“That’s right” is better than “yes.” It signals the counterparty feels that you’ve heard and understood them. Use a summary of what’s been said to trigger a “that’s right.” The building blocks of a good summary are a label combined with paraphrasing.
To get leverage in a tough negotiation, you have to persuade the other party that they have something to lose by walking away.
Here’s how you can do that:
- Anchor their emotions: Audit and acknowledge their fears. By anchoring their emotions in preparation for a loss, you stoke the other party’s loss aversion so that they’ll jump at the chance to avoid it.
- Let the other guy go first: Going first is not necessarily the best thing when it comes to negotiating price. Let the other side anchor monetary negotiations. By letting them anchor you also might get lucky: the other party’s first offer may be higher than the closing figure you had in mind. However, this could have a counter-effect. You need to be prepared to physically withstand the first offer. If the other party is a tough one, they may just end up bending your perception of reality.
- Establish a range: Establish a ballpark figure with credible references to support your statement. For instance, instead of saying, “I’m worth $110,000,” say, “At top places like Acme Corp., people in this job get between $130,000 and $170,000.” That gets your point across without making the other party defensive.
- Pivot to non-monetary terms: Make your offer seem reasonable by offering things that aren’t important to you but could be important to them. Or, if their offer is low you could ask for things that matter more to you than them.
- When you talk numbers, use odd ones: Numbers that end in a ‘0’ tend to feel like placeholders. But any arbitrary number you throw out that sounds less rounded— like say, $78,435—feels like a figure that you came to as a result of a thoughtful calculation.
- Surprise them with a gift: Make the other party feel generous by staking an extreme anchor, and then after their obvious rejection, offering them a completely unrelated surprise gift.
Calibrated questions have the power to educate the other party on what the problem is rather than causing conflict by telling them what the problem is.
Here are some calibrated questions:
- What about this is important to you?
- How can I help make this better for us?
- How would you like me to proceed?
- What is it that brought us into this situation?
- How can we solve this problem?
- What are we trying to accomplish here?
- How am I supposed to do that?
Calibrated questions make the other party feel like they’re in charge, but it’s really you who is driving the conversation.
When you feel that you’re being dragged into a hard bargain, you can switch tracks to non-monetary issues that make your final price.
E.g. If you’re trying to close a deal, you can ask “Let’s put price off to the side for a moment and talk about what would make this a good deal?” or “What else would you be able to offer to make that a good price for me?”
Sometimes, you need to get the other party out of their rigid mindset. If you’re trying to win a deal from your competitors, pitch statements like “Why would you ever do business with me? Your existing service provider seems great!” The “why” can coax the other party into working with you.
Using the word “I” is also great at preventing confrontation. For instance, if you were to say, “I’m sorry that doesn’t work for me,” the word “I” brings the other party’s attention back on to you.
The key is to never be needy. Remember, the person across the table is never the issue, the unsolved deal is.
The Ackerman Model is an offer-counteroffer method. The six-step process is:
- Set your target price (your goal).
- Set your first offer at 65 percent of your target price.
- Calculate three raises of decreasing increments (to 85, 95, and 100 percent).
- Use lots of empathy and different ways of saying “No” to get the other side to counter before you increase your offer.
- When calculating the final amount, use precise, non-round numbers like, say, $37,893 rather than $38,000. It gives the number credibility and weight.
- On your final number, throw in a non-monetary item (that they probably don’t want) to show you’re at your limit.
Before you head into a negotiation, carefully prepare your Ackerman plan. This will ideally help you get the bargain and prevent the other party from trying to milk your deal for the maximum value.
This blog post is the single best thing I’ve ever read on salary negotiation. I consult it every ~6 months. It should be your go-to any time you think about negotiating a promotion or a new job’s salary.
The cheat sheet by Yan-David Erlich summarizes Never Split the Difference. It’s an invaluable tool to keep in front of you during a negotiation.