How to Take Charge in a Negotiation Even If You Believe the Other Party Has More Power Than You.
When I speak with clients about upcoming negotiations at some point we talk about power and assess which party has more power and why; and in most cases, my clients believe that the other party has the power over them. They see their opponent as someone who is much bigger, has much more influence, is a tough negotiator and often gets the better deal. They feel they have less power and are unsure of what to do to negotiate successfully.
They look at the negotiation like a David versus Goliath. Only that David the courageous shepherd boy has been able to battle a giant that many have been so fearful of and demonstrated that size does not always matter. David won the battle as he was not scared, he was confident and prepared. He was in control of himself and did not let anyone influence him by their fears. He had a strategy and he stuck with it, he decided against heavy armor as he knew it would slow him down.
By studying Goliath he understood his strengths and weaknesses and could therefore use this knowledge to shift the perceived power in his favor.
When I speak with my clients about their negotiations they often find themselves negotiating against such giants which can be any powerful opponent; a big brand, a big retailer, or any big corporation which makes them believe that they are the underdog and have to play by their rules. But as Malcolm Gladwell writes in his book ‘David and Goliath: Underdogs, Misfits and the Art of Battling Giants’, ‘giants are not what we think they are.’ Giants also have weaknesses, pressures, motivations and goals because at the end of the day we are all people and we all have certain aspects that motivate us. The key is to understand that and then figure out how you can shift the perceived power in your favor.
When we talk about power in a negotiation we refer to two types of power, actual power and perceived power. Actual power relates to the position and the capacity of the negotiator that enables the negotiator to get the better deal.
Perceived power is not objective, it is the perception one party has of the other as to how much power the other party has in the negotiation.
If you believe that the other party has more actual power than you then you need to work on building perceived power, just like David did when he took on Goliath.
Preparation is the key to success here. Through preparation an understanding of the strengths and weaknesses of the other party is gained. You then need to understand the motivations, desires and pressures of the other party and work out a negotiation strategy with that information. Think about how they will behave in the negotiation and why they behave the way they behave. Negotiating with an experienced opponent could mean that there is a negotiation history which can be obtained by talking to people who have dealt with that party before. Most people are creatures of habit meaning that their negotiation tactics and styles can be predicted which gives a huge advantage.
Once you have researched the other party and have gained an understanding you can look into the Power Toolbox and develop your strategy.
The tools we discuss here are Silence, Questions, Pause, BATNA and Conscious Competence.
In any negotiation information is power. The more you talk the more likely you are to give vital information to the other party that can then be used against you. We tend to feel uncomfortable with silence, but silence is a powerful tool in negotiations. You have the upper hand if you let the other party speak as they might give you important information that you might be able to use in the negotiation against them.
Asking the right type of questions is a skill that can be learned. Closed questions are questions that ask for a yes or no answer. They are ineffective as they don’t give any information, they need to be avoided. The type of questions that need to be asked are open questions, questions that require the other party to answer in one or more sentences. Ask questions that start with what, why or how. And if you didn’t get enough information the first time then just re-phrase the question and ask it again.
For example: Why are you selling? Then re-phrase: What is the biggest reason for you to sell? By rephrasing the question and asking again you will get additional information as your counterpart will think about an answer differently again.
While you need to exchange information in order to build trust and get to a deal, you don’t need to answer every question the other party asks you. Think carefully which information you can give and what you need to withhold. There are several techniques to avoid answering questions. You can answer by asking them a question in return. For example, if you are asked: ‘What calibre of clients do you have?’ you could answer: ‘That is an interesting question, what impact would that information have on the negotiation?’
Secondly, you can be open and say that you cannot answer this question at this point in time. A third technique is just to be silent and not say anything. This often requires some practice as this can be quite awkward. Another way to avoid answering a question is to just talk about something else. I call this the politician tactic as they do that very well in interviews, they hardly answer the questions that are being asked by a reporter.
Make sure you pause often. Pause after you have asked a question and give the other party time to respond. Pause once you have made your demands and pause once you have placed your offer. It makes you come across as composed and being in control.
BATNA stands for Best Alternative To A Negotiated Agreement. The more alternatives you have the less you are under pressure to come to a deal. The more BATNAs you have the more power you have. It is therefore imperative that you do your research on your BATNAs before you go into the negotiation.
When you prepare for a negotiation make sure you think about power and assess their levels of power and yours because you will often find that you do have more power than you think you have. Think about your strengths and weaknesses and how you react under pressure and in stressful situations; how you handle uncomfortable situations. You need to be conscious of your weaknesses, so you can work on them. Some people tend to talk more than they would normally do when they are in stressful situations, others tend to show that they are under stress through their body language. Any skilled negotiator is able to see these signs of weakness which put you in a powerless position.
The key here is to be conscious competent meaning that you are aware of your weaknesses and consciously work on them so that they don’t work against you in a negotiation.
Thinking about power before going into a negotiation is vital. If the other party does have the power than it is important to think about ways that will enable you to shift the perceived level of power in your favor. This gives you confidence and confidence helps you to take on the Goliath and negotiate a favorable outcome because at the end of the day they are also people and have motivations, pressures and goals just like you.
What to Be Aware of when Negotiating Over Email
Digitalisation has enabled local businesses to become more global. A local business no longer relies on the local community, digitalisation now provides businesses with global opportunities, not only to sell their products and services but also to source, manufacture and find staff.
With globalisation the way we negotiate is changing as it is no longer possible to always negotiate face to face due to the geographical challenges, hence e-negotiation has become a major part in business with e-mail being now one of the major means of communication in business.
E-negotiation is different to negotiating face to face and therefore has its own challenges and tactics but it also creates new opportunities for success.
People tend to hide behind emails and can be tougher in e-mails than they would be if you met them face to face. Firstly, the physical distance makes people more detached from the other party and it is therefore easier to play tough and make tougher demands. Secondly, if you are tough with the other party you don’t get an instant reply, which you need to deal with right away. You have time to ponder over your response.
Dana Carney from the University of California found that e-mail makes it easier to mislead and lie to the other party due to the distance, as the distance we have from someone makes us care less, we are detached, and the behaviour becomes contentious.
You can work against that by using the law of reciprocity. What I mean by that is that if you add some personal details about you or the other party in the email to make it not only about the issue you are negotiating over, you are creating attachment and a warm climate and show that you care. In return, the other party might feel obliged to do the same. This creates a great foundation for negotiating over email.
Be conscious of how the other party may interpret your emails. Re-read it and check with someone if possible before pressing send.
When we communicate we not only communicate verbally we also use our body language and our tone to bring a message across. Albert Mehrabian, a professor at The University of California found in his studies on how we communicate that only 7% of our communication is done verbally, with the words we say. 55% of our communication, on the other hand, is done through non-verbal communication, our body language and 38% is communicated by our tone, the way we say it.
When negotiating over e-mail we only capture 7% of the total cues which leaves the email open to interpretation by the other party. This indicates that it can be much more difficult to interpret the intentions of the other party which invites room for wide interpretation which is not always productive to the negotiation. Contentious issues that are being discussed via e-mail are also easier to abandon and or letting them drag out which can be disastrous. Imagine you are negotiating over extra charges that have come up with a client and the client is dragging the negotiations out. This can become costly not only in a monetary sense but also to the relationship. It can destroy a relationship and future business opportunities.
In order to overcome such situations, you need to be collaborative in your email. Ask them what is important to them, show some interest and try and acknowledge their point of view which does not mean that you agree. You need to show some empathy showing your understanding of their situation.
Lack of Focus and Commitment
When both parties meet at the negotiation table they have made the commitment to come together and negotiate to try to come to a deal. For the time they meet they are focused on the negotiation on hand. That focus, however, can get lost when negotiating over e-mail as people multitask and get interrupted, meaning it can deliver mediocre results.
The way to overcome this is to keep the other party engaged and not to leave too much time between emails. Try to be focused when you prepare your e-mail and even re-cap previous e-mail exchange that you had and summarize the points.
While communicating via e-mail defies geographical boundaries and can save time, the absence of body language and tone makes it harder to interpret the message and can change the course of a negotiation if there is no awareness of the pitfalls when negotiating via e-mail. It also requires more effort to develop trust and to keep the other party engaged to arrive at a good outcome.
Does toughness in a negotiation pay off?
Does being cold and indifferent in a one-off negotiation get you the best deal?
There are two schools of thought on how to approach one off negotiations where price is the main variable and where you never see the other party again.
One side believes that you should take a firm, cold and arrogant approach when negotiating over price as this would give you the best deal. It is believed that this approach makes the other party feel uncomfortable and they are then more likely to concede as people are not comfortable with uncomfortable situations.
The other approach is the warmer approach, building rapport but still being tough, sincere and challenging on the issues however warm on the people. The important point to make here is that just because you are warm on people does not mean that you can’t push hard to get the best deal.
At Octalo we support the second approach for several reasons. While this is a one-off transaction and you technically never see the other party again, you never know what the future brings and there could be the chance that you might need the other party again. Secondly, negotiation is a people’s business and people deal with people. Research has shown that people tend to be more likely to make a deal with people they like; so do you think you get a better deal by being cold, tough and arrogant or by being more collaborative? I will leave that up to you to decide but here is a story that recently happened to me.
I recently bought a second hand car from a dealer. It was a one-off transaction and at the end we haggled over price. I did not need to buy the car at this particular dealership as there were a lot of alternatives around.
Before the negotiation, I did my research and devised a strategy. I set my maximum acceptance point, meaning the absolute maximum I would want to pay and lined up my BATNAs, my alternatives. I was ready to negotiate. Before I went into the negotiation I decided to take the second approach, being tough and sincere on the issues but building rapport with the people. The intention of my approach was to build rapport, so I could get the best deal.
On my way to the car dealership, I thought through possible negotiation scenarios and statements and what their responses could be.
The car was advertised for $25,500. I went in and gave them my offer of $17,546. I deliberately used an un-round number to make it look like as if I had thought about my offer long and hard and calculated every cent and dollar I had. The car sales agent looked at me and said ‘that is too far off’.
I looked at him and said nothing because I had nothing else to say. He then said, ‘look I can do 23,500$ that is the best I can do’. He conceded 2,000$ in the first 5 minutes, which indicated to me that there was definitively more room.
My approach was to built rapport, so I told him what I needed the car for weekend trips I had planned and somehow we ended up talking about The Yarra Valley and red wine. I then gave him my next offer of $18,754. He then said that he really liked to sell me the car but he can’t do it for under $21,000.
I then said if he throws roof racks in I offer $19,728 and a bottle of Shiraz from a particular winery in the Yarra Valley. And then there was silence again and it was uncomfortable for both parties.
It seemed like an eternity when he broke the silence and said that he will need to speak to his boss.
He disappeared into the office and came back after 5 minutes telling me that he can’t go below $21,000. I thanked him for his effort and said that I am not in a hurry and he could give me a call if the car hasn’t sold at the end of the month. I demonstrated that I was not desperate to buy the car, I had time up my sleeve.
A couple of days later I got a phone call from the car dealer, he asked me if I am still looking for a car. I told him that I am still interested in the car plus roof racks and that my offer of $19,728 plus a bottle of red still stands.
After some more back and forth we did come to a deal. I got the car and a set of roof racks thrown in which cost me all up $19,728 plus a bottle of red.
I left the car dealership being very content with my deal and the car dealer was happy to receive the bottle of wine as a deal sweetener. Over the course of the negotiation, we developed rapport and a relationship despite me being firm on my offer. Being tough on the issue does not mean that you have to be tough on the people.
A couple of weeks later I jumped in the car and realised that the battery of the car was dead, it was due to be replaced, something I should have done already but did not get around to it. I was stuck, so I rang the guy who sold me the car and told him that I had a flat battery and said to him that I would be delighted if he could do me a quick favour and come over to jump start the car. Since he was only ten minutes away he had no problems coming over and helping me out.
If I had taken the dismissive, arrogant and tough approach when purchasing the car, we would not have had a relationship and I doubt he would have wanted to help me out.
Five Tactics You Can Use to Negotiate With Someone More Powerful Than You
1. Control the Conversation by Using Framing
Framing is a technique that relates to how the way you describe your offer strongly affects how others view it. Framing is also how you can create a conversation around a specific point of the problem.
Did you know people tend to resist compromises — and to declare impasse — when these compromises are framed as losses rather than gains?
Here is an example: Suppose a company offers you, as a recruit, a $20,000 increase over your current salary of $100,000.
Now, if the offer is presented to you in that fashion, rather than as a $30,000 decrease from your request of a $150,000 salary, it seems much more appealing. Here, the company is focusing on presenting the advantage rather than the disadvantage. The salary increase is a gain. The fact it is less that you asked for, is a loss. This is how framing can change the way your negotiation is heard by the other party. Stressing what the other party would gain rather than lose can be an important use of framing in negotiation.
Another use of framing is using the “yes and yes” response. For example, you might be negotiating over a start date for changes to be made within a company. You say, “Do you want to start implementing these changes at the end of the quarter, or do you want to do it at the end of the month? Your choice.”
Those two last words are much more emphatic and certain than, “What do you think?”
2. Give and Give Again
When it comes to negotiation, it’s simply not the done thing to give things away. However, if you offer expertise and solutions, you will be seen as someone who is genuinely there to help. This does not mean give away what you are there to negotiate. Rather, it’s all about leverage.
Let’s look at the example of a vitamin water brand that is giving away free bottles of water — but when you are given one, you are asked to fill out a survey.
Compare this to being asked to “spare some change.” Which option are you more receptive to? They’re both pitching for your attention. And it would be less time consuming to hand over some change. The difference is you are getting something back in return for completing the survey. Being willing to give makes a difference in a power negotiation dynamic.
3. Be Firm and Use Gentle Strength
In my program Feminine Art of Negotiation, I discuss being assertive when it comes to negotiation. However, I also stress that you need to do this without resorting to aggression. This is where you can use gentle strength, which is when you know what your bottom line is and stand firm on it without being adversarial or abrasive.
This dovetails nicely into the importance of knowing your B.A.T.N.A (i.e., your best alternative to a negotiated agreement). For example, if you saw a pair of shoes you loved in one shop, you would go and check them out in another store to compare the price. However, you are also taking into consideration every other factor included in those prices. The cost to get to the store, are the shoes available immediately, are they in the color you want? This all plays into your B.A.T.N.A. What is the best alternative outcome for your purchase? I talk about this in my programs, and also in my blog post titled Know Your B.A.T.N.A. Before Bargaining.
4. Allow Yourself to be Underestimated — And Leverage It
Canadian journalist Malcolm Gladwell discusses in his book David and Goliath: Underdogs, Misfits, and the Art of Battling Giants how a lowly shepherd boy defeated the biblical giant.
Their story is told in the Old Testament. Powerful warrior Goliath was said to stand more than 7ft tall. David was a small, skinny boy with no experience in battle. Their respective armies, to decide the victor and avoid widespread bloodshed, pitted the two against each other.
On first glance, you would cast Goliath as the victor, with his ginormous physique and heavy armor. However, what is not mentioned is that research has suggested it’s likely the giant was suffering from the hormonal disorder acromegaly, a condition associated with gigantism that also affects vision and can cause the afflicted person to see double. Plus, Goliath was expecting to face down someone like him in expertise and fighting strength.
What the giant perceived as weaknesses were ultimately David’s strengths. Nimble on his feet and with no heavy armor, he was well practiced at taking down lions with his slingshot. He was able to run at Goliath and was right under the giant’s nose when he took him down, with a stone hitting his forehead at what was estimated as the same force as a bullet. Goliath didn’t stand a chance. David was able to leverage what was perceived as weaknesses and use them to his advantage. They became his strengths that allowed him to win.
It can be intimidating to approach the negotiating table when you think you’re coming in as the weaker force. But by following these steps, you turn your vulnerability into a position of power.
Here’s an example: You have created a startup company that provides a communication system between organic farmers around the world to work together on fulfilling supplier needs, and you have been approached by an investor. However, the acquisition team is very shrewd, and they know they have the power of a conglomerate behind them.
In the instance of this company, they already have global networks in place, but not the technology to allow instant communication between them. Their team knows you want what they have, which is an investment.
One way to gain leverage is to see what their problem is and solve it. Put yourself in their shoes. During your meetings, ask why they are interested in your company. What do they envisage you can solve for them? What challenges are they facing that you can help with?
Know your worth and your worth to them. This puts you in a position of power irrespective of whether they are a multimillion-dollar company and you are a one-woman band.
5. Bring Them Around to Your Thinking
This may appear to be a daunting prospect if your counterpart has more power. So, you need to create some bridges to connect both sides.
Going back to your startup, your counterpart already has an investment in the outcome, but you don’t want it to be an “us vs. them” competition. Instead, you need to make sure they see you are both in ittogether. So, point out what you both have in common.
The more things they know you have in common that demonstrate your worth, the smaller the power gap. It’s no longer “us and them,” it’s “us” and how you can make it work for “both of you.”
Remember, one of the worst things you can do is negotiate against yourself. Understand what you, your services, or your mission is worth, and don’t undersell or second-guess. If you aim high, you won’t be disappointed when you meet somewhere in the middle.
It would be wonderful if every time we went into a negotiation, it were an even playing field. But that’s not always the case. All too often, you find yourself heading into a negotiation where the other side holds more cards.
To move them closer to what you want, you’ll need to make sure they know what they are invested in. Help them get over their “us vs. them” thinking and instead start thinking about how the deal they want will impact your company. Appreciate the position the other side is in and show them some respect. The deal that you wish for will then come naturally.
In conclusion, you never need feel intimidated if you go into a negotiation with someone who you perceive to be more powerful than you. You have the ability and the skills to be successful in your argument and achieve your goal. And if you use these five tactics as and when you need them, you can feel confident in your success.