The topic of negotiation came up quite a few times recently during my coaching conversations. I realized that unless you went to an MBA program, took specific courses in college or graduate schools, or work in a business development/sales role, most people don't know a lot about the basic principals of negotiation. Additionally, people (including me) often don't feel comfortable about negotiations, because we feel that asking for more suggests greediness and risks damaging our relationship with the other party.
Even after taking a couple of negotiation classes during business school, I still find myself coming back to the Stanford GSB's talk on negotiation (video attached at the end of the blog) for encouragement and inspirations before preparing for a negotiation myself. I also recognize in myself that the more I think about the topic and the more I practice negotiation, it becomes easier. Therefore, I want to share some basic negotiation principals in this post and encourage you to try them out next time. To me, the biggest barrier to a successful negotiation (or even choosing to negotiate) is the mindset.
Mindset for a negotiation
- Negotiation is necessary: There is a reason that you want to negotiate. It could be that you feel that you are under-valued, or you feel that there is room for more in an offer. No matter what your reason is, just know that if you do not at least try to have the negotiation conversation, you will continue to wonder about the "what ifs". Therefore, for your own peace of mind, think of negotiation as a necessary step which can potentially benefit both you and the counter party.
- It's about expanding the pie rather than give-and-take: This is one of the most important mindset changes that I advice to my clients. It is very easy to see negotiation as "if I get more, he has less". This give-and-take mindset narrows negotiation into win-lose situation and makes the conversation uncomfortable. When done correctly, negotiation can actually be a win-win situation. Instead of focusing on who gets what % of the existing pie, think about how can we expand the pie so that both of us can get more. This turns negotiation into a more collaborative and pleasant conversation.
Basic negotiation principals
- Multi-issue negotiation: I consider this the most important principal to negotiation. This principal allows you to expand the pie. Multi-issue means that you consider all the issues that you and your counter part care about and bring them all on the table for negotiation. For example, job seekers often focus on salary number in offer negotiation. The danger is that some employers do not have much wiggle room for salary, especially for more junior level positions. However, there are a lot more to a job that we care about than just the salary. On the money side, there is signing bonus, annual bonus, stock options, performance-based compensation, other allowances, etc. On the non-monetary side, there is flexible work schedule/location, work responsibility, visibility of projects, training & development, promotion schedule, promotion terms, mentoring, and many more. Employers might have a lot more room to provide something that you want in these other areas.
- Think in package deals (interest-based negotiation): You should avoid issue-by-issue negotiation in multi-issue negotiation, because it puts you back in the limited give-and-take conversation. What you do is to always think in package deals. "If I give up some in issue 1, can I get more in issue 2." This provides flexibility in negotiation for your counter part to think about what issue is more important to them, and allows room for more creative win-win solutions.
A few additional principals for mostly single-issue negotiations
- Establish an aspirational goal: You might not get to your goal, but having one helps you aim high and not settle for low. Otherwise, you might just accept an un-optimized deal.
- Know your BATNA (best alternative to a negotiated agreement): The most powerful negotiation is to have a strong BATNA. That is why having another job offer can help you negotiate more effectively.
- Know your reservation price: This is your walk away price, which means that at this price, you would rather walk away then taking the offer. Sometimes, this is not as relevant for job seekers but in many other types of negotiation (such as buying a car), it is important to know your walk-away price. The reservation price and your aspirational goal sets boundary for the range you are going to negotiate in.
- Prepare, prepare and prepare: You can come up with an effective negotiation strategy only if you do research on you and your counter part's interests. Remember that the key to finding an optimized solution is to identify issues that you care more about than your counter part and vice-versa. So spend the time to think about your priorities, and put yourself in the shoes of your counter part to think about his priorities. Do industry benchmark research if it's for a salary negotiation. Practice with others if you feel unsure about the delivery so that you feel more comfortable in the real thing.
Lastly, here is the video from Professor Margaret Neale of Stanford Graduate School of Business on negotiation. Some content of this video is targeted at women but I find the basic principals applicable to everyone. Enjoy!