Top 10 tips on how to negotiate

Negotiation may conjure up images of trade delegations, hostage situations and large corporate mergers. However, the truth is that negotiation is also all around us, it is a fundamental part of life and business. Knowing the basics will stand you in good stead, be it deciding your holiday plans or negotiating your salary. If you stick to these ten tips you will find that both you and the other side will walk away feeling like you’ve got a fair deal.

Table of contents

1. Tough guys don’t win
2. Listen
3. Coinage
4. Preparation
5. Set the scene
6. Set the tone
7. Bargaining power
8. Some deals just don't work
9. Enjoy it
10. Remember Win-Win

1. Tough guys don’t win

Good negotiation creates a deal that both parties feel good about. Win-win, not out to win. There have been many studies showing the benefits of a win win attitude, including game theory. Perhaps more importantly, your reputation will be far greater if you negotiate fairly and with respect.

2. Listen

The key to successful negotiation is truly understanding the other party's wants, needs and motivations. You can only do this by listening and drawing out information from what they tell you. The adage that 2/3rds should be spent listening and the other 1/3 speaking is a good one to follow.

3. Coinage

Coinage is something that means a lot to the other party and not that much to you. Finding out the other party’s motivation can allow you to keep coinage for the latter part of negotiation. You may have even had this happen to you, for example salesmen “throwing in” a free warranty - it is most likely of a marginal cost to the salesman but may give you the piece of mind that you can return it if anything goes wrong.

4. Preparation

Fail to prepare and prepare to fail. Co-ordinated negotiation is key, especially if you’re in a team then you all need to make sure that you are on the same page. If you are by yourself you need to be clear on what your alternatives are. In trade negotiation this is called your BATNA, short for "best alternative to negotiated agreement” or put simply; what can you do if it doesn’t work out.

5. Set the scene

Surroundings and climate make a difference to negotiation. Choose the venue carefully as it will reflect how the negotiation may play out. For example, cold and informal boardrooms may inspire hostility, whilst a more informal setting may encourage warmth and agreement. Think of Camp David used by the US for the Israel and Palestine negotiations compared to the intimidating large boardroom’s of a major multinational.

6. Set the tone

At the beginning of a formal negotiation you should set out the terms of engagement. For example, everyone should agree to have a productive and respectful negotiation. This is useful for clarity but also allows you to anchor back if anyone deviates from the point. For example, if one person is becoming obtuse and playing the tough guy, you can remind them that they agreed to be respectful.

7. Bargaining power

Bargaining power comes in many forms and you may often have more of it that you think. It is key to understand where your strengths and weaknesses lie. Bargaining power is not just the obvious metrics such as market power, but can be subtler, for example relationship power and time (for example deadlines).

8. Some deals just don't work

Some negotiations may hit a brick wall. It may be a good idea to to take a break and regroup, or to be open and discuss the impasse frankly. If all else fails, then perhaps the deal cannot be done. Some deals are not meant to be, new information may come to light, which changes the whole equation - there is nothing to be shamed of.

9. Enjoy it

Negotiation can be tense, drawn out and stressful. Learn how to turn it into an enjoyable experience and everyone will be thankful.

10. Remember Win-Win

If there is any tip to take home it is win-win. Negotiating is about getting a good deal; aiming to destroy the other party will do you no favours.  The long-term reputation cost may be very damaging.