negotiation commandments

The 11 Commandments of Negotiations

The 11 Commandments of Negotiations used by permission of Huthwaite International

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Huthwaites research into what skilled commercial negotiators actually do the worlds largest body of data on the subject uncovered some startling insights, many of which demolish myths and challenge traditional ideas about how the skilled negotiator thinks and behaves compared to the average negotiator. As a high-level overview, we have distilled some of the major findings into this document The 11 Commandments of Negotiations (For more information about Huthwaites negotiations research, see the appendix at the end of this document).

1st Commandment: Sell first, and then negotiate (but only if you have to) If you can sell your buyer an unchanged solution at the full quoted price, why negotiate? However, this is rare in major business contracts. Usually the buyer will signal the start of negotiations by saying something like, Id like to do business with you if . Average negotiators will already have given things away to achieve this position; the skilled will not.

Keep The Buying Cycle (below) in mind when the buyer begins to make overtures to negotiate. Ask yourself, where this opportunity is in The Buying Cycle? If it is still in Evaluation of Options or Recognition of Needs it is too early to negotiate. There is selling still to be done. Skilled negotiators are aware of when it is time to sell vs. time to negotiate. Average negotiators will often blend the two areas, in many cases under the mistaken belief that they are being customer focused.

Decision

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2nd Commandment: Never concede, always tradeEffective negotiation involves movement by both parties towards an outcome. Avoid giving something without getting something in return. When you need to move from any stated position, make a conditional offer, such as I might be able to move on X, if you are prepared to move on Y. This is particularly important towards the end. The sight of a deal can seduce the unwary into unilateral concessions.

3rd Commandment: Win/Win is not 50:50Were all encouraged to aim for a Win/Win outcome when negotiating. Concluding a negotiation with one side feeling positive and the other feeling resentful is not the basis for a strong ongoing relationship. However, there is a trap here that average negotiators frequently fall into. Win/Win doesnt necessarily mean splitting the difference. Skilled negotiators are far more effective at representing their organizations interests and achieving their targeted outcomes, while still allowing the other party to feel that theyve achieved a satisfactory result.

4th Commandment: Power is in the headIn the majority of cases, sellers report feeling that power in a negotiation lies with the buyer. Interestingly, in our discussions with professional purchasers they frequently report feeling the opposite. They need the service being sold and can seldom afford the deal to fall through either. So what does this lead us to conclude about where power actually resides in a negotiation? That it is merely a perception. If you feel powerful, you are powerful and you will behave accordingly. If you feel weak, the reverse applies. If power is about perceptions and feelings, you can manage and control it. What can you do to increase your chances of feeling powerful? The diagram below shows there are three elements:

Preparation and Planning: Going in to a negotiation having done adequate preparation and planning gives you confidence and fluidity. Even if youre thrown a curve ball, youll have enough depth in your plan to confidently and agilely shift directions or use your power to guide it back.

Preparing and Planning

Strategics and Tactics

Behaviors

Power Effective Negotiation



Strategies and Tactics: Knowing how to maintain a positive climate or use a particular tactic, such as Feelings Commentary, can un-stall a negotiation or get the other party to reveal critical information.

Face-to-face Skills: Those who produce better results are aware of their behaviors, and chose them consciously.

5th Commandment: Prepare and plan with great careTrue or False: Skilled negotiators spend more time preparing and planning for a negotiation than average negotiators?

If you answered false, you would be correct.

Our research into successful vs. average negotiators found no difference in the amount of time each spent planning. It is not the amount of time that suggests success, but how that time is used.

Skilled negotiators do a number of things before a negotiation. Here are three of them:

They develop a credible fall back or BATNA (Best Alternative To a Negotiated Agreement). This is not the worst case they will accept; rather, it describes what they will do if this particular negotiation fails entirely. A good fall back stops them feeling that they must do a deal at all costs.

A skilled negotiator develops a wider range of options and outcomes than the average negotiator. They identify as many negotiable issues as possible, prioritize them and develop a negotiating range for each from best through target to worst. They also calculate the cost of any concessions for each situation to avoid impulsive and expensive mistakes in the heat of battle.

Does the skilled negotiator concentrate during planning on the areas that hold the most potential for conflict or give attention to areas of possible common ground? Huthwaites research showed that although both groups of negotiators tended to focus on areas of conflict, the skilled negotiators gave over three times as much attention to common ground areas as did average negotiators.

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2.6

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Skilled Average Skilled Average

Average number of outcomes planned (per negotiable issue).

Average percentage of comments about areas of common ground (during planning).



6th Commandment: Plan and ask questionsHuthwaites research into successful selling found that, on average, the more successful sellers asked more and better questions during a meeting with the buyer than average sellers. Similarly with negotiations, skilled negotiators asked significantly more questions during negotiations than average negotiators. This is a significant difference in behavior. SPIN questions, in particular, applied in the context of negotiations, are extremely effective for a variety of reasons, as they:

provide data about the other partys thinking and position;

give control over the discussion;

are more acceptable alternatives to direct disagreement;.

keep the other party active and reduce their thinking time; and

can give negotiators breathing space and time to gather their own thoughts.

Skilled negotiators prepare smart questions to probe the other sides stance. Their objective is to create doubt in the validity of that stance the first step in persuasion. Problem and Implication Questions are particularly powerful here. They help the other side explore and discuss alternatives through Need-payoff Questions. They accomplish the second step creating movement by offering Benefit statements, flexible trades and using their levers.

7th Commandment: Identify and use your leversA lever is a negotiable issue that is of relatively low importance to you, but is likely to be of high importance to the other side. It is something that costs you less than the value the other party places upon it. It can, therefore, be traded for something you value. Comparing the priorities during planning yours and theirs on each negotiable issue identifies those levers.

Linking issues and obeying the Second Commandment makes sure that you use them.

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Skilled Average

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9.6

Questions as a percentage of the negotiators overall behavior.



8th Commandment: Focus on your most important reasonsTrue or False: Skilled negotiators use more arguments to persuade the other party than do the average?

The answer is false. The research found that successful negotiators used fewer reasons to back their argument than average negotiators. This seems counter-intuitive. How could that be? Its because of a phenomenon called argument dilution. That is, the more reasons you give the weaker your case becomes. Why? Weaker reasons dilute the most powerful ones. If a negotiator gives five reasons to back a position and the third is weak, the other party will exploit this reason in their response. The poorest reason is a lowest common denominator: a weak argument generally dilutes a strong one. Be careful when planning that you dont fall into the trap of trying to present a multitude of reasons for a particular position. You may be unknowingly weakening your case.

9th Commandment: Dont just cut the pie, grow itA good deal is a creative deal. It adds value to whatever the two parties bring to the table. Ideally, that additional value is created at the expense of a third party; for example, the competition or the tax man! When planning, skilled negotiators generate a wide range of options when considering how each negotiable issue might be settled. They look outside the deal for extra value.

10th Commandment: Keep all the balls in the air until the endTrue or False: Skilled negotiators work to get items agreed on and finalized one-by-one?

Again, the answer is false. However tempting, avoid settling issues as you go, especially those that seem minor. The risk is that you will discard your levers and the negotiation will come down to a single-issue confrontation (typically, on price) with no other issues available to break the deadlock.

You need to be able to juggle all the issues so that you can bring any of them back into play at any time until the whole deal is concluded. Until the end, settle issues provisionally.

Of course, as in any good set of 10 Commandments, there is an 11th

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Skilled Average

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Average number of reasons given to back an argument.



11th Commandment: No deal is better than a bad dealObvious isnt it? But not so obvious when the deal has been in the sales forecast for months; it seems tantalizingly close and all thats required to close it are a few final concessions. Because they are clear about their worst position and have a credible fall back, skilled negotiators recognize a bad deal and arent afraid to walk away from it.

SummaryOur research shows that the stereotypical image of the effective negotiator as a hard-faced and intractable character is incorrect.

Skilled negotiators have wide behavioral repertoires and the flexibility to match their behavior to suit the situation. Developing these skills is a key element in your ability to create Win/Win outcomes and close more opportunities while maintaining acceptable margins.



Appendix

Huthwaites negotiations researchWe are not gurus or theorists. Huthwaites methodology is based on a series of discoveries, not inventions, extracted from the largest body of directly observed research into real negotiations. In comparison, almost all the publications about negotiating behavior fall into one of three classes:

1. Anecdotal Heres how I do it accounts by successful negotiators. These have the advantage of being based on real life, but the disadvantage of frequently describing highly personal modes of behavior that are a risky guide for would-be negotiators to follow.

2. Theoretical models of negotiating that are idealized, complex and seldom translatable into practical action.

3. Laboratory studies, which tend to be short-term and contain a degree of artificiality.

Few studies have investigated what actually goes on during a face-to-face negotiation. Two reasons account for this lack of published research.

1. Real negotiators are understandably reluctant to let a researcher watch them at work. Such research requires the consent of both negotiating parties and constitutes a constraint on a delicate situation.

2. A lack of methodology until recently there were few techniques available that allowed an observer to collect data on the behavior of negotiators without the use of cumbersome and unacceptable methods such as questionnaires.

Over the past 20 years a number of long-term studies using behavior analysis methods have been carried out by members of the Huthwaite organization. These have allowed direct observation during real negotiations, so that an objective and quantified record can be collected to show how the skilled negotiator behaves.

The successful negotiator The basic methodology for studying negotiating behavior is simple find some successful negotiators and watch them to discover how they do it. But what is the criteria for a successful negotiator? The Huthwaite studies used three success criterion:

A. They should be rated as effective by both sides.

This criterion enabled the researchers to identify likely candidates for further study. The condition that both sides should agree on a negotiators effectiveness was a precaution to prevent picking a sample from a single frame of reference.

B. They should have a track record of significant success.

The central criterion for choosing effective negotiators was a track record over time. In such a complex field, the researchers were anxious for evidence of consistency. They also wished to avoid the common trap of laboratory studies looking only at the short-term consequences of a negotiators behavior and therefore favoring those using tricks or deceptions.



C. They should have a low incidence of implementation failures.

The researchers judged that the purpose of a negotiation was not just to reach an agreement, but to reach a viable one. Therefore, in addition to a track record of agreements, the record of implementation was also studied to ensure that any agreements were successfully implemented.

As part of this study, 103 separate negotiations that met this criteria were observed and documented. They fell into three categories of negotiation:

labor relations (union and management);

contract negotiators; and

others.

In this document, these people were called the skilled group. In comparison, we also studied a group of negotiators who either failed to meet all the criteria or about whom no criteria data was available. These people were called the average group. By comparing the behavior of the two groups, it was possible to isolate the crucial behaviors that made the skilled negotiators different.

Huthwaite is the worlds leading sales performance improvement organisation. Founded on scientifically validated behavioral research, our methodologies which include the internationally renowned SPIN Selling, guarantee sales success. Huthwaite assesses your organisations needs and develops customised sales performance improvement and coaching programs that drive real business results.

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www.huthwaite.com

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