Mention bargaining or negotiating and most people immediately think of it as a way of haggling, the way you might with the man in the picture, a silk and carpet trader in a Turkish market.
Negotiation is known as positional bargaining, it’s like a game where each side tries to argue for their position, making concessions occasionally, until either the deal is done or one party walks away.
Here’s how this game is played:
Buyer: “How much do you want for this vase?”
Seller: “It’s hand-made in Paris. I’ll take $100, not a penny less.”
Buyer: “What? It’s chipped. Right here in the base. I’ll give you $30.”
Seller: “Are you crazy? That’s less than I paid for it.”
Buyer: “I could go to $45 but no more.”
Seller: “I don’t think you’re a serious buyer or you’d know the true value of this piece.”
Buyer: “I am serious, that’s how I know what this is really worth. My final offer is $50.”
Seller: “I couldn’t go lower than $80.”
Buyer: “Sorry, no deal.”
Seller: “What do I tell my wife and children when I can’t put food on the table? Give me $75 and go before I change my mind.”
There are occasions when this style of offer/counter offer method works, but most times it’s too time-consuming and there are many occasions on which it’s unworkable. When multiple parties are involved, for example.
Try negotiation on the merits.
This technique was developed by the Harvard Negotiating Project as a means to produce wise outcomes efficiently and without alienating any party.
These four key elements form the basis of merit negotiation:
Always separate the people from the problem.
People are emotional. They often think and debate with their hearts overruling their heads. When you’ve taken a position based largely on emotions, it becomes almost impossible to retreat from it without damaging your ego.
Overcome this by making it clear before negotiations begin that all the participants have a duty to solve the problem and, in that sense, it’s almost as though everyone’s on the same side.
Focus on interests in a negotiation, not positions.
The objective of any negotiation should be to satisfy everyone’s underlying interests, not their stated positions. A negotiating position is likely to obscure what you really want, so how can anyone propose a solution that meets your needs if you’ve concealed them? Identify the interests of the parties and focus on those.
Discuss a variety of possibilities before you decide what to do.
Negotiations are usually undertaken under high pressure circumstances, not the ideal conditions for reaching an amicable solution. Take time to invent options for mutual gain. Create a wide range of possible solutions that reflect shared interests and reconcile differences.
This helps to reinforce the idea that each party shares the responsibility to find a suitable outcome for all sides.
Insist that the result is based on an objective standard.
Had the person haggling for the vase Googled on their phone the prevailing price for slightly damaged items of that type, the negotiations could have been swiftly concluded.
Of course, the solution to more complex negotiations can’t be found on the internet. Insist that a fair and impartial standard be applied such as expert opinion, market value, custom, law, accepted best practice, independent third-party evaluation and so on.
Finally, a word ofnegotiation from the Swiss.
They are the world’s experts. Perhaps it’s their expertise in financial trading, or perhaps it’s a reflection of their practical and logical nature or maybe it’s just something in the chocolate, but the Swiss approach is as simple as this:
The parties meet, having done their homework on what they and the others will consider an acceptable deal. Let’s call one party Jurgen’s group and the other Kurt’s.
Jurgen: “Your building is exactly right for our client but we think you’re asking too much.”
Kurt: Oh? What do you think is fair?”
Jurgen: “I’m authorized to go to $70 million.”
Kurt: “I can make a call but I don’t think they’ll accept less than eighty.”
Jurgen: “Alright, let’s not waste more time. I think I can get seventy-five for you but that’s really the highest we’ll go.”
At that point, Kurt knows he’s looking at the final offer. He will also know it’s a fair one because he and his team have done their research, just as Jurgen and his team have.
They will either shake hands and confirm the deal or Kurt will say he’s sorry they couldn’t conclude and they will part with their egos intact and their mutual respect undiminished.
Of course, there will be plenty of sidebar discussions during this process and maybe even a breakout session for both parties to review their options but, generally, they won’t play the game of bidding and counter bidding long into the night.
Read about the Harvard Negotiating Project