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Negotiation will present you with difficult issues regarding subjects you would rather not have to discuss. Yet, everybody makes mistakes. The difference between negotiations that end successfully and those that do not is often a result of how you manage mistakes.
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The Best Way to Manage Mistakes in B2B Negotiations
Without Damaging Your Credibility or Leverage
Imagine this…
Imagine this…
You are in a sales negotiation. As part of your services, you will create a solution for an inventory problem that your customer is having.
OOPS…
In the middle of your negotiation, a member of your team tells you that this
solution can only be implemented manually, which will drive up the cost by $250,000.
OOPS…
What do you do?
What do you do?1. Omit the solution in the next agreement draft and hope the other side forgets
the whole thing.2. Tell the other side that you’ve made a mistake, but you will absorb the cost of
the additional $250,000 since it was your mistake.3. Immediately notify the other side, apologize for this mistake, and tell them that
if the solution is still of value to them, $250,000 will have to be added to the price.
4. Say nothing and eat the additional $250,000.5. Keep silent. Add the $250,000 to the price and address the issue at the very end,
and only if the customer brings it up.
What do you do?
In this instance, the third choice is probably the best.
We conduct negotiation training exercises such as this with our clients, but sometimes not even the best negotiation training can prepare you for all the tough, pressure-filled situations you will
encounter.
The Facts
The fact is this…
Almost everything we do in a negotiation effects either credibility or leverage in some way—usually both.
That’s why you have to prepare and manage information thoughtfully.
6 Key Negotiation Principles to help you preserve credibility
How You Manage Mistakes
Negotiation will present you with difficult issues regarding subjects you would rather not have to discuss. Yet, everybody makes mistakes.
The difference between negotiations that end successfully and those that do not is often a result of how you manage mistakes.
In this case, explaining the mistake is critical to maintaining integrity. And you don’t have to be “punished” for the mistake by eating the $250,000.
Confront Mistakes Quickly
In our negotiating programs, we teach that it’s usually best to admit mistakes sooner rather than later.
If you focus on the merits of the deal and confront mistakes quickly, you should be on firm ground.
If you make a mistake, don’t be afraid to admit it promptly.
Covering Up is Costly
When you hide mistakes, their discovery later will jeopardize your credibility and a successful outcome.
Making mistakes can damage your credibility in the short term, but hiding them for later discovery damages your integrity for the long term.
Politicians from Nixon and Clinton to Sarkozy have discovered this; lying and covering up can be much more costly than any admission would have been.
Negotiation Capital
Is the other side going to give you a hard time because you made a mistake?
You should expect them to try to erode your Negotiation Capital—the term we coined to describe the amount of willingness by either side to negotiate and exhibit flexibility in bargaining.
Gaining Capital
Think of it this way: Negotiation Capital is like currency.
If you have a good relationship and have done a good job persuading the other side (creating leverage), you have earned Negotiation Capital.
This “currency” translates into the other side’s willingness to move closer to your way of thinking.
Losing Capital
If you lose credibility or have to backtrack due to mistakes, then you use Negotiation Capital as if you were “burning” currency.
This loss of currency should be momentary; after all, the other side is not perfect either.
However, if you tried to hide the mistake you will have to work much harder to earn back your Negotiation Capital.
Building Integrity
If you want people to accept your ideas, you must be respected and trusted.
People don’t listen just to your words; they also focus on you.
Taking ownership for errors that occur is a good way to build integrity and preserve your chances for a good deal, even when you slip up.
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About K&R Negotiations
K&R Negotiation Associates, LLC, is a consulting firm specializing in structuring and negotiating business transactions around the world.
K&R’s clients include Fortune 200 companies such as IBM, EMC and Xerox, as well as smaller companies such as Bristol Technology (now part of HP), Priceline, SEI and others.
For more information, please visit www.negotiators.com. K&R Negotiation Associates LLC Voice 203-431-76934 Island Hill Fax 203-431-1945Ridgefield, CT 06877
