One of the most eye opening moments of my Executive MBA was our short one day course on Negotiation.
Before, I’d thought negotiation skill was a kind of magical superpower out of reach of mere mortals, like me. But the truth is negotiation is not magic. It can even be learned from a book. By following a few simple steps I’ve been able to get what I’ve wanted faster and more smoothly, whilst helping my counterpart achieve their goals too.
Furthermore with this new understanding, where before I might look upon “tough negotiators” with respect and admiration for their gall and negotiation skill, I now see confident amateurs losing opportunities for better deals.
The more you prepare, the stronger your negotiating position.
Make sure you have answered the following, ideally in writing for yourself, before entering negotiations:
- What are your goals? How are they prioritised?
- What are the issues to be negotiated and how important are they are to you?
- What are your BATNAs? — best alternative to negotiated agreement
- What would be the minimum terms you would accept?
- What will be your starting position? — the maximum you will push for
About the other side
- What do you think their goals are? How do you think they prioritise them?
- What do you think is their BATNA?
- What do you think the minimum terms they would accept would be?
About the situation
- Deadlines? Which side is under more pressure to conclude negotiations quickly?
- Are there any precedents that could benefit you? (Or work against you?)
- What would you like to avoid talking about? What will you say if they bring it up?
In your research you should identify your starting position. This should be ambitious but not outrageous, otherwise you risk not being taken seriously or causing offense. The more you can back up your starting position with research the better.
You could say:
Based on my research from asking some of my contacts performing similar roles at other firms, I would like to ask for a salary of X.
There are people who say it’s better to let the other set the starting bid, others who say it’s better for you to. But bear in mind that studies show that the opening bid acts as an anchor, pulling the final agreement up (or down).
Finally, remember once you’ve stated your opening offer, you can only negotiate down, not up.
BATNA stands for “best alternative to a negotiated agreement” and is your fallback should negotiations fail.
This explains why you are in such a stronger position to find a new job when you already have one.
But don’t leave it at just that. Develop multiple BATNAs. Nurture and strengthen your BATNA. And above all, make sure you do nothing to weaken your BATNA.
When applied to job negotiations, this can mean:
- Pursue multiple opportunities in parallel.
- Ask to hold offers whilst you consider other opportunities from other parties.
- Even if you hate your job, you don’t need to let the other party know that!
Don’t jump in and start making demands. First listen.
Before stating your perspective, listen first to the way they see it. Ask why in a neutral, friendly tone. Genuinely listen and learn. Either by asking directly or indirectly, validate the research you’ve done on the other side’s goals and priorities.
Except for the rarest of simple transactions, a negotiation is just one small part of your relationship with the other party.
Being perceived to have squeezed the other side too hard can have consequences that you may pay for eventually.
Remember that after concluding negotiations for your new job, you will need to work with the people you have negotiated with potentially for several years to come.
Respect that each side needs to prioritise their own interests but that you also have common interests: namely getting to a deal.
A good negotiation should not lead to a win-lose, it should be win-win.
The more collaborative and trustful a relationship you can develop between you and your counterpart, the more likely you will be able to help each other identify opportunities to make the deal better for both of you.
Don’t focus on headline figures alone. In job seeking, companies are structured to have multiple budgets and salary pulls only from one.
Don’t dismiss this as spare change. These extras can be significant.
Personal development, travel opportunities, annual leave allowance, flexible working arrangements, job title, size of your team… can all make a massive difference to the value you get from your role (and can be far more tax efficient than paying for them yourself out of your income). Also consider the effect your job has on your health, happiness and general well-being.
Once you have come to an agreement, offer your counterpart the opportunity to improve it.
This is not about re-opening negotiations. Honestly and genuinely commit to honouring the agreement you have already negotiated. But suggest both parties treat it as both of your new BATNA’s.
If the initial negotiation has gone well for both sides, there will be areas of the deal you wish you had done better and areas your counterpart wishes they could have done better too.
This is your chance not to make a new deal but improve what you’ve already agreed on.
By following these tips, I have negotiated better deals for myself at work and in my personal life and, occasionally, have succeeded in making a deal where others had thought impossible.
I feel I really have gained a magical superpower.