You know you are going to engage in a negotiation at some point, whether it involves making a bid pitch, getting assigned to a new project, or negotiating the terms of your next job.
Do you know how to start? Do you take an assertive approach? Do you wait to be approached? Should you wait to be approached, or for the time to be “right”?
Negotiations are often fluid. Many people hesitate to start and are not sure even how to start a negotiation. But how you start a negotiation often will determine where you end up, so start your next negotiation as you mean to continue. Your end goal must be in mind at all times, and will impact whether and when you make an offer, how you counter, and who should be the one to make the first move.
In my previous blog, we talked about four steps to ensure that you are ready to negotiate:
1. Get a sounding board, work through the issues, and practice what you will say.
2. Don’t be afraid. Use the facts you have—or gather those you do not—and push through. Look for connections between the facts and the needs of your negotiation partner.
3. Take stock of the other side’s perspective and needs. Think of them as your “partner” in getting the deal accomplished. Then you can prepare for it and how to respond.
4. Prepare your negotiation partner. Don’t let lack of preparation on their end stymie your efforts at a successful deal.
Once you are ready, do not forget to plan your strategy on how to start your negotiation. You should carefully consider if you should make the first overture or wait for the other side to do so. There is risk in waiting for the other side, as they may not be working on your timetable. Also, there are theories that if the other side starts, they have an advantage.
On the other hand, some strategists believe it is better to wait for the other party to begin so that you can gain a sense of where the lower end of their zone of potential agreement lies and thus retain control in how you respond. However, this often requires a negotiation tactic that takes trust out of the equation. If you have an ongoing relationship with your negotiation partner, trust is essential. Even in a more one-off type of negotiation, developing trust with your negotiation partner is important for how you proceed toward a successful resolution.
If you start the negotiation, you “anchor” the discussion and influence the perception of your negotiating partner of how high they can go. They will be anchored to your low offer and will be less likely to deviate radically with an extremely high counter offer. This theory in itself does not often bear out in reality, however.
What does seem to work most effectively is coupling an opening offer by anchoring the other side’s frame of reference by supporting your offer with a specific and compelling justification to show the reasonableness of your offer.
Your offer, whether it is the first offer or the first response, should be the best possible offer that you can justify, based on an objective standard that is segregated from either side’s self interest. The other side is less likely to be as reactionary. If the other side makes the first move, you can use this technique by simply asking them to justify the offer that they have made.
You can use statements such as:
• “I have reviewed the other bids on this job and our proposal is a better one—we cover all of the items required plus we have the ability to provide assurance on a timeline due to the software that we are using that helps us to expedite the delivery to the job site. Based on this information, we can offer you ….”
• “Please help me understand on what basis you find your initial offer to be a fair and reasonable one?”
• “I would like to work with you on this project; our research has shown that …”
Then wait. Let them process and get a response to you.
So, get ready to negotiate and be prepared to make the first move if necessary. But, if you are going to make the first offer, be sure to provide a clear justification to support the fairness of your offer, make a reasonable and justified offer and ask your negotiation partner for their best reasonable offer, and most important, do not move from your position unless the other side can tell you why your justification is flawed or if they can support their position with reasonable justification.
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